Ignoring the business plan is halfway to failing your company. To find out what it is and how to create a business plan.
Want to launch or revamp a project, but have several open questions? It’s time to get ideas and make your company born on paper with a business plan.
A business plan is always a good idea. Whatever the reason – making more money, wanting to be your boss, applying available resources, achieving success – why you decided to create a business, and assuming you already have a good idea in mind, the next step is to analyze if that same idea is viable and lower the risk with a baseline plan that structures and defends your concept.
Seen as a guiding tool and the one that most easily brings you closer to the true potential of your idea, it is nothing more than the same transferred to paper and must answer questions.
Use the business plan to clarify your strategy, identify potential obstacles, decide what you need in terms of resources, and assess the feasibility of your idea/growth plans before starting the business.
But what is a business plan?
Often associated with the need to obtain funding/investment – in the case of startups – a business plan is, in fact, an important tool for any company, regardless of its stage of development, as it allows for anticipating problems, monitoring progress, and even recruiting talent.
Yes, drawing up a business plan takes work because it forces you to reflect on the essential aspects of building your project, but ignoring it is halfway to failure. So instead, think of it as the more or less concise answer to an important set of questions, which will help you formulate specific business objectives.
You will find several options for structuring this document on the Internet, such as an extensive explanation. But to make it easier for you to understand how you can start structuring your ideas, we’ve summarized these topics for initial guidance.
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Executive Summary
Think of the executive summary as the synopsis of a book or movie. It is a kind of “business card,” it should summarize (in no more than 500 words) the entire presentation of your project, and even if it is the first chapter to be read, it should be the last to be written.
Ideally, it should be as clear, as appealing, and cover all the important aspects of the plan as a whole, because there is no guarantee that recipients – such as potential investors – will be willing to read your business plan. But, in the end, even if that is your goal, as you work it out.
2. Your vision
Time to go back in time and start explaining how the idea came about, justifying the creation of the business (“why does the company exist?”). This exercise will help you define the project’s mission – a global statement that explains the general objectives –a fundamental step in creating any company.
Please take the opportunity to talk about the career/professional experience of the creator(s), showing how they can contribute to the success of the current project and revealing their know-how in the business area in question.
The market
Market analysis is essential to substantiate the basic viability of the idea/product. It must be supported by facts and figures, whenever possible, on market data created by credible entities. The objective is to determine the size, stage of development and characteristics of the potential target audience and define the profile of the main competitors. Then, use arguments that allow you to differentiate yourself, such as product cost and segmentation, defending them as competitive advantages.
Try to understand the profile of your ideal customer, namely in terms of demography, and make projections taking into account their trajectory. For example, if your product’s target audience is retirees, gather data that allow you to estimate how many people expect to request retirement in the next few years, as well as consumption patterns related to that group. And don’t forget to analyze the sector, looking at medium-term trends.
What do you know about your market? From your competition? What economic indicators or trends support your idea? Did you have access to any studies? It is important to base your plan on hard facts and not just your intuition.
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The idea
Now that you’ve analyzed the market, it’s time to show that there is room for your business. What arguments show that it is financially sustainable. And that its executives have the necessary business and management skills to succeed? Do this analysis and consider what is different about your product or service offer. What is your competitive advantage? What will physical and production resources be required? The idea is to show the capacity to transform the new idea into sales that generate the expected margin.
In cases where it is not possible to base credibility and solidity on the company’s history. With emphasis on the most recent commercial results and on the goals already achieved. Highlight the path of the founding partners and successful experiences in previous businesses.
The Project
Here, the emphasis should be on the product/service (what is it, and why is everyone going to buy it?). Including topics such as patents and licenses. As well as a detailed description of the production process. With answers to questions such as “Will you produce the product or will you subcontract this work?” And “what machinery is needed and what is its cost?”. Specify all procedures necessary to launch the item, their associated participants (if financial sources are needed), and the given time while anticipating potential limits.
One of the key variables for the success of any business is the motivation of the stakeholders, so it is time to address this topic, mentioning aspects such as the adequate levels of involvement of each one and the expected role. And because not everything is rosy, share everyone’s reflection on the critical points. Doing so demonstrates maturity, allows for anticipation and reduces the associated risk.
Commercial strategy
Have you already set a price for your product/service? An estimate of the minimum value – calculated by aggregating the costs associated with the product’s production, marketing and distribution. Is essential to arrive at the final deal, which takes into account aspects such as typical market margins or analyzes of added value perceived by the customer.
Having identified and quantified the needs of that same customer. It is time to define a clear marketing strategy to satisfy them. And implement the sales channels and channels, considered the basis of the communication process with the potential buyer. At this stage, and if none of the project promoters has know-how in the area. You should consider involving someone with this experience. This person will be responsible for creating a plan that includes the actions to be carried out. The sales forces to be involved, distributors, agents, forms of advice and the production of appropriate advertising media.
Business management and control
Sales, production and financial information, are three fundamental areas of the company that must be controlled – through regular reports produced by the respective managers/departments – from the beginning. This information is imperative for taking timely action, namely to correct situations that require it.
Investment
There are several ways to finance your business plan, whether with equity, commercial bank loans, investors or even the famous crowdfunding. Before choosing which model is right for you, get advice on potential investment structures.
In any case, once the form of financing is chosen. It must specify the basic capital requirement and the funds needed to purchase the premises, equipment. And any type of initial investment necessary. As well as the period and form (if phased or one-time) funding.
Financial projections / financial model
As the last vital element in determining the viability. And attractiveness of your idea to partners and potential investors, the financial projections. Sales, cash flow (estimate of the monthly net cash position) and profitability – must be made with the support of someone trained in the field.
Now that you know how to think about your business plan, it’s time to get to work. Please write it down, rewrite it and share it with people close to you who can give you perspective on what you have in mind.
With a plan ready, all that remains is to put it into practice and choose the right tools. Don’t forget the management software to leverage your idea, as critical business control is important to your success.
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