Everyone who has decided to start their own business needs to understand what a business plan is for. Without awareness of the importance of planning and its principles, falling into the category of successful entrepreneurs will be difficult. First of all, because the market is an aggressive environment where you need to be able to gain a foothold in order to later increase your position. Without analysis and planning, it will be extremely difficult to do. Moreover, such a document is extremely important in the process of attracting investors.
What is a business plan for?
The main objective of such a document is to translate a specific idea into numbers and paragraphs. That is, the most detailed planning of future business activities.
A full-fledged business plan has the form of a document - electronic or paper. He gives answers to questions such as:
- Is the idea of the resources necessary for its implementation?
- whether the business will pay off, and what degree of profitability it will possess.
Thus, identifying risks and potential profits is the first thing a business plan is for.
For planning to be effective, you need to conduct marketing research. We are talking about a thorough study of the direction of activity, the product itself or a specific service, taking into account the current market relations.
If we are talking about an enterprise, then business planning in this case will include the following areas:
- Full analysis of the manufacturing, trading and business sectors. The main goal of such a process is to identify the features, distinguishing features, advantages and disadvantages of these areas.
- Development of a specific project of the company. For each new product, you need to create a separate plan for its launch on the market and subsequent promotion. For this, it is necessary to determine the characteristics of the market and product / service.
- The results of the study of commercial, financial, technical and organizational mechanisms, the use of which can help to achieve the objectives.
Internal and external goals
To understand why a business plan is needed for an enterprise, it is necessary to pay attention to such options for its application as:
- The decision of internal problems of the company. In this case, the purpose of the document is to identify prospects, strengths as well as weaknesses, weaknesses and various threats. Such a plan is used as a management tool, which makes it possible to extremely objectively evaluate a specific product or company as a whole.
- Providing by third parties and organizations. An external business plan is used to attract individuals and companies beneficial to the company. It can be government agencies, banking institutions, various funds, business partners or investors.
Such analytics gives the greatest effect in the case when, immediately after the formation of the internal business plan, an external one is created. This is explained by the fact that high-quality monitoring of the state of the organization and the subsequent correction of the identified minuses greatly facilitates the formation of a truly interesting proposal.
Moreover, it becomes clear what kind of investments and partners the company needs at the moment.
Management tool
Understanding what the enterprise needs a business plan for, it is worth determining the practical benefits that the head of the company can get from such a document. Directors use it in the process:
- entering a new market;
- increase sales;
- developing a tactical plan;
- search for promising areas;
- assessment of the financial condition of the organization;
- formulating a strategy;
- definition of short-term and long-term goals;
- development of a marketing policy in order to confirm the company's position in the market;
- estimates of business and production costs;
- definition of quality criteria for goods and services;
- the formation of the correct structure of the personnel, allowing extremely effectively achieve the goals set for the near future.
Considering what is needed to create a business plan (analytics, strategy, assessment of effectiveness, risks, etc.), the manager, using such a document, can see the weaknesses of existing processes and pay attention to them.
Small Business Benefits
Entrepreneurs, especially beginners, carry out activities associated with risks of significant losses or even closure of the business. In order to avoid mistakes that entail tangible costs, you must be able to predict possible problems and appropriately assess the level of income in the near future.
That's why an entrepreneur needs a business plan - with the help of competent analytics and accurate planning, prepare for the successful launch of a new business.
In addition to taking into account all possible risks, such a document simplifies the solution of several important tasks:
- Fixation of the main thoughts. It is about placing emphasis in the planning process. When preparing for a new business, you need to understand what is important and which elements will be of secondary importance during the launch process. When all key thoughts are detailed, it becomes possible to evaluate the plan as a whole and to see its weak undeveloped places.
- The designation of goals. It is important to display on paper all the tasks that need to be achieved. In this case, you must specify all the dates and numbers necessary to evaluate the result. That is, an entrepreneur should have a clear picture of what, to what extent and for how much he should receive.
- Assessment of the effectiveness of the team. The work of employees and their results are easier to evaluate using a benchmark, the role of which is the business plan. Such checks allow you to make the necessary changes to the strategy for implementing a specific idea in time.
- Search for investors. In some cases, it is financial injections from the outside that can give the necessary impetus to the development of small or medium-sized businesses. But investors, being experienced players, want to understand exactly what they have to invest in. Here, both details and the overall picture are important, with numbers, timelines, indicated risks, alternative development paths, etc. The more accurate and thoughtful the plan, the higher the chances of getting money.
In the planning process, it will not be superfluous to write down any hypotheses regarding business processes. They can subsequently be tested and implemented with positive results.
Structure
Planning must be competent, otherwise it will not give a good effect. Here is what you need to draw up a business plan:
- title page;
- table of contents;
- project summary;
- Description of the service or product
- marketing analysis;
- risk analysis;
- financial forecasts and indicators;
- applications.
With this structure, the plan should be outlined on 30-40 pages, taking into account the applications. This volume is enough. Exceptions are possible if the document is prepared for an organization that presents its special requirements. As an example, banks, state corporations and government agencies (RUSNANO, SEZ, etc.) can be cited.
How to write a resume
This part of the document outlines the essence of the idea and the basic information regarding it. It’s better to do resume writing at the end. This recommendation is explained by the fact that after all the research and calculations, a more accurate and in-depth understanding of a particular idea appears.
The project summary should include:
- Start date of the business.
- Mission of the project. It is about clearly defining the benefits that owners and customers can get. It will also not be superfluous to draw up a vision of the business at various time periods: 6 months, a year, 5 years.
- The key idea. In this part, it is necessary to describe on what exactly the money will be earned and how.
- Key project staff.
- The location of the head office of the company and its branches (if any).
- A brief description of the product or service.
- Sales results.
- The history of financing.
- Company development prospects.
Of course, not every entrepreneur will have enough experience to fully fill out each paragraph of the resume. A company can only start its business. In this case, investors need to focus on the reasons for the demand for a product or service. It is also worth highlighting those factors that will definitely contribute to the successful process of a company entering the market.
Any voluminous text descriptions complicate the perception of the idea.
Therefore, in order for information to be perceived easily and quickly, it is better to submit it in the form of infographics, diagrams and tables.
Description
Detailed idea and the formation of its structure - this is the first why you need to draw up a business plan. The “description” section contains just such information. It should contain:
- brief description and scope of the target industry;
- designation of company goals;
- a short story about the process of the company;
- detailed business model;
- identified factors and the planned technological component of the project;
- full information about the team and key skills of each employee.
Thus, the main task of this part of planning is to formulate a detailed picture of a service or product. The more specifics, the better.
It is also important to pay enough attention to competitive advantages and resources necessary for the development of a business.
The risks
When preparing for a presentation, you need to clearly understand what data is needed. A business plan without specific numbers and detailed, well-designed forecasts cannot fulfill its function.
One of the goals of such planning is to assess risks as accurately as possible and identify ways to overcome them.
This means that the document should describe specific potential problems that could have a significant impact on the process of implementing the idea. Given all the data regarding risks, the businessman should draw up a competent program to reduce them. Moreover, the methods of counteraction should be convincing enough so that investors decide on investing in the project, despite possible problems.
A sober risk assessment is what you need a business plan for an individual entrepreneur to open a project without having extensive experience in the field of entrepreneurship. Those who neglect this part of the calculations often fail, losing all their money.
Financial performance
Without detailed, up-to-date data, it is difficult to imagine a complete business plan. What documents are needed for the presentation largely determines the format of the business.
If we are talking about a company that has already been present on the market for a certain time and has statistics, then investors should provide the following information:
- cash flow statement for the last year;
- data on losses and profits;
- balance sheet.
These documents will make the presentation more convincing.
Both an entrepreneur and an average company can include in the business plan a forecast for all categories of expenses and profits for 3 years in advance.
It is also important to analyze the planned return on investment.
Marketing analysis
This is an information-intensive and complex part. Any entrepreneur who understands why a business plan is needed will not save money and time for such a study.
The main objective of this planning unit is to determine the strategy for introducing the product to the market and the subsequent strengthening of its position.
That is, you need to think about how exactly the exit to the level of sales that is needed to support the activities of the company or its specific department will occur. It is also important to clearly build a strategy to increase customer loyalty to a product or project.
To conduct a full-fledged marketing research, the following actions are important:
- competitive environment identification;
- the selection and subsequent analysis of the target part of the market;
- identification of company capabilities within its segment;
- generating a sales forecast;
- building a development strategy.
All forecasts and assumptions should be based on verified information.
Applications
Having figured out what a business plan is for, you need to decide how to make it extremely convincing. And here documents have a role to play. Their presence is desirable at every point, as they serve as supporting elements of planning.
However, there are many documents that should be present, but in a separate section called “applications”. This part may contain complete and detailed marketing research data, complex technological information and information regarding company registration.
If the entrepreneur himself does not know how to properly format such a section, he can attract outside specialists.
Summary
A business plan is needed to identify the strengths and weaknesses of a product / service. It is also important for the reason that it allows you to draw up a complete and competent project development strategy, taking into account the characteristics of the market. In addition, without such a document, investors will not consider a specific idea.