Planning is a very important process in the daily life of modern society. It all starts with the assignment of tasks for the current day and lasts for a month, year, five-year period and longer. In building a business, planning also plays a key role. If you want to successfully implement your plan, you need to make clear instructions for yourself. In addition, it is necessary not only for the businessman himself, but also for his partners, investors, banks. In this article we will analyze what it is, why it exists, the content of the business plan, the main provisions, the order and stages of development.
The essence of the business plan
So, what is it and what should be the content of a business plan? Have you thought about creating your own business, but do not know where to start? Any undertaking should not be based on a rash impulse. It is necessary to develop a behavior strategy, learn all about the industries in which you intend to work, arrange monitoring of the market and competitors, calculate possible risks and profits. All of these items are a summary of the business plan. At its core, this is the document from which any deliberate business begins; on its basis large companies and successful entrepreneurship are born. This document has its own standards, although, of course, it does not have a mandatory regulatory form. But the recommendations on its structure should be listened to, since it is often useful in the process of life of an economic entity.
Why do I need a business plan
First of all, the content of the business plan will allow the entrepreneur himself to act clearly and consistently. Without instructions at hand, making operations and transactions in a chaotic manner and without preliminary calculations, you can make a lot of mistakes than soon destroy all your work. Planning should be based on the most comprehensive information available. Such an approach to business will make it possible to calculate the possible consequences several steps ahead, avoid negative incidents and find additional ways to resolve issues. The content of the business plan will allow you to push yourself to action, since all people are afraid of the uncertainty that awaits at the next step, and here it seems like everything becomes open and clear.
The second reason to draw up this document is to attract additional affiliate programs, invest in a project from external sources, and gain access to large amounts of credit. Any self-respecting partner, and especially large organizations, do not want to get involved with projects of dubious profitability and viability. But the structure and content of the business plan may well convince prestigious and wealthy organizations to invest in the development of a new project. The contribution must pay off, and therefore it is necessary to provide analytical information on the upcoming case, which will clearly state the benefits of this kind of financial investment in a newcomer to the market. Properly structured and the content of the business plan will open the door for the entrepreneur to large bank loans on favorable terms, state support and subsidies, commercial investments from well-known companies. Such help at the start of operations will provide a successful and quick start-up, and in the future will strengthen the position in the selected industry.
Who are the investment intermediaries
At the stage of considering a business plan, it is very important not to overestimate one’s own capabilities for foresight and ability to anticipate turns of events. The ability to analyze situations and identify, based on the data obtained, the near and long-term prospect of market behavior comes with experience. Neither education nor natural ingenuity will help here. Some things can be done only after going through a visual presentation many times. Therefore, many novice entrepreneurs do not risk independently undertaking even the basic provisions of a business plan, let alone delving into analytical activities all the more.
Young entrepreneurs prefer to contact the so-called investment intermediaries. These are companies that undertake to draw up this document. Their tasks include many points and processes, but they charge a tangible fee for their efforts, often in the form of an advance payment. Typically, the size is determined by the interest rate on the size of the desired investment in the project from third parties. Such companies employ experienced financial analysts, specialists in various economic sectors, theorists and practitioners of building a successful project, which make up the approximate contents of a business plan. A sample is provided to you for consideration, decision making, correction of inaccuracies. All details are repeatedly discussed and clarified, a lot of meetings and re-formulations of the first version of the plan take place before it finds its final form.
Choosing an investment intermediary is a very responsible business. A big name can be the result of only the skillful work of a PR company. And at the exit, you can get a standardized and tailored, far-fetched business plan. There can be no cliches and stamps in the development of this document, each project is developed strictly individually with a full understanding of the essence of the business under construction. Therefore, at the stage of signing the agreement, discuss all the details with your investment intermediary, so as not to get into an undesirable situation with prospective investors.
What is the danger of a wrong business plan
The content of the business plan, an example of its correct structure, was invented for a reason. It would seem, why be aggravated in some specific forms, if the document does not have regulatory requirements for filling out from the state, tax authorities and other regulatory authorities? Everything can be made much simpler and faster. To look at the first content of a business plan that you find, an example of which you will find on the Internet, adjust the wording to the meaning of your direction - and you're done.
Maybe for your own use this option will do. And even then, he will have much more problems than benefits. But such a document will definitely not attract third-party investments. First of all, investors check the market situation and the compliance of your data with them. No self-respecting organization will rely solely on unprofessional statements by an absolute beginner. Not a single bank will provide a loan to such a business plan, not a single commercial person will see a gold mine in your project. As a result, all funds spent in the first stage will be simply irretrievably lost. And for a novice entrepreneur, these are significant amounts that can delay the creation of a business project for a long time or completely deprive of hopes of opening a business sometime in the future.
General document requirements
The content of the business plan, as requested by UNIDO, should be developed according to several fundamental rules. Without taking them into account, the document turns into a set of completely useless information.
So, the first rule refers to the joint work of the project initiators and the drafters of the plan. The initiators draw up the terms of reference, pass it on to the developers, then in the process of drafting, all accuracy and omissions are discussed. It is necessary to conduct a complete market analysis in order to accurately formulate a forecast for losses and profits.
An important point is the preparation of a portrait of the client. It is necessary to clearly understand who the product is aimed at. Many entrepreneurs, inventing a completely innovative product, rely on the "right of the first idea." In this case, do not forget that the most competitive and strong organizations can reproduce this product very quickly and at lower cost. It is necessary to adequately assess their weaknesses, as well as goals. It is important for lenders to provide information about the cash refund process and the estimated timing. The content of the business plan of the enterprise and the procedure for its development should be completely under the control of the initiator.
The second rule relates to the volume and specificity of the document. The structure and content of the sections of the business plan should be clearly formulated, not contain water, too blurry and deciphered processes of technical production of products. The size of the document usually varies from eight to twelve pages of printed text (on both sides). In some cases, the volume can be up to twenty-five pages of double-sided printed text. The content of the business plan of the project should be simple and complete. The document should present an honest analysis based on real events. It should specify the risks of the company.
The content of the business plan: an example
As a standard structure of a business plan , the following sequence of project information items is mainly used:
- Title page;
- summary;
- description of the enterprise and industry;
- product description;
- marketing analysis, strategy and marketing;
- production plan;
- management and organizational plan;
- financial plan;
- focus and effectiveness of the project;
- risks and guarantees;
- appendices (accompanying documents).
Description of company and product
The title page should contain the following data: name, legal structure, phone numbers and addresses of the organization, status, phones, names and addresses of its owners, confidentiality of statements, date and year of the business plan, as well as the names of its drafters.
A resume is a business card of your organization. That it is a summary of the business plan and its peculiar outcome. Here you can find information in a condensed form about the company, the uniqueness of its project, financial needs for implementing the idea, features of the sales market, guarantees and profitability forecast. The investor should decide to read the business plan in full by reading the resume. Since reputable companies receive dozens of such projects a week, not all of them will be read, which means that a maximum of project specificity and seductiveness should be put into the resume.
Description of the enterprise and industry requires an account of the history of the company, its status for today and future ideas. This section covers the financial results of economic activity, the staff and the management apparatus, which are aimed at activities, achievements and merits in the industry, prospects for the economy of the industry and the company, relations with partners and activity in the social environment.
Description of products and services necessarily requires the content of the business plan of the enterprise. A description of the production technology is also required. For each type of product it is said separately, in addition, it is best to provide a visual sample or, at worst, a photograph. Describe what technical innovations are required for the successful implementation of the plan, competitors with similar products, technology patents, the reasons why you chose your product, technology or service.
Marketing, production and management
Marketing analysis is the most important part. The content of the business plan of the investment project requires a particularly careful approach to the description of this paragraph. Whenever possible, it is necessary to address the truthful, interconnected factors during the analysis. This section should show the investor how successful the probability of a product entering the market is. Wholesalers and retailers, as well as end users, should be considered. The portrait of the end user, his age, gender, place of residence, geographical and regional features of the implied part of the population should be presented. It also distinguishes consumer characteristics of the product itself: type, purpose, price, shelf life or use, safety, etc. The approximate structure of the section implies the existence of a clause on consumer requirements for the product and a clause on market competition.
The structure and content of the main sections of the business plan requires an item on the production plan. In this section it is necessary to talk about the production capacities involved in production and planned for implementation in the future. It is necessary to calculate the volume of production that covers the costs of operation, to calculate direct and indirect costs, raw materials and so on. The most complete cost estimate should be presented here.
The business plan should reflect the list of personnel of the organization. The management team, the role of each specialist in economic activity and production should be specifically described. In addition, the costs of salaries and bonus payments to employees are indicated. Potential lenders closely study the team of managers, whose efforts and professionalism are going to invest their money.
Finance, focus and efficiency
The content and procedure for developing a business plan requires reflecting all financial information on the project being prepared. In the financial planning section , you should indicate the amounts that need to be spent on the preparatory and current stages, calculate the profit from the project, specify the costs of lending, taxes, other items and so on. In this section, it is desirable to indicate the total size of the requested funds, the financial request to the investor, the schedule according to which the debt will be returned, in what amounts and by what numbers. It is necessary to indicate for what purposes the allocated funds will be used and in what percentage ratio. The structure of the capital existing at the moment, as well as the effectiveness of the use of cash in hand is indicated.
In the section it is necessary to indicate the orientation, sensitivity to market changes, volatility, materiality for society.
Risks and Warranties
In this section, it is necessary to take into account all possible entrepreneurial risks and circumstances equated to force majeure. The lender must be sure that in any circumstances his investment will be returned to him at least in the amount of the deposit. Usually, the period from two to five years of the organization’s work is considered. The main risks are reactions of competing organizations, possible weaknesses of personnel or specialists. Risk may relate to the functioning of the technical equipment of the organization and competitors. Even if no risky situations are foreseen, they must be specified in detail in the business plan. The creditor and investor should see that the organization is aware of the riskiness of any business and is ready to bear responsibility for its actions.
Applications
It is recommended to attach documents to each business plan on the basis of which it is drawn up. The constituent documents of the organization (legal entity) are also attached here. Such annexes include a certificate of registration, a charter and an agreement on founding, documents confirming certification, patents, licensing, diplomas and background information on the education of key personnel, excerpts from press articles on the activities of the organization.
Applications include product photos, market research data, costing, and tables. It is advisable to include in these materials photographs of production and sales outlets, a map of the organization, some contracts with partners, data on the resume of the management apparatus, and analytical results of third-party organizations.
As an appendix to the clause on risks and guarantees, warranty coupons, letters, composition and value of collateral, contracts, extracts from legislative and regulatory materials should be attached. The fuller the sections will describe the current and planned situation, the current state of the market and forecasts for the demand for the offered goods and services in the future, the higher the likelihood of receiving subsidies, loans, investments for entrepreneurs, both beginners and market participants for a long time.