Business plan for individual entrepreneurs; what is it for and how to make it right
Currently, the degree of trust in IP banks is not high and leaves much to be desired. And during the ongoing financial crisis and in the conditions of a sufficiently large number of bankruptcies of credit institutions, there is a requirement for banks to provide a business plan when receiving a loan to an individual entrepreneur. This requirement is key at the present time, which explains the relevance of considering the issues of drawing up business plans.
Essence and necessity of a business plan for individual entrepreneurs
A business plan is a fairly detailed, extensive document in its structure, which analyzes and describes in detail the activities of a particular organization, taking into account financial indicators and a large number of various factors applicable to a given economic entity. The business plan considers both the current state of the activity and the activity for the future. In other words, it is designed to model economic processes for the future, relying on such basic indicators as, for example, the current exchange rate, interest rates, etc.
For an individual entrepreneur, a business plan is designed to reflect the current state of affairs, that is, property status, cash flow, purchases and sales of products and services. The IP business plan describes the profitability of the enterprise, such an important factor as its financial return. If it is drawn up, for example, for a bank or creditors, it is important to focus on calculations and specific financial indicators.
An individual entrepreneur needs a business plan to substantiate the efficiency and profitability of the business if the activity has not yet begun. In addition, it is important to consider performance indicators in dynamics, therefore there is a need to draw up a business plan in the process of carrying out activities in order to assess the results obtained and develop a policy for further actions. Also, as already noted, a business plan is required when obtaining loans.
General business plan structure
Let's consider the main components of business planning, carried out at the first stages of any enterprise.
- Summary - a summary of the main points. It describes the scope of the future firm, the direction and financial results that are expected. This part of the business plan is focused primarily on investors.
- Description of the product or service being produced - describes the differences between a specific product and its analogues, its usefulness.
- Analysis of sales markets - study of the potential market for a product. A trial release of products into circulation is possible.
- Assessment of competitors - it is necessary to find out who will be potential competitors and develop advantages over them.
- Marketing strategy. Concerns issues of distribution of goods, prices for goods, advertising.
- Production plan. Includes a step-by-step, detailed description of the manufacturing process.
- Organizational plan. Contains questions about who is the head of the enterprise, what specialists are required and how the organization works.
- Financial plan - detailed calculation of all of the above items. This is a kind of confirmation of all the proposed measures by calculations. The estimated costs, revenues, profits and payback period of the established enterprise are calculated.
Video - "What is a Business Plan?"
Methodology for drawing up a business plan for individual entrepreneurs
For a full-fledged business plan required for obtaining loans, an elementary documentary description of the planned expenses and income will be enough. However, from the point of view of practical value, this business plan is not significant enough, since there is no possibility to model data. This kind of business plan does not fully reflect the state of affairs, because there is no accounting for fixed assets, a number of indicators are not kept, such as, for example, depreciation. With such a plan, the main function of planning is not respected - the entrepreneur's ability to act along the chosen path and be based on a previously written detailed plan. Business planning should become one of the most important parts of the firm's activities, and for this purpose it is necessary to maximize the use of the capabilities that are endowed with the latest software.
Having decided on the type of activity and assessing the opportunities, the entrepreneur must begin to implement his plan. The starting point for further work will be the preparation of a business plan.
To begin with, he will help the individual entrepreneur to comprehensively analyze the situation, and in the future will affect the external development of the business.
The article provides a detailed guide on how to draw up a business plan for a sole proprietor. Sample field of activity trade.
Why do you need a business plan
A business plan can be written independently or ordered from a professional. But it is important to understand that this serious document is not just a pile of papers for a bank or potential counterparties.
A business plan is needed for personal planning of individual entrepreneurship.
When compiling an IP, it starts from what goals it pursues by writing, and what is the general purpose of the document:
- For myself. Each entrepreneur designates an action plan for further development. But it is precisely a clear and well-thought-out business plan for an individual entrepreneur that is a step-by-step guide in which goals, ways to achieve them, possible difficulties and methods of solving them are noted.
- For business partners, investors. After reviewing the papers, a person will make an important decision for an individual entrepreneur - whether to invest in the business or not.
These are two different business plans, since the entrepreneur takes into account the real situation for himself. Without this, a clear understanding of further actions is impossible. For investors, it is important to show how profitable it is for them to work with this particular partner and to prove that they will not be mistaken in their choice. Here the emphasis is placed more on maximum attractiveness and the best prospects.
If the real state of affairs is slightly embellished for partners, then the entrepreneur should be clearly aware of this!
As you know, any business starts with planning. To open your own individual entrepreneur, that is, a small enterprise, you must first think over everything in detail, weigh the pros and cons, evaluate the real possibilities.
Of course, you can do this only formally, by simulating the situation in your head. But it is much safer to draw up a business plan that will serve as a visual guide to action.
Why this document is so important for entrepreneurs, and how to draw up a business plan for an individual entrepreneur from scratch, we will tell you in today's article.
What is a business plan and what is its role for an individual entrepreneur?
Today you can find many definitions of what a business plan is. Someone insists that this is the basis for building a business for the entrepreneur himself, while someone is sure that its presence is necessary not so much for the individual entrepreneur as for his potential investors or creditors.
But one thing is certain - a business plan is necessary, since it is in fact the basis for building a business from which entrepreneurial activity begins.
Let's define the concept of a business plan in a little more detail.
A business plan is a document that can be drawn up independently by the individual entrepreneur or with the participation of competent persons: marketers, financiers, lawyers, etc.
Also, a business plan is a step-by-step guide for business development for the next few years, which not only describes the current state of affairs, but also allows you to anticipate the course of events in the future.
The purpose of each business plan is to predict how and according to what scheme the enterprise will develop in the future: what it will produce or sell, what goals the individual entrepreneur should achieve, how much capital investment will be required to start his own business.
But such a definition of the goals of business planning does not mean at all that it is advisable to draw up a business plan only when opening your own individual entrepreneur.
In fact, a business plan is relevant in both situations: when its preparation involves the opening of a new enterprise, and when an already experienced businessman, in connection with the expansion of his field of activity, wants to model a business development plan in the future.
As for the addressee of the business plan, that is, the party for which the individual entrepreneur is important to draw up it, there can also be two options.
Often, the prospect of drawing up a business plan scares an entrepreneur, because he has to conduct research, analyze figures and facts, draw up tables and interest investors. Let's try to alleviate this task somewhat by identifying what a good business plan for an individual entrepreneur should contain.
An individual entrepreneur's business plan is a roadmap that describes the idea of the project, business processes and how to implement them. The business plan helps to identify the weak points of the idea, calculate the profitability and reach the break-even point.
The main task of a business plan for an entrepreneur is forecasting and planning crisis situations. A well-designed business plan will help insure the business against unforeseen circumstances.
It is possible to make a mistake with far-reaching consequences already at the stage of registering a business and choosing a taxation system; in order to avoid this, entrust the accounting affairs to a reliable outsourcing company.
Who needs an IP business plan?
For the entrepreneur himself. Newbie businessmen are afraid to draw up business plans: there are many numbers, complex tables and incomprehensible words. However, at the initial stage, while the sole proprietor is only thinking about the idea of his business, a typical business plan is simply necessary - it can be tested, refined and refined. Not everything that is described in the standard plan will work, but this work makes the idea more real and tangible.
Investors and Lenders. In order to decide to invest in your project, it should be short, clear and transparent. Be sure to consider the interests of investors in your business plan. Tell us about the benefits they will receive if they invest - their participation in the share of profits or annual dividends.
See also: Clothing store business plan: how to start your own business from scratch
How to draw up a business plan when opening an IP?
Aspiring entrepreneurs often take someone else's business plan as a template for writing their own. This method has the right to exist, especially since almost any plan has a sequential structure, which consists of: