How to draw up a business plan correctly and competently
Each business plan is unique, because it is developed for certain specific conditions. But you need to be familiar with the different types of business plans to understand their key features. Experts recommend doing this before compiling your own similar document.
What is a business plan?
Today there are a large number of classifications of business plans. Each author has his own reference point and key points by which this classification can occur. But with a detailed analysis, one can understand that in all three main directions are described. Of course, such a gradation can by no means be called harsh and strict. But with all this, it is thanks to her that you can get a complete understanding of what type of planning you need to choose in order to develop your business plan, taking into account the tasks that have been set.
A business plan is a plan or program by which business operations are carried out, as well as the actions of a firm. Such a document should contain information about the company, the goods and services provided, production, planned sales markets, marketing, as well as the organization of various operations and analysis of their effectiveness.
A business plan is a software product that is generated during business planning.
Types of business plans by appointment
The first direction is a business plan, which is designed to receive finance from external sources. The following sources can be used as such:
- bank loan;
- investments from business partners or shareholders;
- funds received from grant organizations.
Potential investors have special requirements for the business plan, which must be followed. Moreover, very often potential investors even have their own forms that are used to fill out applications. Such documents are standardized, and companies have been working on them for years. In fact, thanks to them, you can draw up an ideal business plan for an investor that will perfectly show all the benefits of investing money.
There is also a type of business plan that is developed exclusively for internal use. Such a document should show the possible risks, as well as the characteristics of the future enterprise, including:
- specifics ;
- potential at work;
- For myself (a set of points that determine the sequence of your actions and the ultimate goal);
- For investors (a detailed description of the idea with market analysis and financial part).
In this case, we will not consider the plan "for ourselves", but we will pay attention to the plan for investors. With this document, you can go to investors with the hope of financing your future business.
Why and what is needed and what are the main goals of the plan, read in the following article: "The goals of the business plan".
Parts of the business plan in eight points
Any business plan can be presented in eight points. Remember: the main thing is not the number of pages and material in it, but the information content and clarity of presentation. Providing investors with a plan of 15-20 points, or even more, it is not always possible to hope for the success of the business itself. So, 8 points that need to be included in the future plan:
- Summary ;
- Description of the product or service you intend to sell or provide;
- Market analysis and research;
- Marketing plan;
- Production plan;
- Financial component;
Each point needs to be worked out, and some will require the help of specialists. For example, market research can only be done by people who have the necessary knowledge of the industry you have chosen. So, for each item in more detail.
Resume as part of a business plan
In this paragraph, you must indicate the purpose of the project, as well as its leader - you. It is advisable to immediately indicate how much money you need to implement the proposed idea and the payback period. You will receive this data from calculations that you will make in the future. Briefly describe the very idea of the business - what exactly will you do, why is it profitable, etc.
A resume allows investors to define the nature of the business and get a visual representation, including in financial terms. If this point interests them, they will move on to the second.
Description of services or goods
Here it is necessary to describe in more detail the type of business, what exactly you want to do and how. Explain the reasons why customers will use your services or buy your product. How do you plan to develop your business, what funds are needed for this and how many people - all these questions need to be reflected in this part of the plan. For example, if you need factories for small businesses for the purpose of manufacturing products, then it is appropriate to display this in this paragraph. It is also necessary to attach a price list of the company selling this equipment, with a note of the model you need.
However, philosophizing and writing an essay is not worth it, because everything should be specific, clear and to the point. The approximate size of this part should be 1 A4 page.
Don't think about whether you are right or wrong. The main thing in business is how much capital you earned by being right, and how much you lost by being wrong (George Soros)
Before writing a correct and competent business plan for a small business, you must understand why it is needed in principle and clarify your understanding of this document in commerce.
A business plan is a step-by-step instruction used when opening and developing a new business idea, with an analysis of all the actions and steps that go through to move to the final result.
Based on such a business plan, a businessman can see the implicit and explicit risk options for the growth of a business idea and decide which ways will best help to reduce and reduce negative actions on the way to launching this idea.
Even before the start of his project, a businessman can, at the stage of drawing up a business plan, understand how much money will be needed as start-up capital and how much capital will need to be invested in the project. Among other things, with a correctly and cleverly written and independently compiled business plan, the chance for additional infusion of funds that interested investors can provide will increase.
Let's try to make a business plan for a planned wellness center as an example.
What to write in the business plan
The activities of commercial organizations are of various types and each of them has its own specific characteristics. There is no predefined template that allows you to compose any business plan yourself from scratch. But for a business plan for any area of small or large business, there are points common to different activities.
The first item is a short description of your idea:
What is a business plan
By and large, this is a document necessary for the implementation of measures to establish and develop a business. It writes a detailed plan for each step towards achieving a specific goal. A business plan is written for an enterprise once and is implemented once. Detailed development programs for subsequent periods are no longer a business plan. Many business directors confuse the two. Annual work plans are drawn up, development plans for a year, for two, for three. But a business plan is a special document that is designed to outline the purpose of the business, its mission, its financial and production strategies, sales and marketing programs and other points.
All this in the business plan is set out briefly, as clearly as possible, without specific terms and deepening into the production process and technology. You yourself understand that your investors and bankers must understand it. Also, in accordance with the business plan, your employees will have to work, who not all know the concepts that you know about. Therefore, it is best to write it in simple terms.
The business plan must necessarily be focused on the final result, which you describe in detail and measurable. This is especially important when you are reporting to investors on the implementation of their funds and getting a return on the project. If you write that the goal of the process is “to make a profit from the production and sale of wooden furniture,” it will be very difficult to defend your position when investors are not satisfied with the size of the profit, because you have not accurately described it in numbers. Therefore, write that as a result of the implementation of the business plan, you plan to "receive 500 thousand rubles in 1 year from the production of cabinets and beds and 200 thousand from the production of kitchen corners." It is difficult to argue with the numbers that will simply have to be compared with the planned ones.
Do not forget that with the help of a business plan you have to manage your production, so it should contain a development strategy, all the tools that you will use, so write what is really achievable. The more accurately you draw up a business plan, the less you will be distracted by drawing up plans in the process. You just need to follow its points, and at the end you will receive the finished result indicated in the plan.
It is important to know that a business plan is not a dogma; it may undergo adjustment during the implementation process. It is important to stipulate this when discussing with investors. After all, your business will be influenced not only by you personally and by your employees (that is, internal factors), but also by external circumstances: changes in tax legislation, an increase in the exchange rate, even a banal change of the director of your state controlling body can greatly affect the conduct of business, and even more than raising the tax burden. Therefore, be sure to set a "financial backlash" in your business plan. This is the maximum profit that you can get, and the minimum if external circumstances suddenly become strong.
Goals and objectives of the business plan
But the business plan has a lot of tasks, just like the business itself.
It defines the specific lines of business for the firm. All target markets and the place of the future firm in this niche are also analyzed. It is necessary to clearly formulate the long-term and immediate goals of the enterprise, and the ways to achieve them, that is, the strategy and tactics of work. It defines the persons who will implement the project, describes in detail the product that will be produced, or the service that will be provided. All risks, possible costs and losses are indicated in the business plan, all the same in specific monetary terms.
One of the tasks of writing a business plan is to present the motivation of future employees, as well as all the requirements that apply to the result of their work and to the work itself. This point of the plan is very important for a leader, for an individual entrepreneur. After all, he will not do anything if his cadres do not work the way he wants. Therefore, in the tasks, describe everything that you want to see from your employees, and this is not only good production performance, but also personal growth, implementation of ideas, optimization of working time. There are special tools for this, so they need to be written in the business plan.
Any plan, by definition, sets the sequence and nature of actions for a certain period of time. Accordingly, the business plan describes what actions and in what sequence the businessman intends to carry out to ensure the functioning of his enterprise.
Business plan objectives
- Planning of actions necessary for the operation and development of the enterprise.
- Presentation of enterprise opportunities for attracting investments.
Obviously, action planning is primarily intended for the businessman himself, while the presentation of opportunities should focus on potential investors. From this it follows that structurally any business plan is divided into two parts, the first of which is intended for internal consumption, and the second for external consumption. Moreover, these two parts are inextricably linked due to the fact that the more detailed and complete the developments represent the state of affairs at the enterprise, the more chances to arouse the interest of investors. A specific business plan can be designed to solve one of these tasks, in this case it makes sense to talk about an internal or external plan, or to solve both. Depending on this, the requirements are determined that are imposed on it at the time of compilation.
Business Plan Objectives
Regardless of the purpose for which it is intended, the business plan necessarily includes the following points:
- General information about the company, which includes a description of the production or sales capacity and resources involved.
- Information about the directions in which the enterprise is developing.
- Assessment of the situation in the relevant market segment and designation of the niche that your business claims to.
- Prospects for the development of the enterprise, the outlined milestones that you expect to reach, and the development of actions to be taken for this.
- Estimated sales volumes of products and calculation of gross income.
- Development for the supply of resources necessary for the production of products.
- Requirements for a fleet of production equipment and detailed designs for its expansion and modernization.
- Information about the employed manpower and the requirements for the qualitative and quantitative composition of the personnel.
- Development of the amount of required investments, calculation of current income and expenses, conclusion on the profitability of the business.
Internal Business Plan
The internal business plan, the purpose of which is to streamline and systematize the tasks facing the businessman as clearly as possible, focuses on points that relate to the real state of affairs in the enterprise.
You should be aware that the internal plan should reflect as much as possible the true state of affairs in the enterprise. The naturalness of this requirement stems from the fact that the businessman writes it for himself. Its purpose is a personal program of action.