Today I want to talk to you about the business plan or Business plan , a strategic document with which you can launch your projects with the peace of mind of having taken into account almost all the details, internal and external, that will make your new company a success story.
When we plan any new project, our head has the ability to visualize all the details to which we give importance, often forgetting the reality of the market and its viability.
There’s too much competition out there! And if you do not plan your new idea well, it is very likely that it will not work. Therefore, today I want us to see what a business plan is and how to do it (and I will also share with you a small example).
What is a business plan?
A business plan , or Business Plan, is a document that encompasses the projection over time and the assessment of an idea or business project, collecting all possible information about the business model that you wish to implement.
The best thing about this complete report, about what the business is or should be, is the level of detail that is reached about the company, the market, the objectives, the strategies, the organizational structure and the economic investment, in order to know if this new project can become truly viable or not.
This document takes into account not only the main idea about what you are going to do or sell and what the structure will be like, but also important aspects such as the market situation, the financing you need for your start-up or the business plan. Marketing that you will carry out to get more sales.
It also includes all the legal aspects necessary to start your new activity. It is not just a document that we do every time we want to open a new company.
In addition, you can use it in your business for any diversification idea of your own company; in fact, the business plan for these cases is also called a business plan.
What is a business plan for?
The main objective of a business plan is to know if that fantastic idea you have had for your new project or company is worth it and, above all, if it is viable .
By analyzing in detail everything that business development implies, in addition to having a global vision of it, you can anticipate possible problems and unforeseen events that may arise in the development of the activity.
In addition to being able to evaluate the viability of the business you want to start, it also helps you to seek external financing.
You already know that not only banks can help you financially; there are also private investors or venture capital companies, among others. And even, it can also be used to present before a public administration.
Therefore, a business plan is a communication tool about an idea or project that has two purposes:
- Internally : every time you want to implement a new business idea, this document will help you identify and analyze its strong and weak points, as well as being able to plan all the tasks to carry it out.
- Externally: it is your letter of introduction to potential investors or external partners whom you need to convince to help you (you will also need to create your business plan each time you apply for a grant).
How to make a business plan in 7 steps?
Before presenting you with all the elements you need to know how to prepare a business plan, I am going to talk to you about the importance of the details of this highly relevant document, where a large part of your future is at stake.
Pay attention to these tips and you will achieve a great result when you sit down to write your business plan.
5 Tips to make a perfect Business plan
- The ideal extension is between 40 and 70 pages , and it is good that you develop it both in a text editor and in a slideshow program: Word and Powerpoint if you work with Windows or Pages and Presentations if you are on Mac.
- It has to be a very explicit document . Go straight to the point in all its sections and only include relevant and valuable content for the project.
- Write the key ideas in the different sections of the business plan. And if you want to add some secondary but relevant data, it is better to do it in an annex.
- Be original and persuasive : use your creativity to write a document that is thought-provoking and highly attractive to anyone who reads it.
- Use simple language and forget about complicated words, even if your industry has specific jargon. Remember that investors need to understand it correctly.
Let us now see, in detail, all the parts that this strategic document should have.
What are the main parts of a business plan?
1. Executive Summary
An executive summary is the letter of introduction of your new company and it is the document that must convince potential investors to go ahead, or not, with their intention to invest in your project.
You must summarize in one page, or two at most, the keys to the business plan:
- The business idea : explain the reason for this idea, and add the mission, vision and values .
- What is your unique value proposition : here you have to talk about the market situation and how you are going to cover its deficiencies with your business idea.
- Target audiences : define who your potential customers are going to be.
- Your team : presents the necessary resources to be able to satisfy the needs of your clients. Talk about the company’s human team, as well as all the resources you have to carry out the project.
- The necessary investment : you have to present a financial plan where you must highlight the time necessary to recover the investment, in addition to the return you expect from it.
2) Description of the business
In this section you have to develop the business idea . Explain all the details of how you want to develop your idea, what it consists of and why you want to start your project.
Talk about your unique value proposition, what you can contribute to the market and what are the differentiating elements compared to your competition, or to companies that are already in your sector, if you are presenting the project of a new company.
Here you also have to talk about the people who will collaborate with you . Describe your academic record and the merits that have led you to the place where you are currently working with you.
You must convey the union of the team, the role of each one of you and, above all, the ability to react to any unforeseen event or deviation from the project that may arise.
This is looked at with a magnifying glass by potential investors; You have to be able to convey that the team knows how to take advantage of opportunities and detect potential threats on time.
3) Market study
Knowing the sector in which you are going to work, as well as the companies that already operate in the market, is essential to know if your business plan is really viable.
Analyze all the relevant details of each company , such as its market share, customer profile and opinions, and also its financial data.
Also included in this section is a SWOT analysis ; It will help you better understand your strengths and weaknesses in the market, as well as discover where the opportunities and threats are so that you can get ahead of them.
4) Marketing Plan
The time has come to prepare a Marketing and sales strategy (both Digital and Offline) for your next project.
This is the detail of everything you should analyze when developing your strategies:
- Define your ideal client well : you must know the potential clients of your business very well. And it is not enough to know that they are men, women, or that they are 35 years old and live in Madrid. Invest time and resources to make a good buyer persona report .
- Set your prices judiciously: the best way to price your products and/or services is given by the needs of your potential customers, and how you are going to help them.
Because it is not the same to cover the deficiencies of other products of your competition, than to introduce a new product on the market.
- Choose the sales channels by also making a sales forecast.
- You also have to prepare a purchasing program with all the details of the expenses that your business needs to be able to give a correct service to your customers.
- Talk about the communication channels you are going to use to publicize your brand.
5) Human Resources
You have already mentioned the management team in the executive summary of your business plan.
Now is the time to explain the entire organizational chart of the company ; You have to include all the staff, as well as the external collaborators that will be part of the company.
Also talk about how you will carry out the selection process in case you need to expand or replace a member of your team.
And you also have to record the salary of each person, as well as the type of contract you have with them and their work hours.
6) Financial plan
The financial program includes the expense items that you have already calculated in the sections of the business plan that I have already mentioned: marketing strategy and human resources.
It is important that you make a balance sheet and an income statement where you include the financial forecast for at least 2 years.
Do not forget to include the net cash flow (FNC) together with the financial data that helps you visualize the viability of your project, the VAN and the TIR; especially if you are looking for external financing.
7) Legal plan
Whether you plan to create a new company, or if what you need is to expand your business, the business plan must include all the essential legal information to be able to carry it out.
The legal form of your company, the procedures for its constitution and the fiscal and tax obligations are extremely important data that should not be missing in a business plan.
Finally, you must make a contingency report where you analyze and evaluate the possible risks that may arise as a result of unfavorable scenarios for the company.
Analyze the consequences that the most unfavorable situation can bring to the company, and create an emergency plan with the measures that you would adopt in case it occurs.
Example of a basic business plan
Now that you know what a business plan is, I want to share with you an example of the first part of it, the executive summary, so that you can understand how we are going to start creating this document.
You already know that this is one of the most important parts of the business plan and you have to be able to put your company on one page, or two at most.
To achieve this, I suggest you answer the following questions, so you will not leave any relevant information without including:
- What is the business? Describe the business idea .
- What are your sources of income ? Here are the products and/or services of the company.
- What investment do you need to get started? It is important that in this section of the executive summary you say at what moment the profitability of the company will begin; and covers all the necessary expenses until then, do not only take into account the initial investment.
- When will the break even arrive ? This is the moment in which the company reaches the threshold of its profitability. For this reason, it is called deadlock. The 3 factors that define this moment are: time, billing and the number of customers.
- What is the strategy to attract and retain customers ? Summarize the Marketing actions that you will carry out and do not forget to highlight the most striking information that manages to arouse the attention and interest of investors.
- Who is behind the project? All the members of the management team are in this section .
- What experience do the team members have? It summarizes in a very synthesized way the previous experience of the people who form the team.
If you are thinking of opening a business, or you already have one, surely you are visualizing how to organize yourself, how many people you can help and what characteristics your products and/or services have.
The business plan helps you put your idea on paper so that you take into account all the important details for your company to be successful. Among them: market research, financing, marketing strategy or legal aspects.
In this way you will have a global vision of your business and a direction to follow.