The Business plan is an integral part of any commercial activity.
- What is a business plan?
- Why write a business plan, and what is it for?
- SWOT analysis and its role in business plan development
- How to write a business plan: a step-by-step guide?
- How to write a business plan: step-by-step instructions?
- Interesting facts about writing a business plan
Without it, it is impossible to rationally think over the scheme of steps and features of attracting finance.
What is a business plan?
This is a paper that contains a detailed design justification, and also reflects an assessment of the effectiveness of decisions made. The main purpose is in the following aspects:
- demonstration of the fact that the product will definitely become in demand in real market conditions;
- assessment of costly directions for the manufacture and sale of goods, their advertising;
- determining the profitability of the future enterprise and analyzing the benefits for the investor.
The functions of the document, as well as its tasks, are extensive and numerous. They are in the following areas of use:
- a tool to objectively assess the actual results of commercial work within a certain period of time;
- a tool for creating a complete project concept for the future;
- the possibility of attracting new investments in order to implement the company’s strategy.
As you can see, this is the most important aspect of planning the work of the company as a whole.
Why write a business plan, and what is it for?
Studying the broad concept of the term, it can be noted that this is a plan, a program for the implementation of various operations and actions, which contains data on such aspects as the company itself, the goods it produces, sales markets, and marketing. This is a software product, the development of which occurs in the course of planning business processes.
It allows you to determine the goals and means of achieving them through the development of specific programs and actions. Of course, in the course of work they are subject to adjustment in accordance with current circumstances. There are two options for writing a business plan for a small business – for yourself and for third parties.
Composing a document for myself
The purpose of the paper is to be a guide for completing the tasks. According to the data from this document, actions are being taken for the successful implementation of the project.
Such an estimate should contain more details, as well as a pessimistic, realistic and optimistic forecast. As for the cost part provided to investors in the calculations, it will be more restrained and specific. The emphasis in this type of planning is on one’s own needs and schemes for the implementation of projects.
Drafting for investors
The target function is to attract borrowed funds to finance the project. This type of paper is created for third parties, which are creditors, commercial banks, government agencies.
The key goal is to be able to prove that the project is viable and profitable. When compiling this plan, it is necessary to pay special attention to the logic of operations, as well as the calculation part, the comparison of facts with plans.
SWOT analysis and its role in business plan development
Drawing up a plan starts directly with an analysis of the big picture. To do this, it is necessary to collect all the information and conduct analytical activities. One of the integral stages of work is SWOT-analysis.
Despite the complex sound, it is extremely easy to understand. Thanks to its use, you can easily structure all the available information and make effective decisions based on it. SWOT is an abbreviation that stands for:
- “S-strengths” – strong positions, these may include a low production cost, a high level of professional competence, an innovative product, decent service;
- “W – weakness” – weaknesses – lack of premises for business, brand unknown, high level of competition;
- “O – opportunities” – opportunities, they are dependent on external circumstances in the form of a political situation, social environment (introduction of advanced technologies, obtaining funding, age characteristics of the area);
- “T – threats” – threatening factors, force majeure, man-made disasters, other unforeseen circumstances (the presence of customs duties and the likelihood of their increase, competition and its increase).
The purpose of the analysis is to carry out a detailed high-quality assessment of the external and internal factors of the organization by drawing up a detailed picture. After these activities, you can begin to describe each section.
How to write a business plan: a step-by-step guide?
Structure and content
Drawing up a business plan is a complex and painstaking process that requires the proper level of knowledge and qualifications. In order for the resulting calculation to have integrity and be understood by investors and founders, it is necessary to competently approach its creation, acting in stages. To do this, it is necessary to make a review of each section and consider it in detail.
This sheet contains the general name of the project, authorship and year of implementation. The main requirement is that the name be attractive and that the wording be clear so that everyone who reads it can catch the main idea.
This is the most important part of any such document, since it contains a brief reflection of its essence. The fact that potential investors will be interested in your project depends on the specifics of the preparation of this part. Due to the complexity of the work, there are several factors in compiling a document that you should pay special attention to:
- design targets;
- short summary of the organization;
- statement of advantages over competitors;
- amount of investment required;
- calculation part with financial indicators;
- money back scheme;
- patent and certificate number (if any);
- certificates of the reliability of the company, guarantees.
Set clear goals
In this case, we are talking about the descriptive features of the enterprise and its tactical and strategic goals. The description of the company should contain such aspects as:
- basic activities, general nature of the firm;
- the stage at which the project is developing;
- legal form of the company;
- product and service that the firm can offer;
- general technical and economic parameters for previous years;
- prospects for geographic expansion;
- proof of the competitiveness of the firm and product.
An entrepreneur or a group of entrepreneurs must clearly formulate goals for the coming years and formulate them in the most attractive way for investors.
How to write a business plan: step-by-step instructions?
Analysis of a niche, industry
This is a mandatory step that will prevent possible errors in the initial stages of activity. The purpose of market analytics is to explain how a future business can affect the market space and respond to the situation that develops in it, or will develop in the future. This stage contains several important aspects:
- detection of demand for a product/service;
- calculation of market capacity indicators;
- assessment of the level of competition and the influence of other factors;
- market research results;
- forecasts of sales volumes;
- description of marketing tasks.
Before the activity, the entrepreneur must study the niche, research the offers of competitors and think about how he will be better than them. Evaluation of other firms is carried out on the basis of a detailed study of their advertising, product, quality of service, pricing policy.
Business opportunity assessment
This section is critical for investors, as it contains a description of promising areas of development. After a full study of the niche, it is worth starting to analyze the possibilities for the year ahead, and then for 5, 10 years.
Opportunities lie in the geographical expansion of activities, the natural increase in profits, the increase in the range and are determined by the financial base of the company and external circumstances.
Information about the product being sold
The quality of the product is 90% of the success of your business. Actually, as well as the quality of its description in the business plan – 90% of the success of what you want to allocate funds. When describing, you should focus not only on the classic scheme, but also on the original presentation of your products.
Typically, this section contains the following information:
- a physical description of the service or product;
- enumeration of application possibilities;
- positive aspects in terms of progress;
- readiness of products to enter the market;
- list of experts with good reviews.
Marketing is the driving force behind modern business, so this plan plays an important role in the entire planning process. It contains the following descriptive features:
- pricing data, price forecasts;
- market reach tactics;
- prospects for the creation of new commodity items;
- sales schemes for products;
- description of basic implementation channels;
- enumeration of methods for distributing product information;
- definition with advertising strategy.
Modern business involves the existence of a large number of marketing positions. It is worth focusing on those areas that are closest to your target audience.
This is a key stage, one might say, the “heart” of any business plan. It includes several constituent elements:
- general production concept;
- raw and material resources, determining the sources of their origin;
- implementation of technological processes, their algorithm;
- required equipment and its specifications;
- a list of requirements for personnel of all stripes and categories (engineers, technicians, administrative workers).
This point is basic, because it involves all the settlement operations that are most interesting both for the founder of the company and for potential investors. It contains all the previous parts summarized in terms of value and includes several components:
- sales forecast;
- balance between expenditure and revenue;
- the company’s available budget;
- owned securities, risks;
- general liquidity indicators (payback, net profit, return on sales).
There are special formulas on the basis of which settlement actions and activities are carried out.
Interesting facts about writing a business plan
- Additional sections may appear as additional data. For example, they may relate to an assessment of the risks likely to the project and what are the consequences of unforeseen circumstances.
- It is important to provide a full-fledged schedule for the implementation of all planned work, that is, draw up a calendar plan within which the project will be implemented.
- Production support plan, which contains data such as analysis of the effectiveness of the use of the resource base, assessment of the need for various resources, material and technical and information base. An important role is played by regulatory and methodological production support.
- Each thoughtful element should include a section related to managerial tactics and process organization. It describes the main participants of the company who occupy certain positions, considers the general organizational chart that demonstrates internal connections, reflects the procedure for selecting personnel, the system of remuneration for their work.