Find out what a business plan is and what are the main elements it should include.
On other occasions we have already talked about the fact that having a business plan is the first step for our enterprise to be successful, since it will set the objectives, goals and guidelines to achieve them. A business plan that is well designed will tell us if our idea is viable or not, before starting it, this can help us avoid wasting money and time.
A business plan is the best way to bring that idea that has been in your head to paper and then to reality. In fact, it will tell you if that idea that seems to be super revolutionary can be a viable product to go to market, from a logical or financial point of view. If you discover that you have a viable idea by developing such a plan, you will then be very clear about every detail of your concept.
Broadly speaking, these documents should describe what your business structure is, what the market is like, what your plan will be to sell the product or service, financing needed, financial projections and permits, as well as rents and operating expenses.
What is a business plan?
Before starting to write a business plan, we believe it is convenient to define it, so that at the end you can write a document that will help you to start your business and present it to investors or funders.
A business plan is a document that contains the objectives of your company, in which the current situations of the market, sector and the environment of the market niche are analyzed. It gathers the necessary information to detail the start-up and operation of a business. Although it serves to establish the basis for the formation and operation of a company, it must also be thought of as a document to be presented to investors or funders, so it is important to present clear and complete information.
Broadly speaking, a good business plan should contain the objectives of your company, the time frame in which you plan to achieve them and the how, but these elements are not the only ones, here we will analyze them one by one:
1. Executive summary
This is a very important part because it presents quickly and concretely the elements of the plan that will later be developed in more detail. Write it with a reader in mind who has little time and wants to learn about your project as quickly as possible.
2. Description of the company
In this section you should describe a little of the history, vision and mission you expect from your company. Basically, it is the presentation of your company and its objectives.
3. Description of the service or product
This is one of the most important sections, since it is about describing the product or services you expect to provide. This is the space in which you should describe the characteristics that make your product different from those of your competitors.
4. Market analysis
This is one of the longest parts of the document, in which you must provide a description of the market in which your business will be located. Remember to answer the questions:
- How big is the market?
- What is the target demographic?
- Who are your competitors and their competitive advantage?
- What are the market expectations?
5. Business model
This section is where you have to detail the portfolio of products or services you plan to offer as well as the necessary actions to achieve the strategic objectives and goals set.
6. Management structure
It is in this part where you have to describe who will be the people in charge of operating the business and what their responsibilities will be. It is also useful for investors to evaluate your ability to organize a work team.
7. Marketing plan
This is an outline of how you plan to advertise your business, specific channels and budgets you have for this. In short, here you have to answer: How are you going to get customers?
This is the part where you are going to detail your budgets and how you are going to use them, you also have to detail what funds you already have and where you get them from.
9. Development status
This part can be optional, but it is always a point in favor of your business if you decide to include it, especially if you already have a significant progress in the start-up of your business, since it is precisely to give news of the progress of your company and what are the priority points that you are interested in developing as soon as possible.
10. Contingency plan
Another element of the business plan that can be completely optional, but that will give you many points in your favor is the contingency plan. In fact, the 2020 crisis caused by Covid-19 has shown how important it is to design a plan B in advance that can guide us in the event of any unforeseen event.
So, it is important that you put on the table the problems and contingencies that may arise. Although it is impossible to prevent all possible unforeseen events, at least think about those that are most likely to happen in your market niche. For example, if your company has to do with tourism on the beach, your business plan has to consider how to protect against a hurricane or natural disaster. If it has to do with restaurants, you should think about how to act in the event of a shortage of any ingredient, so you show investors that you know the risks and you can deal with them.
Take care of the design of the business plan
Once you have dedicated yourself to creating your business plan in depth, it is time to pay the necessary attention to its design, because in the end this aspect also counts. Remember that it will be a document that you will end up presenting to investors, funders, producers and clients, that is why you must take careful care of its presentation if you want to make an excellent and impressive first impression.
The golden rule is that the document should contain all the necessary information and be clear, so try to include a section where the most important information such as objectives, budget and profit projections can be seen quickly and clearly, allowing a quick glance at it. Do not hesitate to use headings, bullets and lists to draw attention to the important information you want the reader to pay more attention to.
Don’t be afraid to modify your business plan!
We just talked about how to face problems in entrepreneurship and one of the conclusions we reached is not to be afraid to modify your plan once you have started, and today we want to reaffirm it. Ideally, a business plan should contain all the information necessary for your business to face all possible problems, but this is impossible, that is why in unforeseen situations or in crisis situations it is best to prefer an immediate solution even if it is contrary to the business plan. Remember that if you don’t make changes when they are required, the consequences can be catastrophic.
Now that you know how a business plan is structured, it is time to evaluate the quality of yours, if you have already prepared one or are starting to draft one. Remember that in the end it is a document that has to demonstrate the soundness of your business to both you and your lenders, funders or investors, because there is mutual interest on both sides.
Tell us, do you think there is anything else you should add to a business plan? Comment on our social media!