What is the business plan?
Abbreviated as BP by ABBREVIATIONFINDER, the business plan is the starting point of a new venture, a management tool for planning business initiatives. It helps the entrepreneur to measure whether his idea is viable, be it a new company, a product launch or the expansion of an existing company.
In practice, the business plan is like a report that contains all the essential information for the enterprise to be put into practice. He must indicate the path to be followed, from the idea to the achievement of the objectives set.
What does the business plan include?
The business plan must show everything that is necessary to put the business into operation, considering all areas of the company involved, such as financial, marketing and legal.
The business plan usually includes market studies, definition of the target audience and the best marketing strategies to reach it, hiring estimates and forecasts for revenues and expenses, for example. It is also important to indicate the strengths and weaknesses of the business to anticipate possible problems.
The business plan may be required by some investors or banking institutions to offer financing. Regardless, developing a business plan is essential for the entrepreneur who wants to take his steps with greater security.
How to make a business plan?
There is no single business plan methodology or model. Planning will always depend on the type of activity and the size and complexity of the enterprise. The business plan for a small cafe, for example, will be much simpler than that of a large industry.
The following steps will therefore only be an example of a business plan. The steps can be adapted according to the needs. The idea is that, when finalizing his business plan, the entrepreneur is convinced of his viability, prepared to deal with possible problems of route and ready to attract investors.
Step 1: Present the idea
Briefly describe the concept of your business and present the curriculum of the partners involved in the project.
Step 2: Introduce the market
Start by doing a sector analysis, presenting data on the segment in which you intend to operate. Show how much it moves and numbers about its growth. To do this, use data from associations linked to the sector.
Then, do a market analysis, showing who your potential audience is and what their consumption habits are. If it is a trade, for example, collect data on the population living in the region and what their income range is. Tell if there are any plans for the region that should attract new residents.
In this stage, do, if possible, a market research, interviewing possible future customers. Find out if they would be interested in your business and what factors they consider crucial to choosing your product or service.
Study the competition. Set up a table with the strengths and weaknesses of each of the competitors. Discover and present the differentials that your business will have in relation to the others, that is, what will be your competitive advantage.
Step 3: Develop the marketing and sales plan
Start by defining the “four P’s” of your business, that is: product, price, square and advertising.
Indicate, in detail, what you are going to sell, what price range you want to operate in, who your target audience is and how you intend to advertise your business to them.
Step 4: Build the operational plan
Here is indicated everything that has to do with the structure and the operation itself, for example:
- Where the company will operate
- What equipment is needed
- How many employees will you need to hire and what will be the tasks of each
- Who will be the suppliers
- What is the production capacity
- How many customers does the company believe it will have
Also build a schedule, providing the necessary steps for the business to get off the ground and, if you have partners, who will be responsible for each of these activities.
Step 5: Present the financial plan
Here you should plan your cash flow. Show the initial investment, the cost estimates with the operation, the revenue and profit margin projections and the expected return on investment.
The ideal is to make several tables. Start with the projections for the start of operations, when the business is expected to remain in the red, until it reaches the point of stability. Make an estimate, based on the studies you did in the other stages and the trajectory of similar companies, how long each of these phases will last.
The ideal tool for this is Excel spreadsheets or similar software. These programs allow you to create linked folders. In them, when a variable is changed, the items that depend on it are automatically recalculated.
Step 6: show how you will follow up with the business plan
Set goals for the coming months, deadlines for asking for feedback (from customers, partners, employees and suppliers) and business plan reviews. The follow-up will serve to check if the project is on the planned course and if it is necessary to make any adjustments. Keep in mind that the business plan is dynamic and may need to be adapted during implementation.
Some management tools can be useful to make your business plan. For example, the BCG matrix helps to predict the impact of each product on revenue. The SWOT analysis is essential to know the strengths and weaknesses of your business and competitors. The RACI matrix can assist in the division of tasks between the partners for the implementation of the project.