What is a Business Plan?
A Business Plan is a written document that communicates a company’s managers’, partners’, and investors’ aims, plans, and tactics. When asking for a bank loan, it is also utilized.
In this way, a roadmap allows following a planned direction and the necessary maneuvers to achieve the proposed objectives. In addition, it forms the general plan of the company since it shows its history, training, what it does and what it intends in the future.
Why is it essential to develop a Business Plan?
Having a written business plan is extremely important due to the following issues:
- Helps coordinate the different areas of a business that are key to success ( Marketing, Finance, Operations, etc.).
- It allows identifying the value of the business by establishing the value proposition of its products and services, along with its strengths, weaknesses, opportunities, and threats.
- It facilitates the request for a loan since it presents organized information on the financial plan, market size, and competitors’ analysis, among others.
- By describing in detail the different activities and sectors involved, it allows for the early detection of needs and problems.
- It serves as an orientation for the different audiences of the company ( employees, investors, etc.) since it marks the course that is intended to be followed.
How to create a Business Plan?
According to different authors, the business plan has various sections that vary in composition and quantity. Beyond the other formats, a business plan contains the following information:
- Executive summary: a brief description of the company, product or service, and value proposition. The team that integrates it and the investment scheme sought are described.
- Description of the business: the company’s history, what it does. Its current financial situation, legal structure, business operations, vision, and mission.
- Products and services: line of harvest and services offered by the company, together with their respective attributes, including their production process, costs, and profits. The customer’s profile is also reported with their preferences, needs, desires, and emotions involved at the time of purchase.
- Industry analysis: factors that influence the company’s external environment and over which it has little or no influence (government regulations, entry and exit barriers, economic policy, exchange rate, inflation, etc.).
- Market analysis: this section analyzes the size of the market, the niche served or intended to enter, current competitors, sales, and profits in the sector, among others.
- Marketing strategy: the target markets are identified, and the process for attracting new customers and the loyalty of current ones is defined, establishing promotions and discounts for products and services, among others.
Operations and Administration
Operations and Administration: Information about the operations plan and its administration, both for an internal and external public. Describes the distribution of facilities, production methods and processes, administrative purchasing procedures, inventory management, distribution, etc.
Implementation plan: describes the tasks to be carried out, the description of each of them, the dates of completion, and the assigned managers.
Financial plan: determines the viability of the business, that is, the analysis of the cash budget, the sales forecast, the human resources plan, the general and administrative budget, the income statement, etc.
Contingency plan: identifies the potential risks ( liabilities, termination of contracts, etc.) and the plan to reduce or eliminate the identified risks or threats.
Business Plan examples
Some business plans are referenced below. Although the presentation format may vary according to the author of each project, the content of the sections is usually the same, although it is presented differently.
- Coffee shop business plan. Recovered from the University of Chile.
- Business plan for a women’s clothing and accessories store. Recovered from the Peruvian University of Applied Sciences.
- Real estate business plan. Recovered from es.slideshare.net.
How to make a business plan
Below, you will discover each of the business plan elements in detail and learn how to carry them out.
1. Write an Executive Summary
An executive summary aims to give readers a general overview of the company and the market before delving into the details.
Pro tip: It might be helpful to write your executive summary after you’ve done the rest of your plan to extract the key points more quickly.
The executive summary should one-page stretch and cover the following key points. They should all explain briefly, in 1 or 2 paragraphs each:
- Summary: what is the company, where is it located, what does it sell, and who are its customers.
- Company profile: the structure of the business, who owns it, what previous experience or skills they will offer, and who could be the first employees.
- Products or services: what will your company sell.
- Market: the significant discoveries of your market analysis.
- Financial consideration: how do you plan to finance the business, and what are your financial projections.
2. Make the Description of the Company
Next, you must describe your company. Here you have the opportunity to offer a summary of what your company does, its mission, its commercial structure, and the business owners’ data. You should also add the location details, the needs of the market that your business will try to satisfy, and how your products or services will achieve it.
3. Conduct a Market Analysis
One of the first questions you should consider when evaluating your business idea is whether that proposal has a place in the market. Ultimately, this will determine the success or failure of your business. Who is your target market, and why would they interest in buying your product or service?
You must be specific: if you plan to sell bedding, you must not include all the people who sleep in a bed in your target market. It would help if you initially focused on a smaller group of clients, such as teenagers from middle-class families. Then you could answer the following questions: how many adolescents from middle-class families are there currently in your country? What kind of bedding do they usually need? Does the market continue to grow or remain static?
Include research analysis that other people or companies have done and exploration that you have conducted yourself, whether through surveys, interviews, or other methods.
In this section, you should also include a competitive analysis. Describe the strengths and weaknesses of your potential competitors and strategies that could give you a competitive advantage. Based on the same example, you will answer the question: “How many other bedding companies are already on the market and which ones are they?”
4. Provide details of your Product or Service
Moreover, In this section, you can develop the details of what you sell and how it will benefit your customers. If you can’t explain how your business will help those people, your idea probably isn’t the best.
Start by describing the problem you want to address. Next, please explain how you plan to fix it and your product or service’s role in that solution. Finally, determine the competitive landscape: what other companies already offer solutions to this problem, and what makes your answer stand out from the rest?
5. Develop the Operations and Management plan
Use this section to develop your company’s unique organization. And management structure (consider that you can change it later): Who will be responsible? How many tasks and responsibilities will each person or team assign?
However, Include brief resume descriptions for each team member. And highlight any relevant experience and training to justify why those employees are ideal for their roles. If you haven’t hired staff yet, it doesn’t matter; be sure to identify those roles and explain the responsibilities that those in those positions will have.
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Review What is a Business Plan?.