Business plan: how to create from scratch and where to get a ready—made one – expert advice
The success of a young company in the market, its ability to overcome difficulties and subsequent growth depend on planning. A business plan is a document describing the full development cycle of an organization, which contains:
- information about the founders of the company;
- detailed description of goods or services;
- assessment and analysis of possible risks;
- Financial planning and budgeting;
- advantages and disadvantages of this company.
Without thorough preparation and a business plan, the chances of success plummet. Therefore, it is extremely important to work out all possible scenarios for the development of events.
A business plan is a kind of path map describing the details of a future business. All elements are taken into account, from the production process to the provision of services, because business success requires a systematic and flexible approach. Among the key functions of the business plan are forecasting growth, attracting investors and working with government support such as grants.
Who needs it
Business owners should have a clear understanding of their company’s strategy, while being aware of all possible impacts on the final result and developing an action plan for successful business development.
Employees – it is important for them to understand their role and tasks within the company, even if they do not know all the details of the business plan.
Investors – they are necessary for financial stability and investments in the company, and their interests in this can bring significant benefits to all participants. A functional business plan here plays the role of an excellent tool for product presentation and attracting potential investors.
Principles of business planning
Experts describe 7 interdependent foundations for drawing up a competent business plan. First, it is necessary to look at the organization as a single integrated system – there must be synergy and synchronicity of development of all elements of the company. Since, according to the above–mentioned principle, organization is integrity – all members of the team involved in any stage of the plan should be involved in drawing up the plan, there should be no hierarchy. In order for all aspects of the business to develop simultaneously and in a single way, it is necessary to adhere to the rule of continuous activity. Continuity is achieved through adaptability, it is important to adjust to the conditions in a timely manner. Accuracy in calculations allows to adjust the course of an organization’s development, improving its adaptability. There must be a commitment in the process of doing business. The very essence of planning is to ensure that the set goals are achieved, despite any obstacles. And the last rule is transparency – all information related to the business plan should be easily accessible and understandable for all participants. Thus, here are a set of rules for successful business planning:
- The rule of unity;
- The rule of engagement;
- The rule of continuous activity;
- The rule of adaptability;
- The rule of accuracy;
- The rule of execution;
- The rule of transparency.
The main types
The business plan changes each time depending on the format of its presentation intended for a specific target group. So, one version may be intended exclusively for use within an organization, another for attracting investors, and another for contacting banking institutions, etc. for clients
A business plan created for internal use (“Internal”) is used exclusively within the enterprise
For investors
Attracting investments is one of the main tasks of the business plan, therefore, the document must meet certain conditions.
For lending
When drawing up a business plan in order to obtain a loan, it is important to follow the established business planning standards.
To receive subsidies
Receiving subsidies and grants from the state can provide the project with the necessary start.
Anti-crisis
Anti-crisis business plans may well be called plans for lending.
Stages of compilation
Drawing up a business plan is a process that requires a lot of time and effort –need to collect all the necessary data. This process includes analyzing the market and competitors, collecting information, creating a financial model, and finally writing the actual plan. When analyzing the market and competitors, the local situation in the country and the city where the business is planned to be launched is taken into account, whether there is demand for these products or services, as well as who in this area already confidently occupies a leading position. It is very important to study the situation carefully.
Data collection includes obtaining all information about the organization, its finances, development needs, production requirements, number of personnel, and so on.
According to the financial model, need to choose methods and tools for calculations or choose organizations that will take over this function.
As for writing the plan itself, it is necessary to decide what format to give it, how to arrange it, and so on.
Structure
The format of the document is determined by the standards followed by the business owners and the type of business plan (for example, if it is free). In general, a business plan may include the following sections:
The title page is the “face” of the plan, which contains the name of the company, its location, contact details, date, information about the owners and other important information.
Summary – This section provides a summary of all the points of the plan. Despite the fact that this information is provided at the beginning of the document, it is recommended to compile it only after completing work on the entire plan.
The idea of the project – here it is indicated what makes the project unique, what problem it solves, and so on.
A confidentiality memorandum is a document confirming the correctness of copying and distributing data from the plan.
Goals – a description of the key business goals.
Market analysis – this section requires the use of a lot of data – market volume, description of the target audience, number of competitors, and so on.
Product or service information – details about the product are indicated here: names, specifications, instructions for use, quality certificates, information about supplies, and so on.
Typical compilation errors
Experts identify the following typical mistakes that are often made when drawing up business plans:
- technical errors, including inconsistencies in calculations and unreliable data;
- incomplete accounting of all costs;
- using a large amount of theoretical information that is not supported by verified data;
- non-compliance with legal requirements;
- incorrect calculation or insufficient amount of investments;
- Insufficient risk analysis;
- incorrectly set deadlines for the implementation of the project;
- unconfirmed or completely missing refund;
- lack of information about competitors.
In addition, the authors of a business plan often overlook such an important point as grammatical errors in the text, which can spoil the overall impression of the document.
“In running a business and creating a plan, entrepreneurs often make the following “mistakes” — lack of monetary accounting, focusing on sales rather than profit, misunderstanding how to calculate income, illiterate staff remuneration (too high or underestimated), lack of strategy, lack of orientation to the needs of the target audience, etc.” – Oksana Tkachenko claims
In addition, experts recommend following the key principle when forming a business plan – to avoid self-deception. Very often, when drafting a document, there is a desire to “decorate reality” based on favorable data and to a greater extent using an optimistic development scenario. This approach can lead to the fact that the creators of the project begin to accept their assumptions for the truth. For example, they may assume that customers are willing to pay large amounts or that there are no competitors in the market for the product they plan to release. It is important to carefully work out the most difficult scenario and check all the factors that will face in reality.