How to make a business plan?
5 August, 2021
The structure of a business plan depends on each specific situation, but there are certain guidelines that are worth mentioning.
We have already written when you need a business plan. But how to make it? “The structure of the business plan depends on each situation, but there are some recommendations that are worth mentioning,” wrote Lydia Pashchuk, president of the Vasyl Khmelnytsky Foundation K. FUND, head and member of the supervisory board of the School of Small and Medium Business, in her book « Ukrainian dream. I am an entrepreneur! ».
In communication with investors, the business plan will be your business card, in internal work — the company’s work plan. In any situation, there are 4 key groups of questions that a business plan should answer.
- About the company: what does it do, what are the main products of its activities, what is the company’s business, what are its goals?
- Strategies: how will the company achieve its goals, what strategies and tactics will it use? It will be about marketing, and production, and sales, and finance.
- Resources: what exactly is needed to achieve the set goals and how will the obtained resources (finances, personnel, raw materials, equipment) be used?
- The result: when and how will the investment be returned, when will the money bring income to investors and the business become profitable?
The business plan should contain clear and only necessary information. “I like business plans of 7 to 15 pages – that’s enough to set out the key points in such a document. However, investors, lenders, and donors may require larger and more detailed business plans. In this case, you should follow their requirements, because in the end they are your customers and the right decision will belong to them, “- writes Lydia Pashchuk.
What are the main parts to include in a business plan?
Yes, it does matter because the investor will read your business plan from the beginning. It can contain the following data: name, address, contact information. Also put on the title page sentences that determine what the company does, the amount of funding, the date of creation of the business plan, the names of contact persons.
This is a summary of the main provisions of the business plan. We write this section after drawing up the whole business plan. The size of the resume should not exceed two thirds of the page. It should indicate the market potential, the experience of the company or team, information about products and technologies, funding needs and planned results. The main goal is to interest the business plan, as well as to show the skills and knowledge of the team.
This section of the plan should describe the company, taking into account previous results, current positions and plans for the future. Pay attention to such important points as product types, dynamics of the company’s development, form of ownership, founders, organizational structure, competitive advantages of the company, strengths and weaknesses.
Describe the products and services of the enterprise. Also, the prime cost and cost of new developments may be part of this section. The Boston Consulting Group matrices are a good tool for compiling this section (we’ll talk about them later).
Trends in the industry in which the company operates or intends to operate are extremely important. Here it is necessary to highlight the main characteristics of the industry, the dynamics of its development in the global and Ukrainian dimensions. An important part is the analysis of competition, the positions of major players in the market, the competitiveness of products and services of the enterprise under these conditions. In short, this section should contain an analysis of the macro- and micro-environment, as well as the internal potential of the enterprise and end with a SWOT-analysis (we will also talk about it later).
Identify market capacity, target segments, company positioning, and competitive strategy. Pay attention to the development of marketing goals, as well as a set of strategies for marketing: product, pricing, sales, communication strategy. Here you should make a plan of marketing activities, calculate the marketing budget, as well as targets for marketing effectiveness.
For manufacturing enterprises it is about the volume of production, for service – about the number of customers, for sales – about the volume of sales. In this section it is advisable to indicate the suppliers, as well as to justify the need to upgrade the equipment, if any.
Indicate whether you have patents, whether research has been carried out, whether innovative solutions have been implemented, etc.
The organization and management of the company is important. Indicate the organizational structure of the company, who are the leaders, how decisions are made in the company, which departments are key, and so on. In service organizations, employee qualification can be one of the key competitive advantages.
The business plan should take into account the potential problems that the company may face in the coming years. Risks should be divided into the following groups:
- external risks (political factors, exchange rate fluctuations, solvency of the population, changes in tax legislation, etc.)
- risks of the competitive environment (actions of competitors, entering the market of foreign players)
- internal risks (lack of funding, lack of staff, reduced production capacity).
Identifies the required investment and demonstrates how cost-effective a business plan can be. The appendices to this section may contain financial statements, financial history of the enterprise, including information on borrowing. In any case, the main will be the calculation of the necessary financial costs and payback periods. And in this section you need to present three scenarios:
- optimistic – the best course of events;
- realistic – the most likely scenario;
- pessimistic – the worst case scenario.
They should contain documents that may be of interest to the investor, financial statements, articles, statistics, customer feedback, and so on.
On the basis of the conducted analysis, the set purposes and the prepared business plan it is necessary to develop the detailed schedule of performance of each planned action. And you need to develop a system of indicators by which you assess the effectiveness of the implementation of the developed business plan. For each of the sections you should write a list of actions and measures, deadlines, indicate the responsible persons, performance indicators.
So, whether you like the idea of business planning or not, the plans still need to be formed, and their format can be developed in a way that will be convenient for you. “And even if you can not implement the plans, do not worry – just take this experience into account and reach new heights,” – sums up.
