When should you compile a business plan?
It should be the starting point for both the enterprise and the project.
Today we live in an extremely fast-changing world that does not always contribute to the stability of doing business. The overwhelming majority of large corporations do not achieve their long-term goals, the conditions of the market environment are changing at the speed of light, not to mention exchange rates and legislation… Often, under such conditions, you can hear that wasting time on drawing up a business plan is an unnecessary decision. “But still, a business plan is worth making. At least in order to understand in case of failure what you have done, what you have achieved,” writes the president of the Vasyl Khmelnytsky Foundation K.FUND, head of the Small and Medium Entrepreneurship School Lydia Paschuk in her book “Ukrainian Dream. I’m a businessman!”. Both the enterprise and the project should start with a business plan. A business plan can be drawn up for external and internal users.
A business plan is a document that contains information that justifies the feasibility of implementing a particular business and project. It may contain audit data of the environment of the enterprise, an action plan, and financial calculations. It is an essential component of business management.
For external users, the business plan will serve as the basis for the provision of investments and loans, for strategic support of the business and the project.
For internal users, a business plan can become a “road map” in the sequence of actions, in the formation of key performance indicators, goals of the enterprise.
The business plan provides a detailed explanation of how the business will be run and when the investment will return.
Lack of planning can be very expensive. The staff will not understand the direction of the company’s movement, its goals, and therefore the motivation will be lower. Large businesses can talk about long-term planning. But small businesses will be more dependent on fluctuations in demand and delivery terms. At the same time, small companies are more flexible and adaptable.
There are three main situations when you need to write a business plan.
It can be obtaining loans, grants, that is, non-repayable financing, an offer for an investor. Usually, the provider of funds can take a form of a business plan. I highly recommend using it.
If you are working with investors and they do not require a business plan for specific templates, I recommend developing a business plan yourself. After a successful pitch, you should be ready to submit a business plan.
A business plan is needed for the operation of the enterprise, the formulation of its goals, and the definition of areas of activity, communicating them to employees. Such business plans are, rather, the strategies of companies and can be formed at the end of each year in general strategic sessions of all employees. Compiling a business plan is actually a process of self-assessment of an enterprise and building a map of the company’s development for the next periods.
A business plan is an excellent tool for justifying the feasibility of introducing a new project. In the process of forming a business plan, we determine the necessary resources for its implementation. These are funds, personnel, and equipment, as well as payback, results of project implementation. From the point of view of project payback, there are two main aspects — financial and market payback. The financial result, the financial payback of the project determines the period during which the spent funds will be returned to the investor, and the results of the project will begin to bring profit. But the market payback of the project is the results that can be achieved through the implementation of the project, in particular, the number of new consumers, an increase in customer loyalty, market segment, brand awareness, attitude towards the manufacturer, and the brand, and the like.