What is a business plan - how to start creating it?

Drawing up any business plan starts from the very end, namely, with a resume – the summary. The final version of the summary, of course, is prepared after all the other sections of the document have been drafted and edited. All the key employees and external consultants who participated in the creation of the business plan should be involved in this process. However, the summary should be sketched at the very beginning of the business plan, because it is its essence in a condensed form. It is necessary to identify the business idea and the expected results of its implementation in practice. The summary of the business plan should not exceed 6-7 phrases:
  • Characteristics of the enterprise and business project
  • The state of the industry and company features
  • Market segments and existing niches, prospects for their development
  • The direction of the business, its possibilities
  • Information about the company: its organizational structure, competitive advantages, innovation policy.
The summary, which did not impress investors, will ruin the business plan. The reading will simply be postponed, and money for the project will not be given. Therefore, such a summary is almost the most important part of the business plan. When making a business plan, especially for beginners, you need to write a resume, as if you have to explain all the advantages of your project to a casual person. You should do it in simple words and with a minimum of professional terms. When drafting a business plan that will be demonstrated to potential investors, you should ask yourself two key questions:
  • Having successfully implemented this business plan, what will we get?
  • What are the risks of losing all invested funds?
A brief description that is present in any business plan compiled by a novice entrepreneur should contain the following information in concise form:
  • The section about the business
  • The section about the products
  • The section about the leaders and staff
  • The section about business financing.

As you can see, these sections cover all important spheres that the business plan contains. Many beginning entrepreneurs do not consider the drafting of a business plan as an essential and necessary step. They are sure that the main thing is to get started, and the business plan can be written somehow later when it is needed. Top managers - both beginners and already experienced in conducting business - face the need to compile a business plan when searching for investors.

Both private investors and banks require the presentation of a business concept. But if the entrepreneur initially is not going to use borrowed funds, then, as a rule, he also neglects to compile this document. But this is not the best solution: without a business plan, it is impossible to assess the prospects of a business idea, the likely risks and ways to minimize them. For start-ups, this is especially important, even if it is a very small business (private or family).

By taking care of drawing up a program for your project at the very beginning of its creation, you solve several tasks at once: prepare the document that will be required at the stage of investment search, and think over the development of your enterprise. If you want to learn what is a business plan, you need to learn more about each of its sections. Here are the things that you should include into sections about the business:
  • A brief history of its creation and development
  • Description of its current state, development stage and operating conditions
  • Participation in the company's management in making important decisions, distribution of shares and responsibilities between shareholders
  • Actual business objectives (for example, an added value of the goods at the processing and marketing stage)
  • Ways to implement a business plan and provide the project's prospects.

When it is necessary to start compiling a business plan

Business plans can cover different time periods. As a rule, the development of the company should be planned for the next 3-5 years, with the most detailed - the first year of business operation. Its expected indicators, tasks, prospects, and risks should be described in detail. It is also difficult to predict the next years in detail. This is the reason why beginning entrepreneurs are limited to quarterly indicators for the second year of work and annual ones for the third and subsequent ones. However, they should deal with that when creating a business plan.

What you should include in the about the products section

This one of the most important sections of the business plan, because it shows its essence. It should include such elements as:
  • A brief description of the product (or service) in terms of its uniqueness
  • The difference between the products of competitors
  • The advantages that put it out of competition for quality, price, and duration of supply (if it comes to raw materials)
  • Indicators of capacity and market growth at the moment
  • Coverage (domestic or international market)
  • Possible sales channels
  • Growth forecast
  • The share of the market that is planned to be won.
When you write the section about the leaders and staff, and business financing, you should cover several questions. They will help you to fully understand what is a business plan:
  • Whether the entire staff of employees is recruited
  • The level of education of managers
  • The current unemployment rate in this area
  • Professional experience of managers and employees.
  • The purpose of financing
  • Estimated revenue and income after tax payments for three years
  • When the first profits from the business are expected.

Drawing up a business plan for beginners step by step

Before writing a business plan, you need to study the current market situation. One of the most popular technologies for market research is SWOT analysis. It allows you to collect and summarize all information about the company and the market. This simple method is perfect for creating a business plan. In the same section of the business plan you should describe the range of goods and services offered by the company:
  • Their names
  • Key characteristics
  • Areas of use
  • Advantages, disadvantages, unique features
  • Licensing documents - certificates, certificates, licenses, patents
  • Conditions necessary for the production of goods (services)

The strategy of promotion

When drafting a business plan, neither beginners nor experienced entrepreneurs can do without a description of the marketing strategy. This is a rather complicated point, requiring a thoughtful analysis of the market and the choice of instruments to stimulate sales. This section should be the answer to the question about what goods or services you offer to consumers and how you intend to organize sales. Here are the moments that should be revealed to a beginner business man when drawing up a section of a business plan dedicated to product promotion:
  • Area of use of the product
  • The needs of the people to satisfy
  • Competitive advantages of products
  • Target audience of the product or service
  • Methods of market promotion
  • Shortcomings in the goods and ways to minimize them
  • Unique selling proposition.

The target audience

To call a product or service unique is possible only when it comes to an innovative product. When developing a business plan, especially for a business that is just beginning its operation, it is necessary to determine the territory on which the product is intended to be sold and the target groups of consumers. It is best to focus on the work of competitors: what are their weaknesses, how do they act and what results they achieve. The target audience of any product and service is characterized by:
  • The gender and age of consumers
  • Their place of residence
  • Income level, social status
  • Style of life, interests, expectations, preferences.

Having determined who is your potential client, you can approximately estimate the number of these people in the chosen region and use this basis to predict your profit. In addition, the business plan should also contain a brief description of the competitors of the firm occupying the same market segment. The main emphasis in drawing up a business plan for beginning entrepreneurs should be done on competitors that are as close as possible to the assortment and operating in the same region.

Here, in a separate subsection, you should identify ways to build up your business from competitors by using your own advantages. Drawing up a section of the business plan for marketing, you need to complete the forecast of sales in a given period (usually a year with a monthly or quarterly breakdown).

The production plan and the organizational part

When drafting a business plan, you should address the issues of not only selling but also manufacturing products. For companies providing services, the production program is also mandatory. The organizational structure of the future firm, its organizational and legal form, licensing documents are also very important for the investors. Here are some tips for compiling this section:
  • List the technologies and methods for translating your business idea into a real product
  • Describe the required production capacities (trade halls, offices, warehouses, machinery and transport, materials, raw materials)
  • Indicate with which counterparties (suppliers, retailers, partners) you intend to cooperate, who will be employed as employees
  • At the end of the production section of the business plan, there should be an estimate, in which quarterly or monthly expenses are indicated
  • The composition of the governing body of the enterprise
  • Professional experience of the top manager and his subordinates
  • Consultants and other contractors, to whom it is planned to apply for professional support.

Financial plan

Of course, when drafting a business plan, both a beginner and an experienced entrepreneur cannot avoid financial calculations. In the financial part of the program, the volume of necessary investments and the prospects for the return of these funds are fixed. The purpose of this section is to show investors and creditors that the business promises to be profitable. The previous sections proved this idea verbally, and in the financial part, all the same, is expressed in exact figures. This information should be stated in the financial plan:
  • Sources of financing: own funds of the head, bank loans, government subsidies
  • The term of creation and start-up of business (by the end of this time the project should function fully)
  • The choice of the taxation system (determined by the organizational and legal form)
  • The calculation of income and expenses. A start-up company needs to attract additional funds, which are attributed to losses, and profits at this stage are zero.

The section with the risk assessment

Drawing up a business plan for a start-up entrepreneur for a newly created business is impossible without an analysis of the risks that threaten the firm. This section lists:
  • Possible natural and man-made disasters - fires, earthquakes, tsunamis, threatening the property of the company, including real estate
  • Theft, damage to property
  • Changing the laws of the state, the actions of the authorities
  • Non-compliance by suppliers and partners.

This section of the business plan should convince the investor that the project will be stable, viable and ready to overcome crisis situations. Beginning entrepreneurs are best guided by the most pessimistic scenario when developing a business plan.As you can see, the business plan is a complex writing that needs all your serious efforts. If you feel that you cannot perform the assignment effectively, you should think about using the professional writing help. We hope after reading our article you don't have any question what is a business plan?

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