How to write a business plan

A business plan is a road map for any business venture. It will be useful and even necessary when creating a business from scratch. For its separate direction or in preparation for the implementation of a new project.

Who may need your business plan

1. Potential investors. They will want to receive comprehensive information on the subject of investment of their funds to draw conclusions about the feasibility of investment.
2. Banks. Without a quality business plan, do not expect to receive credit for the implementation of the business initiative.
3. Partners. A well-written business plan can help convince a company or entrepreneur to join your new business.
4. You. When starting a new business, you can't do without a clear plan of action which considers all the nuances. A business plan will be useful first of all for you.

The document has two main functions: program and presentation. On the one hand, it contains a list of indicators and a sequence of actions necessary to implement the business idea, and on the other hand, it represents the attractiveness of the idea for potential partners, investors or creditors.
Some experts recommend dividing the business plan into internal (for yourself) and external (for others). In reality, such differentiation is a bad thing, because in this case one version of the business plan may conflict with the other and thus endanger the achievement of the stated goals.
A business plan can be considered optimal if it is equally realistic and convincing for the owner of the future business, partners and investors.

Preparing a Business Plan

To make a quality business plan, will need to collect and analyze a lot of information. Next, you need to structure, systematize, and put it into a document.
The best way to start a business plan is to find answers to a number of questions.

Who is the target audience for the future business?

When planning to open a business, you need to be very clear about to whom you are going to sell your goods or services. For this, you need a comprehensive and accurate portrait of your target audience:

• age,
• social status,
• income level,
• problems and needs,
• product awareness - do future customers know that your product can be useful to them?

With an understanding of these questions, you can position your company more accurately in the marketplace.

What is the level of competition in the industry you choose?

You need reliable information about potential competitors. When preparing a business plan, you should create a checklist of the competitive field and do a structured analysis on the following items:

• list of competitors,
• the scale of competitors,
• price level of competitors,
• quality of the product they offer,
• quality of their services,
• territorial location,
• logistics,
• the level of implementation of innovations.

It is possible to obtain the necessary information using data from public sources, monitoring, mystery shopper method, etc.
You can use techniques such as Porter's Five Forces Method or SWOT analysis to help you systematize and analyze data.
As a result, you will create a competitive strategy for your future business.

What is the concept of your advertising?

Even if you are confident in the quality of your product, this does not guarantee that there will be a high demand for it.
You need to get the customer interested, to attract their attention to your store and product. This can be a unique concept of the store, an interesting marketing move which focuses the attention of your customer to the product. Correct and interesting product presentation plays an important role in sales.
A good store location, a cup of coffee or a small gift for each customer, loyalty programs, bonuses and promotions are marketing elements that play an important role not only in attracting but also in retaining customers.
To create the concept of the perfect purchase or the perfect product, you need to answer the question, «Why should the customer buy your product instead of someone else's?»

How will the organizational structure of the business look like?

Here we formulate the organizational needs of the business at all stages of creation and development.

• The composition of management.
• The number, functionality and interaction of structural units.
• The number of employees. The range of jobs for employees.
• Premises: production, office, retail space, depending on the number of workers. The necessary equipment.
• The expenses for wages, rent, and other mandatory payments.

All of these parameters should be projected with the time stages of business creation and development.

Step-by-step action plan

To avoid the waste of time, effort, and finances, it is necessary to make a step-by-step plan for setting up a business. It will be necessary to register a business entity, open a bank account, obtain the necessary licenses and permits, rent an office, hire people, conclude contracts for the supply of raw materials or products, order a website, advertise, and start sales. Each of these steps will be effective if they will be in time.
Gather information on the necessary time and finances for all organizational steps and simulate their implementation.
Transfer the results to a timeline, and you'll have a clear organizational plan.

Financial plan: how much should we invest and spend, how much will we get as a result?

The financial model is the key section of the business plan. Here it is necessary to present a forecast of all funding and income sources, plus all expenses (regular, one-time and periodic) for the implementation of organizational, marketing activities, and operational activities.
If the business plan is prepared for a small or micro business and it is not planned to attract outside money, you can make the necessary calculations by yourself.
If you are planning a large venture, experts recommend hiring a consultant to describe the projections of the company's three main reports in your business plan:

• Profit and Loss Statement (P&L).
• Cash-flow statement.
• Balance sheet.

It is recommended to create a financial plan for three possible scenarios: optimistic, realistic, and pessimistic.
This stage is the defining point in creating a new business.
Based on the results of the projections, we say to ourselves: Is the business idea viable? Do we believe in it or not? What risks and threats may affect the implementation of the business idea? Are we ready to start implementing it, or better stop?

Creating a business plan. Turning information into a structured document

You definitely need a formalized business plan if you plan to raise funds from investors or creditors to implement your idea.

The classic structure of a business plan:

1. CV,
2. marketing strategy,
3. organizational plan,
4. financial model,
5. risk analysis.

Business plan CV

This is the first section of the business plan, but it is usually written the last. In fact, this is a text with the main information from your plan, which summarizes the business idea, what is required to implement it, what is the point of the proposal to the investor or partner and what are its benefits from this partnership.
How professionally you write your CV determines whether an investor will want to read your entire business plan.
Experts recommend using the technique of «Elevator Speech», a short speech for your CV, with which you can interest the interlocutor in your idea.

Marketing strategy

This block contains information on the market structure, product features, promotion logic, channels to attract and retain customers. Also, how the knowledge about the product will be created, the interest of potential clients will be stimulated, how it will be converted into sales transactions, and how the brand and corporate identity will be developed.

Organizational plan

Here it is necessary to describe everything that you need to start a business: the organizational structure, premises, equipment and computer technology, automation, personnel, channels of communication with key partners and suppliers, logistics, etc. It is important to describe each direction connected to the corresponding stage of implementation.

Financial model

This section should provide projections of the main financial indicators of the business for three scenarios: optimistic, realistic and pessimistic. Here it is necessary to focus on what will lead to one or another scenario, and how the conduct of business will differ in each case.

Risk analysis

This section contains a list of possible risks and measures to counteract each risk. It makes sense to name a critical risk after which it is better to stop.

What else can be added to the business plan?

All of the above is the basic part. Additionally, you can add any information you consider important.
For example, talk about the educational or environmental value of the future business, its positive impact on local development or addressing social issues.

The volume of the business plan, the planning period, formatting

• There are no clear guidelines for the length of a business plan. It is important to strike a balance between exhaustive content and conciseness. It is not worth putting a lot of unimportant details into the document.
• A business plan is usually drawn up for the period from preparation for the start of the business to its break-even point and stable financial indicators. Usually it is 1-3 years.
• Pay special attention to the preparation of a business plan. Nowadays, more and more such documents are prepared not as a text file, but as a PowerPoint presentation. This version is more visual, and there is no need to prepare a new document in case it is necessary to present the plan in front of investors.