What exactly is a business plan? A business plan is similar to a building plan, that is, a document (in this case written) where the way in which a business project should be carried out is described in detail. In the case of a building plan, the structure of the building, the facilities it will have, the way it will be built and how it will look when it is ready are graphically detailed. In the case of the business plan, we are talking about a document in which it is intended to detail the structure of a company, the form it should have, how much it will cost (opening, operating, advertising budgets, etc.) and the scope of the itself (mission, vision and objectives).
Elements that make up a business plan
There are various elements that make up a business plan, many of them specific to the business in question. However, here are the most common ones:
Planning
The planning describes the business idea, its name, the history of the business, a brief description of the company and the products that the company will market. Here we try to answer the questions: What will the business do? What products or services will you produce?
Commercialization.
Later comes the marketing phase, where the market to which the products will be directed will be analyzed (target market) and the strategy to reach them will be defined (marketing plan). This phase includes “market studies”, which consist of conducting careful research to determine the commercial viability of the project.
It is worth mentioning that it is very dangerous to assume that it will be successful because "you already know the market." There are always variables not considered that can influence the viability of the project: economy, competition, market fertility, growth prospects, and so on. A market study, when carried out by a professional in the field, will minimize the risk of not considering some of these variables.
The marketing plan will detail the objectives, strategies and activities necessary to execute the marketing as well as its approximate cost. It will detail the steps to follow to launch the products to the market, the means to be used, the distribution channels, the price of the products, and so on. It could be said that this marketing plan is the backbone of the business, since if it fails, it runs the risk of going bankrupt due to lack of flow.
Operation.
This section defines the human resources necessary to operate the business (organizational structure) as well as the techniques to produce the goods and services and the administrative policies.
The organizational structure will define who will lead the company, the number of employees that will be required and their hierarchy, the type of work they will perform, the payment structure and the skills they must have.
In the production section, the following should be considered: key suppliers, minimum stocks (in case of marketing physical products), minimum delivery dates and the elements necessary to carry out the distribution: freight, packaging, etc. (if applicable) .
Regarding the administration, the following must be defined: credit policies, creditors management, management of accounts receivable and accounts payable, discount policies, as well as opening expenses and the financial plan, that is, the sales projection, the cash flow, profitability and breakeven. Also, if you are not the only investor, you should describe how you plan to obtain the necessary funds.
The executive summary.
This section, normally a single page, summarizes the most relevant information of the entire project: the project idea, the investment required, the target market, how the goods or services to be offered differ from those of the competition, etc. . This section is particularly useful for capturing the attention of investors reviewing hundreds of projects. Tip: Write this page at the end, because it will be up to this point that you will have all the necessary information.
Importance of the business plan
The real importance of developing a business plan does not lie in the final document; it really is the exercise of researching, thinking and planning for all possible internal and external factors that will affect the business. This exercise can prevent unexpected and even dire results for the new venture.
It is evident that the business plan is not an easy task, although its completion in many cases does not take more than a couple of months. Many of the times, people who start a business think they have all the information in their heads, but this is equivalent to having a new puzzle inside its closed box. It is true that you have the complete image, but if we decide to specify the image and hang it on the wall, it will be necessary to open the box and assemble it piece by piece, until the panorama is fully detailed.
Large companies that are dedicated to franchising their businesses (and that are really successful) know in detail each of the pieces that make it up, and therefore, control each of their processes. This does not mean that unforeseen events do not occur, but they do occur less frequently.
So before undertaking, make your business plan with the assistance of a professional in the field. Remember what the popular saying dictates: "He who fails to plan ... plans to fail."
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