A business plan is a written description of the future of your business. That's all there is to it a document that describes what you plan to do and how you plan to do it. If you write a paragraph on the back of an envelope that explains your business strategy, you have written a plan, or at least the germ of a plan.
Business plans can help perform a number of tasks for those who write and read them. They are used by investment seekers to convey their vision to potential investors. They can also be used by companies that try to attract key employees, new business prospects, deal with suppliers or just to understand how to better manage their companies.
So what's included in the business plan, and how do you combine it? Simply put, the business plan conveys your business goals, the strategies you will use to achieve them, the potential problems your business may face and how you can solve them, your organization's business structure (including title and responsibilities), and finally, the amount of capital needed to finance your business and keep it down until it comes down.
The Main Section of the Business Plan
Sounds impressive Could be, if put together properly. A good business plan follows the general guidelines for forms and content. There are three main parts to the business plan:
- The first is a business concept, where you discuss your industry, your business structure, your particular product or service, and how you plan your business to succeed.
- The second is the market section, where you describe and analyze potential customers: who and where they are, what makes them buy and so on. Here, you also describe the competition and how you position yourself to defeat it.
- Finally, the financial section contains the statements of cash flows and cash flows, balance sheets and other financial ratios, such as a breakeven analysis. This section may require help from your accountant and a good spreadsheet software program.
Break these three major sections further, where a business plan consists of seven main components:
- Business plan summary
- Business description
- Market strategy
- Competitive analysis
- Design and development plan
- Operations and management plans
- Financial factor
In addition to this section, the business plan should also have cover, title page and table of contents.
How Long Your Business Plan?
Depending on what you use for it, a useful business plan can be any length, from scratches on the back of the envelope, in the case of a detailed plan that describes a complex company, over 100 pages. Typical business plans run 15 to 20 pages, but there is room for wide variations of the norm.
Much will depend on the nature of your business. If you have a simple concept, you might be able to express it with very few words. On the other hand, if you are proposing a new type of business or even a new industry, it may take a bit of explanation to convey a message.
The purpose of your plan also determines its length. If you want to use your plan to find millions of dollars in seed capital to start a risky venture, you may have to explain and convince a lot. If you will only use your plan for internal purposes to manage running businesses, a much shorter version should not matter.
Who Needs a Business Plan?
About the only person who does not need a business plan is a person who does not do business. You do not need a plan to start a hobby or moonlight from your regular work. But anyone who starts or expands a business that will consume significant money, energy or time resources, and which is expected to generate profits, should take the time to devise some kind of plan.
Plan an Update Checklist
Here are seven reasons to think about updating your business plan. If only one applies to you, it's time to update.
- The new financial period will begin. You can update your plan every year, quarterly or even monthly if your industry is fast changing.
- You need financing, or additional financing. Lenders and other investors need an updated plan to help them make financing decisions.
- There are significant market changes. The shift of client appetite, the consolidation trend among customers and changing regulatory climate could trigger the need for plan updates.
- Your company develops or will develop new products, technologies, services or skills. If your business has changed much since you wrote your plan for the first time, it's time to update.
- You have undergone a change in management. The new manager should get new information about your business and goals.
- Your company has crossed the threshold, like moving from your headquarters, passing the $ 1 million sales mark or hiring your 100th employee.
- Your old plan does not seem to reflect reality anymore. Maybe you did a bad job last time; Maybe things just changed faster than you expected. But if your plan seems irrelevant, repeat it.
Finding the Right Plan for You
Business plans tend to have many of the same elements, such as cash flow projections and marketing plans. And many of them also have certain goals, such as raising money or persuading couples to join the company. But the business plan is not the same as all businesses.
Depending on your business and what you want to use for your plan, you may need a different type of business plan than other employers. Plans differ widely in their appearance, appearance, detail of content, and the pressures they place on various aspects of the business.
The reason that the selection of a plan is so important is that it has a powerful effect on the overall impact of your plan. You want your plan to present you and your business in the best and most accurate light. It does not matter what you want to use for your plan, whether it's destined to be presented at a venture capital conference, or will never leave your own office or be seen outside of an internal strategy session.
When you choose clothing for an important event, chances are you will choose the items that will play your best features. Think of your plan in the same way. You want to express the positive things your business may have and make sure they accept consideration.
Types of Business Plans
Business plans can be divided into approximately four separate types. There is a very short plan, or a minipada. There are work plans, presentation plans and even electronic plans. They require a very different amount of labor and not always with different results proportionately. That is, more complicated plans are not guaranteed to be superior to the abbreviated, depending on what you want to use.
Miniplan
A miniplan can consist of one to 10 pages and should include at least a cursory attention to important matters such as business concepts, financing needs, marketing plans and financial statements, especially cash flow, projected income and balance sheets. This is a great way to quickly test business concepts or measure interest from potential partners or small investors. This can also be a valuable start to a full length plan later on.
Carefully abusing miniplan. This is not meant to replace the full length plan. If you send a miniplan to a comprehensive looking investor, you'll just look stupid.
Work plan
A work plan is a tool that can be used to run your business. This should be long on the details but may be short on the presentation. Like miniplan, you may be able to get a rather high level of openness and informality when preparing a work plan.
A plan that is meant strictly for internal use can also eliminate some important elements in one thing that is aimed at someone outside the company. You may not need to include attachments with key executive resumes, for example. The work plan will also not benefit from, say, a product photo.
Fit and finish are very different in the work plan. It's not important that the work plan is printed on high-quality paper and coated with a luxurious binder. A bundle of three old rings with "Plans" written on them with felt-tipped markers will work quite well
The internal consistency of facts and figures is as important as a work plan as it is for outsiders. However, you do not have to be careful about things like typos in the text, very much in line with business style, consistent with date format and so on. This document is like a pair of ancient khaki trousers that you wore to the office on Saturday or an old-fashioned transport truck that never seems to be broken. It's there to use, not admired.
Presentation Plan
If you take a work plan, with low pressure on cosmetics and impressions, and turn the knob to increase the amount of attention paid to its appearance, you will be finished with a presentation plan. This plan is suitable to show to bankers, investors and other parties outside the company.
Almost all the information in the presentation plan will be the same as your work plan, although it may be slightly different. For example, you should use standard business vocabulary, ignoring jargon, slang, and informal abbreviations that are very useful in the workplace and appropriate in the work plan. Remember, this reader will not be familiar with your operation. Unlike the work plan, this plan is not used as a reminder but as an introduction.
You should also include some additional elements. Among the requirements of investors for due diligence is information about all the threats and risks of competition. Even if you consider some important things just peripherally, you need to address this issue by providing the information.
The big difference between a presentation and a work plan is in details of appearance and polish. The work plan can be released on the office printer and clipped in one corner. Presentation plans should be printed by high-quality printers, perhaps using color. This should be tied to the expert in a long-lasting and easy-to-read booklet. This should include graphs such as graphs, graphs, tables and illustrations.
It is important that the presentation plan is accurate and consistent internally. The error here can be regarded as a misnomer by an unsympathetic outsider. At best, it will make you look less careful. If the summary of the plan illustrates the $ 40,000 financing needs, but the cash flow projection shows $ 50,000 in incoming financing during the first year, you might think, "Oops! For updating the summary to show the new number." The investor you are asking to care for cash, however, may not be too charitable.
Electronic Plan
Most business plans are arranged on the computer, then printed and presented in hard copy. But the more business information ever transferred between parties only on paper is now sent electronically. So you may find it necessary to have an electronic version of your available plan. Electronic plans can be useful for presentations to a group using computer-based overhead projectors, for example, or to satisfy discriminatory investor demands that want to investigate in depth the basic parts of a complex spreadsheet.
