Poor planning is a good chance of failing a business project; lack of planning increases that probability many times over. If you need a business plan only to draw a pretty picture and get a loan, you can not read further. In this article we have tried to describe all the factors that must be taken into account before starting your own business.
Why is it necessary?
A business plan is a demonstration that you have thought of everything in advance, have a roadmap for the next 3-5 years, and can forecast revenues. It will make it easier for you to focus your efforts on specific goals and objectives, avoid potential risks, and attract partners or investors.
Sections of the business plan
The sections of the business plan below are suitable for any commercial enterprise.
- A brief description of the business;
- Market Analysis;
- Competitor Analysis;
- Structure of the future company;
- Description of the product (product or service);
- Marketing plan and sales strategy;
- Amount of funding required;
- Payback calculation.
The volume of each of the sections is directly proportional to the scale of the business and product range. Let’s take a closer look at the items.
A brief description of the business
The section contains the essence of the project, its objectives, the problems that you help to solve consumers, the proposed place of the enterprise in the market, information about the founders, contact information, details.
Assess the prospects for the industry as a whole. Determine for yourself what market share you claim. During your analysis, answer the following questions:
- How many customers in your target region are ready to buy your product?
- What are the wholesale and retail prices for similar goods or services?
- How often do people buy these products?
- What is your typical customer like?
Study the rules and regulations relating to the target market. Are there restrictions on advertising these products? A license will be required for some types of business activities.
Find out what your potential competitors do to attract consumers. What is their concept of business, their terms of service? Can you compete with the big players? What are your advantages? Consider not only direct competitors, but also indirect competitors offering a product or service that meets the same need.
Structure of the future company
This section includes the organizational structure of the company: management, key employees, core staff, and support staff. Define the responsibilities of each team member. Take into account the increase or decrease in demand for the product. Consider outsourcing to subcontractors, temporary or seasonal workers.
Describe what your product is, what its pricing model is. What resources will be required for production. The list includes:
- renting of production facilities;
- raw materials and supplies;
- staff salaries;
- logistics, storage, maintenance;
- the cost of product promotion, etc.
The longer the product lifecycle, the greater the share of costs that are not directly related to production. Design, distribution, and maintenance become more complex.
Marketing plan and sales strategy
Determine how you position the product. What is unique about your selling proposition? How meaningful is it to the customer? How will you attract new customers and retain old ones? What channels will you use for communication? Examples: telephone sales, mailing lists, contextual advertising, and targeted social media groups. Will you use intermediaries such as dealers, marketplaces, independent outlets?
List each of the anticipated sources of income: direct sales, subscriptions, subscriptions, etc. Use additional income from non-core activities, leasing unused space.
Amount of funding required
This section includes a calculation of your financial needs over the next 3-5 years, broken down by expense item. The list includes initial investments for the purchase of fixed assets, fixed costs, repayment of credit debt when using borrowed money. Based on the cost structure, choose the optimal taxation system.
Calculate how long it will take to recoup your initial costs and determine your breakeven point. To get the payback period in years, divide the amount invested by the net cash flow the business will generate per year. For simplicity, you can assume that revenues will be constant. Build a financial model that shows costs and profits broken down by month. Set aside funds for contingencies.
Is it possible to copy someone else’s business plan?
Complete copying of someone else’s business plan and makes no sense, because the conditions for two different projects will always be different. It is possible to take someone else’s plan as a basis, adapt it to your own requirements and the peculiarities of the market environment. Studying the business plans of successful businesses can bring the knowledge needed when you lack experience.