If it’s good, you have a chance to get the attention of investors. If he’s bad, you might be glad they talked to you at all. A business plan is highly underestimated by entrepreneurs. But why is it so important anyway?
A business plan (also called a business plan) is a document that says almost everything about your business. It contains information from costs, to information about competitors and employees, to how you will make a profit in your business.
Simple at first glance, but writing a high-quality business plan takes time. And in addition, most entrepreneurs underestimate it. What a huge mistake!
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Why do it?
A business plan can convince investors to put their finances into your business. If you brush it off, you can completely forget about them. On the other hand, it gives you information on how to run your business. After starting the business, the plan will serve you to check whether you are going in the right direction as you planned at the beginning of the business.
Thanks to the business plan, you can quickly find out whether your plan is realistic and profitable at all. Many entrepreneurs do not do it and go, so to speak, blindly. Later, he discovers that he has exceeded his finances, employed more people than he can afford, or bought goods that he cannot pay for because he does not have enough profits.
The business plan is also there to keep you in check and not succumb to momentary illusions. Alternatively, they knew that you had to change something in order to meet your planned turnover or profit.
So let’s see how such a business plan should look like:
1. Summary
One of the most important parts of a business plan. Here you define the whole idea of the business. How you will do business, why you will do business, how you are different from the competition, what will it bring to your customer, and what will be the vision of your business.
The idea should not be too long. For example, Slovnaft defined its business vision as “The MOL Group enables people to move forward: it discovers new ways to better meet their energy needs and creates value for generations to come.”
Short, simple and to the point.
Also Read: The 3 Pillars You Should Know Before Making A Business Plan
2. Who and what?
All basic information about you must be included here – Company name, registered office, date of establishment, amount of share capital, who is a partner of the company and contact information. It’s enough to be brief.
A list of the products or services that you will offer should not be missing either – simply describe them.
3. Market analysis
You can divide this section into three – competition, industry and target group.
Competition
In the competition, you should analyze your direct and indirect competition in detail (it is best to mention the names of the companies directly). Their strengths and weaknesses, how you differ and what unfair advantage you have (competitive advantage). If you don’t have it, it’s a good idea to think about going into the given business at all.
Industry
It is enough to define the basic characteristics of the given industry. What is specific about it, how it develops and what are the trends.
Target group
In this section, you need to define the customer. Getting your target audience wrong can ultimately cost you your entire business. Define exactly who the customer is and what the size of the target group is. This will tell you, among other things, how big the demand is. If it is very small, it is again questionable whether the given business is worth starting.
Finally, define your unique value proposition – benefit and added value for the customer. It must be a matter of course in your business.
4. Organizational structure and human resources
Also an important section in the business plan. The organizational structure defines who is superior and who is subordinate and most importantly – who is responsible for what. It changes over time as the business progresses and grows, so of course it needs to be constantly updated.
Human resource
You can also plan job positions here, how many workers you will have and what salary you can give them. This will create a very important employee cost that you will use later.
Material and investment equipment
Almost every business requires input costs for various things, such as materials, office supplies, premises, etc. You can also list software equipment or logistics here. In this way, you will make a summary of the initial and monthly costs. Based on this, you can later determine what profits you will need to make in order to break even.
If the costs are miscalculated, either overestimated or underestimated, it will have a negative result in both cases. With underestimated costs, you can set the price too low, and thus you will be at a loss. In case of overestimated costs, you will not be able to push the price down, and thus compete with others on price.
5. Marketing communication
Here you will need to enter all the marketing channels you want to use. Whether it will be offline marketing, such as billboards, flyers, advertising in newspapers or on TV…or online marketing – PPC campaigns, SEO, social media or internet videos.
If you choose any option or a combination of both, you need to set aside a separate budget for them. The amount of the budget already depends on you, but at the beginning of the business it is advisable to invest more in marketing so that people learn about you.
It is especially important for a new product or service to have a well-thought-out plan on how to get your website as high as possible in the search results – the so-called SEO Optimization , which will bring you more traffic to the website and customers. It is a longer-term process than, say, PPC advertising (after payment, you will immediately start appearing in paid results). That’s why it’s good to start with SEO in the early days of your business. We recommend starting from keyword analysis and also thinking about link building .
Business without marketing is like winking at a woman in the dark.
Do not forget about the price-creation. You can choose from three options for determining the price of products:
- According to the competition
- According to demand
- According to cost calculation
6. Finances
In the end, probably the most difficult thing – the financial plan. I recommend at least an annual projection of your finances – balance sheet, profit and loss statement and cash flow. Such a plan should include an estimate of your company’s profits and costs. It is better not to overestimate your profits, but to look at it with a little more pessimistic eyes. In reality, you can thus avoid various losses, even bankruptcy.
It is always better to rely on a worse option than a better one.
Even in the case of costs, whether monthly or entrance fees, it is ideal to write them as realistically as possible. Many entrepreneurs have a tendency to underestimate their costs, thereby only fooling themselves.
The entire business plan should be simple, concise and true. Therefore, be sure not to hide your weaknesses. The entire document can be up to 40-50 pages.
Also Read: 10 Tips On How To Avoid Mistakes In Your Business Plan
