Last Updated on 6 months by Raaj Kumar
Business Plan – Step-by-Step Planning
The business plan is a critical, but necessary, step for all new start-ups. In this guide you will find the most used techniques on how to make an effective business plan for start-ups
The business plan helps you manage your business idea / activity. How? By giving you direction, planning the organization and attracting investors. You must think of the business plan as a road map that guides you through every phase of your business: start-up, management, development.
Strategically focusing the strengths ( Strengths ), the weaknesses ( Weaknesses ), the opportunities ( Opportunities ) and the threats ( Threats ) of a project or a company – the so-called SWOT analysis – is the first step to achieve the objectives set .
It is not just a document, therefore, but a real way of approaching the company : you will have to be able to think simply, through the key elements of your business.
Here are three examples of the purpose of using the business plan:
- Raise funds and attract partners for a start up as a tool to contextualize your project and your idea.
- Study the commercial potential of your company from the business model to competition, critical issues and market opportunities, development plan.
- Obtain funding from banks and lenders to demonstrate your company’s strengths and what the chances of getting their investment back to lenders.
How to make a winning business plan
We talked about the philosophy of the business plan, a way of thinking that is the basis of new techniques for making an effective business plan. Here are three rules you should keep in mind when deciding to write your business plan :
It must be short and concise : your business plan is made to be read by third parties, but also to be your compass. Nobody wants to read a 40-page document, where the main focuses are scattered among non-essential concepts.
Know your audience : the person to whom the business plan is addressed is what determines the tone and language to use. If your business is focused on developing complex medical processes, for example, but your potential investors are not scientists, avoid technicalities or acronyms that make understanding difficult.
Show that you are master of your field : without hesitation you make it clear that you have clear ideas. Keeping the right distance between being convincing with data and numbers and daring with imagination is the biggest challenge to face in making the business plan
How to make a standard business plan
You will see, informing yourself on how to make a business plan, that there are nine standardized pillars in its structure. It is important to know them because they can, in whole or in part, help you design the right business plan for your idea. You can also take the help of Business consultant as well.
Summary: a snapshot of your business
In this initial part you will describe the project, responding to the 5 W of the business :
- Who (who)
- What (thing)
- Why (why)
- Where (where)
- When (when)
Who the team, manager and employees are made of; what is the product or service you want to sell / promote; why the idea will be successful and why invest in it; where it will be located, if located or relocated; when you estimate that the break even point will be reached .
Company description: mission and strengths
What is the mission and what is the specific target of your company? Go into the details of the need that your company intends to intercept and explain what are the competitive advantages that will turn into economic success. If you have a physical location, this is the right time to talk about it; as well as you can talk about any consultants who will support you in the start-up and development phases.
Market analysis: context and competition
You will need to know the target market in which you intend to position your business: perspectives and trends and how other companies already operating in the sector are moving. What are the competitors’ strengths? Why does their strategy work? What can you do better than they do?
Corporate organization and human capital
How is your company structured: what is its company name and who is it made up of? This is the section where you need to answer these questions. Enter an organization chart if the company has more than one initial partner and, if necessary, attach the qualifying professional experiences for the key team members.
Service or product: what do you offer to the market?
You will have to talk about the ‘heart of your business’: how it is produced or created and why it will be an advantage for customers / users. Describe the production cycle and any patents or copyrights.
Placing on the market and sales strategy
Your goal is now to make it clear how the product / service will be placed on the market and channeled to consumers / users. Describe a possible sales scenario and how you will continue to attract customers over time. Now talk in depth about your marketing and sales strategies .
Funds needed: how much money you need for the next 3/5 years
Define the requirements and purposes of any funding. You must specify if you are looking for a loan or equity partners. What do you need the funds for? To buy equipment and materials, to pay consultants and salaries, to advance costs etc. This section also explains what your three-year or five-year financial plans are and how you intend to repay debt.
Income statement and forecast balance
Show off your ability to handle infographics, statistical charts and graphs here, adding economic and financial statements from the past three years if you have one. If, on the other hand, you are a start-up, you produce financial forecasts based on the performance of the reference market. Enter the specific gross margin and direct costs, list any guarantees for the investment. Add a section of ” What if ” or hypothetical, but realistic scenarios: for example, if the market becomes more competitive, profit margins may decrease; if a sales channel fluctuates, it shows alternative strategies etc.
Appendix: various and any
Use the appendix to insert documents and materials useful to further detail the various sections. A dossier that may include: newspaper articles, resumes, reference letters, legal documents and contracts, permits and licenses and various types of insights.
Business plan start up: why it is so important
For a start up, the business plan represents the preliminary focus of its business model. The scenarios opened up by new technologies and digital have also impacted the practices of how to make abusiness plan , with striking models that in recent years have partly distorted the rules.
Suspended between truth and legend, the business plan of Brian Chesky – founder of the worldwide giant Airbnb – who is said to have summarized his business idea on a single page. But it is equally certain – as Chesky himself stated – that, in the three months during which the project was admitted to the Y Combinator acceleration program, staying focused made all the difference: “In those three months we did nothing but work, we didn’t want to do anything else, we were completely focused : this is one of the factors that made things change . “
It is therefore evident that setting a budget and a financing strategy, planning sales and sales promotion channels, analyzing the competition, making growth forecasts are all necessary steps. And the more they are carefully studied and analyzed the more they produce substantial and fast results. This is why you cannot do without a tool that proves to be even the most efficient in the planning and control function, as shown by the research conducted by magazines and experts in the sector.
The ” Journal of Management Studies ” in 2010 found that not only the companies that had drawn up a business plan had a growth rate of + 30% compared to similar ones that had not done so, but that the timing was also different.
Companies that operate with an inadequate business plan, if they achieve the same goal, spend twice as much time as companies led by a preventive business plan. However, the data that makes us think more about how indispensable the business plan is is that reported by a study published in ” Small Business Economics ” in 2011: the start-ups that define their range of action according to the standards established by a business plan have up to 150% more likely to turn the project into a business.
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