05 Dec, 2009
Business plan: Guide, Conceptos and Examples
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Once developed your business idea, it is necessary to prepare a business plan. In this post we will show the structure of plan and how to develop the content necessary for a plan of successful business.
Before starting, there are three points of that it is necessary to take care in the business plan:
1. Structure of the business Plan: it is advisable that it contains eight sections, which are exhibited in detail in the following chapters.
2. Content of the business Plan: it should provide clear and concise information about all the aspects of the proposed business. This includes practical questions regarding his creation, functioning and direction, analysis of the costs, sales, profitability and perspectives of expansion. The above mentioned information will allow to know if our business Idea resists to a more exhaustive study, or if we need to modify it or, even, to think about another piece of news. If we come to professional investors, these will rel="nofollow""" our planning efforts and will act of tutors and advisers. Thus they will redeem a crucial role in the starting of our new business.
3. Writing of a business Plan: it needs a few knowledge I negotiate major than in the previous stages. In case formation or specific experience is not possessed in this field, quite what it is necessary to know on this matter is in the chapters that they continue. The information appears of a concentrated form, which will help to bear in mind the most excellent questions and act like a competent associate at the time of talking on the project. If, on the contrary, one is provided with this formation or experience, it will be able to serve as model for the key questions that it will be necessary to consider at the moment of starting a company of rapid growth.
Part 1. Executive summary
The executive summary offers a general impression and everything what a reader pressed for the absence of time must know about his business Plan. The clarity and the facility for the comprehension turn out to be especially important. The summary is, for this way saying it, the sketch of our project; the business Plan is the definitive drawing. Nevertheless, it must bring to the reader all the excellent elements of the last one. The following chapters explain in detail the information that a summary must include and they provide more precise technical information. Nevertheless, these should not contain surprises in the shape of messages or completely new concepts.
To prepare a clear and concise summary of a business Plan on two pages implies often a top difficulty and a time major than needed to prepare twenty sheets of detailed description. The synthesis demands an additional intellectual process and, therefore, time.
Also, we must think about the reader: to assure us of that the structure
it turns out to be clear and understandable. The language must not be complicated – so that it could be read more quickly. The presentation has to be an egg white – this way we will manage to attract the attention of the reader. What is claimed is that the investors show interest in him. Before they decide to finance our start-up, they will want to have a major information and extract conclusions if the project will be or not capable of overcoming the critical test of the throwing the market.
Part 2. The idea of the product or service
The essential target of a new company is to offer a solution to an existing problem on the market – to satisfy a need of his potential clients. For it, the business Plan must begin with the identification of this need and with the proposal of a solution. We have already prepared a sketch of some of the key elements of our future company – the utility for the client, the market and the mechanism of income - in the description of the business Idea. Now we will have to specify them in our plan. What is what it will do of this slightly irresistible idea on the market?
To consider the business Idea from a more practical perspective, in general, implies a process iterativo, in that new perceptions on an element of the plan can affect others. We must be opened for the criticism and it will be suitable to consult experts, investors, businessmen, companions and potential clients.
Presentation in the Plan of Work
- To indicate the problem and his solution.
- To describe what the innovation of the idea is; to explain until point our solution offers to the client the only utility, and quantifies the last one.
- To indicate the situation of the patent and, if it proceeds, the details of the same one.
- To communicate of visual form. An image of the product, prototype or service “in action”, or a flow chart of the system they will serve so that the reader does to himself an idea of what we have in mind. Also, to document the state of evolution of the product.
- Not to worry for the technical details – they lack interest for the investors, and it is very possible that they do not influence his decision to invest.
List of Cross-check of the Idea of Product or Service
Does our business Plan offer an answer to the following questions?:
a. What problema/s solves the idea? What need of the client does it satisfy?
b. What type of product or service do we want to sell? What is exactly what it offers?
c. What does the product or service have of innovator?
d. Is it a product or the only service or not? How will it be protected as regards the law?
Part 3. I equip of Work
To start a company of rapid growth constitutes a task enormously ambitious. To obtain the success, and to fight for him, it is necessary to do it step by step. In addition to the guessed right idea, an appropriate environment and the rel="nofollow""" of a wide list of associates, we will need the tireless impulse of the team of work. After all, the difference between the success and the defeat is in the form in which the Plan of Business takes to the practice, and this task relapses, undoubtedly, into the team.
The team of work is, therefore, the crucial factor for a company that is started. This is the reason for which the present chapter occupies a fundamental position in the business Plan.
Presentation in the Plan of Work
It is suitable to describe the characteristics and the qualities of the team and of his components, for example, of the following form:
- The team in his set: complementary qualities of his members; proof that they are capable of working together, as well as of staying joined in the difficult moments; the participation of each of them in the team; the share-out of the property between they and the role that they redeem of individual form.
- The members of the team: excellent aspects of his curricula, such as the studies, the professional training, the labor experience, the time through that they have lived abroad, his experience in the ambiences of direction and communication; capacities worth mentioning, love, sports, musical achievements, etc. He is an advisable brief being: not to include any more than one third of a sheet for every member; the curricula can be added to the finished one in an appendix.
List of cross-check for the team of work
a. Who are the members of team of work and in what do they stand out (studies, labor experience, achievements, managerial reputation)?
b. What experience and skills is possessed by the team of work that they will serve to take to the practice the business Idea?
c. What experience and skills does the team lack? How and with whom should the team be completed?
d. What motivates each of his members?
Part 4. Marketing
The principal task of any company is to satisfy the needs of his clients. This is the basic idea of the Marketing, which must not make a mistake with the "sales" or the "publicity", since these only represent the application of his ideas. The market skills have a major scope: be which be always the type of company – research and development, production and administration, sales and contact of the clients - it is necessary to raise two key questions, namely: what advantages does he suppose for the client? and: what benefits does it bring to the company in relation to his competitors?.
The marketing plan is, consequently, one of the essential elements in our business Plan. We must be capable of convincing the investors that, for our idea, there exists a market - one to which we can serve as profitable form. The investors will want to insure themselves that our expectations on the potential of expansion of the company go to expire. To obtain it, it does not turn out to be necessary to present a definitive marketing plan in our project – it would not even be possible it to do in 3 ó 4 sheets which we will have not also. What yes has big importance is a relation of the market to which we hope to come, the strategy of price making and the distribution.
Basic elements of the marketing plan
The Marketing is not an exact science and, especially in case of one new Idea of Business, we must allow ourselves to go for the common sense often. The most serious errors of the managerial projects often come from the Marketing design. The reasons are the following ones: first of all, we must put ourselves in the pelt of the future client and adopt his way of thinking, his affective attitudes, which does not turn out to be easy. Frequently the necessary attention is not paid. Secondly, there are numerous factors of market which we cannot influence of direct form. For example, the fundamental question: how many clients will buy our product? - we can never answer it with accuracy in advance, how very much we will be able to come closer. Nevertheless, there is possible to improve to a great extent the predictions by means of one rigorous analysis of the market and the competition.
It turns out to be advisable to prepare the marketing plan in three following stages:
1. To analyze the market and the competition: in this phase we will familiarize ourselves with the market to which our business Idea goes, analyzing the strong and weak points of your competitors.
2. To choose the target market: now we happen to select the group of clients (“clients target”), whose needs it satisfies better our product, and which we offer him more than the competition. We must establish also how we want to differ from the last one (“position by means of the differentiation”).
3. It determines the market strategy: in this stage we will decide how to come to our clients and of what form to speak to them, making use of specific measurements on the design of the product, the price making, the distribution and the communication.
List of cross-check of Marketing
The business Plan must answer to the following questions:
a. Have we formulated the Only Proposal of Sale (USP) of precise form and from the perspective of the client?
b. What clients constitute our objective segment? Why does it turn out to be this segment of special interest for our company?
c. What is the dimension of the market in its entirety? And that of the market that we are interested in? How is this one going to evolve?
d. Who are our competitors? What are the substitutes of our product?
e. How do we try to extend our market share and our sales volume?
f. Which are going to be our prices?
g. What channel / is of distribution we will use?
h: How much will cost us the publicity?
Part 5. The business System and the managerial organization
With the marketing plan, we have defined the purpose of our company from the point of view of the client. Now it is the moment to turn the benefit for the client into a reality. We will have to decide which the necessary independent activities are and how we will be able to combine them in a “System of Business”. All the steps that are part of the manufacture of the product or of the offer of a service must be carried out in a systematical and profitable way, like part of a coordinated process.
Only this way we will be able to obtain economic benefits both for the clients and for the company. So that a business System works correctly, it must be clear what are the elements of which it consists and how these interact. The organization aspects include the allocation of tasks and responsibilities, the planning of personnel, the direction and a corporate culture. It turns out to be especially useful to appear which there are the activities that the company is going to redeem for itself and what are the products and services that it will obtain of third (“to make or to buy”).
What is a business System?
Any managerial task consists of a combination of independent activities. When each of them is represented of systematical form in relation the others, the result is a “System of Business”. This one describes the activities that need to be carried out to prepare a product and to make it come to the clients. To the advantage of the clarity, these activities gather together in functional blocks. A typical example of business System, common to the majority of sectors and companies, is the one that appears next:
1. Research and development
3. Marketing and Sales
A System of suitable Business will depend to a great extent on the sector in which it is located and, undoubtedly, on the proper company. The system that a computers manufacturer will use will differ enormously from the one that there adopts an adena of restaurants of fast food. Even that of a few department stores will be very different from that of a company of direct distribution, although they sell the same products. Applicable general norms do not exist in all the cases. Our system has to present a logical, finished and useful structure for his planning.
What is the organization?
Apart from the business System, it will be necessary to consider several questions regarding the organization. In case of a "start-up", we will not have to prepare a complicated scheme. What it imports really, is that the responsibilities have been distributed in a clear way and that a simple structure exists with only a few categories: executive director, heads of department and personnel of department. Everything else will be given by the new needs that raise the activities of the business. The organization has to be flexible and capable of adapting itself to new circumstances – it is of hoping that during the first years we should restructure our company several times.
When we were trying to form our “ideal team” (see the part 3: I equip of work), we already begin raising the task that the company was going to fulfill and how it was going to carry out it. There was the base of the "competitions" that the company would need. Now we can use the business System to group them in the corresponding areas, defining in each of them who there is the person in charge of so, (allocation of tasks and responsibilities) For the making, it is necessary to design a flow chart. It uses the hardware of Microsoft Word to create the flow chart and to present it correctly in the business plan. Once we have established the functions representative of every area, such as the executive board, the HRM, the finance and the administration, we will be provided with an organization that will be ready to act.
List of cross-check of the business System and the organization
a. How is the business System of the company?
b. What activities of included in the business System
will it carry out the proper company and which will he buy (“to make or to buy”)?
c. What is our approach?
d. What are the managerial functions that shape the organization and how are they structured?
e. What values and norms define the organization (corporate culture)?
f. With what associates are we going to collaborate? What are the advantages of this cooperation so much for us as for our associates?
Part 6. Achievement calendar
A realistic planning is not simple to realize, especially when one lacks the necessary experience in the creation of a business and, even more, if nobody has worked earlier with a business Idea – which is very common in case of a start-up. We must not leave that the fear of that our plan shocks with the reality prevents us to realize a planning as realistic as possible, since any mistake will transport with all probability terrible consequences for our business.
The achievement plan exercises a significant influence on the financing and the risks of the company. Therefore, it us is going to be of big help, to us, and also to our future associates, the exhaustive study of the interactions of an early way and the analysis of the effects of the diverse influences.
Presentation of the Planning
We must center the presentation of our calendar of achievement on the key points and on the most excellent interdependences. Normally they will be enough three elements:
- A graph with his program
- The authentic key points
- The most excellent dependencies between the diverse work bundles
List of cross-check of the calendar of achievement
a. A measurement that produces the expansion of the company to itself: what tasks are we going to have to carry out and what is the best way of grouping them in work bundles?
b. What the key points are for the enlargement of his company and when will we have to fulfill them?
c. What tasks and key points are interconnected? What is the critical way?
Part 7. Risks
Any company implies risks – especially in case of those of new creation and with a big growth. At the time of ours starts, perhaps it turns out to be better to us to face them with the investors' help. To gain us the confidence of these, and to increase ours, we will need to study these risks of open and exhaustive form.
If we include them in the business Plan, we will demonstrate to them to the potential investors that we have polished ourselves in every detail. Otherwise, they will assume that the presentation of the business idea, or the expansion of the business, is too optimistic. We must act carefully: there fits the possibility that, being based on its own experiences, they judge the project with major demand of the one that deserves – or even that they push it back. Nevertheless, we must bear in mind that for very open that we are in relation to the risks, these should not occupy any more it spread in the plan that the one that we dedicate to the opportunities. If his number is major, then the fact is that there is something in the idea that it has not just fitted.
Examples of risks
In the company:
– It does not turn out to be possible to cover essential positions
- A key member of the personnel, since he might be the development chief, leaves the charge
- The loss of the prototype delays the process of development and the throwing of the product to the market
In the environment:
– We are only capable of selling half of the due thing
- There is burned a factory of a key provider
- Shortly after the throwing to the market, a competitor presents a cheaper alternative product
- Not cconseguimos to patent the technology
- Our distribution associate gives for the agreement finished with our company
What is a sensibility analysis?
To value the risks consists of doing forecasts: the risks are never
absolute and they can only be calculated being based on hypothesis. In general,
these appear in the shape of prognoses, in order to simulate the future evolution of the business in diverse conditions. Our business Plan not
it should contain more than three stages. Next they prove to be the most habitual:
- The “stage for a normal situation”, that, in principle, it is much
- The “stage for an ideal situation”, that will take place if we can make use of all the opportunities and if your positive forecasts are fulfilled
- The “stage for awful situation”, to which one will come if the risks turn out to be complete and our negative predictions turn in fact.
List of cross-check of the risks
- What risks do we foresee that they might suppose a threat for the success of the company?
- How will we confront them and how will we limit to the minimum his impact?
- What is the quantitative effect of each of the risks (prognoses)?
- How might the company go out afloat in case awful situation was taking place?
Part 8. Financing
The first thing that it is to wonder on the financing is how much is going to find it hard to start the company and carry out a good management of the same one. To calculate the quantity of money that we need, we will be able to use a financial plan based on the hypotheses that we have used to foresee the evolution of the business. Secondly, we will have to appear what the necessary liquidity will be in every moment so that the company could pay debts. This task turns out to be fundamental in the financial planning. In the third place, it will be advisable that we consider how and where from we will be able to obtain the funds that we need. In the majority of the cases, the team of work will not be able to reach port any more than a part of the whole. Consequently, to look investors becomes essential for the existence of the company – the question of: “to be or not to be?” it will depend exclusively on the money.
The business Plan should contain information about the future financial evolution of the company, as well as a sketch of a financial plan of rel="nofollow""". Detailed calculations are not needed since the prognoses are, for their own nature, brought near, and even more when it is a question of a new company. The investors will be satisfied with a limited number of key numbers thought to conscience. The business Plan will have to offer an answer to the following questions:
- How much money will need the company in every period?
- Once we have established our company: how many benefits will we be able to obtain?
- What are the principal hypotheses on which our prognoses are based?
This information will serve so that the investors have a set vision on the viability and the verisimilitude of our numbers. On it it will depend that consider the interest project and deserving of the risks of investment that it bears.
The minimal requisites for the financial planning inside the business Plan are detailed next:
- The calculations of the cash flow, statements of accounts and statement of condition
- The prognoses for the next three or five years, and at least one year after the breakeven
- The information for the first two years will appear for trimesters or months, and the rest without divisions
- All the numbers will be based on hypotheses meticulously studied (only the most excellent will be mentioned)
Ready financing cross-check
Does he answer our business Plan to these questions?
a. On what hypothesis does the business Plan rest?
b. How many capital needs the company up to covering the expenses?
c. How much cash will be needed at the worst?
d. Where from will the capital proceed?
e. For what yield can the investors wait?
Examples of business Plan
You can guide yourself of these business plans to develop yours:
You guide to Develop your business Plan
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