We are looking for financing for our project. At the bank they tell us “OK, but we need to see your business plan”. And what is a business plan? We don't really know what they mean!
That of the business plan “sounds familiar to us”.
We have a slight idea of what the definition of a business plan would be.
A document in which we talk about our business project.
But we are not very clear. We think that it is a kind of “business model”. (No, it's not the same thing: just read our definition of a business model or see how a Business Model Canvas
is articulated ). So would it be more like a market study?
We are going in the wrong direction!
But let's stop uncertainties . After reading this article we will have cleared up our doubts and will have a clearer understanding of the business plan concept.
If you are going to start making your business plan, we recommend reading our complete and detailed guide on how to make a business plan.
SEE A FREE SAMPLE BUSINESS PLAN
LET'S START BY DEFINING A BUSINESS PLAN
A business plan (business plan) is a document that summarizes the commercial, operational and financial objectives of a company in a determined period of time.
We already have the “official” definition ! Now let's move on to the details.
To put it simply, the business plan is the roadmap of our business.
It is a document that indicates how we are going to go from point A (where we are now) to point B (usually within 3 years).
Obviously, the business plan contains all the elements that indicate how the objectives should be achieved.
For everyone starting a business, this is an essential first step.
Important! A business plan is the roadmap of your project for the next 3 years. But first, you have to know how to start a business plan.
- Presentation of the industry, the sector and the global market
- Presentation of the market opportunity (which we will have previously identified)
- Presentation of the solution provided and the value created
- Presentation of the project owner
- Analysis of our market segments
- Analysis of the competition
- Marketing plan
- Recruitment plan (sometimes)
- Operational (and technological) plan
- Business model
- Financial plan
- Annexes (sometimes)
Classic structure of a business plan
DEFINITION OF BUSINESS PLAN: WHAT IS IT DONE FOR?
Why do companies need a business plan?
Studies have shown that entrepreneurs who take the time to write a business plan have 2.5 times more chances of their company succeeding.
Setting up a company is an extremely difficult task.
Therefore, it is best not to get complicated: the most practical thing is to make a plan (or do it for someone, as we explained in our article on the price of a business plan).
If we have an idea to start the project of a business plan, that can help us determine if our business idea is viable.
Obviously, starting a business when there is only a slim chance that it will be profitable is a waste of time and money.
A business plan allows us to determine the success options that our new company would have .
In many cases, the people who create a new company do not have the necessary money to launch their project.
If they need a financial boost from the bank or investors, you will need to have a (good) business plan .
A business plan will help you show the full potential of your business project. In our article Business Plan for Beginners, we explain how to do it.
For example, market researchIt will reveal whether there is sufficient demand for the product or service we offer from our target market.
If the market is already saturated, we will have to modify (or abandon) our business model.
Through competitive analysis we will be able to evaluate the strengths and weaknesses of the competition, which will allow us to guide our strategy to gain market shares.
Our acquisition strategy will demonstrate how we are going to win over our first customers.
If, for example, the existing market is dominated by established competitors, we will have to develop a marketing plan to attract customers to our product or service.
To do this, we can use sales techniques such as promotions, loyalty programs, a better product, a better brand image, etc.
The management plan describes the company's structure, management, or staffing needs.
If in our business we need personnel with specific skills, we will need a strategy to select and retain our qualified personnel.
Our business plan will also help us to get an idea of the salaries that are paid in the market.
The exploitation plan also serves to describe our facilities, equipment, stocks, and equipment/furnishing needs.
The location and accessibility of companies are essential for many companies. If that were the case, we will have to locate the most convenient potential locations.
If our company only needs to manufacture materials or raw materials to sell to customers, we must study the potential logistics chains. We will have to have a distribution strategy.
Finally, we come to the financial plan, which is fundamental .
A financial plan can help us to check the profitability of our project
The financial plan is the determining factor to know if the company is likely to succeed .
It shows how we are going to generate profits and the impact that the different expenses will have on the profit margin and profitability of the company .
It will also show investors if our business is profitable , after how long it will be, and the money that we are going to "burn" before all this.
It will allow us to have an excellent general idea of the company and an excellent plan for our marketing, management and exploitation strategies.
But if the financial plan indicates that the company does not generate enough profit to be profitable... then the business model will not be viable.
In other words, it is not worth setting up the company!
In conclusion, a business plan can save us a lot of time and prevent us from starting a project that will not be profitable in the long term .
THE BEST WAY TO UNDERSTAND WHAT A BUSINESS PLAN IS? SEE A MODEL BUSINESS PLAN!
Everything we just explained is very good.
However, as the saying goes: “a picture (or a model, in this case) is worth a thousand words.
If you want to see what a business plan done by professionals looks like, you can download our business plan templates here.
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