The intricacies of compiling a business plan
Today we will discuss the business plan with a detailed description of business, environment in which it operates and how you need to manage it to achieve your goals. And tell us about it A. P. Ivanov - the author of the business blog: . There is no standard business plan, and therefore, the described 3 or 5-year business prospects requires certain skills and commitment. The main use of the business plan will be the creation of a written plan, which will evaluate all aspects of the economic viability of your commercial organization, including a description and analysis of the prospects of your business.
a Business plan is an important step in any careful and prudent businessman, regardless of the size and type of business. This step is very often skipped.the
Why write a business plan?
Your business plan will be useful in some cases. Here are some of the reasons why you should not neglect such a valuable tool:the
- First of all, it will define and focus your objective using appropriate information and analysis;
- You can use it as a sales tool in your important relationships, including with creditors, investors and banks;
- You can use the plan to poll opinions and advice from people, including the target area of your business that will be able to provide you with valuable tips;
- Your business plan will help to identify omissions and / or deficiencies in the planning process;
- You can use it when creating a framework for measuring business results;
- as a key tool for the management of the company;
- For tools to assess the strengths and weaknesses of the company;
- For the determination of viable alternative strategies.
What you need to prepare the plan?
to Read the business plan, pay particular attention to the fact that the authors have demonstrated a deep and convincing understanding and mastery of the dynamics of the company and the industry / sector in which it operates. Most importantly, readers will want to learn how these skills can be used to ensure a profitable return on investment with minimum risk level for the investor or parent company.
Thus, it will be necessary to demonstrate that the plan is quite reasonable, to prevent the deficit at the projected level of sales as a result of unforeseen difficulties in the terms of trade.
At the beginning of enterprise activity there is a temptation to be too optimistic and assume that everything will happen as planned. But that rarely happens! Almost always arise not provided for in the budget costs, therefore, make a plan in such a way as to demonstrate its reliability in case of unforeseen events. A plan that is not flexible enough in case of worst scenario, are unlikely to be considered favourably.
the Content of the business plan for each particular enterprise depends on nature of business and organization, which is a potential investor. But, nevertheless, there are certain categories of information that should be included that the proposal was successful. Main categories on the basis of which it will assess the business plan can be summarized as follows:the
- the Financial soundness of financial structure (liquidity, profitability);
- markets and products
- Physical and productive resources;
From this it follows that the document should be written from the point of view of the person to whom it is addressed, not the author. Sometimes it happens that the author of the business plan is the Creator of invention, which means a person with scientific or technical expertise. In such a situation there could be a temptation to include technical data, formulas and charts to demonstrate the technical intricacies. This should be completely avoided! Technical information must be simplified so that it more understandable for the layman, and its use should be solely for the purpose of demonstrating the commercial and financial viability of the proposed business.
the Content of the business plan is formed by the preparation of the information and predictions needed for the development of the headings of sections. These data can be obtained only by a detailed analysis of the entire company and its environment. The process will require making many important and crucial decisions. Decisions taken under one of the headings will inevitably affect decisions taken in other sections, and this requires revision of earlier decisions. Thus, writing a business plan is a cyclical process. Process can do not a single loop, until you reach the consistency among all sections of the plan. Writing a business plan may take several weeks or months.the
What to avoid in business plan?the
- Set some reasonable limits on long-term forecasts for the future. (Long term - more than one year). Best to stick to short term objectives and modify the plan as your company development. Very often, long-term planning has no meaning, because reality is your business may differ from your original conception;
- avoid optimism. In fact, to offset optimism, be extremely conservative in predicting capital requirements, time limits, sales of products / services and profit. Few business plans correctly include how much money and time is needed;
- don't ignore the writing strategies in the event of adverse business circumstances
- Use simple language in explaining issues. The text should be easy to read and understand;
- do Not rely exclusively and fully on the uniqueness of your business or even a patented invention. Success comes to those who are starting a business with excellent economic ideas, not necessarily major inventions.
Assumption that should be avoided in writing your business plan.
Business plans as a rule, too optimistic, and the authors, as a rule, vain. Although the business plan is a tool to "sell" the company's image, it should never be unrealistic, otherwise it will lead to inefficiency. There is, however, a few basic assumptions about which entrepreneurs often do not know and which lead to erroneous estimates, which, in turn, sometimes leads to failure of business initiatives. The following are some assumptions that should be avoided:the
- Our customers will buy our services, because we consider them to be a good product;
- Our customers will buy our services because they are technically better;
- Our customers agree that our services are different;
- Our customers risk nothing in giving up their current suppliers and the transition to purchase our services;
- Services will be sold by themselves;
- Distributors really want to have our product in stock
- We can develop services on time and within prescribed budget;
- We won't have any difficulties in hiring necessary staff;
- prudent Competitors will react to our appearance in the market;
- We can protect our services from the competition;
- We will be able to restrain prices and to conquer part of the market;
- the Company will maintain our strategy and provide us the necessary support.