The project document that is necessary when starting any new business is called a business plan. If this is not done, it will be difficult to determine the prospects of the project, and it will certainly be impossible to attract investments or a bank loan. You can develop the plan yourself or order it from specialists. In any case, an entrepreneur must know how to draw up a business plan and understand the principles and procedures for its development.
Business plan - what is it?
This is a document where the sequence of business development is determined, its working model is formed, a market analysis is carried out, a financial and marketing plan is prepared, and goals and activity forecasts are identified.
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Why do you need a business plan?
If you start a business without a plan, you increase the risk of incurring losses, closing down, and being left with debt. Its main task is for the entrepreneur to form a clear picture of their activities and make effective decisions for the benefit of the business.
Without a plan, you can start a business and develop it, but it is impossible to attract outside funding:
- To apply for a loan from a bank
- To receive subsidies and government grants
- To attract investments.
A bank, state, or investor will not provide funds if, in return, they do not receive a strategy for developing a business and making a profit.
Let us clarify that to obtain a loan from a bank, you do not always need to provide a business plan. Sometimes, accounting is enough to attract funds. Usually, a plan is necessary to start a business, expand it, or open a new direction.
Contents of the business plan
It must be drawn up based on the characteristics of the business and the goals of its leader. There is no specific fixed structure of a business plan, but there is an approximate one from which you can build.
If necessary, sections can be added and some removed. It is important that the plan is consistent, can form a clear picture of the business's activities, and helps the entrepreneur make decisions more confidently. Some platforms can provide valuable insights and data, enriching the business planning process and enhancing strategic decision-making. It's worth considering the resources offered by Grata vs Pitchbook, two prominent players in the venture capital and deal-sourcing arena.
We should note that banks and investors can put forward wishes for the content of the business plan and offer to draw it up according to their template. All this needs to be discussed individually in each case.
Project summary
This is the shortest but, at the same time, an important section of the plan, which plays the role of a "hook." You need to briefly talk about the business and why you need money and highlight the guarantees and benefits of this from an investor or lender. This will get them interested and motivated to study the plan fully. The task of the remaining sections will be to convince the decision to finance the business.
For an existing business, the summary should reflect the following main aspects:
- The main goals and mission of the company - brief information in a few sentences.
- Concise information about the company - year of foundation, number of staff, location, information about the founders.
- Business characteristics. Key financial indicators, growth indicators, and company share in the target market. It is possible to place graphic material - diagrams, graphs, and the like.
- Description of the company's products or services.
- Company plans for the future. Explain how you see the business in the future.
The text should be short, without vague wording, and concise. This section can be entrusted to copywriters with experience in writing business plans. It is important that the summary appeals to investors and lenders so that they are willing to take the time to study the plan in detail.
Startups need to focus on leaders. It is important to talk about the motivation for starting a business, plans for its development, and personal experience. The summary should be written last when the rest of the business plan structure has been prepared and filled out.
Information about the company
The first step when drawing up a business plan is to structure information about the enterprise. For example, if this is an operating organization, then it is necessary to analyze its full or partial activities and provide data:
- Describe the type of activity - what products or services it provides.
- Which consumer is the organization's work aimed at?
- How does an organization stand out from its competitors in the market?
After reading this section, an investor or lender should understand what the organization does, who its final product or service is for, and how it takes its market share.
Market analysis
It is necessary to talk about the market and the area in which the company operates. Information should be indicated in the structure of the business plan point by point, using graphs and diagrams if possible.
In a business plan, the market analysis section is important. The information received makes it clear whether the organization has prospects, whether its activities are relevant, and what results can be expected.
Company and team
Information about the company's organizational structure, owners, and management is disclosed here. Additionally, specialists whose experience and skills play a key role for the company in achieving its goals are highlighted.
This section in the structure of the business plan consists of information about departments, their tasks, experience, and level of training. Also, it includes information on wages, social packages, benefits, and incentive measures.
Product Description
Obviously, the key factor for an organization is the final product. It is necessary to provide information about it, highlighting the benefits for the audience and competitive advantages. The description of the product or service should be detailed, clear, and concise. There is no need to write that it is "the best," "unique," and "in demand" without appropriate evidence.
Marketing and sales
You need to provide a strategy for promoting the product in the market and gaining an audience and market share. This requires a marketing plan. It is impossible for an entrepreneur to correctly draw up a marketing plan without the appropriate skills and experience. To do this, it is better to use the services of specialists.
Financing
This section is necessary to attract external funding. It is important to disclose the amount of funding required to implement ideas in the business plan.
Economic indicators
Financial results are the most interesting section of a business plan for investors and lenders. It shows when and in what volume the invested funds will pay off and begin to pay dividends.
Appendix
You can insert more detailed information into an appendix, which is given in the main sections.
Conclusion
Remember that a business plan is one of the tools for interacting with an investor or lender. Keeping their interests, criteria for evaluating investment projects, and behavioral characteristics in focus is essential - only then will it be possible to build interaction.
