What is a business plan?
A business plan is a project development map, a document with calculations and a perspective for the next few years, which leads you to the intended goal. It is needed by the project’s creator, business owners, and investors.
The purpose of a business plan is to prove that the idea and vision of the entrepreneur are achievable, that there is a place in the market for a new product or service, and to show that the project will pay off the money invested and bring profit.
The document analyzes industry information, product demand, growth potential, and its scalability to other markets.
Offline or online
Quarantine in 2020 forced companies to pay more attention to the online direction and optimize offline. Consumer habits have been forced to change. People began to spend more time on the Internet, solve many issues online, and even make large purchases, so businesses have to differentiate channels of interaction with customers. For example, some restaurants and cafes began to work with delivery, but they didn’t before.
Companies began to strengthen their marketing and brand:
- Pay more attention to their own and partner online promotion channels.
- Review online budgets for marketing and promotion.
- Look for new sales channels online.
Business plan formats for online and offline businesses do not differ in structure. For example, a business plan for an online store and a coffee shop will have the same structure because the business owner, potential investors, or bank wants to see the same questions answered.
Start with Product Testing
Before investing money in a project and thinking about how to write a business plan, it is important to test the product. If you don’t write your business plan by yourself then you can hire business plan writers. Experienced entrepreneurs recommend making at least a hundred sales. After this, you can understand the customer’s need, adjust your idea (pivot), make it more popular, or even form a new market. For an investor, this is also a plus when you already have a product sold and a pilot project implemented on the market.
How to order a business plan from experts
To write a business plan for a small, medium, or large business, you can seek help from a special company that will prepare a detailed plan with historical market indicators and a forecast for 3-5 years. Experts will calculate the potential niche that the product can occupy in the future, analyze competitors and their market shares, prepare 2-3 development scenarios, take into account possible risks, and calculate and prepare all the necessary sections.
Preparation of a business plan takes from one to several months. The cost depends on the subject of the product, detail, preparation time, and level of expertise. Ratings assess the reliability of the company. Therefore, the company’s level, the number of attracted resources, paid bases, and experts affect the quality of work and the cost of the business plan.
When choosing a contractor, pay attention to:
- on the experience of implemented business plans,
- expertise in your industry;
- company reviews.
Usually, along with the contract with the company, they sign a non-disclosure agreement about your product and draw up a technical task.
How to write a business plan yourself
If you have experience in market research, building financial models, or want to understand this, you can write a business plan yourself. For this, a standard template will be enough, of which there are many freely available if you google it. In addition, you can modify the template depending on the type of product and industry. For example, the Logistics section is relevant for companies that need to calculate logistics costs and proximity to consumers.
For more information please visit: Maven Business Plans
What sections are included in a business plan
The format and design of the business plan may vary in detail. To clarify what to focus on in each section of the document, we gave a guideline – what investors first pay attention to when they read the document and make a decision.
Consider the main points of a business plan.
- Project summary– a summary of the project, proof of its economic efficiency and feasibility.
What the investor looks at: according to the summary, he evaluates the project: if the project interests him, then he looks at the business plan in more detail.
- Description of the company– information about the creators, the company’s location, the activity’s status to date, and your achievements, such as licenses, patents, and participation in competitions.
What does the investor look at: do you have a strong team to implement the project? Do you have experience in launching similar projects? For example, if you have no biotechnology experience, you should not go into this area. It is better to make a product in the field that you understand.
- Description of the industry, market, and competitors– you need to disclose the size of the market, competitors, and their shares, and evaluate the market you plan to enter since markets in different countries have significant differences.
What the investor is looking at:
- How exactly is the market niche of the product defined?
- How is the target market defined?
- Whether it is possible to scale the product to other markets (for some investors, this is a decisive factor in making a decision).
- Description of the product or service– you need to answer the questions: why did you decide to create a product, its characteristics, competitive advantages, what problems does it solve, why does the market need it, and why is it better than existing ones?
- Strategic marketing– describes the market for the product, what market share the product can take in the future, the buyer profile, your tactics for working with competitive products, brand and positioning, the result of product testing, promotion channels, pricing policy, and marketing budget. If the product is technological, then a prototype is needed.
- The production plan discloses: the geography of the project, production costs, production capacity, capital investment plan, material and technical base strategy, recruitment, logistics and delivery plan, product quality strategy, and legal and accounting issues.
Assesses the possibility of reducing costs while improving the quality of work.
- The organizational plan reveals how the project will be implemented. Project founders, project executors, and board of directors, consultants. Their experience in this area, a plan of tasks for implementation.
The investor is looking at the expertise and who is responsible for implementing the marketing part.
The financial plan contains:
- The current financial condition of the organization and its reporting for 2-3 years (if you have a startup, then immediately go to the forecasts);
- cash flow forecast for 12 months and forecast for 3-5 years;
- estimated volume of investments with funding sources;
- project economics with indicators of revenue, cost, and profit;
- The net present value of the undertaking is determined;
- calculation of the payback period of investments for the project;
- Determination of the break-even point.
At the pre-seed investment stages, the seed investor pays attention to the market potential, product readiness, team, and unit economy (economy per unit of production).
There may be other sections in the business plan. For example, a bank or an investor may additionally request a risk analysis: technological, managerial, financial, economic, legislative, environmental, and sufficiency of material resources.
Mistakes in business plans
When we work with entrepreneurs and startups on their business plans, we often encounter common mistakes. For example:
- There is no market assessment. There is a product, but there is no complete assessment of the market, its volume, competitors, and competitive advantages. The business model is not well developed.
- There is no clear positioning. There is a technological product, but there is no clear positioning for the buyer so that he can assess the need for the product.
- There is no own money invested in the project. There is a product, but the creator of the business does not have a complete picture of how it will work. He does not have his investments in the project – this raises a question among investors.
Finally
To properly write a business plan yourself:
- Write a draft and ask for feedback. The business plan you write for the first time can be changed and edited more than once. Therefore, it is important to make it without bringing it to the ideal and check it in practice. And how you get feedback – adjust.
- Consider a financial cushion. Usually, the financial plan does not consider the need for an “airbag” to pay salaries to himself and the team. But it makes sense for an entrepreneur to provide for it.
- At the meeting with the investor, briefly explain the project’s economics. When the business plan for an investor or bank is ready. You make an appointment and make the first presentation (pitch deck) – a brief overview of the business plan. The task is to show the investor the economics of the project and interest him. Investors note that a systematic approach is important for them in a presentation: when an entrepreneur has a vision, a product for a specific market, and a reasonable project implementation plan.
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