An idea is an important part of every business. When an idea comes into your mind, the only desire you have is to start doing something to develop it. However, even excellent business ideas can be useless if you cannot formulate, execute and implement a strategic plan to make your business idea work. It is important to sensibly assess the potential of your business. What resources do you have? What resources will you be able to have? What is the breakeven point? What is the anticipated rate of return? Is your idea even feasible?
Good ideas are two a penny, making one work is where the magic is.
That is where a business plan comes to help you. First of all, let’s define what a business plan is. Imagine that you decided to build a house. What are your next steps? Probably you won’t go and buy bricks and then start just stocking them on top of each other. The first thing that needs to be done to build a safe house is a blueprint. You should draw a scheme, make calculations, take into account the necessary materials and adapt the house to the surrounding area.
A business plan is a blueprint of your business. It is a detailed description of your project, including calculations and prospects for the near future. A business plan is usually written for 3-5 years. Nevertheless, depending on the economic situation and fast changes in the modern world, a business plan may include calculations only for 1 year. The main goal of a business plan is to convince your potential partners that the project is investment attractive, and the invested money and effort will be profitable. Also, a business plan is a source of information for all stakeholders taking part in the new company.
A business plan has a strict structure, and there are many writing methodologies. It is not always a twenty-page document. A business plan can be a presentation or a printed brochure. You need to choose the one that fits your views. However, anyway, all of them focus on quite similar things. For example, according to KPMG, a business plan must have the following structure:
This part includes a short overview, offering products, services and your project missions, goals and objectives.
Here you should give a detailed description of the products and services your company provides. Also, you should analyse their potential, actuality and development variations.
Market analysis suggests a detailed analysis of your company’s concurrents. Based on market research, you should conclude what share of the market you can claim.
It is important to realise who you are going to offer your product to. This means you need to define your target consumers, geographic target markets and pricing.
The goal of the promotion is to bring the product to the market successfully. In this part, you should answer the following questions. What offer can you make to your consumer? What sales channels to use? How to stimulate sales? What advertising support to choose from?
In this part, you define the type of management organisation, key staff, corporate burn and cost of production. Also, a description of the company’s structure includes a definition of subdivisions and subordination.
Last but not least, this part shows general financial indicators. You need to describe all of the various sources of finance, income and expenditure (one-time, regular and periodic). Do not forget to take into account marketing, organisation and production plans. Here you show the cost price of sold products, break-even analysis, quantitative analysis, cash flow, company’s balance and risks.
A business plan requires a systematic approach and a detailed view. We created ReSkript to help you manage your ideas. ReSkript allows you to collaborate with your colleagues, using interactive chat or integrated video call, and discuss your ideas. Writing a business plan with ReSkript is easier than ever.
For some people, a business plan seems an outdated way to approach and a waste of time they can spend more effectively on applied work. However, we are convinced a business plan is a must. To prove it to you, we have collected 10 reasons why you should write a business plan.
Writing a business plan forces you to explore the market, the competition and systemise your knowledge. It is critical to understand your company’s competitive advantages.
In a business plan, you assume if your product will be on-demand. To validate an assumption, you will need to make in-depth customer analyses. Knowing your customer needs and behaviour is essential to a successful business.
A business idea may appear to be successful as a concept in your head. For turning a concept into a business, entrepreneurs must assess whether an idea is feasible or not. Creating and developing a new business venture is a process of mitigating product/technology risk, market risk and execution risk.
For a commercial startup, it is valuable to know how exactly your business will make money and present this information to your investors. Also, you can use the revenue model as a living document to change your strategies focusing on sources of income that work the best.
A business plan helps an entrepreneur to determine how much capital he needs to raise and what he will use to do it. This process is essential for effectively employing the capital.
Investors want to know that you are on the right track. They want confirmation that you have a plan to grow the business. A formal business plan is a basis for financing proposals.
A developing business faces many risks and a properly done business plan is one of the ways to reduce them. The right analysis helps to minimise opportunity costs. In a business plan, you assess the attractiveness of the particular opportunity versus others.
How big a company can be? Is it $1M, a $10M or a $100M company? How fast can you get there? Is it a B2B (business to business) or B2C (business to consumer)? A correct business plan is like a roadmap of your business adventure. It provides an accurate course of development, so you do not waste your efforts. It helps to focus and to move in the right direction.
The modern economy is mutable. An entrepreneur can get through a tough situation by rewriting and defining new ideas and strategies in his business plan. You can shift short-term goals without changing the long-term.
Through the process of brainstorming and reconsidering, you will likely see your business in a different light. As a result, you will find new ideas to run your business and marketing your product or service.
A business plan saves your efforts by defining the focus of your business. It is a strategy that will highlight weaknesses and make your business idea work. As you will look for ways to make your ideas clear for the investors, you will come up with new ways to think about your company. If you are engaged in commercial activity, your efforts must be profitable, and a business plan is definitely worth the effort and time spent.