How to draw up a business plan? Introduction and Editorial guide

How to draw up a business plan? Introduction and Editorial guide
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How should my Business Plan be? How long should it be? Do I really need it? How often is it updated? Find out how to prepare for the editorial staff.

The business plan is a fundamental document for every business activity, from the simplest and most traditional to the most complex and innovative. A document that describes the business idea and the program for the realization of the idea itself. By simplifying, we can say that the definition of a business plan is: a description of the future of a specific business.

The business plan has multiple functions and can be of fundamental help, both for those who draft it and for those who read it, in carrying out a series of strategic and management tasks. It can be useful for entrepreneurs looking for investments to convey their vision to potential investors. It can be used by companies that are trying to attract key employees (e.g. a marketing manager of an important company, an important sales manager, a specialized workshop manager or a renowned chef), to search for new business partners, to deal with suppliers, etc. … But the most common, central and often underrated function is management: that is, to understand how best to manage the activity.

In short, the business plan conveys the company objectives, the strategies that will be put in place to achieve them, the potential obstacles that could create difficulties and the possible ways to solve them, the detailed organizational structure of the activity, and finally the necessary capital to finance the company and the time needed to break even and start making profits.

business plan

How long must the Business Plan be?

One of the first perplexities that arise when starting the first business plan usually concerns the length and composition of the document.

A complete business plan, or rather the most complex form, consists of at least the following 9 chapters or sections …

  • Executive Summary
  • The description of the company
  • The description and illustration of the products or services
  • The analysis of the sector
  • Market analysis
  • The marketing strategy
  • The management structure
  • The implementation plan or operational plan
  • Financial analysis: necessary capital and financial information

The document length may vary from a single page to a hundred in the case of very complex businesses. On average, a business plan will consist of 15 to 20 pages, but as anticipated, wide variations from the norm are possible.

Much will therefore depend on the nature of the business and its purpose. If the business plan refers to a “simple” activity (e.g. a stationery business or a thermo-hydraulic handicraft activity) and the objective is purely that of management it will be possible to summarize everything in 3-4 pages. On the other hand, if you are planning the launch of a new type of innovative activity or even a new industry or a particularly complex business and the goal is to find lenders for several million dollars, the document will certainly require a description more extensive and detailed.

Who needs a business plan?

To date the only person who does not need a business plan is a person who does not conduct business, while, any activity at any stage of life, of any extension that consumes significant resources (money, energy or time) and which should return a profit, it should invest some time to work out its plan.

business plan

Startup

The business plan is usually the typical document that occupies the mind and time of the entrepreneur looking for funds to start a new business. Many great companies have seen their birth on paper even before spending even one dollar for their start. The plan in this case is often useful to convince investors (whether these individuals, venture capitalists or banks) to invest the capital necessary to create the project described in the business plan.

Most business planning books and guides are often aimed at this type of situation. For start-ups, the drafting of the business plan is fundamental for analyzing, designing and refining the business idea at best, understanding its risks and opportunities. However, it is a mistake to think that only new businesses need a business plan. As already mentioned, the business plan is useful in all phases of the company’s life, whether the purpose is to find the starting funds or whether it is trying to understand how to invest a capital surplus.

Enterprises already started

Another typical case, in which a lot of time is spent for the production of the business plan, are the activities already started, which after some years of activity, are nearing a turning point in business growth and need to analyze and plan the steps that will lead the business to “climb” and expand. A business plan at this stage not only allows planning the management of the existing but above all a serious analysis and planning of growth.

Companies that are at an intermediate stage and are ready to take an important step may also need to find funding to accelerate the process. In the case of multiple purposes it may be useful to also have different versions of the plane depending on the purpose.

business plan

How often to update the Business Plan?

There is no practice regarding the periodic updating of the business plan, but without doubt we can identify some obvious cases that more than others suggest the moment for an update.

  • Perhaps the most recurring update is linked to the financial periods. It is essential to update the annual plan by aligning it with new objectives and new resources. If the sector in which you are operating is in rapid evolution, the plan could even be half-yearly, quarterly or monthly.
  • The need to find financing is a key moment for the preparation and updating of the business plan. Lenders and lenders require and usually require an updated plan to make financing decisions.
  • Significant market changes, for example: a new competitor, a change in customer tastes, regulatory changes, etc … can strongly influence the fate of an activity. An update of the plan in these cases allows you to update your vision on the market and the reality in which you are immersed.
  • When you are about to develop a new product, technology or service; updating the business plan is not a choice, but a duty! Wondering how the novelty influences the company, its activities, projects and supply is essential.
  • Another topical moment is concurrent with management changes. New managers or members should get the latest information on company and goals.
  • Finally, it will seem trivial, but redoing the business plan when it no longer reflects reality is one of the most underestimated conditions by companies.

What is the best business plan for me?

Business plans share many common elements and some goals. But as already mentioned, the business plans are not all the same and depending on the activity in question and the purpose of the plan may be necessary to choose one type of business plan rather than another.

The choice of the type of floor is very similar to that of a dress, every occasion requires a specific one. The plan can strongly vary in length, in appearance, in the depth of details and the point of view or the accents placed on the various details.

There are roughly three distinct types of business plans:

  • Mini-plan: Usually short and dry.
  • Worktops: Typically more voluminous and detailed.
  • Presentation plans: The business plan typically used to be exposed to potential lenders, partners, collaborators, stakeholders, etc …

business plan

The Mini-Plan

The mini business plan is usually very synthetic, can reach a maximum of ten pages and includes at least basic: the idea and description of the business, the financing needs, the marketing plan and the operational plan (implementation). The decision to provide in-depth information on the management of incoming and outgoing cash flows and therefore on company liquidity and the projection of financial statements can be very useful.

Without a doubt, the mini-plan is perfect for quickly analyzing a business idea or measuring the interest of a potential partner or minor investor. It can also be useful as an introduction or prelude to a complete business plan that at a preliminary stage can be overly burdensome both in production and in reading.

The Work Plan

The so-called “working plan” is the typical tool for running a business. Usually this type of business plan is particularly voluminous and can, in the most complex cases, reach the tens of pages.

The working plan is mainly for internal use, must go deep without neglecting details, but the exhibition must know how to be dry and direct. It can therefore be functional to expose each topic in a synthetic way, even if complete, referring to each section to attachments and chapters of in-depth analysis, creating a complete, in-depth but easily consultation document.

The work plan usually does not require particular aesthetic or display frills, indeed. It is a management document created for the company itself, it is like the bricklayer’s trowel or the van for the carrier, it was not created to show off on its own, but to be used!

Presentation Plan

If you take the work plan, clear it from the technicalities and the informal approach, and complete it by giving it a more business cut in the language used and in the exhibition we will have a perfect business plan for the presentation of your company to bankers, investors or similar.

In preparing this type of plan it is therefore necessary to keep in mind that the recipients will not be familiar with the operations or specific products, but they will certainly be very familiar with the management, economic and financial aspects. To convince the interlocutor, it is therefore necessary to speak his language in order to break down every possible communication barrier.

Clearly the work plan is very tied to the most practical activities of the company and the plan for a presentation therefore requires additions. It will therefore be necessary, for example, to include a complete, honest and rigorous analysis of competitive threats and risks, followed by potential solutions.

It is important to remember that this business plan is specifically designed to convince and capture attention. Therefore, it is fundamental not only has the obsessive cared of the contents, but also of the form and presentation.

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