Imagine a rocket ship without radars or a transatlantic ship without a compass. Exactly like this you can imagine a business idea without a good business plan.
Many entrepreneurs eager to make money make the mistake of embarking on the adventure of starting a business without giving enough importance to have a “business map.”
What is a Business Plan?
A business plan is like a map that leads you to success. If you were in an unknown city and you want to reach a certain point. You have only 2 forms. Ask each person you find or use google and look for digital guide.
Definitely the second option will be the most convenient to arrive by yourself and safely to your destination.
If you do not have a digital map you simply go anywhere. A business plan is something similar, it is the guide that allows you to navigate towards your destination and arrive by the best path.
Hence, a business plan is more than a simple document that indicates the kind of business or economic activity you want to do.
How elaborate should my business plan be?
Basically there are 2 kinds of business plans. The best known is the document that is prepared to be presented to the bank, investors or venture capital companies.
Its purpose is precisely that, to obtain capital to build a large corporation with the intention of competing in the stock market. This document is usually very broad, detailed and formal but it is not what we need for a small or medium business.
On the contrary, if you are an entrepreneur, with a great dream of being independent and being your own boss what you are really looking for is putting that great idea to work and transforming your small capital into a company that allows you to support your family and achieve financial freedom one day.
So you need a basic business plan, what we will call a: “hands-on”.
How to start my business plan?
Relax and start putting your ideas in order
First of all, you must relax. Remember that your main objective is to put your skills and talents to work and turn them into a business that generates capital that will help you to get ahead.
So avoid all kinds of pressure and remember that in this business the only investor is yourself and you are probably the only employee, for some time. So your business plan will be one more tool to guide you in that goal.
Describe your plans in black and white
Take paper and pencil and do not worry that your business plan should not have more than a few sheets. The main focus will be on 2 aspects: operations plan and marketing plan.
The operations plan should answer this question: What am I going to do and how am I going to do it? The marketing plan should respond to this: Who am I going to sell and how am I going to do it?
Answer the 2 main questions described and use a maximum of 2 sheets for each one. This will help to clarify your ideas and determine the fundamental aspects on which you want to guide your business strategy.
Elements of a Good Business Plan
- Objectives of the Plan: Here you must specify the main motivators for the assembly of the business as well as the most important general objectives. It is important to describe the medium and long-term goals.
- Market analysis: Ask yourself who is in need of the products or services you want to offer and how much they will be willing to pay or hire you. Describe on a sheet, who your potential customers are and how you plan to reach them. At this point a study should be conducted to determine the business environment, the potential demand, competitive analysis, pricing policies, target market for the products and services of the business.
- Structuring the company: Here you should clearly describe the way the company will be run. Specific functions, levels of authority and administrative as well as technical responsibility must be assigned. A SWOT is an ideal tool for this section.
- Financial Analysis: You must write clearly how much money you expect to earn and in how much time. Detail on a sheet of paper the estimates you have of income, an initial investment budget and a budget of monthly fixed expenses as well as any important detail that you consider related to the investment theme. This part will surely help you determine if you are ready to start your business. Projections of sales and expenses should also be considered in this section of the plan.
- Competition: Write on a sheet of paper who your competitors are. Clear! There is always competition and of course you will be penetrating your market space. Admit it, accept it and contemplate it in your business plan. Always ask yourself what you can do better than them.
- Note: Finally, on a page, write the name of your company, your name and your business vision. What is your dream? Describe where you would like to be with your company in 5 years, and make sure you dream big. This is the cover of your business plan. Only for yourself
- Executive Summary: This is the formal report that must contain all the previous points described in such a way that it can be used to present the project and process requests for financing. Preferably, this summary should not be more than one page.
Important! Flexibility in Your Plan
A business plan must be flexible, adaptable and regularly reviewed. Remember that it is a guide that will help you to keep your priorities clear and not lose yourself in the daily hustle and bustle.
Therefore, your plan must be flexible and adaptable to the challenges and adversities of each stage in your company.
The mere fact of describing in detail the execution of the business will reveal many aspects that are not always appreciated at first sight and that should be contemplated in order for things to go well.
Clearly describe the functions and attributions of each collaborator is also essential to avoid misunderstandings that affect relationships and performance within the organization over time.
Finally remember to elaborate it with a lot of enthusiasm, positivism and visualizing your company successfully and soon you will be navigating in the right direction.