How To Make A Perfect Business Plan

What Is A Business Plan?

A business plan is a document that describes the future of an enterprise, analyzes all the problems that it may encounter and determines how to solve these problems.

A correctly drawn up business plan ultimately answers the question: is it worth investing in a business at all and will it generate income?

In the process of creating a Business Plan, all procedures and strategies are developed that are necessary to transform the aforementioned opportunities in a particular business project.

How To Make A Perfect Business Plan

The first thing a novice entrepreneur should decide on is the area of ​​activity and a specific product. First, a current market analysis is carried out and a list of niches with low competition is compiled. By choosing just such a market segment, an entrepreneur is more likely to be able to quickly take a strong position in this area. Once the desired niche is determined, you should, using open sources, collect all available information about the features of this market segment.

If your chosen field is popular, then it will be easy to find a sample of a ready-made business plan. For example, in the case of a clothing shop or beauty salon, everything is already in the public domain. Moreover, you will also find a number of services for forming a perfect business plan. If your undertaking is highly specialized, then you may need help. If there is insufficient data for analysis, you can always pay for a consultation with specialists in a particular field.

What Is Needed For A Perfect Business Plan?

You should carefully study the market situation, before starting work. For this, a SWOT analysis is used, which consists of structuring all the information about the company.

SWOT analysis is an element that should bring reality to your business plan. Based on the SWOT analysis, we must see how much we really analyzed and planned, see our strengths and weaknesses, as well as opportunities and threats. The abbreviation SWOT comes from the first letters of the following words:

• Strengths – the most powerful qualities (high quality of goods and services, low cost, qualified specialists, etc.);
• Weakness – its weaknesses (low fame, lack of premises for trade, etc.);
• Opportunities – chances, opportunities;
• Threats – possible threats to development.

A common mistake in the framework of SWOT analysis is working with the pros and cons of a specific product, and not the enterprise as a whole. It is necessary to analyze the business as a whole and not just one product.

Above, we have already given the standard structure of a perfect business plan. The volume and content of each of the 12 points directly depend on the features of the project.

1. Cover Page

Here are indicated:

• Name of the company and project to be implemented. In the same paragraph, all contact details for communication (telephone, address of the legal entity, etc.) are indicated.
• Name of the head of the organization.
• The person or list of people who made up the business plan.
• Date of a compilation of the document.
• In some cases, the inclusion of key project indicators on the cover page is allowed.

2. Non-Disclosure Memorandum

This document, which is part of a business plan, will not allow anyone to steal your idea or innovation. The memorandum contains a requirement to prohibit the sharing of information obtained when reviewing your package of documents. This section guarantees confidentiality.

If there is a memorandum, any actions that violate copyrights will be prosecuted according to law, including the exact repetition of a business model or copying documents.

3. Brief Summary

This section, despite its location at the beginning of the document, should be completed last. In essence, this is an excerpt from the main provisions of the entire business plan: a description of the concept, the meaning of the undertaking, as well as a brief overview of financial indicators.

Here is how to properly format this section:

• First, you need to describe your product or service.
• Describe the target audience.
• Provide calculations of the number of goods sold/produced, as well as the amount of income that the company will enter within a year from the date of opening.
• Indicate the number of requested funds and planned costs.
• Do not forget about the legal and organizational nuances.
• Fill in the hiring details.
• Indicate the list of sources of subsidies for the project (if applicable).
• Enter the deadline for breaking even and returning the project.

Important! The first thing investors pay attention to is a brief summary of the business plan. The decision on the allocation of money depends on how well this section is compiled. Do not forget to also indicate in this paragraph the total annual income, the total amount of funds at the end of the year, information on the profitability of the enterprise and net present value.

4. Section With A Description Of The Project

This part should show those facts that speak about the reality of translating ideas into reality. Here’s what to indicate:

• The essence of the undertaking (as simple as possible, avoiding the possibility of double interpretation).
• What is important to do in order to achieve your goals.
• What hurdles do you see on the road to implementing the idea, how can they be eliminated.
• What specific steps do you plan to take so that the company achieves its goals in the shortest possible time? In this paragraph, it is better to indicate specific numbers: 2 months, 6 months, year, 7 years, etc.

Important! Indicate only facts; state information briefly. Ideal if this section fits on 2 pages.

The method of SWOT analysis helps to most clearly demonstrate the degree of project viability. This allows you to visualize the advantages, disadvantages and possible difficulties of the undertaking. As a result of this, a holistic assessment of the project can be given. The essence of the method is encrypted in the very abbreviation SWOT: strengths, weaknesses, opportunities, and problems. Project information in the analysis is divided into these four categories.

The pros of the selected market niche are indicated as strengths. Weaknesses should be described in more detail, as they will have to be addressed during the implementation of the project. This includes all the theoretical flaws of the plan, for example, problems with profitability and lack of premises for opening or expanding a business.

Items included in the strengths and weaknesses most often fall under the category of internal factors that can be influenced by the founder of the enterprise. Opportunities and challenges, in contrast, are external factors. They can either be used or adjusted.

A common mistake in the framework of SWOT analysis is working with the pros and cons of a specific product, and not the enterprise as a whole. It is necessary to analyze the business as a whole and not just one product.

5. Market Niche Analysis

It is important to draw up a business plan for both small businesses and large enterprises, taking into account the marketing situation in a particular sales market. Here’s what you can specify:

• Sales figures for a similar product over a significant period (3-6 months, 7 years).
• The growth rate of the market segment that is planned to take.
• Features of pricing policy.
• Analysis of competitors.
• Information about small companies and startups, including their pros and cons.
• Analysis of the characteristics of your target audience, including financial viability: what usually gets? What would you like to buy?
• The force of the influence of external factors in the market segment (politics, economics, etc.).
• Prospects for a selected market niche.

6. Details Of The Project

This section reveals the essence of your project in more detail. Here it is necessary to tell in detail how the project is ready for launch. Indicate the availability of necessary resources, including personnel.

Mandatory items for this section:

• The main goals.
• A detailed portrait of the target audience.
• Specific measurable criteria for the success of an idea in the market.
• A detailed description of the product, the quality of which should be higher than the average of analogous.
• Stages of introducing a new product (in the case of an existing enterprise). Information about copyrights, patents, certificates of conformity.
• Company Information.
• A detailed distribution scheme for each tranche from potential investors.
• Primary costs for creating organizational and marketing units in the company.

7. Marketing Strategy

Describe the basic criteria for an effective marketing strategy for your product. Give detailed information about the tools that marketers will use. It is also worth giving a work plan for all employees of the marketing department to implement the chosen strategy. Give the amount allocated from the budget to the promotion of the product.

The use of advertising tactics to attract customers in the form of traffic to your online e-commerce store and retain them after purchase is called as E-commerce marketing.

In general, the marketing strategy of e-commerce includes actions on your site and beyond. Well-thought-out solutions will help you increase brand awareness and customer loyalty, which will ultimately increase online sales.  Planning for an online store or e-commerce store is the same as an offline market place.

The following items must be included in this section:

• Analysis of the market situation.
• The range of goods and their quantity, including the release schedule and the moment of 100% capacity utilization.
• Improving product characteristics as the company develops.
• Pricing data and product packaging description.
• Sales and purchasing data.
• Roads to promote the product to the targeted audience.
• Quantitative indicators.
• Service Data.
• Estimated measures to control the implementation of the marketing plan.

Important! There is no single model on how to draw up a business plan. Every standard item you can change, completely or supplement excludes. It all depends on the strategy and goals of your company.

8. Plan For The Use Of Production Facilities

If you are going to start selling finished products, then this item can be skipped. Otherwise, enter here all data on future production. Consider seasonality.

When a new product is created, it is important to give complete information about the necessary capacities, describe the specifics of the manufacturing process of the goods, give a list of operations outsourced. Include here a list of equipment with cost, including when buying on a lease.

In addition, this item includes:

• data on the amount of m ² for the organization of production;
• list of materials;
• costs at the stages of the production cycle.

Important! Any factor that directly or indirectly affects the value of the goods produced must be taken into account.

9. Stages Of Organizational Activity

Provide a plan for hiring, managing a team, and assigning responsibilities in this section. Work on understanding the organizational structure will be useful not only for the newly created enterprise but also for the existing one. This helps to assess whether the structure is fit for purpose.

Here’s what to indicate:

• Company address (legal and actual).
• Form of incorporation
• Control matrix. Consider reflecting relationships between employees and departments, and responsibilities of each team member.
• Data of founders and co-founders.
• Management (general manager, commercial, sales, etc.).
• Instructions for interacting with employees.
• Information on the supply of administrative link.

10. Financial Plan

This section should take into account all the financial aspects of the project. This includes profitability indicators, payback periods, etc. It is also worth mentioning the effect of exchange rates if imported components are used.

The following items must be in the section:

• Data on tax payments (what and how much to pay).
• Capital structure (taken loans, investments, stocks, etc.).
• The plan report on income and expenses.
• Cash flow (or cash flow, designed using tables).
• The balance of the project.
• Payback period.

It is also important to indicate a breakeven point and make calculations of the net present value.

To show the effectiveness of investments in a specific project, it will be useful to give calculations of a number of other indicators: the index of return on investment (PI) and the indicator of internal rate of return at several discount rates (IRR). The formula for calculating PI is as follows: PI = (NPV + I) / I, where NPV is for the last year, and I is the volume of primary investments.

11. Risk Analysis

You are aware of the potential risks to your business. Pay special attention to factors affecting profits. Consider industry, financial, social and other risks. Provide a list of measures to prevent or reduce the impact of these factors on the project.

Put in this section the most complete list of possible risks, as well as those methods that you will use to stop problems and preventive work. You can simulate a situation with zero growth of the company and describe the steps to get out of this situation.

12. Additions

This is an optional part of the business plan, but it will be useful to work on it to attract an investor. Here it is allowed to give references to external sources used, to place full versions of calculation tables. In the same section, it is logical to place certificates and research results, as well as other documents related to the products.

Mistakes In The Preparation Of A Business Plan

It is easy to make a mistake in creating a business plan, as in any other mental work, without proper experience. Even working through all the necessary parts with sufficient care, following the advice of experts and taking as a basis ready-made options, it is easy to take the wrong path. So what are the typical mistakes in this matter?

There are three main types of errors that you need to pay close attention to:

1. Technical oversights, which include badly processed information, collection of false facts, incorrect presentation of even reliable data, blots and errors in calculations, not written conclusions and conclusions, lack of indications of information sources;
2. Conceptual errors appear due to lack of education in business, lack of understanding of sales technology, implementation of selected technology, and so on;
3. Methodological, which even with a perfect business plan can give you an unpleasant surprise, which is especially annoying.