How to write a business plan: what you need to know when developing
The three most important goals of a business plan are: creating an effective growth strategy, identifying your future financial needs, and attracting investors and lenders.
Business plans are important for several reasons, one of the most notable reasons being that they contain a clear outline of the actions that companies need to take in order to achieve their goals. These plans can give an organization a clear idea of how viable their company is and what it takes to grow and prosper. Business plans help set out the specific steps companies need to take to start their business and contribute to its success, such as:
- Describe what resources are needed to achieve goals
- Set a clear timeline for when the company can expect to achieve goals
- Can help a company identify the steps it needs to take to enter a new market
- Offer a clear way to track progress as the company grows
- Allow business owners to anticipate and plan for potential risks
- Allow investors to see the viability of the company
The structure of the right business plan
So, for example, a traditional business plan, taking into account the requirements of the UNIDO international standard, should contain the following sections:
- The relevance of the project.
Description of the idea of developing a new project or bringing a new product or service to the market.
- Market analysis
Or a detailed competitor analysis that clearly shows how your organization compares to competitors. Outline the strengths and weaknesses of your competitors and how you expect your company to compare to them. This section should also include any advantages your competitors have in the market and how you plan to differentiate your company. You should also talk about what makes your business different from others in the industry, as well as any potential challenges you may face entering the market, if applicable.
- Marketing plan
Factors to consider in this section include:
- Where is your target market geographically located?
- Top pain points your target customers face
- The most important needs of your target market and how your products or services can meet those needs
- Demographics of your target audience
- Where your target audience for your product spends most of their time, such as specific social media platforms and physical locations
- Organizational plan
This section of your business plan should cover the details of your business management and organization strategy, human resource requirements and the legal structure of your company.
- Production plan
Includes all relevant information about your products and services, such as how you will manufacture them, how long they will last, what needs they will satisfy, and how much they will cost to create.
- Financial plan
The financial section should consider the main assumptions of the financial plan, determine general and administrative costs, sources of project financing, analyze sales, the structure of direct costs, tax payments, the structure of the full cost, loan servicing, calculate the discount rate level, financial results of the project, investment indicators. efficiency, the cash flow statement and the dynamics of working capital are shown, the analysis of break-even and sensitivity of the project is presented. Conclusions are drawn about the feasibility of the project.
- risk Analysis
It implies an analysis of possible problems in the implementation of the project, as well as a forecast of payback periods and growth.
What mistakes and problems can arise when drawing up a business plan?
It is worth paying special attention to the realism of financial forecasts and a clear definition of the target audience, product distribution channels. An incorrect definition of these aspects or their absence may adversely affect the quality of the preparation of a business plan.
Poor market research can also be a big problem. All studies must be cross-checked and validated. Using incorrect or outdated information will discredit your business idea and the rest of the plan.
Do not forget that you can not completely hide the weaknesses of your project. Every business has its weaknesses, but by hiding them or highlighting them too much, you will scare off the investor. The only way to address these shortcomings is to include a detailed strategy for how you plan to address these issues.
Do it yourself or contact an agency
If you are going to be responsible for the decisions that will be based on the plan, you need to be involved in its development. However, for the competent preparation of a business plan, it is better to turn to specialists, especially if subsequent approval of the project from investors or a bank is required. However, do not leave the writing of the document entirely to other people, you can get input from experts in developing the basis and analysis of the business plan, but as an owner and entrepreneur, the enterprise is an extension of your desires, goals, philosophy, skills and abilities. If you are not directly involved, this will not be an effective planning document.