From words to action. How to write a business plan for your idea

So, you have come up with an original or not necessarily original idea of how to create your own business that can bring in a good income. Pictures of success and imminent wealth stand before your eyes, everything seems possible and achievable. It remains only to reach out and take. But not everything is so simple in real life. An idea is good. But what about a detailed plan for its realization?

Any brilliant idea should be accompanied by a detailed business plan, which describes all the stages of development of your future company and takes into account not only costs, but also possible risks on the way to realization. In this article, we will tell you how to properly draw up a business plan, what it should include and what kind of design is considered acceptable and convenient for potential investors

What is a business plan and why do you need one

A business plan is a document containing: calculations of financial flows, planning, market research and analysis of possible risks. On the basis of these data, a conclusion is made about the economic feasibility of a particular project.

Imagine the work of an engineer who has the idea of creating a machine. He has an idea of how it will work, he has an understanding of what parts will be needed and how to assemble them to make the machine work. But before starting the physical work, he sits down to drawings, in which he takes into account all the smallest details and calculates the sum of the acting forces on each component of his future machine in order to test for strength and performance.

So, a business plan is the same schematic drawing of your future business machine. In order for your idea to become a reality, you must first check on paper that it will be viable. Next - what costs at each interval of time you will need until you reach the break-even point. And only then can you visualize a picture of your next steps.

Important! No more or less serious person (investor) will provide you with funds to realize your idea without a clear and understandable business plan.

There are three points to keep in mind when writing any business plan:

• The first one. The moment you are in now, or "point A". This may be the seed-up or "seed stage" when you have practically nothing but the idea itself. Or, it could be the development stage of an existing business and you are looking for venture capitalists (a special type of investor) for further expansion. In this case, you will need to detail your existing profit margins and expected ROI (return on investment).
• The second. The moment you wish to reach after a certain period of time, or "point B". Investors are generally not interested in your plans for "market capture" or "ingenious product". They are interested in "point of entry" and "point of exit". They invest for profit. And you need to understand that. So clearly describe the prospect of their income after a certain period of time. This is the reason why business plans for investors are described 3-5 years ahead.
• And the third. A list of the steps that will get you from "point A" to "point B". The plan itself.

There are two main cases in which a business plan is required for your idea. And in each case, the manner and nature of the description differs significantly.

Let's break down these cases.

Writing a business plan for investors

In this case, your main task will be to properly present the prospects of the project in order to obtain the necessary loan funds. There are some rules to follow when drafting:

• Only verified and clear information. Such turns of phrase as "I think", "quite likely" and "most likely" should not be in the final document. Conciseness and brevity should be maintained.
• Positive development dynamics. You must be able to show how and why your company will succeed, over what time period and on the basis of what data you draw such conclusions. Remember, investors will try to find ALL possible risks in your business, as they do not want to lose their money. Try to anticipate these objections in advance and work through them.
• Well-crafted presentation + confident pitch. Show that you have done some serious preparation. Find or make graphs, present them nicely, use statistics on similar businesses. Use official data on the number of people, their average income, describe your ideal customer, cite market research data. All this will give more weight to your conclusions and convince potential investors of your suitability as a manager.

It is not superfluous to involve additional specialists in the presentation. For example, a financial director or future chief accountant, marketing specialists, a brand manager, an IT specialist. Firstly, it will be immediately clear that you have a team, and secondly, you will be able to catch your breath, switching from one speaker to another and complementing each other.

One more thing. If you make a clear mistake in your calculations (and it happens), you should not argue with the investor and stand your ground at all costs, but try to adjust your calculations on the spot taking into account the new data. This will show your flexibility and ability to work in a changing environment.

And remember: at the end of the report, the investor should have a clear and understandable picture of your and his success.

Business plan for yourself

Unlike a business plan for investors here you can omit all sorts of formalities, as you yourself do not need to prove anything. ": 400;"> Nevertheless, even in this case, you need to think through every detail of your business. Expenses for rent, electricity, taxes, costs for registration, purchase of equipment, advertising, the same office supplies. The more detailed you present and describe your expenses and income, as well as their frequency and timing, the easier it will be for you to work in the future.

How to make a business plan correctly

To write a business plan on your own, you will be helped by some well-established techniques that are used all over the world. One such technique is the SWOT analysis.

SWOT is an abbreviation of the first letters of the following words:

Strenghts - the strengths of your product or service;

Weakness - weaknesses or shortcomings;

Opportunities - opportunities or positive prospects;

Threaths - threats or negative perspectives;

As we can see the first two factors indicate internal characteristics of your company and the other two indicate external characteristics. SWOT analysis is necessary for preliminary assessment and is usually done before writing the main business plan.

This is a general description of the positive and negative aspects of your product and prospects for further development without detailing their features. It can look like the following:

Structure and content of the business plan

Here we will analyze what sections should be present in the business plan.

1. Summary
2. Description of goods or services
3. Marketing research
4. Production plan
5. Financial plan
6. Conclusion and risk analysis
7. Appendices

This is a basic, but by no means complete or mandatory list. Depending on the specifics of a particular business, some sections may be excluded and others added.

Creating a resume

The executive summary is a two to three page summary of the entire business plan. It is the most informative and important part of your document. It is written only after the entire business plan is written and is a brief description of it. In the executive summary, you should disclose the essence of your project, its potential and financial attractiveness.

You should not forget about risks, there are no risk-free business plans. In the summary, you should not give details (you already have them on the following pages), but summarize your entire document in a short form.

Description of goods or services

In this section, you need to describe in detail the goods or services you are selling. To do this, you will need to do the following work:

• Describe the name of your product;
• Provide all the characteristics of these products;
• Attach a quality photo;
• Answer the question: what problems for the consumer does your product or service solve;
• Describe your ideal customer;
• Provide a comparative characterization of similar products from competitors;
• Describe your pricing model and indicate the market niche you seek to fill;
• Answer the question - why your product will be in demand;
• Describe the stages of the post-sales service you intend to provide;
• Other important characteristics of your product: packaging, sustainability, innovativeness.
• Patents and certificates, if any.

After such a detailed analysis, the investor, and you together with him, will be able to clearly understand - what you produce, for whom and in what markets this product will be in demand.

Marketing research

Marketing research includes the analysis of sales markets, methods of product promotion, analysis of consumer demand, analysis of the competitive environment, and so on. Marketing strategy is one of the most important elements of a company's success. Many factors should be taken into account here:

• The purchasing power of your customers and the size of demand in the market where you plan to operate;
• Benchmarking against your closest competitors;
• Possible marketing channels for your products with their strengths and weaknesses;
• The cost of promotion on different resources and advertising platforms;
• Distinctive packaging, storage and delivery of your products;
• Planned sales volumes and ways to increase them;
• Seasonality of trade.

A marketing plan is worth working on constantly - this is where the key to any company's success lies.

Production plan

This section is required only for companies that intend to produce any goods. For trade organizations and those selling services, this section is omitted.

In the same case, if you are planning to produce, then in this section you should provide information on your existing assets necessary for production, such as: technical equipment, premises, qualified personnel. Or the need to acquire these assets. In this section, you will need to calculate all the costs of production, both capital and operating costs, as well as depreciation and amortization costs, and from this data calculate the cost of your product. In addition, you should consider the following processes:

• Description and characterization of the technology used in production;
• Layout of production facilities (in the appendix);
• Supply chain of raw materials and justify the choice of suppliers;
• Data on safety compliance in production and technical characteristics of the product thus produced;
• Information on the equipment fleet and plans for its renewal;
• An analysis that displays the unit cost structure;
• Data on plans to modernize the production process and reduce costs.

Financial plan

In this section, you should tabulate all your expenses and revenues (also called financial flows) for each part of the company's life. If it is a three- or five-year plan, then for the first two years you should write data for each month, then quarterly.

When writing a business plan on your own, start with capital expenditures. Describe and tabulate everything you will need to start a business. Next, add there the organizational costs necessary for registration. Then move on to operating costs. Calculate the costs of future advertising, payroll of employees, add to it all tax deductions.

In the case of production, describe how much raw material and in what volume you plan to purchase each month. Depreciation and amortization expenses. Interest payments on loans, etc.

After that, add the expected sales revenues net of all taxes in a neat and approximate way. Also describe the expected income from personal funds, or borrowed funds from investors and banks. This way you will have two cash flows: incoming and outgoing.

And for each period of time you need to display the total total of financial dynamics. From these calculations you should determine the expected break-even point - when exactly this result will come to zero.

It is worth remembering that overly optimistic plans can lead to the bankruptcy of the company at the stage of formation and market entry.

Conclusion and market analysis

In this part of the plan, you can consider several scenarios of possible events. Consider external favorable and unfavorable factors and how they may affect the company's development.

Conclude with a generalized conclusion based on the available data on the feasibility of the investment and the expected timeframe for repayment.

Appendices

The annexes contain detailed technical information that should not be included in the business plan itself. This can be: plans of production facilities, product drawings, packaging design, etc.

So, we have looked at what a business plan is, how to draw it up properly on your own and formalize it properly. The path from business idea to company begins with the writing of this document. Samples of business plans for different businesses can be found on the Internet. But specifically for your idea, the document will have to create its own. Conduct your own market research, make estimates of costs and income and much more. You can always try to turn to specialists for help, but it is not cheap. Therefore, if you seriously decide to realize your idea, then do not be timid, roll up your sleeves and get to work!