The business plan is the central issue, see the bane of many entrepreneurs. Both criticized and necessary, many project leaders who are struggling to know how to complete a business plan that will help them realize their dream. If you are newbie, Please consider to read: The most common 18 Mistake that can kill you at startup.
Yet it must be recognized that it is often tedious and time consuming to perform, the business plan and the necessary steps for its implementation have many virtues. For if the document, when done well, is to be an excellent communication tool with potential partners; the necessary steps to achieve is often the occasion for the project owner to measure the quality and relevance of the project and improve the business model.
The blog of the leader you say more about the reasons why the business plan an essential element for any entrepreneur.
What is a business plan?
1 – A business plan serves to formalize his project
Its primary use is well known. By “formalize” intend, “know where you walk” and it’s always handy when one wants to invest his own money. The business plan serves to validate (or not) his intuitions. by preparing and quantifying the costs and expected activity of the future company we see better able to grasp the reality of the project. Without the business plan drafting process, start a business back from the adventure without a map and without a compass!
2 – A business plan is used to create an economic model
In second place, the business plan to create a business model, namely “how to bring money into the company and make it self-supporting.” Subscriptions, a sale to the room, menus, packages … There moult ways to sell, the whole is to find the most profitable! The business plan helps to establish the economic engine of the company also known as the business model. The forecast allows it includes asking selling price assumptions, margin, investments, …
It also calculates a set of indicators to better understand the company’s business model: the cost price, the expected neutral working capital, ..
Finally, if the business plan allows you to get an idea of the economic operation of the future business it is also used to determine the financial amount to be invested to start the adventure. This is a crucial point because the majority of start-ups that do not pass the milestone of three years should not their failure to a bad idea or a bad project but to an underestimation of the financial needs for the project launch and / or inaccurate business model.
3 – A business plan serves to communicate
Because our ancient institutions like the traditional, nobody escapes the business plan. It remains the main tool for dialogue with funders. While no one in the entire bed, even if it seems tedious, exercise is still required (much like a graduation memory). Hence the importance of certain aspects of the business plan as executive summary that can arouse investor interest.
The business plan is criticized
The business plan is decried. For its heaviness, its long-term forecasts, while the current market moves every minute. Popular startuppers Silicon Valley even begin to boycott! The business plan would be too formal and leave little room for intuition of the entrepreneur. An entrepreneur is, the business plan would push to stagnation.
However, the tool has its place in the world of entrepreneurship. You just know how to use!
How to use the performance of the business plan wisely
At first, the business plan may seem academic, actually. To you to make it more useful! How? Pull the nose of your books and prefer the ground!
The plan is formal, you have to start with market research. Market research can be quite theoretical and based on a series of data and statistics which prove to be correct … or false! By cons, meeting your future customers, by asking the right questions, spying your competitors, you will have a much more accurate view of reality. You will have achieved a “good” market research.
Ditto for your financial projections. You can delegate the entire projected to specialists. Exercise is also recommended (only they know how to be in tune with the expectations of funders and translate your business model in financial language). But you can also interest you are; understand your tables and ratios.
For funders, the forecast states. Objectives that we have no idea if they will be realized or not. But for you, the forecast goes beyond. It shows what volume or what revenues you MUST charge to cover your costs, then to release earnings and to generate sufficient profitability to reinvest … Indispensable data, do not you think?
For the perfect business plan, do not see that the “school” aspect. You must first understand what it is. It simply serves to anticipate your project and your whole life.
Today, that says business plan, said pitch presentation (an oral summary of the whole thing) and executive summary (a written summary, this time).
Still tedious and theoretical work, you might say. Not at all ! If you can summarize the key elements of your business plan, if you know present the strengths of your project, not only you will convert your cause funders, but also sponsors, partners and surely your future customers!
You do not have to “stagnate” in the tedious writing your business plan. Making a good business plan is to go on the field and change day by day, according to your meetings. A good business plan, it is not “I write first, I then tested.” No, a good business plan is actually a real logbook.