How to draw out a business plan
What is a business plan?
A business plan is the basic presentation of an idea and modalities of implementing it
The accomplishment of a realist business plan necessitates a careful study of the market, a correct estimate of all expenses and resources necessary for obtaining the desired result and last but not the least, as good as possible a knowledge of the competition and its strategies.
Why do you need a business plan?
A business plan is useful not only to the external financers, but also to the company owners, because many entrepreneurs must draw up a business plan only when it is requested by a potential investor, in fact, its drawing up must be one of the first steps in starting each business.
On drawing up the business plan, the entrepreneurs are “forced” to take into account aspects which would slip in a superficial approach, but this plan helps you getting a realistic idea over the business without ignoring the existent risks and problems.
How is drawn up and what must contain a business plan?
The business plan does not have necessarily a physical structure; it may vary depending on the informational requirements which it must answer – for example, depending on:
- the final addressee: the business owners or the potential investors;
- the duration of the company: the business plan for a new company shall be different from that for a project of an existent company;
- the specific feature of the company activity;
- the ampleness of the business plan.
The accomplishment of a classic business plan may last up to 6 months and may have as a result a very extended document (20-100 pages), but it must be taken into account the fact that one of the most important stages for the accomplishment of a business plan, is that of market research, the examination of the competition, of products and its strategies in the identification of potential customers and the products demand on the market.
There are basic elements, which are found in the most business plans:
- the resume of the business plan;
- the content of the plan;
- the presentation of the company product;
- the target-market and the competition;
- the process of production and the suppliers;
- the marketing strategy;
- the forecasted sales;
- the financial forecasts;
- the outfit of financing.
Many problems concern a foreign entrepreneur, when entering a new market, especially a new, atypical and still unforeseeable market like the Romanian market:
- WHO is the user of my products /services?
- WHO is the customer for my products / services?
- WHAT is the proper location for my business?
- WHAT price is the Romanian market willing to pay?
- HOW are my products reaching to the customer?
- WHICH are the perspectives of the Romania market on short and long term?
- HOW can I extend the range of products / services?
- WHO are my competitors on this new market and which are their weaknesses and strengths? How can I exploit them?
- WHY a customer shall buy a product from me?
- WHAT is my marketing concept on the Romanian market?
- How much capital do I need?
- WHICH is the most adequate legal form for my company
Beside these questions, you should find the answer to a series of issues which involves you personally, but which are related directly to the future of the business envisaged by you:
- What practical experience do you bring in business?
- What king of theoretical knowledge do you possess?
- What kind of references can you present?
- Is your family willing to support you?
- Do you have financial means in order to support the family in the difficult period you face at the beginning of a business?
- Do you have financial means in order to support the business?
- Do you own contribution in kind in order to support the business?
- Do your and your partner’s knowledge and experience cover the key fields of the business?
- Where will be located the head office of the organization?
- How many employees do you need?
- What qualifications must have the employees?
- What level of wage must be provided for?
- Can you find on the labor market the necessary specialization?
- Have you outlined an organizational structure?
The problems may address to many aspects which make the “charm” of quotidian life of the entrepreneur and in order to render such problems inexistent or, at any rate in order to keep them under control, it is necessary that the future entrepreneur finds in advance, still before entering a new market, the answers for the above-mentioned questions, adapted to the realities of this market.
The most frequent mistakes, done when entering on a market, less known or unknown market, are the following:
1. The aptitudes and the professional qualification of the staff are insufficient
2. No clear strategy is adapted to the new market
3. The insufficient knowledge of the local competitors
4. The excessive dependency on certain suppliers
5. The excessive dependency on the parent company
6. Insufficient capacity for recruitment and selection of the personnel on the new market
7. The ignorance of the legal regulations of the new market
8. Insufficient financial resources
9. Wrong assessment of the operational expenses
10. Overestimation of the capacity to achieve a profit
11. The imprudent policy within the investments fields
12. The erroneous planning of the liquidities
13. Incorrect calculation of the costs
14. Inadequate and incomplete accounting
15. The ignorance of the fiscal obligations
16. Inadequate choice of business partners
17. Inadequate choice of the location
Draft of the business plan - Private kindergarten
The content of the business plan:
- summary
- Company’s presentation
- marketing plan
- production activity
- Company’s management
- financial plan
- addenda
Summary:
- purpose of the business plan
- gaining investors
- operational plan for business control plan operational
- markets’ analysis
- the size of the target market
- characteristics of the target market
- Company
- Company’s status and management
- the needs that the Company will meet
- products or services offered by the Company for meeting these needs
- marketing ands sales activity
- marketing strategy
- sales strategies
- the success in the market competition
- research and development of products and services
- main issues to be solved
- winding off projects in research – development area
- organization and personnel
- successful managers and Company’s managers
- action key directions for the Company’s personnel
- financial data
- requirement of funds and its employment
- the summary of the history of processing the financial resources
- the summary of the financial perspective (including a short explanation of the levels of future sales’ estimation)
Company’s presentation
- identification data of the Company (name, address, telephone)
- the manner the Company will be established
- association form and the reasons determining this form of association
- structure of property
- the mission of the Companies and future perspectives (technologies to be used, markets to be approached, development and diversification projects)
Marketing plan (market study)
- products and services – detailed description of the offered products and / or services, the met needs, comparison with the existent products
- market – size, level of development of the market, characteristics of the sighted clients, mechanisms which are the foundation of the buying decision of the potential clients, the chances of the Company for the respective market, the news the Company brings in comparison with the competition, future development of the market quota
- competition – presentation of the competitor Companies and products, their marketing prices and strategies. The most significant competitors must be described depending on the turnover, market quota, their capacity of production. The strong and weak points of the marketing strategy and of the technology employed by the competitors must be pointed out
- sale of products – ways of identifying the sighted clients, strategies of promoting the products and services. The description of the distribution channels of the products and the ways by which their level of satisfaction is noticed
- access to resources – materials, human, financial, informational resources, time
Production activity
- the suppliers to be contacted
- spaces and endowments
- the way of spaces and endowments (buying or leasing)
- relationships with the subcontractors
- necessary personnel (number and qualification)
- employed technology
- storage methods and spaces
- the manner of ensuring the quality of the products
Company’s management
- in CV’s addenda
- organizational structure of the Company
- description of the important working places – summary presentation of the responsibilities and skills associated to each job
Financial plan
- precise definition of the necessary amount, of the sighted financial resources and of the way the funds will be employed
- presentation of the financial estimations (with the role of proving the viability and the profitableness of the Company) – the following must be predicted for the following 3 years: balance, income and expenses situation, cash flow
- analytic calculus and graphic presentation of the profitableness limit
Addenda
- plans, sketches, photos of the products, flow charts, financial data, legal documents, appreciation letters from clients or suppliers, certain CV’s.