If you’re planning to start a business or expand an existing one, a business plan will be the perfect guide for that journey. Know the details of the document that will help you shape your project.
It is not enough to have a brilliant idea or the will to launch a great business, it is necessary to validate if it is really a viable project. Fortunately, there are tools that are a guide to build the path to follow when starting or expanding a business.
This is where a business plan becomes a great ally for any entrepreneur.
What is a business plan?
A business plan is a document in the form of a report that collects and presents information about the business model you want to implement. Basically, it covers the assessment of the business project and its projection over time.
The recommended length for this document is 30 to 40 pages. However, you can find effective plans condensed to 25 pages and others of up to 100 pages corresponding to complex business structures.
Its purpose is to show the details of the development of the business, to put together a global vision that helps to determine if its implementation is worth the effort. Specifically, a business plan serves as a guide for the entrepreneur himself to identify the strengths and weaknesses of the business, as well as to detail the tasks necessary to carry it out.
Additionally, it works as the letter of presentation of your project before external entities such as financing institutions, investors, collaborators or partners.
Key elements of a business plan
Although there is no rigid structure you have to follow, an effective business plan must contain the following elements:
1. Executive Summary
As a presentation of the entire project, the executive summary gives a brief look at the general idea of the business. It is convenient to include in this section the products or services to offer and what is their competitive advantage.
Likewise, it is appropriate to highlight the market niche, human capital and the means to execute the project. In addition to all that, some data regarding the investment should be mentioned, such as the recovery time and the expected return. In this summary of maximum 3 sheets, the most relevant and pertinent must be presented.
2. Business description
Now is the time to broadly develop the soul of the company. From its organizational culture and the objectives that are intended to be achieved, to exposing relevant data of the owners. Likewise, it is ideal to express what the value proposition is and show the commercial structure.
3. Market study
No less relevant is doing a study of the environment and the competition. Considering the characteristics and behavior of the sector where you want to develop your project and the companies that already operate in it, is essential to know the viability of your idea.
4. Marketing plan
The marketing strategies to be used must be clear from the beginning, both digitally and offline. Defining the profile of your buyer persona, setting prices according to the needs of potential customers and choosing the communication channels to publicize the brand, are some of the aspects to consider at this point.
5. Human Resources
The specifications of human talent must also be reflected in the business plan. This is where it is appropriate to publish the organization chart, types of contract, positions, functions, hours and salaries corresponding to the members of the work team.
6. Financial plan
The financial structure is the part that provides more information to define whether an idea is viable or not. The reports and indicators that should not be missing in this item are: initial investment, income statement, balance sheet, cash flow, scenario analysis, internal rate of return, net value and breakeven point. Likewise, it is advisable to make projections for three years.
7. Legal plan
It is also important to incorporate the information related to the legal terms. The procedures required for the incorporation of the company, as well as details of the tax and fiscal obligations in which it will incur, are elements that should not be missing.
Apart from all the above, you can add a contingency report that includes possible risks. But even better is to develop an emergency plan to act in the event of unfavorable situations that affect the company.
Something optional is to add annexes such as the founder’s curriculum and other documents that support the information presented in the business plan.
In short, developing a business plan will help you figure out if your business idea is feasible. It is the best way to launch a project with the support of a strategic document that will give you the peace of mind of knowing the comprehensive overview of the internal and external details of your new business.
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