All the Ws of a Business Plan
A business plan is a written description of the future of your business and, more importantly, how you are going to get there. It is a document that explains what you are going to do to make your company profitable and how you are going to achieve it. It defines both your business model and your strategies to make this business model work and, more importantly, be profitable.
Normally when a business idea arises, you know what resources and capabilities you have at the beginning of your business and where you want to go in a certain period, usually in 3 or 5 years. But what is the way to achieve that goal? Where to start? How to arouse the interest of investors? How do you even get your business off the ground? Everything seems so easy when you have the great idea and concept of making money. This is how you will achieve these dreams and make enough money to keep the business running for many years.
Writing a business plan is building a map that will guide you to where you start making money with your initial business idea. In its very basic structure, your business plan is a mixture of strategies and plans. It deals with finances, marketing, personnel and products. Think of it as the foundation of your new business.
WHAT are the reasons you might need one?
• Find investors.
• To apply for a loan.
• To establish the viability of your business idea.
• To make improvements to your current business.
• To expand your current business.
All of these types have a different emphasis and a different structure.
What is a business plan?
It is a tool or document that describes a business opportunity or idea, the work team, the operational and marketing execution strategies, the business risks and the economic viability of your business. A well-written document guides you in turning an idea into a viable business.
It can also be defined in another context in which the business plan becomes a fundamental tool in the analysis of a new business opportunity, a diversification plan, an internationalization project, the acquisition of an external company or business unit. , or even the launch of a new product or service within the current business.
In short, both for the development or launch of a startup and for the analysis of new business investments, the business plan becomes an essential tool. So even if you have an established business, you will still need a business plan as you expand and improve that business.
A business plan is never finished and should be reviewed from time to time at least once a year, but certainly when big changes are anticipated in an existing business. This implies that any plan must adapt effectively and efficiently to changes, helping the project continue.
WHAT is the point of a business plan?
Many entrepreneurs think that they only need a business plan when looking for investment or when the bank asks for it. However, the act of business planning, when done correctly, allows the entrepreneur to conduct extensive market research that will provide the necessary information to design the best possible business model that is both profitable and efficient.
Additionally, the business plan will develop strategic measures for all functional areas that allow them to achieve the objectives of the new business.
Once drafted, the business plan will serve as an internal tool to assess the company’s management and its deviations from the planned scenario. Propose, where appropriate, adaptations to the agreed business model in order to obtain updated information for the daily management of the company. This will include preparing for the changes and processes necessary to get the business back on track.
So, let’s dive a little deeper into the concepts behind business planning.
The WHY of the Business Plan
• Why do you want your business plan?
• Why are you writing the plan now?
The WHAT of the Business Plan
• What is the purpose of developing a specific plan?
• In what term do you consider it possible to carry out your projects?
• What is your business model?
• What is your value proposition?
• What are your products or services to offer?
• What positioning do you intend to develop to compete?
• What are your measures of success?
• What markets do you plan to penetrate?
• What percentage of the market do you estimate to obtain?
• What margins do you consider possible?
• What income do you think you will receive?
• What are the expansion costs?
• What are the costs of obtaining new clients?
• What do you want to do with your business?
• What strategies do you want to undertake: financial, marketing and planning?
The WHERE of Business Activity
• Where will your products be sold from? store, office, website, social media, road, party planning,
• In what you base? Locally, centrally, virtually, etc.
• Where are your products made?
• Where are your distribution channels?
• Where will they be sold?
• Where is your market?
• Where will your staff need to be based?
The WHEN of your business planning activities
• When will you need to start your new activities?
• When will they finish?
• When will your investor need to invest?
• When will your investor get his money back?
• When will you have enough staff to carry out your new changes?
• When will your products and services be available?
• When will it be necessary to update and/or improve your products?
• What is the best time to attract new customers?
TO WHOM do you present your plan?
• Bank for lending purposes and will normally take over a property.
• Investor to join your company as a shareholder.
• Angle Investor to join as a shareholder but also participate in the running of your company.
• Management team so they know what is expected of them.
• Providers that will be offering credit.
• Director-level hires to encourage them to join your company.
• Believe it or not, the entrepreneur should also check back regularly.
As you can see, there are many W’s involved with a business plan: the biggest W is why you should write a business plan and the answer is: because it’s a great business tool.