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How to write a proper business plan

Posted 02-03-2022, 09:47 AM
Business plan

After concluding what business you're entering, a business plan would be a very smart move in order to get a head start and an overview of what's needed in order to get started. A business plan should be able to concretize your plans in a simple yet effective manner. The plan should give you and others a realistic picture of the business and will be a very important management tool/document. I would highly recommend reviewing/updating your business plan when needed.

The business plan is a fairly misunderstood document in the sense of its complexity. It's not a simple document that tells your investors why they should invest in you, nor a document that talks about the business in "niche" details. It's simply a document that describes the business aspect of your company and a tool that should be used for planning, in partnerships and for quality controls.


Why make a business plan?

As previously stated, a business plan is a management tool that should describe what you're going to do, how you're going to do it and it's also important to include WHY you should or is going to do it. In partnerships, the plan could be a useful tool helping your partners, banks and governments understand your idea or business. It's very important your partners, especially if they are investing capital, knows what your business is and what they are signing up for.

This plan should be made soon after fitting the most important decisions of your business idea. The plan makes a great overview and it's easy to see the connection between the product or service you're offering, the market and what resources are needed to start up or maintain the business. Most importantly, this will be a tool in managing your business in a formal and appropriate manner.

Remember: thorough work on the business plan will increase the likelihood of a successful startup as you're getting a better overview of the real risk you are taking.


What is the minimum a business plan should include? (table of contents):

The following is a great example of what a business plan should touch on. Please keep in mind the complexity of your business will be a factor in modifying the table either to a more simple or more detailed version, this is just an example of what should be enough in most cases. (explanation for each conten, keep reading).

1 Summary
2 Introduction
2.1 Background
2.2 Initiators and key personnel
2.3 Company
3 Business idea, vision and objectives
3.1 Vision
3.2 Business idea

Market assessment

4.1 Industry
4.2 Customers
4.3 Competitors
4.4 Total market and estimated market share
5 Product/service description
5.1 Description of product/service
5.2 Patenting and rights protection
6 SWOT
7 Business model
8 Objectives

Marketing and sales

9.1 Segmentation - market focus
9.2 Pricing strategy / pricing model
9.3 Distribution
9.4 Sales and Marketing Activities
10 Organization and competence needs
11 Economics
11.1 Budgets
11.2 Capital requirements and financing
11.3 Profitability assessment
12 Risk analysis
13 Progress plan




1 Summary

The summary is supposed to give the reader an impression of what the plan involves.
* Background for your idea
* A little about yourself or the team
* What is the idea?
* How is the market for the product/service?

Write the summary last! It will be easier once you've got an overview of the whole business plan. The summary should be short, effective and as simple as possible. Use the summary to spark interest!


2 Introduction

2.1 Background

A description of the background for the idea and the establishment.
What needs should the company cover?


2.2 Initiators and key personnel
• Contact information (Name, address, telephone)
• Describe the person (s) behind the idea and the establishment, make CVs
* Elaboration of the initiators' experiences and competence that are of special importance for the establishment.
• The initiators' contact network (useful in the establishment phase and in operation)
• Networks/resource persons who will contribute actively


2.3 Company
* Information about the registered company
* GEO?
* Entreprise form?
* Owners or potential owners



3 Business idea, vision and objectives

3.1 Vision


A vision should:
• should give a mental picture of the future
• shall convey the company's innermost opinion
• should be aimed at the heart more than the brain
• everyone should be able to absorb as their own
• should be challenging
• should inspire enthusiasm and engage
• should have an attractive emotional content
• must be able to be visualized in a pedagogical way
• be able to connect the needs of the organization and the individual.


3.2 Business idea


Concretization of the company's business idea. The business idea should briefly and concisely give the reader an insight into what is the company's product and/or service and what needs in the market is to be covered.

The company's business idea should in a few sentences say something about:
• What should the company do?
• For whom should you do it?
• How to do it?
• What is unique about the product/service?
• Try to see the product/services from the customer's point of view, and emphasize the benefits that the product/service will be able to give the customers.


4 Market assessment

4.1 Industry


Description of the industry the company will operate in.

• State of the market (well-established market or developing market - development trends)
• Available distribution channels/marketing apparatus
• Conditions that regulate the cooperation between suppliers and manufacturers.
• Regulations or restrictions with significance or guidelines in the industry
• Potential partners


4.2 Customers

Describe the most relevant customers and what characterizes the customers
• Geography / location
• Demographics (age, gender, etc.)
• Purchase preferences (purchase criteria)
• Volume and regularity
• Willingness to pay and financial capacity


4.3 Competitors

Describe the company's competitors
• Strengths and weaknesses
• Market position

Degree of rivalry in the market
• Distribution
• Price structure and policy
• Sales methods


4.4 Total market and estimated market share

Estimate the total market and consider how large a share of this market it is realistic that your business can achieve.

Example of some specific customers that are assumed to be representative of the market as a whole. Take these as a starting point when assessing the market size and potential market share that can be achieved.


5 Product / service description

5.1 Description of product / service


Description of the product/service with an emphasis on customer needs

• The product / service's uniqueness / uniqueness
• The advantage of the product/service in relation to existing solutions
• Existing obstacles
• Description of the production of the product/service
• Description of subcontracting with a dependency relationship and how the company will ensure this.

Remember that those who read the business plan may have limited knowledge of the area in question.
All technical terms used should be explained.
Bring the necessary background information and avoid placing too much emphasis on the technical details.

5.2 Patenting and rights protection

Description of the possibility to protect the product/service with patents, trademarks or the like?

• Description of already prepared applications
• The possibilities for patenting, design or trademark protection.

6 SWOT

A SWOT analysis is a summary of the current situation and should be a starting point for choosing which way the company should go. What are the strengths/weaknesses of this product/service?
How do you assess the opportunities and threats in for the product/service?

This can go to, for example, the market, access to raw materials / other subcontracts, access to relevant labor / skills, etc.


7 Business model

By business model is meant how the business is organized to generate revenue based on a product/service in selected markets.
Describe which model the company intends to use to achieve sales to its customer groups.

• Description and delimitation of what will create value (product sales, framework agreements, return on invested capital, investments, rentals, etc.)
• Description of prerequisites for creating value
• Description of functions that will be in the company
• Description of functions to be performed by partners
• Description of agreements with partners

An example of a business model is, for example, companies that post some of their simplest products on the Internet for free and charge for additional solutions that customers will eventually need.
It is important that a business model is chosen that is adapted to what the company can handle in terms of competence, organizational structure and finances. Also, describe whether there are plans to change the business model in the future.

8 Objectives

Description of the company's objectives.

• Strategic goals (2-5 years)
1. Quantitative: growth, market share, "ROI"
2. Qualitative: reputation, "KTI",
• Long-term goals (1-3 years)
• Annual targets (often related to budget - possibly broken down to quarter)
• Short-term goals ("hour to hour", day, week, month)

The objectives must be concrete and measurable
Divide goals into financial and operational goals
Find methods for quantifying qualitative objectives
Feel free to divide goals into goals related to marketing, marketing, sales, organization, etc. if it is appropriate

9 Marketing and sales

9.1 Segmentation - market focus


Description of the company's positioning in relation to customers and competitors

• Primary target group (geographical or demographic segmentation)
• Shopping habits in the target group
Opportunity to enter into alliances with partners that facilitate access to the market/target group

9.2 Pricing strategy / pricing model

Description and justification for the chosen pricing strategy.

• Pricing of the product/service
• Price as a competitive factor and degree of importance
• Other criteria that are more important to customers in a purchasing decision

There are many ways to price a product, for example, based on competitors' price levels
Use price to differentiate yourself from competitors
cover the cost of production, wages and other expenses
based on what value the product is assumed to have for the customer


9.3 Distribution


Description of distribution and sales channels (direct sales, via dealers…)
Opportunity to use established distribution channels

• Establishment of own distribution network
• Potential / important alliance partners


9.4 Sales and Marketing Activities

Plan for the selected marketing activities.

• Sales and marketing activities
• Promotion and marketing communication
• Marketing and advertising materials
• Internet

Be creative and think untraditionally when it comes to sales opportunities
Use PR and editorial opportunities for free advertising
Use the fact that the company is newly established as a selling point
Know your customers' customers!

10 Organization and competence needs

Description of how the company is to be organized and staffed (company form, organizational structure, roles)

• Competence needs to establish the company, develop, produce, sell and follow up the products/services in the market
• Relevant roles (day-to-day management, marketing, sales, purchasing, production, finance)
• Tasks to be solved internally and/or through collaboration with partners.


11 Finance

11.1 Budgets

Descriptions and conclusions from the budget. The budget is inserted in this document or attached depending on the format and size.

Budgets should be realistic and well adapted to an establishment phase
Feel free to make "at best - at worst" budgets if appropriate
Through thorough work with the budgets, you get a good insight into what is required to "go to zero", and how long it takes before you start making money.
It is important to specify the assumptions on which the budgeting is based, so that the necessary measures can be taken if the goals are not achieved.

Operating budget
The operating budget must show the total expected turnover, costs and profit for the first years of operation (typically 3 years).
• Describe how the result should be disposed of
• Describe how a possible deficit is to be covered

Investment budget
Description of investments in the establishment phase.
• Investments required to realize the business idea
• Investments that have already been made
• When should the various investments be made

Liquidity budget
The liquidity budget should show how much money you have in your account at any given time, how much money goes out and how much money comes in. The liquidity budget is intended to make visible how expenses and income are distributed over time and is an administrative tool to ensure that the company has funds at all times to meet its financial obligations.

Spend a lot of time coming up with a realistic budget. Talk to resource persons who know what it costs to run a similar business. Always take into account that unforeseen costs may arise.
Take into account that the expenses in an establishment phase will be greater than expected, while the income will come later than expected.
Always have a good overview of future liquidity. It is much more likely to receive additional financing from private investors or public donors if you are out in good time than if the coffers are already bottomed out.

11.2 Financing plan

Description of how the investments are intended to be financed

• Self-effort
• Own money
• Private investors
• Loan financing from banks
• Public support

Long-term investments should be financed with long-term capital (equity, mortgages, any grants and the like).

Equity should cover parts of the need for working capital, e.g. the fixed part of the inventory. (liquidity budget)

11.3 Profitability assessment

In order to get private investors to contribute capital, it is required that a realistic profitability assessment of the investment can be presented. This forms the basis for the valuation of the company/investment.

• General profitability and possible growth
• Real return opportunities for investors (advantageous supply agreements if relevant, return through payment of share dividends, growth and then selling all or part of the business)
• Exit opportunities for investors


12 Risk analysis

Description of how it will be if revenues are lower than expected and expenses higher than expected

• What
• Why
• Who
• Where
• How


12.1 Critical factors

Description of factors that will affect the implementation of the establishment or prevent the establishment from going as planned. Either partially or completely.

• The factors that have the highest risk factor with limited countermeasures,
• Probability and consequence of these occurring
• Countermeasures that can be implemented
• Consequence for the establishment


13 Progress plan


Description of which goals are to be achieved and when. Progress plan that is realistic with milestones and strategic decision points.

• Tasks
• Purpose
• Method
• Who is responsible for the implementation

The progressive plan can also be "connected" to the budgets for a better overview.
04-16-2022, 04:31 AM
Thanks for a worthwhile blog! Well done! Nice work!
02-03-2022, 11:24 AM
Definately a healthy share. I'm sure your objective was to make people understand how to make a presentation. Do you have any sample templates for the same?