The Structure of The Business Plan

The business plan is the basis for a successful company. A structured plan follows and contains specific topics. What is the content of a business plan and what are the components that distinguish it?

Whoever sets up a company has an infinite number of tasks to complete: in order to succeed, it is necessary to have a business plan in writing. But what are the precise functions of a business plan?

Purpose of the business plan

The time to start a company is always quite chaotic. After all, founders find themselves having to make a large number of decisions, and it's not uncommon for course changes to occur at the last minute. At the same time, the administration has limited and often scarce resources. The business plan is the right tool to counter this bustle and bring structure and order into the daily business routine. It also specifies the line of travel and, having a strategic direction function, provides guidance when it comes to making decisions.

But still, the business plan helps during the planning phase, which in itself guarantees a certain order. The founders can see what the pending measures are and what the deadlines are. One of the key points of the business plan is the definition of the objectives, which are relevant both for economic efficiency and for strategic and organizational aspects. Management should compare the objectives with the results achieved at regular intervals. In this way it will be possible to analyze in what percentage the decisions taken have achieved their purpose and what are the causes of any discrepancies between the objective to be achieved and the current state of affairs.

The business plan also plays an important role in the search for potential lenders. A detailed business plan is in fact a necessary requirement for obtaining loans and investments, as it serves to convince potential interested parties of the validity and concrete feasibility of your idea.

Business plan: target

Since a business plan is very varied and extensive, different target groups are created with regards to content. The target groups are both inside and outside the company. The most important ones for a business plan are:

1. The founders or management
2. Managers and employees
3. Banks and lenders
4. Investors, sponsors and shareholders
5. authority

Structure and contents of a business plan

Structure and content are the decisive factors for a successful business plan consultant : the illustrated concepts should include all areas of the company and have the right answers for every possible question. Furthermore, given that the contents of a business plan are quite detailed, they should be divided into a qualitative and a quantitative component. This division is the basis for ensuring a correct structure of the business plan.

Qualitative content

This area contains all the information that cannot be formulated in numerical terms. For example, these are issues related to the organization or orientation of economic strategies. The qualitative section should specifically contain the following points:

1. Purpose of the company : what is the purpose that management sets itself and what strategic objectives must be achieved along the way?
2. Management: who is in charge of the company? What qualifications and skills do the founders have? Is management a first-time experience or has it already proven its worth in other companies?
3. Legal form: what legal form does the company have? Where does the share capital come from?
4. Products and services: what are the products or services offered by the company? What are the USPs (Unique Selling Proposition, which highlights what the advantage is for the consumer in using the product / service, highlighting its uniqueness also compared to the competition)?
5. Target: what is the target of consumers that the company intends to reach with its products / services?
6. Production: what materials and purchases are needed to make the product or to provide the service?
7. Staff planning: how many employees should work in the company? How are the departments divided?
8. Marketing and Advertising: Which Advertising Media Should Be Used? How can you increase the visibility of the company and build a positive image?
9. Structure: how is the company organized and structured? How many departments will there be? Hierarchies?

Quantitative content

After having dealt with the qualitative part with care and attention, you can move on to the quantitative component of the business plan, which is, instead, defined by numbers.

1. Investments : what investments are needed? When should the investment be made? How much are the costs and when should they be paid?
2. Start-up costs : what are the costs to officially start the business (for example legal fees)?
3. Capital requirement : how much capital does the company have? For which areas should money be spent?
4. Funding : where does the money for planned expenses come from? What additional costs do these loans entail?
5. Liquidity : what guarantees are provided to demonstrate that the company has enough money to pay the bills at all times? How to maintain long-term liquidity?
6. Revenues : at what time are revenues generated and of what amount? What are the plans for the gradual increase in revenue?
7. Earnings : what are the profits made? What investments should be made with these profits?
8. Balance : How do the different numbers affect the company's balance sheet? What are the equity funds and liabilities?

The business plan: structure and setting

The business plan should always be bound, have numbered pages and a clear structure.

Cover and index

Like many other documents, a business plan starts with a cover, which should include the title of the business plan, the date, the name of the company, and the business scope. Also there should be a summary. All this provides the reader with an orientation and allows you to consult the desired chapter with ease.

Abstract

The summary is followed by an abstract of the main points of the business plan. This provides the prospective investor with a good overview that allows them not to get lost in the details. The abstract should include details on the company's founder, products and services, legal form, market and distribution. It is also important to mention the financial needs and the financing plan for investors, as well as the timing for the foundation.

Curriculum vitae

The abstract is followed by a curriculum vitae, which highlights the founder's qualifications, skills and past experience; of course, if it is a question of several founders it is necessary to attach everyone's curriculum vitae.

Legal form

Each company has a specific legal form. In general, it is possible to distinguish between three different legal forms: sole proprietorship,

Probably the simplest legal form, which also means less effort in terms of organizational law, is the sole proprietorship (or sole proprietorship). In this case, the founder is the one who responds entirely and alone, regardless of the presence of other directors or agents. This obviously has the disadvantage that the entrepreneur has to pay for any losses with his private assets. On the other hand, however, it can keep all profits from the company to itself.

Place of establishment of the company

In this item you communicate the headquarters of your company. In addition, there should be additional information regarding the area, such as the number of customers or competing companies in the sales area. If you start a new business, your location should be in a good position to reach your target audience. This avoids long journeys to the customer and allows the company to grow faster, as it can serve more customers in less time.

Services

This section contains all the products and services that the company will offer. It is important to highlight what makes you unique or otherwise provide information regarding the possible question as to why customers should buy from you and not from the competition.

Target

Only by knowing its target can the company increase its popularity and profitably sell products and services. Entrepreneurs should worry about defining the target group based on the following points:

Type of consumers

Is the product or service aimed at a target of industrial and commercial (B2B) or private (B2C) customers? Are the products sold directly or are the services intended for the public sector?

Location of the target market

Which geographical area is your product intended for? To a regional market or to the whole internal market? Does the company sell goods or services all over Asian or even worldwide?

Sales structures

Is there a direct contact between your company and customers? Do specialized agencies and mixed distributors trade similar products?

Purchase decision levels

Taking into consideration the target, who decides whether the company's products will be purchased? It could be the high managerial levels of another company, of the commercial direction but also of a single consumer.

Peculiarities of the market

Are there seasonal fluctuations or factors that influence periodically? Are there specific barriers to market entry that initially make it difficult to reach the target?

The most common mistakes in drafting the business plan

The founders of a company need a lot of time and patience for a business plan. In fact, certain conditions must be met, otherwise errors will quickly occur which discourage potential lenders.

Basically for the long-term success of the company it is crucial that the founder is 100% convinced of his idea and that he transmits his enthusiasm. This belief has a very persuasive and positive effect on negotiations with investors and sponsors. If you don't present your business plan well, it will be difficult to charm others with your idea. Other mistakes that make your business plan difficult are:

1. Lack of a unitary and organized structure : without a structured and organized concept, any entrepreneur will find it difficult to convince potential financiers, regardless of the validity of the idea.
2. Lack of industry knowledge : only those who know the market in which they will move with their company can successfully develop their business and adapt to rapid changes. The business plan should therefore address the issue of competition.
3. Ingenuity : many approach the creation of a new business too superficially. Those who draw up the business plan must ask themselves which chapters of the business plan will be particularly interesting for potential investors. Believing that after the complicated start of the business everything will work on its own, it will sooner or later lead to great disappointments.
4. Spelling and grammatical errors : as for applications and curricula vitae, if the business plan has grammatical or spelling errors, this will have a negative impact in the evaluation by third parties. We therefore recommend that you carefully check it several times and also have it checked by third parties.
5. Failure or incorrect time management : a business plan must be meticulous down to the smallest detail, therefore time management is particularly important. There should always be enough time for research, writing and correction, because each section will take longer than initially predicted. Therefore it is advisable to provide for a very large period of time.
6. Lack of sense of reality : alongside the many positive aspects and the innumerable ideas that every new company brings, it is also necessary to deal with any weaknesses and difficulties of the business plan. Only those who work for their purpose in a realistic way are able to remedy any errors (which on the other hand are absolutely normal), obtaining a positive stimulus.