The business plan is a concrete translation of your business model. It explains the need that you have identified, the way in which you meet it, the consumers that you target, the way in which you finance your project, the way in which the activity will develop, your mode of production and your communication… Nothing but that! It is therefore a document not to be overlooked. In this article, we explain what (and to whom) the business plan should be used, and the rules to follow to put it in shape.
Create A Business Plan. Why And For Whom?
You have already understood it: the business plan is essential if strategic partners are to be associated with your project. Indeed, to get them to follow you, they must understand where you want to go and how to assess their interest in joining you on the project.
This document is also essential if you need external financing. Funders need to understand where you want to go and how, and most importantly, what your financial needs are and what they will be used for.
If you are planning to go it alone, a simplified version of the business plan is a very useful business start-up tool for you. It will allow you to keep the common thread of your project without dispersing yourself.
Make A Business Plan: The 10 Important Points
Here are the 10 commandments of an effective business plan!
1. The Team You Will Value
How are you (or the team) the right person/team to carry this project: market knowledge, business skills, … This is called human-project coherence, a fundamental combination for the success of a business creation project.
It is possible to have, on the one hand, a person with all the required determination and all the qualities required to create a sustainable business and, on the other, and economically and financially viable project … but that the combination of two leads to failure because the person is not suitable for this project.
Also, explain who helped you in setting up your project. Introduce the people who accompanied you both technically and morally. Do not hesitate to show that you have taken their remarks into account without modifying your business model, this will show that you know how to listen without however playing the “weather vane”.
2. On The Value That You Bring To Your Customers You Will Insist
Customers do not buy a product/service because it is good but because it meets one of their needs or provides them with a service/fixes one of their problems / creates pleasure for them.
The reader of your business plan must therefore clearly understand:
- That your entire business model is reliable;
- That your offer is realistic and meets the needs of your target market;
- Who are the customers you are targeting;
- What are your competitors and your positioning;
- That the potential of clients is sufficient to ensure the sustainability of the project.
What you say should show that you have done extensive market research. However, there is no point in transcribing everything in the business plan: for example, you can suggest that readers read the entire market study in the appendix.
Be precise, avoid approximations and avoid reasoning such as: “I must be able to take 5% of the market share”.
3. The Realistic Implementation Of The Project You Will Explain
The reader of your business plan must understand that your operational strategies are consistent with the expectations of your target, your vision, your business model. It must also understand the consistency between the resources implemented, your positioning and your operational strategies.
Indeed, an excellent project can be very poorly executed.
4. The Information Expected By The Reader, Quickly And Clearly You Will Give
The main reader of your business plan is the funder of your project. He needs to know three things:
- Who you are;
- Why you are embarking on this project = your objectives and ambitions;
- If you will be able to live with your project… ie if there are enough potential customers for your product/service who are willing to pay the set price.
It’s up to you to prove that your project will work. Don’t expect the funder to know all the activities and trends in each market. Especially if you plan to conduct an activity in a declining national market!
5. The Qualitative You Will Favour
Writing a business plan is not a contest of many blackened pages. It is better to have a few pages but which provide precise answers. If giving numbers, cite your sources.
6. The Tables Of Figures You Will Explain
Each figure you indicate in your financial forecasts must be justified:
- Revenue is a number of products / services sold multiplied by a selling price.
- To define your selling price, you add the charges assessed correctly and a margin consistent with your trade in the range of the psychological price of the buyer and that of your competition.
- To find out your number of potential customers, you carry out a field survey!
- To accurately assess a load, the best technique is to have quotes or a supported estimate.
- To estimate your cash flow lags (WCR), you must have approached suppliers to find out when you need to pay them and have spoken with prospects to find out if your payment terms are acceptable.
7. Honesty You Will Prefer
Identify the risks of your project, even if you do not yet have the solutions show that you are lucid and that you have your feet on the ground. This position is reassuring for your readers.
If you have a lack of skills or a difficulty with a function of the company (management for example), indicate how you are going to remedy it (training, subcontracting, hiring…). A potential partner (financier, client, supplier, etc.) will spot your weaknesses. You might as well show him that you are lucid and that you can remedy it.
8. Pleasant To Read, Your Business Plan Will Give You
Pay attention to the presentation of your business plan. Do not omit the summary. Place clear chapters, titles and subheadings, diagrams, appendices … and, above all, do not forget to do one or two pages of very neat synthesis (see below: commandment 9). Anything that will make it easier for the recipient of this document to read is good to take. Do not hesitate to ask your relatives. At some point, you won’t see anything and it will take an outside look.
9. The Summary Pages You Will Take Care Of
If your reader doesn’t feel like spending time on the few summary pages, that’s a bad sign. So pay particular attention to this part of the business plan. At the end of the synthesis, your reader should know what you are selling, to whom, how much and why you are going to be successful.
10. You Will Adapt To Your Reader
You don’t always talk to the same person. For example, a banker will be very attentive to the level of your risk-taking compared to that which you ask him. He will check the announced working capital in detail, he will look at the number of years expected to repay the requested loan, he will examine the guarantees you offer …
This will be less important for a supplier or a distributor for example. A capital investor will first be sensitive to the team, to the product/market pair, to the strategy and then to the financial plans. A distributor will be more sensitive to sales volume.