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The business plan is a detailed description of the business to be undertaken, is a dynamic project in which describes how to operate and develop such business during a given period.
Steps to formulate
The business plan is a roadmap that allows you to address the expected and unexpected opportunities and obstacles that the future holds and to navigate successfully through the particularly competitive environment of that business, whether it is a new company, an expansion of An existing firm, a spin-off of a parent corporation, or even a project within the established organization.
A business plan is a reflection and work tool that serves as a starting point for business development. It is done in writing by an enterprising person and in it shapes his ideas, the way to carry them out and indicates the goals to achieve and the strategies to use. It consists of writing, with method and order, the thoughts that he has in his head. The business plan evaluates the quality of the business itself. In the process of realizing this document, the business environment is interpreted and the results obtained are evaluated by influencing it in a certain way, defining the variables involved in the project and deciding the optimal allocation of resources for Start it up.
The business plan is a formal written document that follows a logical, progressive, realistic, coherent and action-oriented process, which includes in detail the future actions to be taken by both the owner and the employees of the company. To use the resources available to the organization, to achieve the achievement of certain results (objectives and goals) and at the same time to establish the mechanisms that will control this achievement
This planning tool had its origins in the United States in the 60’s as a response to the need for corporations to invest their capital surplus, but it was from the late 70’s, following the development boom Business around technology, in Silicon Valley, when it became popular. The following graph shows the phenomenon:
A business plan helps you make the future of your business as close to what you want it to be and not to what the destiny comes to you. Borrello identifies the following benefits:
Determine which are the most promising business opportunities for the company.
- It allows determining with more precision the markets of interest for the company.
- It indicates how to participate more actively in those markets.
- It provides the basis for deciding the type of products or services to be offered to customers.
- It establishes objectives, programs, strategies and plans to follow, which allow better control over the future development of the company.
- It establishes a firm base to plan all the activities of the company.
- It stimulates a more rational use of resources.
It allows assigning specific responsibilities and establishing coordinated work programs.
- It facilitates the control and measurement of results.
- It creates awareness of the obstacles that must be overcome.
- Provides a valuable source of information for current and future references.
- It facilitates the progressive advance towards the most important goals of the company.
- It keeps all members of the organization oriented towards profitability.
- It allows evaluating alternative strategies.
- It facilitates practical and effective reviews.
- It allows elaborating more effective strategies of sale from the true potential of sales of the company.
- Creates the general financial framework of the company.
- Determine which are the most important areas to be controlled.
- It allows analyzing the situation of the company with respect to its most important competitors.
- It facilitates the determination of the things that should be done better and in a different way than the competitors do.
- Steps to formulate it successfully
Stately indicates the following methodology:
Define the activities of your business.
- Define the state that your business is currently in
- Define the external market, the competition it faces and its market positioning.
- Define your goals for the period covered by the plan.
- Formulate a strategy to achieve the objectives.
- Identify risks and opportunities.
- Outline a strategy to limit risks and exploit
- Debug strategies until you get work plans.
- Project costs and revenues, and develop a plan
- Document it concisely.
- Get the plan approved.
- Apply it.
- Essential characteristics of the business plan
- The main features of a good business plan are:
- Prioritize the key factors of business success.
- Answer potential investor questions.
- It is crisp, does not leave ideas in the air and uses precise terms.
- It is brief, usually, does not exceed 30 pages.
- It is structured to allow easy reading.
- His presentation is impeccable.
- General Structure
The general structure of a business plan could be as follows:
Executive Summary: offers a general impression of the project, contains the key data and highlights, it must provide the reader with all relevant elements, maximum 3 pages.
Description of the product: the business plan must begin by identifying the need to be covered and the proposed solution that is no more than what is intended to be developed.
Management team: Investors believe more in people with experience or who know the business very well, in addition, they are interested in the commitment of each member who works in the development of the project.
Market analysis: it must identify the market, size it, segment it, put it in geographic dimension, analyze the competition and the possible new entrants, not only direct competitors but substitutes and complementary ones.
Marketing plan defines the strategies on the four Ps always seeking to cover the needs of customers and even better to be above them.
Business system describes the steps, the process, necessary to manufacture the product or offer the service, its interactions, and elements. It includes personnel planning, management elements, development and organizational culture.
Timeline: shows a realistic planning of the project, defines the critical path and milestones thereof.
DOFA Analysis: Identifying Weaknesses, Opportunities, Strengths, and Threats, how to enhance the positive aspects and how to develop strategies to counteract negatives.
Financing: This is a key point, it should be a detailed analysis of the financial situation of the business, including financing needs, expected results, possible sources of financing and the generally used financial statements and ratios. It can include an initial valuation of the business through discounted cash flows. If what is sought is venture capital must propose alternatives to exit investors.
Conclusions: Highlights realistic key factors including risks.