The business plan is a written document of about 30 pages that basically includes your business goals, strategies to achieve them, the organizational structure, the investment amount you require to finance your project and solutions to solve future problems.
Also in this guide are reflected several key aspects such as a definition of the concept, what products or services are offered, what audience is targeted and who are the competitors in the market, among others. Not to mention the precise calculation of how many resources are needed to start operations, how they will be invested and what the profit margin is sought.
Contrary to what some entrepreneurs imagine, developing a business plan is less complicated than it seems. While each project is different, every part of having an idea and materializing it in writing based on five basic points:
Ideological structure. It includes the name of the company, as well as the mission, vision, values and a description of the competitive advantages of the business
The structure of the environment. It is based on an analysis of the strengths and weaknesses of the company, as well as the behavior of the sector in which it develops, market trends, competition and potential customers
Mechanical structure. Here are listed distribution strategies, sales, marketing, and advertising, ie what actions must be implemented to achieve the success of the business idea.
Financial structure. This point is essential because it tests – on the basis of calculations and projections of scenarios – the viability of the idea, speaking in economic terms, and whether it will generate an attractive profit margin.
Human Resources. It helps define each of the jobs that must be covered and determines the rights and obligations of each of the members of the organization. No matter if you’re starting your own, this will be your base to ensure the growth of your company.
Then, you know in detail each of the five basic structures that make up a business plan, as well as practical tips to write it and get the most out of it. And do not forget to run it and improve it every day!
1. Ideological structure
This first structure is the soul of a company. Here is presented and described the business idea, as well as the objectives that are intended to achieve. The value of this section is that it is the business card in front of your potential investors and collaborators.
The ideological structure is integrated by the following points:
Company name. This should reflect in a simple way to what the business is dedicated and the turn in which it develops. It is best to be short, easy to pronounce and remember. Do a search on the Internet to know the names used by your competition and give you an idea of which to choose. Once defined, register it with the Mexican Institute of Industrial Property (IMPI).
Mission. It is the purpose for which a company emerges and is what gives it the identity. It consists of three elements:
Description of what the business does.
To whom is the product and/or service offered.
What makes it different from its competitors.
View. It is an image of the company in the future and its function is to inspire collaborators, investors and public target to reach as far as it is proposed. This is characterized by:
Realistic, with viable and achievable objectives.
Clear. simple and easy to communicate.
Values. They are the rules under which the organization will be conducted when closing a deal with clients, suppliers, investors and collaborators. The important thing in this section is that the values will always guide your business practices inside and outside of it.
Competitive advantages. It reflects the reasons why your product and/or service will succeed in the market. This will depend both on your added value and on your skills and expertise.
Commitment. Answer why you want to undertake, determine how persistent you are, recognize your skills and calculate how much of your time you will spend on the business.
Competences. Take into account your experience in the market that you want to enter, achievements and failures, and how much you know about the industry to which your product and service belong.
Character. Are you prepared for the risk? Are you honest enough to make fair deals with customers, suppliers, investors and collaborators
As for your offer, respond:
What needs does my product and/or service cover?
Who will buy it?
Why do you get it?
Where can I access it?
Why is my offer better than that of my direct competitors?
2. Structure of the environment
This section of the business plan is an X-ray of the industry and market in which your business will be developed. Knowing the behavior of the sector to which your offer belongs, how the sales of products similar to yours have behaved in the last 12 months and what your target audience demands will help you to reaffirm if your idea is viable Or reformulated.
To start generating this information, make a SWOT analysis. This methodology allows you to know, on the one hand, the strengths and weaknesses of the business, that is, internal variables that you can control. And while both the opportunities and the threats are external and more unpredictable, if you have a foreseeable plan you can take advantage of them and avoid them, respectively.
The variables included are:
Strengths. It refers to those characteristics that make the company unique and different from its competitors
Opportunities. Here the entrepreneur must list what the market demands and how his business will be able to meet those needs to be solved
Weaknesses. Honesty is very important in this variable because it is necessary to recognize what are the defects of the product.
Threats. The entrepreneur must know very well the industry in which it participates because only this way will detect where a coup of competition can come from or what the consumer will demand in the short, medium and long term.
Subsequently, focus on recognizing and documenting your industry and market. Start by completing these points:
To describe your target audience. Who will buy you? Are they men or women? Define ages, average income, habits, and customs, professions, etc. Remember that all data provides information that will be very useful
Investigate demographic market data. It includes growth in the sector in the last three years, leading companies in the sector, consumer trends and growth prospects in the short, medium and long-term, etc.
Know how often your product and is purchased. This data is vital to calculate the time to complete your sales cycle and thus determine, for example, your storage and distribution costs.
Study your competitors. Investigate the added value of the offer of your competition, the prices they offer and the distribution channels they use. Also, pay attention to your sales and marketing strategies. Tip: do not imitate them and best use that information to debug your ideas.
3. Mechanical structure
Here are included the company’s objectives and the strategies to achieve them, as well as the deadlines in which the first results should be reported. The mechanical structure will act as a log and will be the one that will help you detect errors and change tactics immediately if necessary.
Based on the Environment Structure determine which strategies you will implement to create a sales and marketing plan that will ensure a steady stream of revenue for the company. Therefore, you will have to define these points:
Price your product. A good way to price your offer is to investigate the range of products and services of your competitors. Of course, do not punish your selling price in order to lower the sale price to the public, a better bet to have internal processes more efficient that decrease your operating costs.
Payment plans.If your product is more expensive than your competition, you can design credit schemes or deferred payments. The goal is for your customers to leave aside the price issue and take advantage of the financing benefits you offer.
Salesforce. Here you determine the number of sellers you need to start, as well as your profile and the skills required to successfully market your offer. It is worth including the compensation and payment schemes.
Distribution channels. Depending on the nature of what you market, you will have to choose the means through which your potential customers will have access to your offer. To do so, it answers questions such as:
Do you need to take inventory?
Do you require a place to store your merchandise?
Are your sales made on demand?
Is it better to have a local or manage a catalog on the Internet?
Communication channels. Today, companies rely on other means than traditional ones to reach their target audience. Therefore, it is no longer necessary to invest large amounts of money in having a massive communication channel. Simply define the profile of your consumer to choose which of the following options you should explore more:
Radio and television spots. It is recommended for businesses that are already operating and that have products and services already positioned in the public mind.
Social networks. The advantage is that they are powerful and even, some of their applications are free. They are ideal for reaching a youth audience, between 14 and 35 years. Among the most popular are Facebook and Twitter.
Web 2.0 Campaigns. It includes direct emails, newsletters, blogs, Web pages and Web banners on sites with high traffic of netizens.These strategies require a moderate investment of time and money.
4. Financial structure
The experience of some entrepreneurs shows that the most complicated part when developing a business plan is the one that has to do with finances. However, this is the one that provides more information about the viability of an idea so that it becomes a successful company.
The basic financial structure of a business plan is composed of six reports:
Pro forma statement of income projected to three years. It aims to present a future vision of business behavior. It is calculated considering the following variables: how many units you will sell and at what price, the cost of sales per unit, fixed costs, variable costs, interest, and taxes. The result will be the net profit affirms the expert.
Pro-forma balance sheet projected to three years. This report is divided into two variables: what the company has and how it was financed. It includes furniture and equipment, as well as from where the resources arose to acquire them.
Pro-forma cash flow projected to three years. Here you define your accounts receivable policies, what term will your suppliers give you to fulfill your obligations to them and what will be your sales cycle. This report should answer these two questions: when will I require capital? And where will these resources be obtained?
Break-even analysis. It is a measure that indicates the units that a company must sell to cover the fixed costs derived from its own operation. This information is relevant to determine when sales will begin to generate profits for the company. Make sure that the break-even point is something real and achievable according to your possibilities. How to calculate your break-even point.
Analysis of scenarios. Take the income statement and project two possible scenarios: one optimistic, with an annual growth of 20%, and another pessimistic, with 3%. In this way, you will know what your utility would be in each of the two cases, as well as the behavior of the rest of the variables, such as costs, expenses, investments, etc.
Conclusions. This section is the most important future investors will give you if you use your business plan as a tool to get financing.Therefore, it should include the Internal Rate of Return and the analysis of the break-even point, among other key indicators.
5. Human resources
One trend among entrepreneurs is to become “all-time” because they are the ones who, at the beginning, become responsible for both the administration and the operation of the business.
However, if the company has founding partners and a work team, it is important that functions, responsibilities, salaries and benefits are delineated according to the role they have. Here are some practical tips for building a human resources strategy:
It begins by developing an organizational chart that outlines the functions, duties, and responsibilities of the team based on their positions.
Determines the salaries, benefits, and incentives of each position
While it is difficult to match the wages offered by companies that have been operating for years, it is also true that you can “reward” your team’s efforts with bonuses or awards for their outstanding achievements
Produces a chart that identifies the leader of each strategy implemented within the organization and includes its functions, people in charge, goals to achieve and in which period it should report its results.
Once your company is consolidated, the ideal is to create a Human Resources department that will handle both the hiring and the development of each worker.
On the other hand, if your business plan is directed at potential investors, Ruiz Massieu recommends including the contracts you have signed with partners, customers, and suppliers. It also includes documents that accredit you as a company formally constituted before the Ministry of Finance and Public Credit.
This document has the function of synthesizing all the activity of your company and is generated based on your business plan once it is ready.
Generally, the summary is one or two pages and should include the following points
The concept of business. Describes the company, the product or service it offers, its competitive advantage, the characteristics of potential customers and the context in which the business operates
Financial factors. In this line, elements such as sales, earnings, cash flow and return on investment stand out.
No financial needs. Includes the capital required to undertake or strengthen the business, as well as the destination of each weight invested
Current status of the business. It provides relevant information such as the number of years of operation of the company, the name of the owner and partners, as well as key personnel.
The greatest results achieved. It is a report on the main achievements, for example, patent registration, prototype development or technology, etc.