HOW TO DEVELOP A BUSINESS PLAN - STRUCTURE AND A RECOMMENDATIONS
WHAT BUSINESS PLAN IS NEEDED FOR
Starting a new business or even considering it, most entrepreneurs find themselves needing to write a business plan - a key document that outlines the overall vision of the future business and its primary objectives as well as details of the company's positioning in the market, competitive conditions, strategies for overcoming competition, marketing mix, promotional tools, organizational structure, operational processes, investments, financial models, growth forecasts, tax and legal aspects, potential risks and crisis management tools, etc
. In essence, a business plan is a document that addresses all aspects of a future enterprise's activities, aligns business goals with necessary resources, and demonstrates the methods and strategies for achieving results.
The need to create a business plan arises when an entrepreneur approaches business creation responsibly, attempts to consider all the pros and cons during the ideation stage, conducts a realistic assessment of their resources and capabilities, thereby increasing the likelihood of success and minimizing the risk of losing invested capital. Furthermore, a business plan is often a prerequisite for obtaining external financing in the form of investments, loans, or credit, as well as for establishing partnerships with significant and powerful suppliers and customers.
MOST IMPORTANT PART IN A BUSINESS PLAN
So, what is required to write a business plan that is maximally realistic and effective? First and foremost, it is essential to have an optimal and logical plan structure, starting with the most crucial and defining elements and moving on to less critical and auxiliary ones. In our view, the most critical starting point for creating a business plan is the marketing aspect of the business, namely market analysis, development of a marketing strategy, branding, positioning, and the marketing mix. The marketing aspect is the primary element that determines the scope of resources required to enter the market, the characteristics of the future product, and all other business aspects. In other words, it is the starting point for the entire business planning process. Indeed, it would be strange to plan production, operational processes, finances, or anything else without first understanding consumer market needs, the competitive situation, having a realistic marketing strategy, and an effective marketing mix supported by available capabilities and resources.
It's also important to understand that creating a one-size-fits-all business plan that can be universally applied to any business is impossible even in theory. Developing a business plan is a unique process and depends on a vast array of factors, making the creation of any template impractical. Therefore, below, we will provide a general structure for a business plan that needs to be customized for each specific business, competitive market conditions, and the entrepreneur's available resources and opportunities.STRUCTURE OF A BUSINESS PLAN
So, the initial structure of a business plan
looks optimal as follows:1. BUSINEES IDEA AND MARKET ANALYSIS
1.1. Description of consumer needs, product, and the market in general.
1.2. Market size, growth dynamics over the last 3-5 years, key trends and tendencies.
1.3. Market structure in terms of B2C/B2B/B2G, distribution channels, key product characteristics, geography, target audiences, price segments, etc.
1.4. Competitive environment in terms of the total number of competitors, market share of key players in the overall market and in key segments.
1.5. Business models of major competitors in terms of procurement, commercial, marketing practices, etc.
1.6. Description of your own or borrowed resources for implementing the idea, including production capabilities, warehouse and logistics capabilities, operational, financial, human, marketing, and commercial resources, etc.
1.7. Justification of the feasibility of launching and succeeding in the business through SWOT analysis regarding expected consumer demand, creating a competitive product, seizing the necessary market share, and the availability of required capabilities and resources, etc.
In practice, the first section of a business plan involves gathering, structuring, and analyzing information to determine at a high level whether the future business will be viable in terms of consumer needs, competition, and available resources. The assessment of the business idea and market analysis is usually performed by professional marketers and researchers who have the necessary skills and knowledge to evaluate current and future demand, the competitive environment, and the likelihood of marketing success for the future product.
A significant portion of business plans at this stage concludes since potential owners, having conducted the necessary analysis, evaluate their chances of success realistically in relation to the required resources. However, if the assessment and justification of the business idea are successful, the next step is to develop a marketing strategy and marketing mix, which more precisely define the directions of the future business, product characteristics, distribution channels, communication channels, etc.2. MARKETING PLAN
2.1. Development of a marketing strategy, including modeling a set of possible strategies, choosing a strategy based on criteria of realism, profitability, adaptability, and scalability, formalizing the strategy in terms of goals, key approaches, resource base, and implementation deadlines.
2.2. Branding and positioning, involving studying the target market, creating a brand platform, and developing market positioning.
2.3. Development of a marketing mix according to the concepts of 4Ps, 8Ps, or 12Ps, where marketing efforts are structured into separate marketing directions. For example, the 8P concept, which we believe is optimal, consists of the following elements of the marketing mix - Product, Price, Place, Promotion, People, Partners, Process, and Performance.
2.4. Demand forecasting, which involves forecasting monthly sales in the short and long term based on market analysis and the developed marketing mix.
The second part of the business plan, dedicated to marketing, is, in our opinion, crucial since it outlines the main directions of the company's development in the market environment. It answers questions such as what needs the product will satisfy, what the physical properties of the product should be, what image of the product needs to be created, what market positioning is optimal given the current competitive conditions, what pricing policy to apply, what distribution channels to use, what methods and tools of marketing promotion to apply, and so on.
Indeed, at this stage of creating a business plan, the owner should be aware of what products and in what quantities they can sell under the conditions of the developed marketing complex and the current market situation, which allows them to proceed to the next stages of the business plan.3. ORGANIZATIONAL STRUCTURE AND OPERATIONAL PLAN
3.1. Organizational structure, which involves defining the necessary departments of the company, including production, logistics, warehousing, sales, marketing, accounting, legal, human resources, and others depending on the business.
3.2. Staffing schedule and job responsibilities, which helps determine the optimal number of employees required to ensure the operation of the company and the production of the planned amount of products.
3.3. Operational processes that regulate the activities of individual employees and departments, as well as facilitate interaction between employees and departments to increase the efficiency of the company.
At this stage, the business owner designs the structure of the future company and the mechanisms for departmental interaction to ensure production of the necessary goods or services with an appropriate workforce whose actions are coordinated, efficient, and sufficient for the planned production volumes. Furthermore, the owner must provide the company with the necessary production equipment and materials.4. FIXED ASSESTS AND VARIABLE COSTS
4.1. Fixed assets, including office and warehouse space, production equipment, transportation, office equipment, etc., in accordance with the planned production volumes and the company's staff.
4.2. Raw materials and materials for production.
4.3. Consumables that support the operation of the company, such as fuel, communication expenses, utilities, office supplies, etc.
4.4. Other expenses, such as outsourcing services for legal matters, advertising, marketing, etc.
In practice, this section of the business plan lists all the necessary investments that the owner needs to consider based on the planned production volumes, the company's structure, and the staffing schedule. Having a complete list of expenses, along with the organizational and operational plans and marketing plan, the owner can move on to the next planning stages - choosing the legal form of the company, the tax system, and calculating and forecasting financial results.5. LEGAL FORM OF THE COMPANY AND TAXATION SYSTEM
5.1. Legal analysis regarding the appropriateness of one form of company over another, taking into account ownership structure, liability of founders, and other legal aspects, such as Limited Liability Company, Joint-Stock Company, etc.
5.2. Choosing a taxation system within the legal form of the company with the aim of optimizing taxes, as well as establishing accounting system.6. FINANCIAL PLAN
6.1. Sources of business financing, including founders' equity, investments, loans, bank credit, etc.
6.2. Planning production volumes and corresponding expenses based on marketing plan forecasts.
6.3. Sales volume planning, break-even point, profits.
6.4. Loan and credit repayment scheme if applicable.
6.5. Profit distribution scheme among founders if necessary.
6.6. Long-term financial plans, such as directing profits towards business expansion, investments in other segments or markets, etc.
Creating a financial plan provides the owner with a nearly complete picture of what the future business will look like at this stage. However, realities can significantly differ from the planned ones. There are many external factors that can disrupt the implementation of the business plan. Therefore, the next step for the future business owner within the framework of the business plan is to develop a risk management system.
7. RISK MANAGEMENT
7.1. Description of possible risks and crisis situations.
7.2. Development of action algorithms in crisis situations.
7.3. Budgeting for an anti-crisis fund.
7.4. Developing a Plan B in case of business failure.
Many business owners neglect the business management section, which often leads to losses from an unsuccessful business that are much larger than expected. Poor market conditions, force majeure circumstances, tax issues, problematic relationships among founders, and more can lead to the collapse of the business. Some of these problems can be solved with an anti-crisis budget, while others are insurmountable. However, having clear counteraction algorithms, an anti-crisis budget, or a Plan B for changing the business field can minimize losses and recover investments.8. LAUNCH ROADMAP
8.1. Stages of implementing the business plan and control points.
8.2. Distribution of responsibilities among key individuals.
The final section of the business plan is the roadmap with stages of implementing the planned business, control points, timeframes, and the allocation of responsibilities. The roadmap is a very useful tool for keeping the entire launch process under control and making adjustments promptly when needed. QUESTIONS AND RECOMMENDATIONS
So, as we can see above, a business plan is quite a complex document that touches upon all aspects of a future business's activities. Then many readers wonder - is it possible to create a business plan independently without external assistance?
Firstly, it should be noted that it all depends on the field of activity and the scale of the business. With a business plan for a small "neighborhood" cafe, the owner can quite handle it independently, but for larger businesses, it depends on the competence of the owners and other individuals involved in the planning. In the case of medium and large enterprises, where the business consists of production, warehouse management, a fleet of vehicles, logistics, a full range of internal departments such as accounting, personnel, marketing, sales, legal services, security, etc. - creating a business plan requires the involvement of relevant specialists, each of whom develops a corresponding section of the plan under the overall guidance of the owner or designated person.
Another common question is whether it is advisable to hire an external contractor to develop a business plan
. This is also a question that does not have a clear answer. For small and simple businesses that do not require specific industry expertise and knowledge, using external contractors is quite reasonable. However, in cases of more complex businesses, external business plan developers may not have a complete understanding of production, organizational, logistical, and other processes compared to professional specialists. In such cases, a combination of efforts between an external contractor and the owner and his experts may be advisable.
So, where to start and how to write an effective business plan for a real business, not a student essay
? From our experience, the best business plans are developed when the owner delegates the creation of the business plan to an external contractor but is personally involved in the writing process at every stage and utilizes internal or external experts where professional assistance is needed. In other words, the best option is a combination of the owner's knowledge and experience with external and internal support. Our company offers a service for professionally developing a business plan in this way
. At every stage of development, we actively involve the client in the process of creating the business plan, discuss options, make adjustments, and, if necessary, involve external experts.
In addition to professional development, our company also offers a service for expert evaluation of your business plan
, which is very useful for entrepreneurs who take the path of independent development and spend their own time but need a quality assessment and recommendations for improvement and optimization. Of course, proportionally to the required time, the expert evaluation service is significantly cheaper than the full-service business plan development.
Creating an effective and efficient business plan requires deep analytical abilities, market research, understanding consumer needs, the ability to analyze and find alternatives, and a creative and innovative approach to problem-solving. Our company has extensive experience in strategic and operational planning for the client's business. You can familiarize yourself with the services and solutions our company offers on the "Services" and "Solutions" pages, respectively.