Many of today's entrepreneurs haven't studied a career in business management nor they have had experience managing the creation of a business. Most of them have an idea to shape and a business plan is a solution.
Do you want to send your business plan to investors, but you don't know what elements it should include? Here, we’ll tell you what is the structure of a business plan that helps you achieve your business goals step by step. Let's get started!
What's a business plan?
A business plan development is a specific planning instrument for business decision-making. It defines the various phases of development of actions related to a business and guides the creation and growth of a company.
The main reasons why you should come up with good business plan ideas are multiple, but the most important has to do with three elements: organization, viability and external financing. In detail, these three elements will give you a better organization in your business and you’ll know exactly how to manage your resources. In fact, having a business plan increases the likelihood of growing by 7%.
Second, the structure of a business plan will help you identify how viable your business project is before putting it into practice. This will allow you to correct some technical errors and start with a lower risk rate.
A research from Barclays states that in the UK 1 out of 4 businesses (23%) don't have any business plan. Approximately half (47%) of the businesses have formal business plans in place while the remaining (25%) have informal (verbal) business plans in place.
Third, a business plan will help you get external financing thanks to the viability and level of technical and administrative organization that you present in the structure.
The basic structure of a business plan
To develop an effective business plan, one of the fundamental keys is not to embellish this tool with words -in the past, an average business plan ranged from 40 to 100 pages, which made reading it a hassle.
This document must provide maximum value in the minimum amount of time and space, answering the main questions, such as the reasons why your product or service exists, the needs or problems it will solve, the product development, its monetization, financing methods, business model or growth expectations.
These business plan documents must include mainly three elements, which separately are key to the business but, together, faithfully represent the executive summary of the company's plan.
- Introduction: In this first block, you will present the company, the mission and the values of the organization. On these principles, you will raise the whole document, configuring and articulating the lines of action of the company.
- Business plan: At this point, you must consider more strategic aspects such as market needs, the business idea, strategic business analysis, staging, planning, internal organization, marketing plan, operations plan, financial plan, business start-up or continuous improvement and management control.
- Financial statement: The business plan components also incorporate the financial statements of the last years, provided that the company is in operation. In this way, you provide real information, so your investors can make 100% objective decisions.
Particularly, we recommend you take the following step to have an idea of where to start building your business plan.
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Tips and tricks to develop a business plan structure
1. Cover
The first component is the presentation of your business plan. It’s important that the name of your company or brand is visible and also the name of the director or the steering committee, in case a group of people is responsible for the authorship. In the same way, it’s convenient that you contemplate adding the logo of your brand or company. It also leaves a brief reference that shows the contact details so that it is visible to future investors.
2. Index or table of contents
It should break down all the elements that you deal with within your business plan. Remember that an index is a useful tool for those looking to consult or verify a specific topic, so you should try to make it as simple, clear and specific as possible.
3. Executive summary
As its name implies, it’s a summary that covers all the information contained in your plan but you must reduce it to its minimum expressions.
Some experts recommend that it doesn't exceed a page in length and others speak of a maximum of three pages. This will depend on the magnitude of your project. However, an executive summary should consider all the aspects addressed, but many times there are certain topics that you can disregard.
In any case, some data is essential such as business name, type of company and activity, location or address, description of the business and the service or product you offer, competitive advantages, vision and mission of the company, goals, strategies, etc.
4. Business definition
This section focuses on giving more details about the business concept and everything about how the company will function. If you have prototypes of your products or beta versions of which you can make a photographic record, this is the place to add all the graphic evidence that will allow readers to know more about the brand, the graphic identity, the type of packaging that they use, what materials it handles, among other elements.
5. Market study
Here, you will write down the companies or brands that compete with your business and you‘ll make a study of the advantages and disadvantages that they present as well as a comparison with your project, so that you can get the most out of your strengths and competitive advantages and devise strategies to minimize the impact of your weaknesses.
Carrying out this part of the business plan development is fundamental to evaluate the market. So, start dedicating yourself to market research and you will see that after completing it will be much easier for you to work on other elements.
At the same time, before immersing yourself in what your company does, you should delve into the problems your product/service solves, as well as the industry trends that make this the ideal time. Take into account the problems and needs that your product solves and the emerging trends or innovative technologies that you can use.
In addition to considering your business within its market, in this section, you’ll show the niche or sector your product is aiming at and you will also delve into the type of marketing and advertising strategies you plan to spread and highlight your business.
Many companies have been successful without being original ideas, but they all have to understand how to differentiate themselves from what is already on offer to get customers. The challenge for many companies that are emerging in the market is to make themselves known to new clients and to achieve customer loyalty. It is very easy for people to be willing to try a product/service once, but if they don't like it they probably won't come back. A good marketing technique and a well-presented product idea are the difference between failure and success.
6. Technical study
This component of the structure of a business plan is responsible for carrying out an analysis of resources, not only economic but also material and conceptual, that make up the project of your brand or business. This is where you should write down the material infrastructure or machinery that you require to develop your product or offer your services. It is the section in which you will specify how many physical spaces you’ll use (central office, buildings, stores, etc.).
7. Business organization
This section of the business plan specifies the organization's scheme of your company and describes in an extended way the responsibilities of each position, as well as the rights that they also acquire when formalizing an employment relationship with the company.
As an illustration, you should present the team: Explain the biography of each member that composes the staff, an indispensable piece of the company's gear. It’s important to specify their title and position in the company, their career background, training, special skills and above all, their role and responsibilities in the organization, providing the reasons why they are exceptionally qualified for the position.
Similarly, it also describes how you will deal with schedules, dress etiquette, functions, professional profiles, salaries of each of the employees, among other information. Explain where in the product development process you are in, if you already have customers or income at present, if you managed to associate with established brands, if you have positive social testimonials, especially from influencers, if you have any patents on intellectual property or if the press mentioned you.
8. Investment and financing study
In this section, you should specify the number of resources or investments to generate profits. You must consider fixed assets such as offices or furniture for stores, vehicles or land. Also, a development and growth forecast for the next three or five years is a requirement to reach those economic goals and the financial development you expect.
Give details of your income model. Here you must determine how you make money, identifying all current and initial sources of income, including costs and margins. Explain your revenue model, specify if there are traditional revenue sources or the comparison with the competition.
Also, you’ll have to describe your goals - something that all investors will want to know- and the reasons why they are fundamental. You should include the investment terms that investors will receive in return, the use of funds, the expected milestones and the factors that make your startup or business a juicy opportunity to raise capital.
For investors and financial institutions, it’s important to be realistic. For example, investors won't believe that your mobile application company will dominate the market in the short term, but that it will expand to an entire country after passing the beta phase of the first few months.
By the way. it doesn't have to be a boring and monotonous document. You can manage to animate the project with photos or diagrams that help illustrate what you want to say or give an added value to the project. Find creativity. All entrepreneurs and founders of a company must know how to sell their projects. A long manuscript is not going to sell your project. Only you can do it. And don't forget to create an awesome pitch deck to get the attention you need!
9. Conclusions and recommendations
Add a section that makes it clear why your company or business is viable and profitable. Highlight the usefulness of your products/services for the niche you are targeting and point out the characteristics that distinguish you from your competition.
In case your product or service is still in a process of improvement, it is convenient that you indicate in this section of the plan structure the strengths and the solution proposals to resolve the weaknesses of your service or product.
Resources to present and measure your business idea
These intuitive websites are interesting to know if your business proposal is viable or not, and they will even help you present your business plan in an attractive way.
- TouchPoint Dashboard: This online tool allows you to develop a customer experience map oriented to the measurement of the value that your service provides. Inherited from Design Thinking, you can use it to draw a diagram on a sheet of paper, putting on one axis the touchpoints or points of contact that you have with your clients, and on the other end, the response of the people consulted. It is a simple and agile resource.
- Business Model Canvas: The Canvas model is a canvas to design business models. This online tool allows you to define the guidelines to attract customers, product offers and implement advertising strategies, as well as to configure the resources or determine the ways to enter.
- Storyboard That: This website allows you to create a powerful storyboard of your idea in just 20 minutes as if you were drawing it on a napkin. It consists of making bullets or sequenced illustrations, addressing the resolution of problems through drawings. If you’re not good at illustrating, this digital tool will allow you to effectively capture your idea by dragging and dropping elements.
- Justinmind: This tool allows you to prototype applications or designs a kind of "preapp" if you are a startup and want to preview its operation. In the case that you want to prototype a web page, we recommend Unbounce.
- Piktochart: If you want to express your business idea through an infographic diagram with a schematic drawing of the service. In this visual way, you can represent the steps around your proposal by simplifying them. Piktochart gives you the possibility of accessing thousands of templates updated weekly to adapt the computer graphics to your business idea.
Now the ball is in your court!
The business plan is not only usable during the first months of the company's creation, but it will become a reference and a legitimate document of your company during its entire life.
It is crucial that this document is concise, well-written and free of punctuation and spelling mistakes; even if you’re a grammar genius, you must get someone else to review it before you go to print. For all its value, it is one of the basic requirements of any investor when injecting capital into a new startup.
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