Building a business plan is a must before starting a business and launching a start-up in order to realize the full potential of the business. Here is a guide to writing a winning business plan according to our experts at Targo Consulting:
The Purpose of the Process
Once you have decided to move forward with your start-up, you have to decide how to implement it, which means planning for the project’s near and distant future.
Everyone needs a business plan
- Investors trying to raise money for the start-up
- Employees in need of understanding the goals and vision of the company
- Entrepreneurs who want to evaluate the enterprise’s level of feasibility
A business plan is a document that:
- Describes all major aspects of the enterprise’s future
- Analyzes all the problems a venture might encounter
- Determines how to resolve the issues identified per analysis
A well-articulated business plan can clearly answer these questions: “Is it worthwhile to invest in this planned start-up and will it generate revenue that will produce a return on all the effort and money?”
Important! The entrepreneur or the team must be involved in building the business plan; but that does not mean, of course, that there is no need for services from consultants and subject matter experts. The process costs of writing a business plan by a professional range from $ 4,000 to $ 20,000. However, you could write a business plan yourself and reduce costs.
In essence, the main purpose of a business plan is: to help entrepreneurs to perform the following tasks:
- Examining your ability and potential to capture significant market share
- Estimating the costs of introducing the product to market and comparing & benchmarking to existing solutions
- Isolating elements under your control and maximizing the start-up’s chances for success
Remember! The business plan is usually written as a tool for setting goals and building forecasts. It is customary to plan activity for period of 3-5 years ahead. At the same time, the first year activity should be presented at a higher resolution in comparison to years 2-5 years. It is usually customary to divide the first year into months or quarters.
Structure of Business Plan
The business plan has a complex structure. The company’s entire life from inception to profitability should be detailed in business oriented & professional language that is understandable to readers. The business plan should be clear to any entrepreneur, investor or potential partner.
The business plan should always be as short as possible. However, sometimes, when it is necessary to elaborate on the market and the problem we are forced to provide more content. A recommended length for a business plan is 20 – 40 pages, no more. Any & all additional materials must be attached as appendices.
- Executive summary (1-3 pages) – Summary of the business plan.
- Business Plan (20-40 pages) – For due diligence by investors or experts on their behalf
Remember! Each business has its own characteristics, therefore, there is not one “standard” type of program accepted in all cases. While there are recurring sections such as market research and the financial model, even these sections can change from start-up to start-up.
Your business plan should start with an executive summary, therefore it is advised that you write it after all other sections of the business plan have been composed. Though it is written last, it should be placed at the very beginning of the document itself. Since the executive summary is produced as a result of the already completed parts of the business plan its succinct summations make it the only section that most potential investors are reading.
- Short description of the product / service
- Problem / need / opportunity
- Target Market
- Competitive Advantage
- Main business and financial data
Required Topics in any Business Plan:
Goals and objectives
Here you need to give an analysis of the idea (SWOT analysis). Uncover strengths and weaknesses as well as opportunities and threats.
- The Company’s Vision
- Company Goals
- Product (service)
It is important that this section be written in clear and precise language
- Description of the products or services and their implementation.
- Technologies required for business qualification.
- Licensing / Patent Rights.
Adapting the product to the needs of the market is the biggest challenge for start-ups. During the research procedure you need to collect and process a large quantity of raw information:
- Competitors (Advantages and Disadvantages)
- Market segments.
- Market size and growth rate TAM & CAGR
- Estimated market share
- Target Audience
- A business development plan or a go-to-market
At this point, the main objective is to gain the trust of a potential investor:
- The main characteristics of products & services compared to competitors
- Pricing (how to determine the price of the product).
- Distribution system
- Promotional methods
In this part of the business plan we will detail the development process of the product or service.
- Infrastructure and equipment required
- Use of Subcontractors
- Team and key personnel
Money is invested in people, not in a business plan; therefore, this section is one of the most important.
- Team Founders
- Management Board
- Team Consultants
- Business Model and Revenue Model
- Core activities
- Value Proposition
- Relationship with the client
- Marketing / Distribution channels
- Cost Structure
- Revenue Model
You should include a detailed financial plan in your business plan:
- Sales Forecast.
- Estimates of profit and loss.
- Cash flow analysis
- Executive Summary – Summary of the business plan
- We recommend that you see more examples of business plans
- A business plan should be practical, including concrete processes and objectives
- Preparing a business plan is a process that requires the involvement of the entrepreneurs