Business Plan
Introduction
In the Directorate-General for Enterprise and Entrepreneurship of the Government of Extremadura, we have developed this tool in order to guide you in developing the business plan of your project.
As you see, our proposal suggests a series of ordered points set to reflect the most important aspects of your idea or project. We hope this tool will be useful regardless of the type of project, its degree of development or the type of business that you are going to undertake.
Before you start you should know that we have tried to make a general tool for all kinds of initiatives. This entails a difficulty, since generalizing entails there may be nuances that do not fit entirely in the multiple variants that the ideas of entrepreneurs who come to use this model can present. So, considering this fact, we suggest you consider our approach as a general line that should guide your work when developing the business plan, adapting these sections to the specifics of your idea if necessary.
What is a Business Plan? What aspects should it contain?
The business plan is a working tool for all individuals or groups who want to set up a business initiative. It is a document that reflects in detail and orderly your business idea.
Usually it’s a useful tool to define the situation of a business project at a given time (eg start-up of the activity), but also includes provision for the future, so that it can serve as a "roadmap" or strategic document to define the steps for a future time horizon.
Why do you need a business plan for your idea or project?
Usually, the business plan is recommended:
- When you need to clarify and better define the idea. Its development will also serve to improve the idea, since you'll have time to reflect and find information about your project.
- If you are several promoters of the idea and need to make a "pooling". Thus, the business plan can serve as a document in which you can state strategy accepted by all.
- To pass along information about your project. Once completed, the business plan reflects your idea orderly and in detail. This information can be used to attract new partners, organizations supporting entrepreneurs with potential customers and, very important, to get investment for your project.
- To search for funding. Related to the previous point, it is very common that when you visit a bank seeking capital for your project, you are asked to show your Business Plan.
In short, it is a document that once completed you can use as a plan of action, as it reflects the basic lines of your project and its strategy.
When should you draw up a Business Plan?
Most commonly the business plan is made before starting the activity. But you can also work it out if your business project is already underway and you want to explore new lines of business.
It is said that a business plan is a "living" document that you can (and should) steadily transform and adapt it to the reality of your "everyday" to adjust any deviations from your expectations.
The entrepreneurs will have to consider whether they should become self-employed, which involves answering with all their assets, or to create a business entity, which responds only to the capital contributed to the company. This decision will be influenced by the type of business or service offered and the requirements and costs of implementation.
We encourage you to work out your business plan before starting your business, and continue to tweak it for at least the first 5 years of life of the company.
Where to begin?
The Business Plan will serve to set your business goals and to transform your idea into a business model. To address its development, you have to answer 4 key questions:
- What do you sell? You have to make an analysis of the offer, be it a productor a service, and point out your competitive advantages over competitors.
- Who are you going to sell to? You should have a clear understanding of the market, both, of customers and competitors.
- How will you sell? You must indicate the procedures related to the production process or the provision of services and the distribution channels.
- How will you finance it? You should state where you are going to get the funds needed to implement your project and your ability to meet your financial bonds.
Once raised these questions, you need to delve into every aspect, focusing on the project you are going to carry out, and arrange the information to define the project in terms of viability.
What should you consider when developing a business plan?
You need to contrast your idea against the actual market. Issues that seem obvious often do not correspond to the reality of the business world.
- You have to ponder your personal and financial capabilities to implement your project.
- You need to set up an action guide that allows you planning activities sequentially.
- The document must be consistent and true throughout its development and be credible with third parties.
- It is a living document, because as progress is made you'll have to rephrase some questions which apparently were clear and defined already. The changing environment is one of the most influential factors. For example, once described the offer you may realize that there is no market for it or that it is already occupied by the competitors; so you have to reformulate your business idea.
Some steps you can take to prepare your business plan
- Describe the idea. Analyse, define the products or services you offer.
- Introduce promoters. Point out their academic background, professional experience…
- Perform a market survey. Describe demand, customers, industry and study the competition.
- Draw out a marketing and selling plan. Analyse pricing, distribution channels, promotion strategies and make an estimate of what your sales would be.
- Analyse the resources, both physical and human, you need to start your project.
- Perform an economic and financial analysis of your business to enable investors to monitor its development.
- Make an action plan. Define the key milestones for your business, and how and when to achieve each of them.
- Finally, set up a summary of all the points above, sorting out the keys that facilitate understanding it at a glance.
On paper you can make as many changes and corrections as you wish anytime. Note that this is a great advantage before starting your business, because changing something on the fly within your day to day, will not be so easy. Take this opportunity to foresee all the possibilities you could be bound to face after you begin your activity, by anticipating events and setting strategies and guidelines for action.
