What is a Business Plan for and why is it important?

Developing a business plan is an essential task when implementing our business idea. In addition to providing a roadmap, it's an indispensable tool for obtaining the necessary resources from both potential investors and financial institutions.

What is a Business Plan for and why is it important?

Whether you want to start a new business or grow an existing business, it is crucial that you take the time to write a Business Plan, since it will be very useful as a guide that will allow you to better understand your business and as a frame of reference to understand and face the challenges that arise, minimizing the risk of failing in your venture. You do not need to develop a complex and detailed plan, but you should broadly outline the characteristics of your business and the environment in which it will be developed.

What is a business plan?

A business plan is a document that provides detailed information about corporate objectives, financial situation, target markets, and required financing. Although it is generally aimed at an external audience, such as potential investors or financial institutions, internal stakeholders (such as the executive team) and potential collaboration partners can also benefit from it.

Why do you need a business plan?

Having a good business plan has many advantages for a company and, in fact, is essential for any serious business. Let's look at some reasons.

It allows us to define the objectives and direction of the business: Having a clear vision of the current situation and a roadmap that indicates where you want to be in the future will help you better visualize the main goals and objectives of the company.

It allows us to better manage the business: Once we are clear about your objectives, the business plan will help us design a strategy to achieve them and use the appropriate resources efficiently; It will also help us adapt more easily as our business grows.

It makes it easier for us to obtain financing: Obtaining financing can be a challenge, but having a solid business plan can greatly facilitate this mission, as it will show potential investors and bankers the direction of our business: where we are at the moment, where we plan to be and how we plan to get there.

Attract the best talent: To attract the most qualified personnel, we need to motivate them through an interesting offer that aligns with their particular interests.

The Business Plan allows us to show them what we want to achieve and how we plan to do it.

Obtain a competitive advantage: despite its importance, it is surprising how many companies operate without a business plan, despite its more than proven benefits. By developing a good Business Plan we can differentiate ourselves from our competition.

How to write a business plan?

Writing a business plan may seem overwhelming, but there are several proven steps you can take to simplify the process:

Executive summary

Start your business plan with an executive summary. This is perhaps the most important section of any business plan, especially if we are looking for investors. An executive summary is a concise and engaging overview of the content and summary of the key points of the entire business plan.

It's often the only section that busy investors or executives will read, so it should grab their attention and contain all the main points we want them to know. We should keep in mind that this section is usually written last, once you have completed all the other parts of your business plan, as it is a summary of them.

Business structure and vision

We must describe the structure of the company. Is it a sole proprietorship, a partnership, a public limited company or a limited liability company? Who are the owners and in what percentage? What is the history of the company and what is our vision for the future based on our corporate objectives and values? What is most important to us?

SWOT Analysis

The acronym comes from Strengths, Weaknesses, Opportunities and Threats. A SWOT analysis tells you the strengths, or areas where we are exceptionally good, our weak areas that need to be reinforced and the opportunities and threats presented by the market where we operate. This way we can identify areas where we are successful and where there is room for improvement.

The results of the SWOT analysis will help us define a clear strategy for the business.

Business Objectives

This section details what we plan to accomplish and in what specific time frame. We must list and clearly define our short, medium and long-term objectives and goals. Examples of objectives may be: the launch of new products or services, the increase in our market share, the entry into a new market, etc.

Products and services

Here we must explain clearly and in detail the products or services that our company offers. We must describe how they work, how they are manufactured or who supplies them to us, how we sell and distribute them, and who our target customers are, that is, to whom we sell them. It is also worth mentioning any patents or trademarks, which can increase the value of the company.

Market analysis

It is very important to know and clearly describe our target market. We must include here any market research and analysis we have carried out. We must also identify and describe which markets are underdeveloped or have potential that can be exploited. We must also include an analysis of our competitors and emphasize why we think we can do better than them.

Financial analysis and projections

Any solid business plan must include a financial analysis and measurements that indicate to the reader the financial situation of our business. This section should include some reports such as:

Balance Sheet with all its assets and liabilities

Income statement, indicating the net profit margin

Cash Flow

It must also include some important indicators such as:

Accounts receivable turnover ratio

Liquidity ratio

The financial analysis section should also cover projected billings, expenses, and estimated profits for the future. It is advisable to include graphs and tables

striking, since this way we can capture the attention of our target audience. We must explain exactly how the invested funds would be used.

Final recommendations

We must write the Business Plan in a clear and precise way. Let's remember that we may understand our business very well, but third parties do not.

Let's also carefully review the writing and spelling; We don't want to look sloppy.

If you need a more elaborate Business Plan, either because the investment or the risk is high, the investors are sophisticated or any other compelling reason, it is advisable that you consider hiring a Consultant who can assist you in this important task.