Today more than ever it is necessary to have instruments and methodologies that allow entrepreneurs and executives to promote investment initiatives and have the most accurate forecast possible of the profitability of a business.
A business plan is a key and fundamental instrument for the success of entrepreneurs and businessmen.
It is an indispensable strategic document, since it is not possible to start or grow a business successfully without having a detailed plan.
It is a series of activities related to each other for the beginning or growth of a company with a planning system tending to achieve certain objectives and goals.
It is a guide for the start of operations and the development of the activities of a company.
Its objective is to have a broad knowledge of the company or the project to be started.
The plan can be made for a start-up company or one that is already operating and has plans for growth.
When the company is operating and growing, a plan serves to rethink objectives, goals and needs, as well as to request additional credits or investments for expansion and / or special projects.
It is wise to be conservative and realistic when making sales forecasts and financial projections for the business.
The business plan must convey to new investors, shareholders and financiers, the factors that will make the company a success, the way in which they will recover their investment and in the event of not meeting the expectations of the partners, the formula to end the partnership and close the company.
It requires considering the analysis of the type of business, its viability, technical, economic and environmental feasibility.
It must include the design of strategies, the definition of objectives and goals, as well as the necessary resources for their implementation.
You must justify and provide sufficient information about any objective and goal that is in the plan. Example: if an increase in the size of the market and in the participation of the company in it is forecast, the reasoning must be explained and supported with objective and convincing information.
To make the business plan more objective and easy to analyze, it should include historical and comparative information, with statistical and graphical data from the last five years, on different aspects of the company and the market.
It must be very dynamic, so it must be updated and renewed according to the needs of the different situations and changes that arise.
Each business plan is different because it has the personal touch of the person responsible for its preparation and is designed according to the size and business of each company, which makes it impossible to have an identical format for all cases, although it can be said that most are similar.
The veracity of the information included in the business plan is of vital importance for its success.
Investors and financiers should be aware of the forecasts and projections that were used to estimate profit.
They also need to know and understand the assumptions, logic and supports that were used to carry out the projections.
The content, writing and presentation are very important for the acceptance of a business plan by potential investors and financial institutions.
To achieve the long-term objectives, it is necessary for entrepreneurs to execute the plan in a disciplined manner.
After a certain period of operation of the business plan, it is advisable to compare the results obtained with the original plan to know the possible deviations, the reasons for them, the consequences and the corrective measures that must be taken.
It is convenient to have quarterly or semi-annual progress reports in the programs to evaluate the results obtained.
A business plan that is not well supported can be detrimental and can generate little credibility from investors interested in providing financial resources.
There is always the risk that things will not happen as planned, so when developing the plan, you must anticipate possible scenarios and be prepared for deviations or difficulties that arise.
Whenever possible, it is advisable that upon completion of the business plan and before presenting it to potential investors that an expert review it for their observations.
Importance of planning
Most entrepreneurs do not give the importance of making plans before starting a business, but it is important to develop them if you want to be successful.
Generally during the initial stage of the business plan the chances of success or failure can be known.
It is a very valuable opportunity to develop a calm analysis of the way in which you intend to manage, operate and fulfill the master plan related to the mission of the company.
An analysis of the probable political, economic, social and cultural scenarios is required to consider the different variables in the preparation of the business plan.
Planning can mean success and peace of mind for entrepreneurs.
The learning curve can be much more expensive, complicated and painful without a well-conceived business plan.
You have to be planning professionals precisely because it is very difficult to anticipate all possible contingencies that arise.
Characteristics of a plan
A plan must meet the following requirements:
- Appoint a coordinator responsible for its execution Define various stages that facilitate the measurement of its results Establish short and medium-term goals Clearly define the expected final results Establish measurement criteria to measure progress and achievements Identify possible opportunities to take advantage of them in the Execution Involve executives who will participate in its implementation in its preparation Anticipate difficulties that may arise and possible corrective measures Have programs with activities, responsible personnel, financial and technical resources available for its implementation Be clear, concise, concrete and informative.
Strategic business planning
We are in the era of creativity, marked by the development of technology and knowledge, where research and the generation of new ideas are a fundamental part of strategic planning.
Strategy is the set of objectives, goals, policies, plans and programs to achieve the vision of the company.
Business strategic planning is understood as the design of strategies so that companies have the ability to adapt to changing market conditions and satisfy the needs and desires of customers.
Strategic planning must be oriented towards creativity, innovation and generation of new proposals and alternatives.
The business strategies of a company must be outlined on the basis of the specific needs of a defined target group in the market.
Strategies are designed to be able to access, win and stay in the markets with quality services and products.
A strategic business plan requires answering the following questions:
- What business are you in? What business do you want and should be in the future? What is the current strategic position of the company? What changes are seen as the most viable in the markets? What forces and trends are observed as the most feasible? What critical elements are detected? What business opportunities can be inferred? What probable and possible events can be configured? How is the future of the company envisioned? What future conditions can be foreseen? What innovations should be generated? What actions can be taken to redirect operations to achieve the goals originally set? What alternatives are there to have more efficient operations,more efficient and with better economy and quality? What preventive and corrective measures should be taken? How to take advantage of the strengths of the company as a whole? How to have better forms of control? How to make better use of resources and facilities? How to have better marketing strategies? How to better understand the market and how to beat the competition? How to increase sales and what are the new goals? How to improve products and service? What type of advertising and promotions are How can future competitive strategies be identified? How identified training needs can be corrected? What are the appropriate training courses? How can staff productivity be increased? How to meet the needs of efficient and efficient staff? responsible? When and how to implementcontinuous improvement processes? How to develop integrated administrative systems? How to detect the need for mechanization and standardization? How to define investments in technology, machinery and equipment? How to start the development of new projects? How to have better purchasing strategies ? How to decide on strategic acquisitions of other companies? What actions or costs can be shared with other companies? How can future financing needs be met? How to return to the company a quality model and best practice? How can generate a culture of quality?machinery and equipment? How to start the development of new projects? How to have better purchasing strategies? How to decide on strategic acquisitions of other companies? What actions or costs can be shared with other companies? How can the future needs of financing? How to return to the company a quality model and best practice? How can a quality culture be generated?machinery and equipment? How to start the development of new projects? How to have better purchasing strategies? How to decide on strategic acquisitions of other companies? What actions or costs can be shared with other companies? How can the future needs of financing? How to return to the company a quality model and best practice? How can a quality culture be generated?
Advantages of developing a business plan
- It is used to plan the start of operations or growth of the company.It is a very useful tool for business promoters.It allows the recruitment of new partners.It facilitates the negotiation to obtain new resources with investors, financial institutions and suppliers.It allows detecting errors and correct in advance Possible opportunities and risks are identified Some of the difficulties that may arise and possible alternative solutions can be anticipated Measurement criteria and indicators are established Reduces the learning curve Minimizes uncertainty and risk of start or growth of a company. Facilitates the evaluation and measurement of the expected results.
Content of a business plan
Different formats can be used to prepare a business plan, since there is no universally accepted content for its preparation.
The content presented below must be adapted to each company, since the business plan differs when starting a company from another that is already in operation and wants to grow.
The information included in the business plan must be adapted to the size, line of business of the company and the availability of documentation.
There are companies that are only services and do not have a production area so information on the subject is not included, others that are only dedicated to marketing, etc.
Large companies and projects require business plans with a lot of information, very detailed and with different scenarios, from the most pessimistic to the most optimistic.
Taking into account the above, the business plan presented below is intended to serve any company and includes all the concepts that large companies should consider.
The content of a business plan is as follows:
Cover page
- Company name and logo Document name E-mail address Web page address Postal address Telephone numbers Name and title of the CEO Date of preparation
Index
- Contents Page Numbers
Introduction
It is an introductory letter that must mention what the company does or will do and the characteristics of the business plan.
Briefly describe the reason why the business plan is being made and highlight the most important points for the shareholder or investor.
Company Background
When the company is going to start operations, the following information must also be included:
- Company name . Business concept Description of the company What is innovative about the business idea Benefits of the product or service it offers Competitive advantages Characteristics of potential customers Context where the business is going to develop Business potential Result of the feasibility study Viability of the commercial idea The financial projection The convenience of investing in the business (profitability) The way to carry it out Analysis of the sector the company will enter General plan for the introduction of the company to the market Detailed launch plan of the company.
When the company is already operating the following information is required:
- Age of the company Constitutive act, statutory reforms and legal representatives Details of the history, evolution and outstanding activities General information of the shareholders General information of the board of directors or sole administrator Relevant data on the administration and operation of the company.Advisors and external advisers of the company.Structure of the legal capital.Description of the company.General strengths, opportunities, weaknesses and risks.Diagnosis of the general market and in which the company develops Key factors for the success of the business.Main Achievements General image of the company before third parties Behavior of the sector in which it has been in the last three years Leading companies in the sector Current position of the business Key personnel in each area.Resources available to the company Experience in the business Know-how mastery Patent registration Government regulations
In both cases, it is required to include in the business plan some items of the following information:
View
The vision is the path to which the company is headed in the long term and serves as a direction and incentive to guide strategic decisions for growth and competitiveness.
It is a guide that allows to focus the efforts of all the members of the company towards the same direction, making them feel identified, committed and motivated in being able to achieve it.
Mission
The mission is what the company intends to do and for whom it is going to do it. It is the reason for its existence, it gives meaning and orientation to the activities of the company; it is what is intended to be done to achieve the satisfaction of potential customers, staff, competitors and the community in general.
The mission must be precise, comprehensive, motivating and convincing, since it is the basis for all personnel actions to move in the same direction.
goals
The general short, medium and long-term objectives of the company should be mentioned, as a whole, as well as the specific objectives and goals in relation to the following concepts:
- Production Social benefits.
Goals
Most entrepreneurs do not consider the importance of setting goals, but these are essential to define the direction you want to follow and know if the path is correct or needs to be corrected.
The main characteristics that goals should have are:
- Contemplate ends and means Be quantitative and measurable Be concrete, realistic and congruent Have a defined time for their achievement Be set by the participants Be documented Individual goals must be related to those of the group.
Policies
They are the rules under which the company as a whole will be conducted. It is what can and should be done in a company.
It is a set of norms or rules established by the management to regulate different aspects of the operation of the company.
These norms can include from the behavior of the employees before clients to the presentation and way of dressing of the workers.
They must be aligned with the vision of the company.
Organization
The following information should be included:
- Organization manual (Structure, objectives, policies and functions) Procedures manual Quality manual Monthly work program by areas Management plan
Executives
- Who they are and what they have accomplished to date What are their motivations and aspirations Why are they the right people To what degree are they committed to the success of the company Financial commitments and investments they have with the company Quality of the work of Group Ability to develop the company Clarity and understanding of the corporate philosophy and mission Knowledge of the company's line of business Experience in the market Administrative culture Management style and managerial quality Successes and failures in achieving objectives and goals in previous years Integration of the objectives of the different areas and hierarchical levels Managerial strengths.
Trusted and unionized staff
- Consistency between the quantity and quality of personnel and the objectives to be achieved Important labor conditions of the collective bargaining agreement Curriculum of top-level executives and key personnel. (Achievements, strengths and experience) Information on the administrative and operational staff by area, mentioning characteristics and income Distribution of functions and responsibilities Base staff, trust and management staff, compared with previous years salaries, benefits and incentives of each position Salary and salary plans, compensation, training and evaluation The total amount of the monthly payroll and special benefits by area projected to three years Age of personnel Frequency of overtime requirements Future needs of personnel and availabilityLabor turnover compared to previous years. If there is a need to hire personnel, the reasons, in what areas, profiles and quantities. Characteristics of the union and its leaders.
External advisors
- These can be: labor, commercial, civil, tax lawyers, external accountant, consultants in information technology, cutting-edge technology, financial, business and other specialists. Types of consulting that are in force or that are required and contracts.
Market situation
- Market characteristics Market composition (geographic concentration, population characteristics, socioeconomic levels) Target market size and potential market Desired market niches Market segmentation and apparent consumption Presentation of the segmented sector and locate in the niche in the What market needs are to be met Market diversification in relation to previous years Market strategy Factors affecting the market and how it will work under certain circumstances Socio-cultural factors of the target market Information on the evolution of demand, supply and marketing Untapped markets and penetration capacity Market share by product Participants and percentage of market shareMarket trends. Future expansions.
Products and services
- Market acceptance of the company's products and services Breadth of the product line Ability to generate and develop new products Product characteristics, descriptions and applications Market availability of new products Balance of product mix and / or services New product and service development projects Services offered or will be offered by the company Status of patents Competitive advantages over existing ones in the market What needs does the product and / or service cover Who and why where you will be able to access the product Warranties and returns.
Sales
- What is the customer database Who are the most important customers How much the company depends on certain customers How loyal customers are and how their loyalty can be affected How is scheduling customer orders How the client portfolio will be expanded Sales comparison for the last five years Goals by product and service Goals for each area and vendor for the next two years at least Goals by distribution channel Sales and sales forecasts Differences from previous forecasts with reality Sales method Number of sellers Profile and skills of sellers Compensation and payment schemes for sellers Daily, weekly, monthly, quarterly, semi-annual and annual sales for products, services and money, compared to previous years.Sales divided by vendors, areas and customers Ability to supply demand After-sales service costs Post-sales complaints
Marketing
- Marketing plan and objectives Definition of the consumer profile Acceptance of the product and brand image Strategies to strengthen the image and sales of the company Strength of the company's brands Diversification, evolution and launch of new products.Advertising campaigns.Effectiveness and costs of advertising and promotion.Distribution strategies and costs.Distribution situation. Company positioning. Definition of the online marketing strategy.
Communication channels
- Establish the mass media to be used Define the social networks to be used Direct emails Web pages Web banners
Main Competitors
- Analysis of the main characteristics of the competition Analysis of customer satisfaction compared to the competition Channels and forms of distribution of products and services Comparative table of advantages and disadvantages (quality of products and services, prices, credit conditions, advertising, promotions, sales network, presentation, economic aspects, market penetration, others Strengths and weaknesses in relation to the competition Who are the most important competitors Market participation of the most important companies of the business Possible entry of new Important competitors in the market Possible strategic alliances between competitors Aggregate value of the competitor's offer Competitive advantages of the competition and the company.Current and projected evolution in technology compared to the competition Benchmarking studies to know the best practices in the business Growth possibilities and new business opportunities.
Finance
- Amount of financial resources needed to implement the business plan From where, how and when the financial resources will be obtained Total annual budget and by areas Historical comparison of compliance levels and deviations in budget management Detailed destination of the resource Financial capacity to generate and attract financial resources Program of financial contributions Request for credits, under what conditions and with which institutions or persons Accounts payable for the operation Structure of general costs of the company and by business line, areas, clients Short and medium-term indebtedness Financial stability and soundness Financial indicators and ratios (net income, return on capital, etc.) Profit margins Margins per product Time calculated for return on investment.Analysis and calculation of the breakeven point Assets (machinery, transport equipment, computing equipment, real estate, etc.) Investments in securities and real estate Mortgage situation Comparative tables of income and expenses, costs and expenses, inventories, gross and net profits of the last three years Cash flow per month projected over three years Proforma income statement Pro forma balance sheet Audited financial statements for the last three years Updated financial statements (maximum three months old) Projected financial statements (3 to 5 years).Account, paid and social capital.Gross and net profits for the last three years Cash flow per month projected over three years Proforma income statement Proforma balance sheet Audited financial statements for the last three years Updated financial statements (three months old maximum) Projected financial statements (3 to 5 years). Accounting, paid and social capital.Gross and net profits for the last three years Cash flow per month projected over three years Proforma income statement Proforma balance sheet Audited financial statements for the last three years Updated financial statements (three months old maximum) Projected financial statements (3 to 5 years). Accounting, paid and social capital.Analysis of probable economic scenarios.
Credit and collection
- Analysis of solvency and liquidity of clients Short, medium and long-term credits Credit schemes or deferred payments Amount and conditions of credit to clients in relation to previous years Percentage of past due portfolio and uncollectible accounts Average recovery collection. Accounts receivable policies. Judicial collection.
Purchases
- Sources of supply Main suppliers Credits and payment methods Quality of acquisitions Delivery times
Inventories
- Stock levels in the warehouse. Optimal inventory levels. Stock rotation. Control of maximums and minimums (differences, supply periods). Reductions or increases in inventories. Value of inventories. Warehouses and warehouses. Storage costs.
Operation and production
- Description of constructions and facilities, present and future needs. Operations plan. How the manufacturing process is done. Fundamental raw materials and their origin. List of main inputs. Product development. Facilities, equipment and machinery necessary and available if demand increases. Current status of the machinery, when it will need to be replaced and what will be the cost Efficiency of operating systems and procedures Flexibility of operations Percentage of returns and losses due to manufacturing defects Level of returns due to defects or poor quality Levels of productivity per employee Staff capacity and training Installed and employed capacity and comparison with previous years Capacity and production levels Ability to react in the event of increased demand.Production area growth plans Production and operation cost structure (fixed, variable and unit) Budget and programs for preventive and corrective maintenance of facilities and equipment Inactivity rates of machinery and equipment Delivery time of the production orders and orders Problems in the manufacturing process Need for technical assistance for customers Engineering, design and quality control support Problems in obtaining spare parts for equipment Technological process used in production Current evolution and planned in technology for operation and production.Machinery and equipment downtime rates Production and order delivery times Problems in the manufacturing process Need for technical assistance for customers Engineering, design and quality control support Problems obtaining spare parts for equipment Technological process used in production Current and expected evolution in technology for operation and productionMachinery and equipment downtime rates Production and order delivery times Problems in the manufacturing process Need for technical assistance for customers Engineering, design and quality control support Problems obtaining spare parts for equipment Technological process used in production Current and expected evolution in technology for operation and production
Informatics and information systems
- Measurement criteria Characteristics of information systems Characteristics of automated systems Type of reports and content Effectiveness of information systems and procedures in operation and control Percentage of company automation Average age of equipment. Average usage time per user Investment to have the necessary IT technology.
Technology and research
- Technology that the company has Knowledge and use of new technologies State-of-the-art technology acquisition plans Development of prototypes or technology Possible changes due to the introduction of new, more competitive technologies.
Location and facilities
- Geographical location and strategic benefits for the company Type of facilities and characteristics of the warehouse, warehouse, premises or office that is needed to start and / or grow the business Minimum area necessary Distribution plans of the different areas of the company Need for Spaces for growth and expansion plans. Characteristics of the rental or investment contract for the purchase of the property. Need for special specifications of spaces due to the characteristics of the machinery and equipment. Requirements for the installation of machinery and equipment.
Key success factors for the company
How it is intended to use financial resources to strengthen the key success factors for the company:
- Buy state-of-the-art technology Hire more qualified personnel Invest in training for all personnel Improve service and quality of products and services Improve the way of distribution Improve the way of obtaining, processing and reporting information Optimize the different processes Improve the productivity and competitiveness of the company Improve service and communication with customers Have a certain differentiation with competitors.
Conclusions
- General analysis of the current situation (political, social, economic and legal factors that can influence the strategy of the business plan) Feasibility of business success Future short, medium and long term of the company Possible risks Profitability
Annexes
Some of the annexes that a business plan may contain are:
- Biographies of key men and directors Letters of purchase intention Copies of important contracts Market surveys Financial statements Profit and loss statements Relevant information graphics for decision making Reports to the board of directors Reports of External advisers List of potential clients Tax payments Personnel and organizational structure Annual budgets Work schedules Sales forecasts Cash flow projection Financial projections
Contracts and documents
- Company deeds and statutes Lease contracts Contracts with subcontractors Maintenance contract Surveillance contract Collective labor contract Contracts with collaborators, clients, suppliers and others Official documentation (licenses, permits, concessions, etc.) Associations with other competing or complementary companies Acquisitions of other companies related to the business Creation of new complementary companies Key collaborators Important clients and suppliers Documentation of access to the electrical energy necessary to start operations or growth of the company Documentation of access to the necessary water service.
The business plan must include an executive summary that allows to understand the business in general. The condensed writing of a business plan is not easy but it can be the key to acceptance.
Executive Summary
Generally, the summary is short and has the function of synthesizing the main aspects of the business plan.
It is the first thing that investors see so it should highlight the most important of the business plan
The content of an executive summary of a business plan is:
- Business viability What product or service does the company offer What need is being covered Legal framework Ownership structure of the company Organizational structure and management team Information about the company's target market Summary of the sales plan Main customers Competitors Summary of financial position Financial comments to facilitate understanding of business factors affecting historical figures A description of the past and projected future in financial terms 5-year financial projection Positive or negative variables that may affect predicted results Sustainable competitive advantages Demonstrate that the business plan represents an opportunity that cannot be rejected General work scheduleAn explanation and a schedule of how the investor or financier is expected to deliver the necessary economic resources Total investment required Return on investments program
The length of the executive summary should include as few pages as possible, allowing investors to understand the business and take an interest in reading the full plan.
Presentation of the business plan
- The exhibitor must have the capacity to persuade and know the details, peculiarities, benefits, benefits and risks of the business plan. It is required to plan the presentation and detail of what is going to be said to the partners, potential investors or financial institutions. You must make an excellent presentation to sell the business idea. It is necessary to have strong approaches and arguments to achieve interest and convince investors of the benefits and benefits of the business.
Usual failures in the preparation and presentation of business plans
- Lacks strategic planning They do not contain comparative analysis of historical figures The budget is not well prepared Social, economic and political factors are not considered Not all costs and expenses required by the project are not considered Lacks a feasibility study. Market research is not carried out. There is no reliable administrative, accounting and tax information. There is a lack of competitive information. The competition is underestimated. Ignore cultural factors. You mistake a business plan for a budget. Too optimistic in the projections. It does not consider the risks.Financial projections and sales forecasts do not have real support. Profitability and capital recovery time are not mentioned. Lack of presentation and bad writing. The entrepreneur sees his business concept in a more differential way than he does. that the market perceives The exhibitor of the plan was not trained or was not the appropriate profile.
It is common for many entrepreneurs, due to inexperience, to make mistakes when preparing a business plan and this is the reason why potential investors are not convinced by the plans presented.
Developing a business plan is not a guarantee of success, but the chances of failure are reduced by being able to see the idea to be executed in perspective.
__________
Jack Fleitman:
www.ciemsa.mx professional consultants
@jackkmex
From the Book The Modern Entrepreneur (in process of publication) Jack Fleitman
