A business plan is an essential tool for the business creator and his future partners. First, it allows you to build a project plan, verify its technical and financial feasibility, set your objectives and define your strategy. You must develop your business plan. No advisor should do this for you, and you shouldn’t avoid downloadable templates.
The Entrepreneur’s Corner offers you a step-by-step approach to carrying out your business plan and provides you with several tips to help you move forward:
The stages of carrying out a Business Plan
A business plan is drawn up gradually and is continuously updated. To approach the business plan in an organized manner, you have to take it to step by step. We suggest below a possible approach to carry out your business plan:
- Presentation of the project and the team
- Market and competition research
- Positioning and product/service offer
- The objectives, the action plan and the necessary means
- Financing, location and business creation choices
- The financial study of the business plan: the forecast
- Last step: validation of the business plan
Presentation of the project and the team
The first step of the business plan is to present the project as a whole and the creators of companies and the partners who participate in it.
The presentation of the project consists of briefly explaining what it consists of. Here, it is not a question of going into details; a few lines are enough. This first part allows all the recipients of your business plan to understand what your project consists of. In particular, you should mention:
- The nature of your project and the offer you intend to offer,
- The sector of activity and the potential of your project,
- The needs related to your project.
Then, you have to present the team you are forming for your project. This element is essential on several levels. Having a good idea is not enough; you also need to bring together the right people to implement it. Together, business creators must have all the project skills and share the same vision. If you are planning to meet investors, this is an essential criterion for them.
Market research, competition and customers
At this stage, you will have to research specific information on your market and your competitors. Care must be taken not to select a too broad sector: your business plan must address only the target market (specific activity, geographic industry, type of customers, etc.). Do not forget to discuss trends and forecasts, as well as, if applicable, the regulatory framework of your industry.
We are discussing this important subject in this dossier: market research.
Next, you must explain which customer segment you are targeting:
- Detailed customer profiles
- Their needs and motivations
- Their purchasing criteria
- Their consumption habits
- Their location
- Their budget
Your target customers must be precise. Otherwise, you must segment it into several categories.
Finally, the analysis of your competitors is an integral part of the development of your business plan. It allows you to highlight the opportunities that present themselves to you. The weaknesses detected in your main competitors will allow you to justify the competitive advantages you want to rely on. It is essential to focus on your main competitors.
Positioning and product/service offering
Positioning work is directly linked to the previous step. In the presence of competitors, you must seek a different positioning. This reflex is critical for your business to create value. Otherwise, you will add an offer on the market and similar to what already exists. Intense competition destroys value: prices will be pulled down, and more resources will have to be put in place to sell your products or services.
To be effective, your product or service offering must:
- Meet the needs of the customer segments you are targeting and their selection criteria,
- And differentiate themselves from competing for offers by exploiting one or more of their weaknesses.
The explanation of your positioning and the detailed description of your product or service offering (characteristics, price, sales process, customer service, etc.) are essential elements of your business plan.
The objectives, the action plan and the necessary means
In your business plan, you must determine the specific objectives that you aspire to achieve. These goals can be quantitative or qualitative, and they should relate to a period that you choose. For example :
- Achieve 100,000 euros in turnover per month from the second year of activity,
- Have the service that records the best satisfaction rate on the market,
- Get 10 new customers per month,
- Intervene within a radius of 100 kilometres after 6 months.
A goal should be measurable, time-bound and achievable (which doesn’t mean it shouldn’t be ambitious). Then, you must design an action plan to explain how you plan to achieve the objectives set and determine the means to mobilize to perform each planned action.
We advise you to collect as much information as possible from your future suppliers in terms of needs.
This allows you to obtain a precise estimate of the budget to be planned and the terms and conditions applied. Regarding investments, quotes are necessary. If you need financing, these documents will be requested by the bank.
Financing, location and business creation choices
Your business plan should present several essential elements of your future business:
- Your business premises: choice, characteristics, catchment area.
- The financing of the project,
- The legal status of your future business and its organization,
- The choices made at the fiscal level.
It is a question here of evoking the configuration of your future company, the financing of the project and the installation of the activity.
Regarding financing, you must explain the resources you will mobilize to finance your expenses and your investments. Without sufficient financial resources, your project cannot see the light of day. Its economic feasibility has not been validated.
Then, it is essential to explain where the exercise of your activity will take place. If you have already targeted a local, you must present it in your business plan: location, catchment area, characteristics and equipment present, work to be done, capacity. The chosen premises must be compatible with your project and the objectives that you set yourself.
Finally, the choice of starting a business is a subject on which you should not hesitate to be accompanied by a professional. Also, the options you choose will have an impact on your financial forecast.
Also Read: The Sales Agreement For A Business
The financial study of the business plan: the forecast
Finally, the business plan includes a section devoted to the financial study of your project. The objective is to offer an accounting analysis through different tables: an income statement, a balance sheet, a cash flow table and a financing plan. This study is generally developed over three years.
The provisional income statement
This table lists all the products (turnover, other income) and expenses (purchases, salaries, overheads, taxes, social contributions, etc.) provided for in the context of your project. In particular, it highlights your profitability with the calculation of the net result.
The cash flow statement
The cash budget analyzes the evolution of your cash flow month by month throughout your forecasts. It contains all the receipts and disbursements relating to your project.
The financing plan
This table lists all the financing needs and the financial resources provided to finance the needs. Your financing plan must be balanced, that is to say, that the resources are sufficient to cover all the project’s needs.
The provisional balance
Although it is necessary, the balance sheet is not the most consulted element in a forecast. The essential features have already been highlighted in the previous tables. The balance sheet is the asset status of your business at a specific time (the closing date of each financial year).
The construction of the financial forecast
To carry out the financial forecast , it is almost essential to rely on software or an application. Without it, you will have to build the tables yourself and perform a lot of calculations. The risk of error will be very high. Also, each modification will require significant work.
Using an application or software, your job will consist of:
- To use your sales assumptions,
- To identify all the expenses and investments necessary to launch your project,
- To mobilize financial resources to finance your needs (contributions, loans, grants, etc.),
- And to integrate all this information into the application or the software used.
Then your financial tables will be completed automatically. You can check:
- That your project generates profits, by checking that the net result of your income statement is positive,
- That your financing is balanced, by studying, in your financing plan, that your financial resources allow all your needs to be financed,
- Your cash flow is positive, by checking that the balance is systematically positive on your cash flow statement.
Last step: validation of the Business Plan
The validation of a business plan is done step by step and with different interlocutors.
Validate the preparation of the project
One of the most critical points is to validate your positioning and your offer with your future customers. This must be your number one priority. Polls and face-to-face exchanges are crucial, as well as testing. For your business to work, your offer must match customer expectations. If there is one essential element to validate, this is it.
Then, you can interact with entrepreneurs, business creation advisers and relatives. Do not hesitate to seek as many opinions as possible about your project. This allows you to get insights from outside people who have nothing to do with your project. Feedback can be interesting on subjects related to the choice of your location, your market in general and your competitors, or even the constitution of your project team.
The financing, the legal arrangement and the tax choices can be validated by your accountant or your business creation advisor. These are technical elements on which the expertise of a professional is welcome.
Validate the financial study of the Business Plan
The best contact to validate the financial forecast integrated into your business plan is your accountant. This professional is exceptionally competent in accounting, financial and tax analysis. It will therefore be able to validate a certain number of critical financial elements:
- The financial balance of your project and its financing plan,
- The evaluation of all the quantified elements incorporated in the forecast,
- Estimation of taxes, duties and social contributions,
- Consistency of financial tables (income statement, balance sheet, cash flow statement, etc.).
When the forecast contains errors, the accountant can rework it to offer you corrected tables. Then you need to incorporate them into your business plan instead of the previous ones.