To evaluate a business, professional investors would want to think with numbers, that is, with a business plan. The business plan is that document that demonstrates to potential investors that your business is legal and has the usual basis from a financial point of view. It is a huge mistake not to have a business plan; not having it means not having the compass capable of directing your future business in the right direction.
The business plan is the identity card of the company, in which all the components of a business plan are put in writing: from market analysis to the financial project, from marketing to human resource management. The more detailed it is, the more it facilitates the possibility of leveraging debt with institutions or individuals while asking for funds.
Preparing the business plan takes time and dedication. This is not a simple description of the activity that you intend to start, nor a reminder of the main expenses to be incurred. Doing so consists entirely of something else.
How to create a successful business plan
In drafting a business plan, you must consider these factors:
- The objectives; which will motivate entrepreneurs and potential investors
- The market research and plan marketing
- The income statement with costs and revenues
- The actual assets with cash flow expected
Sometimes, it is enough to evaluate the assumptions on which the business plan is based to understand immediately if the company will be successful and if this success will be sustainable. Only by reading the document, entrepreneurs, or investors (including banks) can evaluate the business idea. Knowing how to make a good business plan is not a guarantee of success for the company, but it is already an excellent sign to see what it is like to be an entrepreneur: and this applies whether you introduce yourself to the bank, the market, or to investor partners.
Business plan: Why can’t you do without it?
It’s not worth going into the detail of the business plan just for formalities, but it’s definitely a tool you can’t do without. Very few entrepreneurs may have started their businesses with a business plan, but not all have updated their plans over the years.
To write an effective business plan, it is important that you carry out market research. Market research is an essential step in launching your business: How big is it, is it developing, what are the usual profits in the sector? Many questions must be asked in this step. This study can be carried out using documents on the internet, but I strongly advise you to get closer to the target clientele: Do not hesitate to contact professionals in the sector and above all to prospect directly in the field.
You will therefore have to define a very precise target customer segment: the average age of your customer, their gender, their CSP, etc. Make sure you obtain all these elements before you start.
This document is one of the most important things there is for a company. Not just that, it is also for your personal accounts! Would you go on a trip around the world without a map? Would you lend money to someone who doesn’t know exactly how they’re going to use it? Definitely not!
To create a winning business plan, ask for help from an expert. This is why it is important that you know how to draw up your business plan or get help from those who do it for a living. Meeting an expert for it is an appreciated service precisely because doing it yourself would require a lot of time and energy. If you decide to develop it yourself, I would like to give you two important tips:
- If your business plan is more than 50 pages, throw it out and start over. No investor has the desire and time to read 50 pages. Your aim is to explain and convince in a short time, indeed in the shortest time possible using the maximum synthesis.
- Every business plan crashes as soon as the product is available on the shelves. You then have to update it continuously or it will be just a pad of paper only useful for lighting the fireplace.
As you have seen, having a winning business plan is essential for several reasons, and creating a business plan also serves to start testing the terrain on which you will move, and to understand over time how your target market responds to your offer.
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