What is a business plan?
In companies, but also in universities, colleges of higher education and institutions there is an enormous number of potential business ideas. These untapped ideas and potentials need to be translated into specific business concepts before they can become commercially successful. The basis for this translation is the business plan – the detailed working out and planning of operational actions, personnel resources and investments.
Why to write a business plan?
Professional investors, strategic partners and, not least, potential customers only support projects that are founded on a sound business plan. They do this for good reason.
The business plan:
- forces the company founders to systematically think through their business idea.
- shows knowledge gaps and helps to fill these efficiently and in a structured way.
- serves as the central means of communication between the various partners.
- gives an overview of the resources required and reveals holes in the plan.
- is the rehearsal for the real thing: and it doesn’t cost anything if a potential crash-landing is identified during the business planning, whereas, later, the consequences for the entrepreneur, the investors and the employees could be serious.
How is a business plan structured?
Executive summary: brief, concise presentation of the business.
Product / service idea: description of the product or service, including customer benefit and sales arguments. Its objective is to convince the reader of the benefit of the product or service.
Management team: description of the individual team members, their skills and experience with regard to founding a company and building up the business. Usually, the team is the most critical success factor. Therefore, investors will read this section of the business plan with particular interest and care.
Marketing: statements about the size of the market, the customer target segment as well as a description of the product or service’s price and advertising strategy and details of sales and distribution.
Business system and organization: description of the activities of the company, the production concept (e.g., own manufacturing vs. outsourcing) and the organization.
Implementation schedule: current status of the implementation and realization milestones.
Financing: calculation of the investment requirement, return on capital expectations for potential investors, balance sheet, P&L account and cash flow calculation.
Risks and opportunities: overview of risks and financial consequences shown in various scenarios.