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Topics & Tips
Business Planning
Key Steps to Developing a Quality Business Plan
There are many important
steps to consider when developing a business plan for
your company, but the first step is to fully understand
the main uses of a business-plan.
The four main uses of a business plan (BP) are as
follows:
A BP is a written document that you can use in your
search for external financing.
A BP is a tactical planning and management tool for
your business.
A BP is a document showing the capacity of your team
to control and manage all the aspects of the company.
A BP brings you new ideas to refine your project by
checking and estimating the induced hypothesis.
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The necessity of Business Plans
The drafting or update of your business-plan is
essential to the good management of your company. It can
be used when searching for a business partner, for
obtaining external financing, and for defining some
stages of the development of your company, such as:
The creation of your company.
The launching of a new product.
The establishment in a new market.
The transfer, buy-out, or the structural development
of your company.
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Should you call in a consultant or write the BP by
yourself?
You should be the main (if not single) author of
your business-plan, because the BP is, so to speak, your
own "baby", it is a reflection of your personality; it
is by this means that your investors will discover the
person with whom they collaborate.
But your project may be too important and you may want
to call in a consultant for help and consultation. Even
so, you should stay in control of its development!
Tips for developing a quality business plan.
1. To be credible, a business plan must be coherent and
each parameter in the BP must be based on facts.
2. There are many methods to build BPs, but very few can
help you correctly carry out reliable financial
projections based on a preliminary commercial
engineering and market study.
Indeed, one frequent mistake when building BP's is to
first define the target in terms of market share, and
then try to "find" the number of customers necessary to
fill these objectives! This process should be reversed.
3. In addition, one essential point in a BP is to define
concrete policies and measures. This definition aims to
gain a reasonable number of customers, based on a
sufficient knowledge of the market. The quantitative
estimate of this gain must be calculated on realistic
monthly and annual increase rates. A well-founded
pricing policy then makes it possible to estimate the
sales turnover in the years ahead.
The calculation of the costs of the planned actions in
your BP are essential and make overall financial
projections possible. In short, financial forecasts
including those related to the financing of the project
must be elaborated from the basic elements of the
project. They should be preceded by a commercial
engineering study which projects a realistic estimate of
sales.
4. In a BP, the marketing plans as well as the financial
forecasts require a basic understanding of how these
important elements are calculated. You can use good
software some of which is free to facilitate the
development of your BP.
5. The last point but certainly not the least
significant: A BP is never ended "once and for all". A
regular follow-up and comparison between the theoretical
BP and the reality of its execution are essential. You
can then modify your BP and adapt it to improve
performance and achieve your goals.
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