The main idea of a business plan for an individual entrepreneur in any field of activity is to form a crude idea into a step-by-step action plan. Writing a guide stands in the way of starting your own business and successfully implementing ideas.
It is important to deliberately approach the issues of creating a step-by-step plan, since this directly affects the speed of implementation of the plan, the reaction of investors and partners. The absence of mistakes in the business plan is the key to the rapid advancement of the established organization without crises at different stages of development.
A business plan can really be done independently, moreover, this approach is recommended for those who are seriously interested in their business. The main thing is to follow the instructions clearly and avoid the most common mistakes.
What is a business plan and why should it be drawn up
When a novice entrepreneur has a note, an idea, and just a desire to start his own business, he thoughtlessly immediately rushes into the pool with a desire to start acting as soon as possible. Even those who preliminarily conduct an audit of their market segment fall into this category because this step is not enough. For purposeful development with great prospects in the future, a business plan is needed.
It is also needed by those who do not dare to start, even when there are certain ambitions. When an entrepreneur has no idea from which side to approach the implementation of his plan, then he needs a business plan.
What is a business plan
A business plan is a guide that describes the mechanisms for implementing an entrepreneurial idea. Without fail, this plan must be understandable to the compiler, executors, and investors. Also, for a comprehensive analysis, the following should be considered:
- Initial problems, or resources that are lacking. Here a businessman must think about what exactly he lacks for a successful start: money, skills, place, time, experience, etc.
- Initial resources, or what you have: equipment, partners, raw materials, connections, etc.
- Result. What this start should bring: annual turnover, the amount of net revenue, access to the regional / national / international level.
- A step-by-step plan that will guide you from where you are now to the desired result.
All points should not be filled in according to the principle of “just fill in a plan point”. It is important to collect personalized data that clearly corresponds to reality. Problems and resources will allow you to concentrate and collect everything you need to start. Goals will show you which direction to go and when to stop.
The purpose of the business plan
Two main goals can be distinguished:
- Get money from investors. In this case, it is important to use marketing tools, to take care of the beauty and presentability of the business plan, because this is the only way to sell your business idea.
- Draw up a business plan for your own use. The design is not paramount here. The goal is to save money.
Varieties of business plans
Depending on the purpose, there are two types of business plans for individual entrepreneurs: for investors and personal
The document must:
- Present the main idea.
- Explain why it is socially important, profitable and should be sponsored.
- Show how the money received will be used.
- Clear logic. Actions should be presented in a clear sequence, logically justified and justified. It is necessary to provide arguments for all key terms, procedures.
- Attractiveness of presentation. You should like the text: beautiful design, smooth narration, positive aspects, psychological attractiveness. It is also important not to focus on problems, risks, difficulties. It is better to say that there is a situation A, with possible consequences B, but this is overcome with the help of C.
- Innings. It all depends on the speaker and his presentation. He must be confident in himself and his project, and the visuals must clearly fit the text.
By following simple rules, you can not only draw attention to your ideas but also easily achieve the infusion of sponsorship funds into the project.
Personal business plan
Action guidelines include:
- Business Founder’s Entrepreneurial Skills Development Plan;
- Detailed analysis of the idea;
- Step-by-step instructions for each of the stages of the organization’s development (origin, infancy, adolescence, flowering, stability, etc.).
- Financial plan (its purpose is to save money).
Business plan structure
After studying the mechanisms, tools, and basic rules of a business plan for an individual entrepreneur, you can take on the structure of the document. There is a general scheme that can be changed depending on the type of activity and the characteristics of the project. Allowed to make personal edits. It is not recommended to oversimplify the plan.
First of all, you need to draw up a title page. The official title must contain:
- full name of the project being developed;
- the name of the organization for which the business plan is being created;
- location of the organization – country and city, if there is already a room, then the full address;
- contacts for communication: phone, instant messengers, social networks, mail;
- information about the founder;
If you are developing a project for investors, then you can immediately expose financial information with “flashy” headlines. For example, in order to attract attention, you can specify the time for which the project will pay off, the planned income in the first year, the percentage of profitability, etc. However, do not start right away with the amount required.
Foreword or summary
The essence of the next section is to briefly and succinctly describe everything that will be discussed further. If the project is being created for investors, then it is worth approaching the drawing up of a resume as meticulously as possible. In practice, it is the first section that creates the main impression and has a decisive influence on the decision.
The resume must provide an overview of:
- goals and objectives of the project;
- the resources to be used;
- implementation methods;
- the likelihood of success;
- the novelty of the idea;
- relevance of the idea to the target audience;
- the amount to be collected;
- how and when the funds will be refunded;
- performance indicators of the future business.
A resume should inspire and persuade. To do this, speak the truth, use numbers, and avoid water.
Now it is necessary to decide what the entrepreneur wants to achieve: what product or service to provide, what activity to engage in, etc. Describe in detail:
- Technological processes to be used. However, everything in detail and detail should be described in a separate appendix or document. Here it is worth highlighting the most important thing.
- What benefits will consumers get by using your product: Back up each statement with a strong argument.
- The uniqueness of your idea. What will be the originality and difference from competitors.
The point of this section is to show how your idea will stay on the market, how competitive it is.
We make this section as detailed as possible in order to take into account all possible nuances.
It is important to study:
- The general position of the market segment, the laws of functioning, trends of development or decline, prospects.
- What sells well in this industry and how it will help you.
- Technical equipment, as far as it is available to you.
- Why does this niche appeal to you.
- External factors that may affect the project: crisis, labor force, taxation, availability of raw materials, etc.
- Competitors: their availability, what services they provide, the cost of their goods and services.
- A portrait of the target audience and a typical buyer: who will buy the product and why.
- The reason why customers want your product. In what situations can a person choose you or competitors.
You can use only fresh and relevant information since the success of the undertaking directly depends on this.
This section demonstrates what you can do with your businesses within the industry. Here it is necessary to describe everything in detail about the company.
When the organization is created (was created).
- Name and founder.
- Organizational and legal form.
- The number of employees.
- The structure of the company.
- Availability of partners.
- General data on the financial condition of the enterprise.
If you are starting a new business, then carefully write down each item, planning how the organization will look in the future at different stages.
Study your product carefully:
- Name, category, purpose and how you can use it.
- Important and minor characteristics.
- Benefits and arguments for competitiveness.
- Copyright and patent.
- Quality certificates.
- Impact on human health.
- Packaging and appearance.
- Warranty and service.
- Operational characteristics.
- Disposal options.
The marketing plan tells about the strategy for promoting your product in the market. Consumption volumes and methods of their increase are calculated.
It is proposed to study the main mechanisms for attracting customers, as well as to think over the details of the advertising campaign.
Here it is planned to consider in detail the methods of sales (wholesale or retail), as well as methods of sale, places of sale.
Analyze and compose the entire path of the product from the initial stages of production to the hands of the consumer.
- Product packaging.
- Places and methods of storage.
- Service after purchase.
Advertising moves can be as follows:
- Promotions and discounts.
- Partnership programs.
- Free trial.
- Exhibitions, etc.
See how the parameters of quality, price, and profitability are interrelated. If there is a correlation, then the indicator needs to be leveled.
- Technical equipment.
- Manufacturing technique.
All these factors directly affect the production of a product. You also need to think about ways through which, if necessary, you can increase or decrease sales.
If you have a partner, assign responsibilities. It is imperative to conclude an agreement regulating the norms of cooperation.
Additionally, investigate the following questions:
- How developed and competitive is your production.
- Is it possible to introduce innovative engineering solutions.
- Development of the transport system, logistics routes.
- Supply of resources.
- Purchase or lease of production or storage facilities.
- A complete description of the qualifications of the personnel that you need.
- What hazard category does your production fall into and what permits you will have to obtain.
- Production capacity.
- Categories of resources used, their quality, quantity, shelf life and regularity of delivery.
- Contractors, suppliers and third parties who are involved in production.
- Cost of goods.
- Estimates for a month, quarter, year.
Study the legislation of your industry, cite all the excerpts that directly affect the business.
In this section, after studying the legal framework, it is worthwhile to fully describe the steps for developing an enterprise, indicating all the terms. Make a timetable for setting up your business.
The following points should be disclosed:
- Plan of income and expenses for several years ahead.
- How long will the idea take.
- A plan to move assets and money.
- General balance of equity for the first year.
- Break-even analysis, in which perspectives, charts of financial activities, detection of a break-even point should be studied.
It is recommended to describe and think over a plan for attracting additional investors.
When drawing up a financial plan, adhere to the structure:
- Annual report on profit and waste.
- The structure of tax payments.
- A plan for describing the dynamics of finance.
- Planned balance sheet for the first year of the business plan implementation.
- How much investment is required.
- Spending that will follow the use of hired monetary resources.
On the way of development, a young enterprise will surely encounter obstacles that can provoke various crises. It is important to prescribe them, anticipate and think over methods of ways out of a difficult situation. For this, it is recommended to study the basic concepts of crisis management.
Here it is worth placing copies of documents, contracts, and licenses that are relevant to the business.
Errors in drawing up a business plan
Despite the fact that the structure of a business plan is simple enough, beginners can make a number of mistakes. Watch closely for:
- The reliability of the information;
- Calculation errors.
# 1 Investor will pay for everything
The investor will pay no more than 70% of the total cost. If a person is not ready to take risks and invest in his idea, then no one will do it.
# 2 Fuzzy timing
Without a clear timeline, the idea will not only fail to inspire investor confidence but is also unlikely to be implemented.
No. 3 The legal framework is not spelled out
If you do not study the norms of the legislation, then you can get not only a large fine but also criminal prosecution. Carefully study the civil, criminal, and administrative codes. Then, make sure you know all about environmental regulations and taxes.
# 4 I don’t know how, but I’ll do it myself anyway
Engage professionals where needed. The higher the qualification, the better the result.
# 5 Not all expenses are included in the plan
Consider everything, down to the last penny: VAT, expenses for unloading goods, marriage, installation, breakdowns, etc. Lack of funds can completely stop production.
# 6 Forgotten risks
They should not be hidden, it is important to think over and find a solution. Negligence and excessive optimism will not help to cope with the crisis.
Anyone who studies this topic in detail can draw up a business plan. In the future, the document will provide tremendous assistance in raising funds and promoting business.