A successful business plan is the key to the sustainable development of a company or project. Usually, leading businesses and international organizations plan their future activities based on the key indicators of their performance both in the past and those they have now. This article discusses what a business plan is and how to create and use it for development.

Modern markets require new approaches to business planning in an organization. In addition, business planning skills need to be constantly improved by any manager and entrepreneur, since the economy is part of market communications, the market situation is in constant motion, and competition is becoming increasingly fierce. It is necessary to apply such models and forms of planning that will ensure maximum efficiency of management decisions. And the best option here remains business planning.

Business planning is a process of calculating costs, payback, analyzing the market, competitors and niches before starting your own business. Without this, it is difficult to calculate risks, prepare for upcoming difficulties. The creation of a business plan is preceded by preparation stages: searching for an idea, collecting information. The process of developing the document itself, as a rule, follows the scenario of one of the generally accepted international standards.

The essence of business planning

Business planning is an independent area of ​​activity of management personnel, directly related to entrepreneurship. Without such planning, any business will become ineffective, not bringing in enough profit.

The management of a future company carries out its activities in accordance with a special financial document – a business plan. In order for it to be realistic and easily and quickly revised if the situation and competitive environment suddenly change, its development should be carried out by specialists of various profiles.

Business planning allows you to create a working strategy, compare goals and the current state of affairs, and take into account limitations. Business planning saves you from many risks: lack of funds for the company’s operation, negative balance in capital flows, incompetent personnel policy, unsuccessful choice of sales geography, and choice of unsuccessful markets.

The reasons for the unprofitable work of many companies around the world are incorrect assessments or complete lack of forecasts of changes in the market, unrealistic ideas about their capabilities and resources. But the role of business planning is not limited to these functions: with the help of a plan, managers also attract partners, convince investors of the attractiveness of the project. In commercial activities, forecasts for the future and preliminary testing before launching a product on the market are of particular importance, so you cannot do without a business plan.

Usually, business planning is used to solve both strategic and tactical tasks of a company. Such formal planning brings many benefits to the enterprise, which pays off all the efforts, since thanks to the plan:

• top management gets used to thinking long-term;
• it becomes easier to provide the company with the necessary information;
• entrepreneurial risks are reduced;
• the actions of all team members become more coordinated;
• the plan helps to anticipate changes in the market and prepare for them.

Both managers and potential investors must accurately and soberly assess the position of the enterprise in the market and in the ranking of competitors, set clear and specific goals. Such goals can only be achieved in stages (provided that each stage is carried out exactly according to the business plan). If something suddenly goes wrong and the market situation changes dramatically, the business plan can be easily adjusted and redone (if, of course, it is correctly created).

Functions, tasks, goals of business planning

The first function of business planning is to create a document that will be used as a basis for developing and implementing a corporate strategy, which is especially important at the stage when the business is still a startup, and at critical moments (diversification with subsequent expansion of assets, increase in the range of products). Without business planning, it is impossible to analyze the effectiveness of decisions and their compliance with the company’s global strategy.

The second function is to plan the company’s economic activity. The plan is the basis for an objective assessment and control over the commercial side of the organization’s work.

The third function concerns attracting third-party capital: loans, investments. The bank needs not only guarantees of loan repayment and collateral for it, but also documented plans, expected indicators, and the company’s development strategy. This makes your request more convincing for creditors who are afraid that their money will simply disappear if your project fails. Business planning of an enterprise’s activities is one of the tools for attracting investment.

The essence of the fourth function is similar: a business plan is needed to attract investors and other companies, but not for the sake of direct investment, but for the sake of partnership and cooperation. A business plan is also the basis for the company’s marketing and advertising policy, convincing potential clients that the enterprise is promising and its reputation is impeccable.

Business planning involves setting goals and formulating tasks for the near and distant future. But the main purpose of such a document as a business plan is to think through the economic activities of the organization for the near and distant future in order to take into account the demand and needs of the target audience and find opportunities to acquire the necessary resources.

There are other functions of business planning: Social (to raise the status of an entrepreneur) and Special (to become a member of an association, to expand business contacts, to travel abroad).

In order to successfully implement entrepreneurial plans and make a profit, it is necessary to first collect information and draw up a business plan. In the process of collecting information and creating a plan, businessmen proceed from very specific tasks and needs. Usually these are:

• need for initial project data;
• technical and economic calculations;
• research of the current situation in the industry (within the framework of its area);
• marketing research;
• assessment of the financial prospects of the business project.

Modern business planning is designed to solve one serious problem: to outline the path of development of the enterprise. This will be the answer to the main question for any businessman: is it worthwhile to invest in this project? Will the investment pay off, will there be a profit?

As for more specific tasks of business planning, they are as follows:

• Find target markets, determine the company’s place in them, choose certain areas of work.
• Set long-term and short-term goals, think through the strategy and tactics, appoint responsible persons who will coordinate the implementation of the strategy.
• Determine product positions, range of services and those indicators that will be offered to clients, estimate the costs of their production and sale.
• Understand to what extent the existing staff meets the requirements and whether it is possible to motivate them to achieve the expected results.
• Consider what marketing activities need to be carried out (sales promotion, distribution channels, market research, advertising, changes in pricing policy, etc.).
• Analyze the current financial state of the company. Understand whether it has sufficient material and monetary resources to achieve the goals formulated during business planning.
• Identify possible problems and pitfalls that can disrupt the implementation of the plan.

Examples of business plans created by us

Four principles of business planning

For business planning to become an effective tool for a top manager, plans must be made clearly, distinctly and unambiguously. Here are the key principles for creating such a document:

1. Maintain a unified structure so that all the contents of the business plan — calculations, tasks, indicators, orders — are interconnected.
2. Ensure continuity of actions so that each stage logically follows from the previous one. Then it will be easier to track intermediate results and plan your future efforts.
3. Leave yourself the opportunity to adjust the business plan if it turns out that it does not work. If you miscalculated or made a mistake during planning, you need to quickly and flexibly restructure, updating the data and revising the entire document.
4. Describe all processes accurately, reduce qualitative metrics to quantitative ones. Each section of the plan should contain calculations. When the business plan is ready, double-check them all.

Examples of business plans created by us

Types of business plans

There are two types of company business plans: external and internal. The latter are intended for use within the company, and the former are for demonstration to a bank, potential investor or partner.

External business planning

These plans are, in a sense, presentations. They paint a vivid picture of what a promising, reliable and profitable project it is, focusing the attention of banks and investors on the profits they can make in the future. Lying or embellishing the facts is unacceptable, you just need to accurately and soberly describe your advantages. Tell the investor with the help of a business plan how much money you need and in what period of time his investment can pay off. But some are interested in other details, and then you need to provide your market research and outline your competitive advantages.

Business plans for external use are always richly illustrated. Screenshots, infographics, diagrams, factoids make the information visual and allow you to quickly cover all aspects of the project and make a decision in your favor.

The purpose of this document is to prove to the investor that the project is profitable and worth investing in. Think through several scenarios, indicate what amounts of funds are needed in each case.

External business plans are divided into:

• Credit: they are prepared when they want to get a loan or credit from a financial institution. The task of the business plan is to convince the reader of the profitability of the project. The bank sets the loan repayment terms and rate, focusing on this document.
• For the sale of a company. Contain not only a description of the prospects, but also the terms of the sale of the business. The goal is to convince a potential buyer to purchase the company.

Internal business planning

These documents do not go beyond the company and are needed, first of all, by the management. They are as honest and detailed as possible, contain a calculation of all costs, budget, production volumes, and asset valuation. It is also advisable to provide for adverse scenarios.

An internal plan may contain information that is a commercial secret and is not subject to disclosure (such as, for example, business vulnerabilities, competitive advantages, information about partners, and customer base analysis). Such a plan is developed very meticulously: it helps team members to familiarize themselves with the specifics of the project, its prospects, and the direction of its development in the shortest possible time.

Business plans for internal use are divided into:

• Management: with a list of functional roles and tasks of employees, their interrelations, the sequence of steps to achieve goals. According to such plans, it is possible to assess how effective each employee is, to reduce the number of errors in calculations. Management business planning is necessary when creating a company and in the process of its work.
• Project: created for a specific business project at the stage of its launch or when introducing innovations into production. Consist mainly of the calculation of expenses (finances and other resources). This is, for example, a plan for creating a new modification of a car model.
• Target: complement the main business plan of the company.