What should my business plan look like? How long does it have to be? Do I need it? How often should it be updated? Find out how to prepare for the editorial.
The business plan is a fundamental document for every business activity, from the simplest and most traditional to the most complex and innovative. A document describes the business idea and the program for realizing the concept. Simplifying, we can say that the definition of a business plan is: a description of the future of a specific business.
The business plan has multiple functions and can be of real help, both for those who draw it up and those who read it, in carrying out a series of strategic and managerial tasks. For example, it can be useful for entrepreneurs looking for investments to convey their vision to potential investors. It can be used by companies that are looking to attract key employees (e.g., a marketing manager of a major company, a senior sales manager, a specialist workshop manager, or a renowned chef) to find new business partners, negotiate with suppliers, etc. But the most shared, central, and often underestimated function is the management one: that is, to understand how to best manage the business.
In summary, the business plan conveys the company objectives, the strategies that will be put in place to achieve them, the potential obstacles that could create difficulties and the possible ways to solve them, the detailed organizational structure of the activity, and, finally,,, the necessary capital. Then, finance the company, and the time it takes to break even and start making a profit. Click here for more information.
How long should the Business Plan be?
One of the first doubts that arise when starting to draw up the first business plan usually concerns the length and composition of the document. Finally, your company overview should include both short- and long-term goals. Short-term goals, generally, should be achievable within the next year, while one to five years is a good window for long-term goals. Make sure all your goals are SMART: specific, measurable, attainable, realistic, and time-bound.
A complete business plan, which is the most complex form, consists of at least the following nine chapters or sections:
- Executive Summary
- The description of the company
- The description and illustration of the products or services
- The analysis of the sector
- Market analysis
- The marketing strategy
- The management structure
- The implementation plan or operational plan
- Financial accounting: necessary capital and financial information
The length of the document may vary from a single page to a hundred in the case of very complex businesses. On average, a business plan will consist of 15 – 20 pages, but as anticipated, wide variations from the norm are possible.
Much will therefore depend on the nature of the business and its purpose. For example, suppose the business plan refers to a “simple” activity (e.g., a stationery shop or an artisanal thermo-hydraulic activity), and the goal is purely that of management. In that case, it will be possible to summarize everything in 3-4 pages. On the other hand, if you are planning to launch a new type of innovative business or even a new industry or a particularly complex business and the goal is to find financiers worth several million euros, the document will require a description. More extensive and detailed.
Who Needs a Business Plan?
A business plan should be written whenever an individual is considering a new venture. Knowing where you’re going and how you will achieve your business goals is the most integral part of business planning. Furthermore, if you’re looking for financing or to attract investors you will need a way to relay your concept.
To date, the only person who does not need a business plan is someone who does not conduct business. But, at the same time, any activity at any stage of life, to any extent that consumes significant resources (money, energy, or time) and which should return a profit, you should invest some time to come up with your plan.
Startup
The business plan is usually the typical document that occupies the mind and time of the entrepreneur looking for funds to start a new business. However, many large companies saw their birth on paper before even a single euro was spent on their startup. In this case, the plan is often useful for convincing investors (be they private individuals, venture capitalists, or banks) to invest the capital necessary to give life to the project described in the business plan.
Most business planning books and guides are often aimed at this situation. For startups, drafting the business plan is also fundamental to analyzing, designing and refining the business idea in the best possible way and understanding its risks and opportunities. However, it is a mistake to think that only new businesses need a business plan.
Companies already started
A business plan in this phase allows the management of the existing and, above all, serious analysis and growth planning.
Companies in an intermediate stage and ready to take an important step may also need to find financing to speed up the process. For multiple purposes, it may also be useful to have different versions of the plan depending on the drive.
How often should the Business Plan be updated?
There is no practice regarding the periodic updating of the business plan, but undoubtedly some obvious causes can be identified that more than others suggest the time for an update.
- Perhaps the most frequent update is that linked to financial periods. It is essential to update the annual plan by aligning it with the new objectives and resources. If the sector in which you are operating is rapidly evolving, the project could be half-yearly, quarterly, or monthly.
- The need to find funding is a key moment for the preparation and updating of the business plan. Lenders and lenders need and usually require an updated plan to make funding decisions.
- Significant market changes, e.g., a new competitor, a change in customer tastes, regulatory changes, etc., can strongly influence the fate of a business.
- When you are in the process of developing a new product, technology, or service, updating the business plan is not a choice but a duty! It is essential to ask how the novelty affects the company, its activities, projects, and offers.
- Another key moment coincides with the management changes. New managers or partners should get the most up-to-date information on the company and its objectives.
- Finally, it will seem trivial, but redoing the business plan when it no longer reflects reality is one of the most underestimated conditions by companies.
So which business plan is right for me?
Business plans share many things in common and some goals. But as already mentioned, business plans are not all the same.
There are roughly three distinct types of business plans:
- Mini plan: usually short and dry.
- Worktops: typically more voluminous and detailed.
- Presentation plans: the business plan is commonly used to be exposed to potential lenders, partners, collaborators, stakeholders, etc.
The Mini plan
The mini business plan is usually very concise, can reach a maximum of ten pages, and includes at least: the idea and description of the business, the financing needs, the marketing plan, and the operational (implementation) plan. In addition, providing an in-depth analysis of the management of incoming and outgoing cash flows and, therefore, on company liquidity and the budget projection can be very useful.
Undoubtedly, the mini-plan is perfect for quickly analyzing a business idea or measuring the interest of a potential partner or minor investor. However, it can also be useful as an introduction or prelude to a complete business plan, a preliminary phase that can be excessively onerous both in production and reading.
The work plan
The so-called “working plan” is the standard business tool. Usually, this type of business plan is particularly voluminous and can reach several dozen pages in the most complex cases.
The working plan is mainly for internal use, it must go in-depth without neglecting details, but the exposure must know how to be dry and direct.
The worktop usually does not require a particular aesthetic or display frills. On the contrary, it is a management document created for the company. It is like the mason’s trowel or the van for the carrier. It was not designed to show off but to be used!
The Presentation Plan
Taking the work plan cleans it of technicalities and the informal approach and completes it by giving it a more business cut in the language used. In the exhibition, we will have a perfect business plan for presenting your company to bankers, investors, or similar.
In drafting this type of plan, it is, therefore, necessary to remember that the recipients will not be familiar with the operations or specific products. Still, they will certainly be very familiar with economic and financial management. To convince the interlocutor, it is, therefore, necessary to speak his language to break down any possible communication barrier.
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