The Structure of a Business Plan
Creating a business plan is essential before creating a company, regardless of the sector or area in which the activity is carried out. The business plan is the essence of our company, as it establishes its bases and guidelines, through analysis, study, reflection, organization and planning. The structure of a business plan has six parts: executive summary, description, market study, competitor analysis, marketing strategies and company financing.
That is why it is important to learn how to make a business plan correctly because our business project will depend on it. But do you know what each part of a business plan includes? Within our website you will find all kinds of examples of specific business plans; business plan for a restaurant or business plan for a hotel, depending on the sector.
Most important parts of a business plan
Among the characteristics of a business plan, it stands out that this type of plan must be easily readable and understandable and what type of business leadership is going to be applied. Hence it is necessary to structure the business plan in parts.
This will not only make it easier for us to read, but also allows us to detail some aspects for each key area or department of the company. This way it is much easier to refine our business idea, include changes or modifications while preserving the global idea.
- Executive summary: in this part of the business plan we must establish the needs of our company, both at the level of capital and financing as well as material and human resources, and the objectives that we want to achieve: market, customers, sales, profits, potential… For That, although it should come first, it is advisable to complete it at the end, when we have analyzed and filled out the rest of the business plan.
- Business description: it should include everything from the description of what we do, our products or services, to the current context of the sector, including future forecasts.
- Market study: we must include the target market and analyze other businesses within the industry to know where we stand out and how we are different. In addition to the market strategies that we will need to carry out to reach our target audience.
- Competitor analysis: delimit the strengths and weaknesses of our main competitors in order to develop advantageous strategies for our business and detect weaknesses that can become an obstacle to overcome.
- Sales and marketing strategies: defining promotional actions will be key to increasing the reach impact of our product and reaching potential customers. If we want to sell they must know us. To do this, it will be necessary to translate all these decisions into a marketing plan to achieve the set objectives.
- Company financing: located in the last part of the business plan but vital for the survival of a company. In this part we must include everything from initial and fixed expenses to production costs, as well as an approximate estimate of income according to the price of the product or service and the sales volume objective set. In addition, we must ask ourselves if we need external financing, which will involve having to convince investors, and the development of strategies to achieve it.
Example of structure for your company’s business plan
Now that you know the structure and the parts that make up the business plan, you can create your own business plan with which to design the strategy of your business project. This is the example of the structure that you must follow to successfully carry out any business plan:
Executive Summary
- Project description
- Competitive value
- Market
- Customers
- Equipment
- Financing requirements
Project description
- Specific and brief description of the project and what problem the business project solves. This point is crucial, as it is the presentation sheet to capture the interest of investors.
Market Description
- Market analysis
- Market maturity
- Sustainability
Value differences and Competitive Advantages
- Description of the value proposition and the competitive advantages that differentiate you from the rest
Equipment
- Description of the professional team that will be part of the project and the definition of their positions and responsibility within the organization.
- Strategy and Value Chain
- Marketing Mix Analysis: Production, marketing, sales and business internationalization model
SWOT Analysis
- Description of the strengths, weaknesses, opportunities and threats of a company.
Current Status-Milestones
- Description of the current moment of the business, at the point where it is by applying a roadmap of a company
Financial aspects
- Balance Sheet Projections
- Income Statement
- Cash Flows in an estimated period (1-3 years) and scenario sensitivity analysis
- Key financial KPI’s and the Internal Rate of Return (IRR).
Risks
- Identification and description of the types of business risks assumed by the project.
This is an example of a business plan structure, but it is not set in stone, it will depend largely on the needs of your business or priorities and you should focus on one structure or another depending on the perspective of your business.
What are the types of structures of a business plan
The general structure is important to create a business plan, but depending on the needs of your project or objective, you should prioritize one of the following categories or structures.
The four types of structure of a business plan are: mechanical, ideological, financial and international. We are going to see each of them and their specific components in detail.
1. Ideological structure
This first structure is the soul of our company. Here the identity of your brand or company is presented and the values that define it are described. The ideological structure is the distinction and credibility of your company compared to the competition; competitive advantages are also highlighted here.
It is essential to know the idea of your project, because if you do not define this structure well, you will come across it again and again in every strategic decision you make regarding the company.
Mission
The mission of a company answers the question: why does this business exist? It is the personality of an organization, the ultimate goal (the purpose) that the company has, which is why it must serve as a guide to make strategic decisions. In addition, it plays an inspiring role for employees who feel that they are part of that “mission.”
Vision
The vision of a company answers the question: where does this business want to go? It is an image of the company for the future and supports the objectives at both a strategic and operational level. When creating the vision of your company it is important that you reflect on how you will achieve it.
2. Mechanical structure of a business plan
Here are the project objectives and the strategies to achieve them, as well as the deadlines for reporting the results. The mechanical structure will give you the keys to detect errors and be able to change tactics.
Prices of your product or service
The prices of the products that will be decided taking into account the prices offered by your competition and the margin you have in your ability to reduce production costs to be able to apply a competitive price.
Distribution channels
They are the routes chosen by a company that takes its product from its manufacturing until it reaches the consumer.
Communication channels
Communication channels enhance the experience between the customer and the brand/company, provide brand recognition and impact on sales.
The channels you choose will depend on your objectives and should take into account your distribution methods. They can be offline (press releases, television ads, radio, billboards…) or online (email, marketing, social networks, display, etc.)
3. Financial structure of a business plan
This part or approach is the most relevant when creating a business plan, since this is where the viability of the company and profitability are revealed and helps us evaluate decisions, measure efficiency and identify critical points.
To create a good financial structure you must take into account six components:
- Calculation of results.
- Balance sheet.
- Projected cash flow.
- Analysis of an equilibrium point.
- Analysis of possible scenarios.
- Conclusions.
4. Financial structure of an international business plan
In carrying out this structure to create a business plan, you must focus on the analysis of the international environment and market in which the product or service will be launched or the business will expand.
A SWOT analysis must be carried out to know the Strengths, Opportunities, Weaknesses and Threats of our project abroad. This analysis will help us understand the international market and compare our offer with that of our main competitors.
Read Also: Learn How To Start A Business In The UK
Now that you have seen the parts that you should include in your business plan, how to organize the information and some examples that will help you visualize it, you are ready to send your business plan to investors!
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