A business plan as a precondition to success
A business plan is a written plan detailing how your company will implement its business idea in practice. A business plan will help you consider all of the key matters in founding a company, as well as challenge you to think about the profitability of the business and its potential obstacles.
What is a business plan?
A business plan is the foundation for any operations of a company, which helps you structure your business idea into an actionable form. It is a written plan in which you map out the different areas of the business, and measure the performance of your idea as well as how possible it is to implement in practice.
Drawing up a business plan improves your preconditions for commercialising your business idea by challenging you to answer important questions concerning the company’s practical operations.
A carefully drawn up business plan helps in preparing for potential obstacles and improves your chances at success in the market.
Creating a business plan as a light entrepreneur will make it easier to map out possible obstacles and your own competitive advantages.
However, these are not the only benefits. If you later transition from being a light entrepreneur to being an entrepreneur, a business plan is an important part of applying for a startup grant and other financial support.
Light entrepreneurship is an excellent way to test out in practice a business idea that is supported by a business plan, with a low threshold and without any large commitments.
The exact contents of a business plan will depend on how broad a plan is being created.
When it comes to a simple and small-scale business, a more concise business plan may be enough. A startup seeking external funding, on the other hand, will need a more detailed business plan.
In any case, it is good for a business plan to include at least the following:
Write out your business idea in the simplest possible way. Explain what kind of product or service you will be selling, who your customers will be, and how you will reach them.
It should be possible to condense a good business idea into a short and simple form that can also be understood by an outsider.
A business plan should convey what your qualifications are for conducting your future business. Assess your skills broadly in different areas, and detail which of your characteristics or experiences will support your skills as an entrepreneur.
Do you have experience in entrepreneurship, have you worked in the industry before, or are you educated in the field?
Include a description of your company’s products and services in the business plan. Compare your selection to competitors that already exist in the market, for example, in terms of pricing.
Why will customers choose your product or service, what are the company’s biggest competitive advantages?
An important part of creating a business plan is clearly defining the future customer base.
What are the problems or needs of customers that your company is responding to, what do customers value, and how can they be reached?
Mapping out the competitive situation in the market is an important part of surveying the risks and growth outlook of your business. By finding out who the current competitors are and what products they offer, you will also learn more about the number of potential customers in the market and the development outlook.
How does your company stand out from everyone already in the market, and what are your greatest advantages?
In order to plan the marketing of your company effectively, you need to be familiar with the needs and buying behaviour of customers in your target group. Consider which of your customers’ needs you wish to satisfy, and which marketing channel is the best for reaching your customers.
In which channels do the sales of the products or services take place, and what is the easiest way to implement this?
What are the future objectives of the business? What do you wish to achieve through the business, and how feasible are these objectives in the target market?
What are the biggest risks in your business, and if they were to occur, what would their effects be? How can you prepare for these in advance?
A cash flow statement maps out what kinds of costs starting and operating your business will entail. Take into account the necessary marketing costs, equipment and insurances.
A profitability calculation, in turn, will show how much you need to sell of your product or service within a given time in order to reach the result you are aiming for. Take into account the business’s running fixed costs, as well as any possible variable costs that grow with sales.