In his book The Art of War, Chinese philosopher Sun Tzu teaches that “if you know the enemy and know yourself, you need not fear the outcome of a hundred battles. The text, written in the 1st century BC, has a warlike character but fits perfectly into the business world: you need to know the market and your business to grow. Learning how to put together a business plan is essential in business administration to acquire this awareness.
The importance of a business plan
Just as a helmsman ensures the correct direction of a vessel using maps and compasses, a business plan is the ideal instrument to materialize the entrepreneur’s objectives, the strategies that must be followed to achieve success, and correlate these targets to the market’s growth opportunities.
The three functions of the business plan
Diagnose the new venture from a marketing, technical, financial, legal, and organizational point of view. In this way, the document prepared will be a preliminary indicator of the company’s functioning from all these perspectives;
Self benchmarking: a benchmark serves to highlight where we have reached and where we should have reached. Therefore, evaluating the evolution of the enterprise throughout its implementation is much easier when you have a good business plan;
Facilitate investors’ interest in contributing resources to your business.
How to draw up a business plan
In general, a good business plan transcribes all the details of the enterprise and relates it to the external factors surrounding the activity. It is a practical and flexible guide, adjustable according to market movements. Must contain:
Executive Summary
Any business plan worth its salt needs an executive summary. It contains an overview of the primary information in your business plan and summarizes the most critical points for each section. It usually has at most 1 page.
It must have some basic information such as the company’s legal form, location, initial investment, profile of entrepreneurs, products, and services offered, among others.
Strategic planning
I was explaining the definition of the company’s direction, mission, vision, values, goals, and primary objectives. It is the basis for implementing actions in the organization. It usually has a maximum of 4 pages.
Company description
It was spilling about the recent History of growth, revenue, organizational structure, partnerships, location, etc. In general, it is 2 to 3 pages long.
Products and services
What does the company deliver to the market? What are the life cycles of products, their differences, technological factors involved, research, primary customers, etc? In general, it usually has around two pages.
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Market Analysis
It is the most critical stage of planning, as it is at this point that you identify whether there is demand for what your business offers. It’s an excellent way to understand the market you intend to operate in.
Sector growth prospects, consumer characteristics, competitive assessment, market share details, and business risk analysis.
What is the client’s income?
Where does he live?
Why are you purchasing this service?
What are your purchasing habits?
These are some essential questions to ask when analyzing your business’s market. It determines several vital issues, such as your pricing policy, the promotional actions that should be carried out, the most appropriate distribution channels, and how to plan your communication.
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