Business planning allows you to calculate costs, analyze competing companies and the niche, and business efficiency before opening an enterprise. The procedure will help you identify potential risks and carefully prepare for future difficulties. This is a strategic task carried out by top managers. Let’s look at the essence, principles, stages, and typical mistakes that occur when putting a plan into practice.
What does business planning mean?
This is the formation of a working tactic that compares up-to-date information, goals, taking into account all current limits for optimal selection of markets, and geographic distribution of goods (services). Through this process, it is possible to avoid a range of risks that are associated with a lack of financial resources, recruitment problems, and a negative balance.
Tasks, principles and functions of planning
Functions:
- Designing the economic work of the company, evaluating, monitoring the financial indicators of the enterprise.
- Development of documentation – a base for analyzing the efficiency of decisions made by the team, creating branded tactics.
- Involvement of contractors, advertising campaigns, marketing technologies (tools for convincing customers of the effectiveness of the organization).
- Attracting financing: investments, loans. Investors and banking organizations not only want to get a guarantee of repayment of borrowed funds, but also to see the tactics of the company’s development.
Planning is carried out to solve the following tasks:
- considering marketing measures for product promotion;
- choosing the organization’s areas of work, finding target markets, and locating the company in them;
- formulation of long-term, short-term goals;
- identification of problems that may lead to non-fulfillment of the document;
- estimating the costs of manufacturing products, purchasing industrial equipment, and launching an enterprise;
- identification of services (goods) offered to potential buyers;
- assessment of staff compliance with the needs of the company;
- analysis of the actual commercial condition of the company.
Planning is an effective tool for top–level personnel, but only in the case of an unambiguous, clear document design.
There are four principles:
- A detailed, accurate description of all procedures: the reduction of quality metrics into quantitative ones, the inclusion of calculations in all planning blocks.
- Continuity. Each new stage must follow the last one. This scheme will simplify the procedure for monitoring interim results.
- Unity of structure. All calculations, tasks, and other elements must be interconnected.
- The possibility of making amendments and corrections. If planning does not go according to plan, inaccuracies were made during the formation of the plan, you can adjust the design data.
Stages
A business plan is a basic document based on a thorough analysis and containing a description of everything that affects a financial project, the specifics of its development, and as a result, the profitability of the company. All planning development activities are divided into 7 stages:
- Preparation and collection of market information for further use by the team.
- Assessment of the resource base for the company’s development: production facilities, materials, location of services, equipment, machinery.
- Assessment of the staff (including the number of staff members, length of service requirements, qualifications of employees).
- Definition of time limits – the deadline for the completion of the next stage.
- Calculation of expenses, including the costs of starting an enterprise; its growth in the medium term (over the next two years).
- Risk assessment: investigation of possible problems and difficulties that may affect the development of the project; preparation of solutions to eliminate them.
- Drawing up a conclusion: a summary of all data on the organization, the image of the buyer, and the main parameters of the finished product.
Types of business plans
External is a kind of presentation of the company’s activities, containing a vivid, accurate, objective description related to the company’s growth potential. However, distortion of factual data is unacceptable. When developing an external plan, you will need a large amount of graphic illustrative materials, information to quickly cover all the main points and visual clarity. The goal is to demonstrate to banks, counterparties, and investors the profitability and prospects of the plan. At the same time, it is advisable to consider several models of the company’s development, indicating the amount of finance for each of the models.
Internal data may include data related to trade secrets. The development of these plans should be treated with maximum responsibility, as they help the team to study the specifics of the project as soon as possible, which will contribute to its rapid and successful implementation.
The plans are divided into:
- design projects are developed for the project at the start–up stage, in the process of advanced transformations. Usually such documents are cost estimates for the implementation of the goal;
- targets are an addition to the main plan; they are created by the team for a specific purpose;
- managerial – includes a list of tasks, a list of employee roles, and the interdependencies between them.
In addition, such plans prescribe step-by-step actions that will ensure the achievement of the company’s goals.
Common mistakes
When making a plan, the following mistakes are usually made:
- Drawing up a plan is personal, which often leads to one-sidedness and superficiality of the document. It is advisable to involve specialists from different fields and consider different points of view, as this will allow for an integrated approach to document development that takes into account the maximum number of parameters and nuances.
- Lack of “backup business plans” – the project should be flexible, take into account possible difficulties, and consider the initial stages of problem solving.
- Ignoring the tactics of the company, and therefore the specific direction of the course chosen by the company.
- Underestimating competing organizations. A thorough analysis of rival companies will allow you to find their weaknesses and, on this basis, work out your own solutions, identify the competitive advantages of your company.
- Ignoring the needs of consumers: it is wrong to rely solely on your own product ratings.
What to read and watch on the topic
It is necessary to refer to various additional sources of information that will allow you to better understand the mechanisms and specifics of creating projects. Examples of such sources include video archives of webinars, short lectures or entire textbooks on business organization, or paid courses.
It is recommended to read books about the methodology and practice of project development; about starting your own business from scratch or with minimal investment; about the tactics and strategy of an effective company.
Those who more easily master data in audio format with reinforcement of video materials, lectures on planning in video format will be optimal. Various online resources contain information related to the development of business projects, including video lectures recorded during students’ studies.
You can also contact specialized Internet portals, mass media, and thematic online communities.
These are methods for getting feedback from people with practical experience. Blindly following advice and instructions is unlikely to have the desired effect.
FAQ
Is it advisable to upload ready-made business plans?
Yes, but such template cases will not contain personalized data on your product. Ready-made solutions can be used as a basis or example for your own project. They will allow you to explore an area of entrepreneurship that is unknown to you, which will help expand your knowledge of planning as a tool.
In which cases is it better to order a business plan?
It is advisable to use the services of third-party companies when it is necessary to develop a business project for a banking institution. This will help save time resources, as well as increase the likelihood of a loan program being approved.
What is the best thing to do: buy a ready-made business plan or develop it yourself?
The optimal solution is a unique combination of options! Often, the method of self-creation of a business project is much more effective due to a better understanding by the drafter of the document of the nuances of the company’s work. It is advisable to contact consulting firms, but only at the final stage of planning, for a more attractive visualization of the information received.
Conclusion
Business planning should be implemented before starting any project. Through this procedure, it is possible to assess the specifics and peculiarities of the market, outline certain goals and significantly reduce the risk of a failed business venture. It is not recommended to use ready-made business projects as guidance for document development. Planning should be done by a team, not by a single employee. A collective approach will provide a comprehensive and objective approach to the development of a business project, which means that risks and the likelihood of making erroneous decisions will be reduced.
