If you’re ready to take it seriously, you need a business plan that helps you materialize everything you have in mind. In this master plan, you will include both the general description of your business, as well as the resources, skills, and strategies that your future company will require to achieve its goals and achieve profitability.
In Finerio, in some way, we have already gone through a good part of that process. So, we want to share 10 basic points that you must include in your business plan so that you start your business with the right foot.
1. Executive Summary
Your executive summary is the most powerful weapon to sell and attract investors. You build this point from the rest of the points in this list, it is a summary of your entire plan, so you must leave it to the end, but it is the first thing you should present to other people when you talk about your business. Therefore, you must have it very clear. Your executive summary should include:
- What is your business?
- How your business operates (production and distribution processes).
- How money is generated and profits are obtained, that is, your business model.
- Long-term goals and short-term objectives.
2. Market needs
The key to founding your own company is to identify a problem or an unmet need, which truly thrills you. Once you have identified this problem or need, look for an innovative solution, around which you can build a business. Your solution may be completely new or it may simply be an improvement to an existing product or service. Your business must be unique and different from others to be competitive with the rest of the offers in the market.
3. Market size
Analyze how big is the market to which your solution is directed, how much is growing each year and at what pace, and what is the average profit margin. You must make projections in the future and make sure that there is a group of people, who need your solution, big enough to build a profitable business around it.
4. Analysis of the competition
Investigate the weaknesses and strengths of your competitors. This will help you identify and improve the unique advantages of your product or service. It is these unique advantages that you must have very well identified and strengthen your business around them. Do not try to improve your weaknesses, focus on your strengths.
5. Target market
Meet your target or target audience, to clearly focus your marketing strategies. You must know everything about them: their age range, occupation, attitudes, habits, socioeconomic status, geographic location, lifestyle; what excites them, what discourages them, their interests, everything. Speak one on one with your first clients. With this knowledge, you can define your image as a brand, the tone of your advertising and marketing, and even the characteristics of your product or service.
6. Promotional strategies
Define how you will reach your target market: distribution channels, points of sale, advertising campaigns, etc. You must create a complete strategy that contemplates the objective of your campaigns, the means that will be used to reach the majority of your clients, the frequency of the messages, etc.
All the components of your marketing and advertising strategy must work harmoniously and behave as one.
7. Organizational structure
Identify the positions of the company, do not forget to include external collaborators, and describe their functions and the value they bring.
Something we have learned in Finerio is that many investors give great importance to the team behind the venture, sometimes even more than the same product or service. Therefore, to form your team you must do it with great care.
8. Costs and pricing of your product or service
Make a budget in which you estimate everything necessary to develop your product or service and take it to your customers. Also, you must make a sales projection and know the profit margins. This will not be true to the letter, but you will identify savings opportunities in your costs and perhaps discover new sources of income, just as it happens in a personal budget.
The essential elements that you should consider are:
- Direct costs (raw material and labor to produce the product or service)
- Sale price
- Margin of gain
- Projections of units sold
- Indirect or fixed costs (electricity, water, telephone, internet, rent, salaries of administrative employees, stationery, taxes, advertising or others that have nothing to do with the production process of the good or service)
9. Required capital and sources of financing
Once you have your budget, you will know how much money you need to start your business. Then, the next step is to determine if you have the necessary resources and are willing to risk them or you will turn to external sources of financing. If your case is the second one, you can take into account investments or loans, relatives, banks or financial institutions and contests.
10. Cash flow or expense plan
Record the cash inflows and outflows that your company will have monthly. With this control, you can establish the amount of money you need in a certain time. It is recommended to do it for the first two years of your business and to know when you will recover your investment.
In turn, estimate how much money you would allocate in case of unforeseen events. If you stumble and do not have a plan, your business may fail or even worse, put your own finances at risk.
Prepare a business plan is a challenge and we will not tell you that the rest will be a piece of cake, but it will facilitate the next stages of your venture. You will know exactly what elements are necessary to start your business and where you are going. In addition, it will be a crucial element to attract investors. So, good luck and hands on the job!