Business plan writing rules sample. Business plan for small businesses from scratch: recommendations and samples with calculations. Public relations
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Often, aspiring entrepreneurs are faced with a rather difficult problem - how to draw up a business plan. This task is not easy, because in order to work through each element, you need to have certain knowledge and understanding of the activity in which you are going to start a business. If they are not there, then you will have to first get acquainted with the information, various methods, and only then move on to practice. So all the same, you need to start a business wisely and calculate everything.
By the way, we will make a series of articles with examples and sample business plans.
We set an ultimate goal for ourselves
Before writing a business plan, it is very important, at the beginning of project development, to understand for yourself what specific goal the organization will pursue. For a successful implementation, it is necessary to take into account the importance of three significant factors:
- Awareness of the initial location (what we will start from, the so-called point "A").
- Determination of the ultimate goal, the achievement of which will be the most important result (let it be point "B").
- Drawing up a clear sequence of how to come from point "A" to point "B", as well as understanding the mechanism, working it out.
Determine for whom we draw up a business plan
Next, you need to understand for whom this plan is being drawn up. The detail of the presentation, the evidence base will depend on your final choice. Any project is prepared for one of the following "consumers":
- For potential investors ... These can be lenders, government support bodies that provide subsidies and other incentives to developing businesses, various donors.
When writing in this case, special attention should be paid to the evidence base of the consistency of the project being developed, as well as to the conviction of the effectiveness of the use of the funds provided. This information will be relevant both for those who lend money and for those who give them free of charge (subsidies, grants).
At the same time, it is very important to make all your actions logical and consistent. Some of the information may be presented slightly embellished in order to obtain financial support. However, you do not need to be zealous with this.
The main parameters of such a project will be such qualities as cleanliness, accuracy and consistency. All facts must contain specifics, explanations. Detail in this case is also welcome.
Presentation will depend on the presentation to potential investors, you will need to use slides, clarity (samples, research results, etc.).
- For yourself ... Such a plan is drawn up for the actions that will be used during implementation to achieve maximum efficiency.
In this case, it is important to reflect information about the required and available resources. The business plan should be as close as possible to what it actually is.
It should be understood that these are completely two different cases that require an individual approach. You cannot draw up the same business plan for yourself and for potential investors. And of course it is worth noting that the project for those who may provide financial resources will be more complete and detailed.
Making a preliminary analysis
Work on any project begins with an analysis of the situation in the present tense. To systematize all the available information, describe and fill all sections, you need to study the data, analyze them together. If the initial information is not enough, it is necessary to replenish it by contacting specialists or further study all aspects of the situation.
Very often, for a preliminary assessment of the situation, as well as its analysis, a methodology recognized throughout the world is used, which is called SWOT -analysis ... Its popularity is due to its simplicity, clarity and accuracy.
What is SWOT analysis and how to apply it in practice
The name of this technique stands for Strengths, Weaknesses, Opportunities and Threats... It is used to assess all internal and external factors affecting the organization. An important plus is the objectivity of the SWOT analysis, it displays a really real picture.
It is necessary to seriously approach the study of each of the indicators. However, strengths are the inherent strengths of working in a given field. Weaknesses are studied to eliminate them. So, for example, if the weak side is the lack of your own premises, it is worth considering the possibility of acquiring them, while eliminating this disadvantage. These two parameters relate more to internal factors, because they are determined by the position of the organization itself.
But the opportunities and threats are directly related to the external environment. The firm cannot directly influence them. So, having considered the available opportunities, you can use them to your advantage, increasing efficiency or saving on something. For example, adapting the packaging design for the consumer market, while increasing the demand for the product itself. But considering threats and responding to them will help to avoid difficulties and losses. It is important here either to use the policy of "avoidance", or to try to use the current situation for your own good.
After working through all aspects of the SWOT analysis, you need to start considering individual sections of the business plan. In addition, it is necessary to pay attention to the assessment of the resources of the described project, including money, labor, intellectual, time. This will save a lot of time and will also help to pre-estimate the efficiency and costs of the project.
We draw up a title page, resume, set goals for a business project
The design of any project begins with the writing of the title, title page, which must indicate:
- Kind of activity,
- organizational and legal form,
- Name of the organization,
- her legal address,
- as well as information about the founder and location of the company itself.
Next, go to writing a resume... It is important to understand what constitutes this section after working through the rest. It contains consolidated information about what will be considered in the project. Conventionally, the resume can be called a kind of "squeeze" from the rest of the project. It is important that this section provides the reader with an answer to the two most important questions:
- What benefits will potential investors have if they invest money in the project and it is successfully implemented?
- What are the possible risks of loss, and what is their scale (partial or complete loss)?
In the section "Setting the goal" it is very important to indicate the goal itself, the tasks set, possible problems, actions, terms, as well as arguments that will allow the investor to be confident in the success of the proposed project. This is where you can display the results of the SWOT analysis in tabular form like this:
Analyzing the market
In this section, it is very important to reflect the current situation by collecting the most recent information, and not to use the outdated one. You can consider competitors, as well as their strengths and weaknesses in a tabular form:
It is necessary to draw up a portrait of a potential buyer (objectively assessing the situation), consider the possibility of attracting other segments of the population.
We assess the organization's capabilities in the industry
This section contains information about the organization itself. It is worth paying attention to the mode of operation and seasonality, since these factors directly affect the size of the possible income, their constancy. If a business plan is drawn up by an already existing organization that plans, for example, to start producing a new product, then the description of the section boils down to listing the already known data (organizational and legal form, methods of taxation, goods, information about the company, and others).
For those companies that are just planning to open, it is necessary to approach the choice of the taxation system very seriously. It will be necessary to study the legislation: various regulations and other documents.
We describe a product or service
In this section, special attention should be paid to goods and services that will be profitable. First you need:
- Make a detailed description of major and minor items. It is advisable to provide the project with photographs of finished products (samples) or the samples themselves.
- Compare the product with the description of the portrait of a potential consumer.
- It is worth highlighting the advantages and disadvantages of each product, comparing it with competitive products in the industry. Based on the information received, competitiveness is assessed. This data can be presented in the following tabular form:
- Describe the process of supplying goods or providing a service (wholesale, retail, end consumer).
Such a detailed consideration will help you understand what are the features of your products and the sales market as a whole.
Attention should be paid to what additional documents will have to be drawn up (various patents, certificates, copyrights, etc.).
We draw up a marketing plan
Based on the previously obtained results, you can proceed to the development of a marketing plan. Particular attention should be paid to product promotion tools. They can be: advertising, merchandising, direct sales, sales promotion and others.
It is necessary to study in great detail the demand in the market segment in which it is planned to operate. In this case, it is worth determining the average prices, elasticity (variability) of demand, methods of stimulation. It is also important to study target segments and customer groups.
It is worth thinking about the ways of marketing, as well as consumers, whether they are legal entities, individuals or end consumers. For each of them, you can develop a separate sales program.
You also need to think about possible ways to attract buyers. In addition, you can think over promotions, exhibitions, compiling your site.
It will be useful to predict the volume of future sales for the year ahead. This can be done visually using the following table:
It is important not to overestimate the projected sales to make the data look realistic. It is necessary to justify the quantity, while giving confidence to the creditors.
If you wish, you can create realistic, pessimistic and optimistic scenarios, justifying each of them.
In general, any marketing program can be represented as:
We draw up a production plan
Drawing up a production plan is not necessary for those organizations that are not going to produce something on their own. So, if a company is only going to trade in goods or services, this section can in principle be omitted. But for those organizations that are directly related to production, drawing up a production plan is almost a paramount task.
At the same time, it is initially necessary to consider the available and necessary production facilities, including premises and equipment. Information can also be presented in tabular form:
It is also very important to draw up schemes for the supply of raw materials, their storage. In addition, you need to visually depict the production process itself (this information can be placed in applications).
The data on the required employees are also indicated, the staffing table is drawn up, indicating qualifications, the method of calculating wages, the work schedule and other information.
We draw up an organizational plan
This section displays all the activities related to setting up a business. It is important to break them down into separate steps, indicating at the same time the implementation timeline for each item. You can use a tabular view:
It is necessary to distribute all the steps in the correct sequence. Information can be presented in the form of a schedule for implementation.
In addition, the legal aspects should be included here.
We draw up a financial plan
This section is devoted to the preparation of a detailed estimate. In other words, all the costs that will be needed are planned. It is best to do this in a tabular form, providing clarity and ease of study.
It should be understood that any organization has one-time and recurring costs. Fixed assets belong to one-time costs, but periodic ones, in turn, are divided into fixed and variable ones. Fixed costs do not depend on the volume of production. Of course, it makes sense to talk about fixed costs only in the short run, since in the long run any costs become variable.
After all the costs have been taken into account, provided that the cost price is known, you can also find the break-even point, which shows the sales volume at which income will be equal to expenses.
Everyone needs to find a break-even point in order to roughly represent the scale of production or sales that will ensure not only break-even, but also the profitability of the enterprise. For clarity, it is worth drawing up a graph showing the dependence of profit on the volume of goods (services) sold. It can look like this:
Depreciation costs should also be included in the calculations. Indeed, as a result of complete wear and tear, most fixed assets require replacement. In addition, tax and pension contributions (recurring costs) should be taken into account. The most complete display of all costs will help to assess the real size of the profit.
To calculate the payback period, you can use a simplified formula:
Payback period = One-time costs / Net monthly income.
You can also include calculations of profitability here (it is worth considering that there are many formulas, you need to choose the one that is suitable for the type of business and what profitability is calculated for).
We consider the risks
In this section, for clarity, you can create a table that will display:
- Potential risks.
- The likelihood of their occurrence.
- Avoidance methods.
- Possible losses.
If you plan to insure any risks, this also needs to be reflected in the business plan. Do not forget to include the cost of insurance in your financial plan.
What is this section for? Everything is very simple. Any investor wants to be sure of the success of the project, or at least compensation for losses. Knowing the possible dangers, you can always try to avoid them or reduce losses. The main thing in this case is knowledge of vulnerabilities and their exclusion.
Sometimes various applications are added, which include diagrams, graphs, tables, certificates, contracts, licenses. We can say that this is some kind of visual material, which is placed in a separate section in order not to clutter up the project itself.
Applications
You really need to attach to it all those documents that were discussed in the business plan and which would serve as confirmation of all of the above. These can be various schemes, plans, resumes, certificates of creditworthiness, letters of guarantee, various statutory documents, etc.
The most common mistakes made when drawing up a business plan
- Ignoring the seasonality of work. Such a defect negates all the calculations made. If the business is seasonal, then this must be taken into account when calculating sales volumes, while trying to compensate for the lack in other months.
- Overestimation of the planned sales (production). Such an indicator will also affect the efficiency of fixed assets, the utilization of production facilities.
- Incorrect calculation of working capital. It is important not only to decide on the profit, but also on the part that will have to be used for the further functioning of the business.
- Mixing cash flows. This refers to the situation when the company itself finances the project.
- Understatement of the discount rate. Also refers to its own resources. The error is connected with the fact that the possibilities of using funds are not assessed in the amount in which they could be involved.
- The volume of the business plan is too large. There is no need to clutter up the project with unnecessary information.
- The data is not realistic. All information must be supported by strong arguments.
- It is impossible to speak about additional funding with uncertainty. It is either there or it is not.
- Incomplete information on financial projections. It is imperative that until the payback of the project, all financial data must be specified for each month separately.
- Surface analysis of the market. You need to thoroughly study the segment in which you are going to work, because the success of the business depends on it.
- "Approximate" costs. All of them must be taken into account and be accurate, because the profit of your company will depend on it.
Conclusions.
Now you know how to write a business plan. There are no universal business plans. Much depends on the chosen industry, production characteristics and other factors. It is necessary to approach the development of the project consciously, spending a lot of time and effort on it.
In simple terms, a business plan is a document that defines the goals of your business and describes how to achieve those goals. In this guide, I will describe in detail all the stages of drawing up a business plan that will help you discover a successful one. A well-thought-out business plan is the key to success for any entrepreneur, no matter what goals he sets for himself - from attracting investments to developing a strategic growth plan for the company.
There are four basic rules for writing a business plan:
1. Be brief.
Keep your business plan short and concise. There are two reasons for this requirement:
- Your business plan should be such that the reader wants to read it in full. Who wants to spend time on a document that is 40 (and sometimes all 100) pages?
- As a tool to drive business growth and development, a business plan must change with your company. A lengthy document is more difficult to work with, which means that a business plan that is too long is likely to be covered in dust on the shelf.
2. Study your audience.
Write a business plan in a language that your target audience will understand. For example, if your company is in the scientific field and your potential investors do not understand complex terminology, you must adapt to the needs of your investors.
Here's an example of an overly complex wording:
“Our technology is a single-connection accessory for CPAP machines. By connecting to a CPAP device, our product provides non-invasive ventilation with dual pressure maintenance. ”
Simplified formulation:
“Our product is an easy-to-use device that replaces traditional medical ventilators and does not require an electrical connection. The cost of our product is 1/100 of the cost of a traditional artificial ventilation device. "
Focus on investors. Describe your product as simply as possible and avoid complex terms. It is better to put more detailed information in the appendices.
3. Don't be afraid.
Most entrepreneurs are not business experts. They have no special education and are forced to learn as they go. Writing a business plan may seem like an overwhelming task, but it is not. If you know and love what you want to do, it should be easy for you to write a good business plan and adjust it as your project develops.
Moreover, it is not at all necessary to immediately create a complete, detailed business plan, the structure of which will be described in this article. It is best to start with a simple one-page business plan and build a more detailed document from it.
Before writing a business plan, it is better to look at a sample business plan for a company in your industry (cafe, beauty salon, car wash, online store). You will be able to understand how it should look like, how to make calculations correctly, what to include in a business plan, industry specifics, etc. You can find and download examples of ready-made business plans. You can also search for examples on the Internet - just enter into the search bar, for example, "coffee shop business plan" or "barber shop business plan."
Six points that must be present in a business plan
Having dealt with the basic rules for writing a business plan, let's move on to describing the structure of the document. In the remainder of this article, I'll cover what you need and don't need to include in your business plan, list the key metrics for financial projections, and provide links to additional resources to help you write a well-written document.
remember, that your business plan- this is not some boring document that has nothing to do with practice. A good business plan is a tool that can help you build a more efficient and profitable business. It is a flexible document that you will come back to from time to time. As you get to know your customers, identify the strengths and weaknesses of certain marketing strategies, evaluate the accuracy of budget planning and forecasts, you will constantly make changes to your business plan. Your business plan defines the goals you want to achieve, and you should use it to track progress and adjust your course.
1. Summary
A business plan starts with a resume - a short description of your business and plans. The resume should be no more than 1-2 pages. Some documents cite this chapter last.
2. Capabilities
In this chapter, you must explain what you want to sell and how you are going to solve the problem (satisfy a specific need) in your market. Also here it is necessary to pay attention to the description of the target audience and main competitors.
3. Implementation
How are you going to leverage an existing opportunity and launch your business around it? This is where you describe your marketing plan, sales plan, operations and success metrics.
4. Team and company
In addition to attractive ideas, investors are also looking for good teams of specialists. In this chapter, you should talk about those who already work for your company, and also list the specialists you plan to recruit to your team. If your project has already been launched, please provide information on the legal form and location of your company, as well as briefly describe the history of its creation and development.
5. Financial plan
Any business plan should include a financial forecast, which we will discuss in more detail a little later.
6. Application
Attachments include product images and additional information.
Now let's take a closer look at each chapter and try to create a business plan that would make a favorable impression on your potential investors and lenders.
Summary
On your resume, you introduce people to your company, talk about your line of business, and explain what you want to get from your readers. Since this is the very first chapter that potential investors will read, it is best to write it last. Why? By already describing other aspects of your business, you will have a clearer understanding of your project and therefore be able to write a more accurate and concise resume. The resume should summarize the entire business plan, so start with the Opportunities chapter and return to writing the resume when the entire document is ready. Ideally, your resume should act as a stand-alone document that summarizes the most important aspects detailed in your business plan. Often, in order to evaluate a project, investors only need to familiarize themselves with the summary. If they like your resume, they will ask you to provide an entire business plan, organize a presentation, or request other information of interest to them.
Thus, the resume is the most important chapter of the business plan on which the success of your entire project depends. Therefore, try to present the information as concisely and clearly as possible. Highlight the main aspects of your business, but do not go into details. The resume should not exceed 1-2 pages. It should be a kind of bait that will spark investors' interest in your project and a desire to get to know it better.
The main ingredients of a good resume are:
Brief description of the business in one sentence
At the very top of the page, right below, express the essence of your business in one sentence. It might be a slogan, but it's still better to indicate what your company does.
Problem
Each business solves a specific market problem by meeting the demand for that or other product or service... In a sentence or two, describe the problem you intend to solve.
Solution
The solution is your product or service. How are you going to solve the existing problem?
Target market
What is the portrait of your ideal customer? How many buyers might be interested in your product? Try to provide as accurate information as possible.
If you are engaged in the production of shoes, this does not mean that your target audience includes absolutely all people (because almost everyone has legs)... ... Your activity should target a specific segment of the market, such as runners or fashion-conscious men. This will make it much easier for you to develop an appropriate marketing and sales strategy, as well as attract potential buyers who may be interested in your product.
Competition
How does your target audience solve the existing problem? Are there alternatives or substitutes for the missing product on the market? Any company has competitors, and you need to pay due attention to this aspect of your business in your resume.
Command
Briefly describe your team. Justify why you and your team will be able to successfully bring your idea to market. Remember that for investors, the team is even more important than the idea. Without a strong team, even the most attractive idea will not get a worthy implementation.
Financial plan
Provide basic information from your financial plan. Ideally, this should be a chart that clearly shows your projected sales, costs, and profitability. If your business model (i.e., how you are going to make money) requires further explanation, this chapter is perfect for that purpose.
Financing
If you are looking for funds to start or grow your business, you should describe your resume needs. It is not worth thinking about the timing of potential investment yet, since such issues are usually discussed at a later stage in the discussion of the project. For now, you just need to indicate how much money your project will require.
The main stages and the work done
Finally, we come to the last important part of the summary. Tell us about what has already been done, and also indicate the main goals (milestones) that you are going to achieve. It will be great if you demonstrate to investors that you already have buyers who are interested in your product or are already buying it. If you are writing a business plan for internal use, then you can significantly reduce the length of the resume or omit this chapter altogether. In this case, you do not need to provide information about the management team, funding and work already done. In essence, an internal plan is created as a description of the strategic development of the company so that all team members know what to strive for.
Possibilities
This chapter can be called the heart of your business plan. Here you should describe in detail the existing problem and its solution, as well as tell who your potential buyers are and how your product or service will fit into the competitive environment. Also indicate how your solution differs from other similar solutions and how you plan to expand your product line in the future.
Since readers have already read your resume, they already know a thing or two about your project. However, this does not detract from the importance of the Capabilities chapter, as here you provide more detailed information and answer additional questions that were not covered in the Summary.
Problem and solution
Begin this section by describing the problem your potential customers want to solve. What are your potential clients missing right now? How do they solve their problems? Are existing solutions too expensive or inconvenient?
Describing the problem you intend to solve for the benefit of your potential customers is the core of your business plan and directly affects your success. If you cannot clearly identify the problem, you cannot provide a viable business concept that would interest investors. How do you know that you can actually solve a problem that is causing customers an inconvenience? Turn off your computer, go outside and talk to your potential clients. Once you are satisfied that the problem does exist, tell them about the solution you are proposing. What do people think about your decision? After focusing on the problem of the target market, move on to describe the solution you have developed. In other words, tell us in detail about the product or service that you intend to offer to your customers. What is your product and how will you offer it? How will he solve the problem of your potential customers? For some goods and services, it will not be superfluous to give specific cases and situations in which this product or service can be used. So you explain to a potential buyer in an accessible way how to interact with the proposed solution and how it can improve his quality of life.
Target market
Once you understand the problem and the solution, focus on your target market. Who are you going to sell your product or service to? How much detail you describe your target market depends on the nature of your business and the type of your business plan. But in any case, you must have a clear idea of who your potential customers are and what their approximate number is. If the number of potential clients is small, this calls into question the feasibility of your project. If you are going to conduct a full market analysis, it should be preceded by a little research: you need to determine the target market segments and the size of each of them. A market segment is a group of people (or companies) who might be interested in purchasing your product or service.
Here we want to warn you against a common mistake: your target market is not “all customers”. Take a shoe company as an example. In theory, such a company could claim that their target market is all people with legs. But in real life, in order to survive in the market, a company must focus on a specific segment of the market - athletes, businessmen, families with children, etc.
ODR, SDR, LDR
A good business plan necessarily identifies target market segments and contains data that characterizes the growth rate of each segment. The standard ODR, SDR and LDR measures allow for the sizing of target markets using both a top-down and a bottom-up approach.
Let's start with the definitions:
- SDT: This is your General Available Marketplace (everyone you would like to offer your product to)
- HAPPY BIRTHDAY: This is your Segmented Available Market (the portion of the ODR that you intend to target)
- LDR: This is your Market Share (the portion of the SDR that you will actually offer your product to, particularly in the first few years).
After identifying your main market segments, indicate the trends prevailing in each market. For example, is the market shrinking or expanding? Describe the needs and preferences of each market, as well as the changes that await it.
Now you can start drawing up a portrait of the ideal buyer in each market segment. The ideal customer is the average image of your market representative, who should have a name, gender, income level, preferences, and so on. Once the market segments have been identified, drawing up a portrait of the ideal buyer may seem like overkill, but it is not. This portrait will be a useful tool for you to help you design marketing efforts to attract ideal buyers.
Key Buyers
The final part of this chapter should focus on key buyers. This information should only be provided to companies that work with a very small number of clients. Ordinary companies that sell goods and services primarily to ordinary consumers can skip this section. If you sell products or services to other companies, you must surely have several key customers, aboutwhich determine the success of your business, and which set trends in your niche.At the end of the Target Market chapter, tell us about these customers and describe their value to your business.
Competition
After describing your target market, move on to describing your competitive environment. What other companies are offering their products or services trying to solve customer problems? What are your advantages over your competitors?
Business plans often present this information in the form of a “competition matrix” that compares competitor solutions to yours. A simple competitive matrix is a table that lists the competitors vertically and the comparison criteria horizontally. If a competitor's solution meets a certain criterion, a mark is placed at the intersection of the corresponding row and column. Your main goal is to show that your solution is different from or superior to other companies' offerings. Investors will be interested to know what competitive advantagesyou possess and how do you plandifferentiate your solution.
Many entrepreneurs make the serious mistake of claiming that they have no competitors. Remember that every business has competitors. This is not necessarily "direct competition" where another company offers a solution similar to yours. Often we are talking about "indirect competition" when consumers find completely different solutions to their problem. For example, when Henry Ford first started selling his cars, he had almost no direct competitors in the face of other automakers. However, Ford had to compete with other modes of transportation (horses, bicycles, trains, and walking). At the time, these were all alternative ways of solving the problem of moving from one point to another.
Future products and services
All entrepreneurs make plans for how their business will develop if successful.
Although it is pleasant for any entrepreneur to dream about the possibilities of expanding their business, try not to get carried away. Share your plans for the future in a paragraph or two to show investors where you want to go. Refrain from describing long-term plans in detail, because now no one can guarantee that they will actually be implemented. Instead, you should focus on your current product or service.
Implementation
After completing with a comprehensive description of the market opportunity, tell investors how you are going to put your ideas into practice. This section should focus on the following aspects: marketing and sales, operations, success metrics, and the milestones you plan to achieve.
Marketing & Sales
A marketing and sales plan describes how you intend to market a product or service to your target markets, how you plan to sell your product to those target markets, what pricing scheme you will use, and what activities and collaborations will be required to be successful. Before you start writing your marketing plan, you must clearly define your target markets and outline a portrait of your ideal buyer (s). Without a clear idea of who you will be selling your product to, your marketing plan will be useless.
Positioning
The first part of your marketing plan should be about positioning your company and product / service. Positioning is how you will present your company to potential clients. For example, you suggest budget solution or are you a premium brand? Are you offering a product that none of your competitors have?
Before starting to develop a positioning strategy, analyze the current market situation and answer the following questions:
- Do you offer any benefits or advantages that your competitors do not have? If so, which ones?
- What are the main needs of your customers?
- How are your competitors positioning themselves?
- How do you plan to stand out from the competition? Why should buyers choose your product?
- What place do you assign to your company in the current competitive environment?
Once you've answered these questions, you can start thinking about your positioning strategy. Your positioning strategy doesn't have to be voluminous or very detailed. You need to explain where your company is positioned in a competitive market and how your value proposition differs from what your competitors are offering customers.
Here are some examples of wording you can use in your positioning strategy:
For [description of the target market] who [the needs of the target market], [this product] [how the product meets the existing needs]. Unlike [major competitors], he is [the most important differentiator].
Pricing
Having decided on a positioning strategy, you can begin to consider pricing issues. In most cases, your positioning strategy will be the main factor in the pricing of your products / services. As a medium, price can tell customers how you are positioning your product. If you are offering a premium product, buyers will instantly know it for the price.
The pricing process is more akin to art than science. However, it obeys some universal rules:
- Coverage of costs. There are exceptions to this rule, but in most cases you have to charge more for the product than you had to spend to produce it.
- Primary and secondary sources of income. The base price may not be your main source of income. For example, you might sell a product at cost (or even cheaper), but charge a lot more for further contract service.
- Compliance with the market situation. Your prices should match the demand and expectations of potential customers. If you set your price too high, you may not find buyers for your product. And if your price is too low, your offer risks being underestimated.
3 approaches to pricing
- Cost-plus. You can form your prices based on several factors. The cost-plus approach means that you determine the level of your costs and set a price that exceeds that level. This approach is popular in manufacturing, where initial cost coverage is critical to a company's success.
- Market pricing. A different view of the competitive environment and pricing is based on market expectations. Depending on how you position your product, you can work in the high or low price segment of a particular market.
- Cost pricing. Using this approach, you determine the price based on how much value you offer your customers. For example, you offer lawn maintenance services to busy people who don't have the time to do it. If you save them 1 hour per week and their hour of work costs $ 50, then you can estimate your services at $ 30 per hour.
Promotion
Having dealt with positioning and pricing, you can move on to a promotion strategy. Promotion strategy describes how you are going to interact with your potential and existing customers. At the same time, you must be able to determine the cost of promotion and the volume of sales that it can generate. In the long term, maintaining ineffective promotion strategies becomes extremely unprofitable.
Your promotion strategy should cover several aspects:
Package
How your product is packaged has a direct impact on your purchasing decision. If there are images on the packaging, don't be too lazy to include them in your business plan. When describing the packaging of your product, answer the following questions:
- Does your packaging match your positioning strategy?
- How does your packaging convey your value proposition?
- How does your packaging compare to competitors' packaging?
Advertising
Your business plan should describe what types of advertising you are going to spend your budget on. For example, are you planning to run ads on the Internet or traditional media platforms? Particular attention in your advertising strategy should be paid to assessing the effectiveness of your advertising.
Public relations
Media coverage of your product is a great way to reach your target audience. A solid media coverage of your product or service will provide you with the wide audience reach you need to grow your business. If public relations is part of your promotion strategy, be sure to devote a few paragraphs to the topic.
Content marketing
One of the popular promotion strategies is content marketing. It should be understood that your goal here is not to tell the target market about your products or services. The essence of content marketing is to provide potential buyers with interesting and useful information on topics of interest to them.
A business plan is a document that provides a detailed justification for a project and the opportunity to comprehensively assess the effectiveness of decisions made, planned activities, and answer the question of whether it is worth investing in this project.
The business plan should:
- show that a product or service will find its consumer, establish the capacity of the sales market and the prospects for its development;
- estimate the costs required for the manufacture and sale of products, the provision of works or services on the market;
- determine the profitability of future production and show its effectiveness for the enterprise (investor), for the local, regional and state budget.
The main functions of a business plan:
- is a tool with which an entrepreneur can assess the actual results of activities for a certain period;
- can be used to develop the concept of doing business in the future;
- acts as a tool for attracting new investments;
- is a tool for the implementation of enterprise strategy.
One of the most important stages of the planning process is drawing up a business plan, which is necessary both for internal planning and for justifying the receipt of funds from an external source, that is, receiving money for a specific project in the form of bank loans, budgetary allocations, equity participation of other enterprises. in the implementation of the project.
- Business plan summary (short annotation)
- Goals and objectives of the project
- Company description
- Analysis of the industry and its development trends
- Target market
- Competition
- Strategic position and risk assessment
- Marketing plan and sales strategy
- Operating activities
- Technological plan
- Organizational plan
- Personnel plan
- Financial plan
- Social and environmental responsibility
- Business exit conditions
How to write a business plan correctly
Any form or sample of a business plan offered on the Internet gives only a general idea. Any business has its own characteristics, therefore, there can be no "standard" writing algorithm that is suitable in all cases. There is only one tried and tested principle for any business plan: IT MUST ALWAYS BE SHORT.
Start with the right messages. Paradoxical as it may sound, but for most entrepreneurs, a business plan as a document is one of the least important factors in raising capital.
- If the investor is inclined towards a positive decision, then a good business plan will be an additional argument for; but the plan itself is not the reason for this decision.
- If an investor is leaning towards a negative decision, the business plan is unlikely to convince him. In this case, the investor, most likely, will not even read this plan to the end.
Unfortunately, naive entrepreneurs believe that a business plan can inspire excitement and awe in the investor with an immediate request: “ Please tell me where to transfer money».
Well, it's not bad to dream. The correct and realistic motivation for writing a plan should be: which were downplayed in the first euphoria - for example, customer service policy.
Finally, the plan exposes gaps in the founding team. If, looking around the office, you realize that there is no one who could implement some key element of the plan, then there is someone missing from the team.
All midnight, romantic, abstract dreams of changing the world become quite material and controversial, you just have to transfer them to paper. Thus, this document is not as important as the process leading to its creation. Even if you are not pursuing the goal of raising capital, it is still worth writing a business plan.
INSTRUCTIONS FOR FILLING
Title page and content. Start with the essentials: company name, address, phone number and contact information for all founders, as well as a table of contents throughout the document.
Introduction. List the most important things in no more than two pages. First, tell us what the value of the project is: what your company will do, how much profit to have, and why people will want to pay for your product or service. If you are sending a plan to investors, tell them about the capital you will need and how you plan to use it. To highlight the essence, you need to imagine the big picture, so it is better to start this part after completing the entire plan.
Market opportunities. Explain to whom you will sell your product or service and why this group of consumers is attractive to you. Several key questions need to be answered. How big is the market? How fast is it growing? What are the growth opportunities and potential threats? How will you deal with them? Most of this information can be found through industry websites and media, official statistics, analyst reports, and even other businessmen. Be sure to indicate the source of information.
Market Review. Make no mistake, your business is not unique. Try to take a sober look and evaluate your opponents. Who are they? What are they selling? What part of the market do they occupy? Why would buyers choose your product or service over theirs? What obstacles can arise when entering this market? Do not forget about indirect competitors who are still working in a different segment, but have similar capabilities and may compete with you later.
Promotion of goods to the market. Describe how you will promote your products or services to the consumer. Conditions and organization of product sales. What promotion channels will you use? In this section, describe the pricing issues.
Company structure. Control. Staff. Execution is almost as important as the idea itself. Therefore, investors are interested in who is on your team. Attach a resume of all founders, partners and executives: what are their skills and achievements. This should also add information about the legal form of the enterprise and its internal organizational structure, the state of the enterprise.
Business model. This section includes a detailed description of all sources of income (sale of a product, service) and the company's cost structure (payroll, rent, operating costs). Describe the premises, equipment, technologies, production flow diagrams. Make sure you mention and justify all possible income and expenses. Also, include the names of major suppliers and buyers. In fact, this section is the production plan of the future company.
Financial indicators and forecasts. Make a forecast for profit, loss and cash flows (income-expense) for at least three years in advance (it is advisable to break the first year into quarters or even months). Also provide an analysis that shows how soon the start-up investment will pay off.
Risks. Don't wait for trouble to find out how your business can handle it. Work out possible scenarios: worst, best and average, as well as what you will do to reduce the negative impact of risks or prevent them altogether. Make sure you have enough money to weather any storm. If you insure risks, write down what amount you will insure and types of insurance policies.
Sources of funds and their use. If you are trying to get money from investors, they will want to know how you plan to use your capital. In this section, you need to indicate the estimated startup costs: premises, purchase of new equipment, company logo design, etc. Most entrepreneurs underestimate the cost of starting a new business. Therefore, do your research before contacting investors.
Applications. This may include a resume, credit information, market overview, schemes, a promotion plan, copies of contracts, including leases, letters of guarantee from future customers, certificates of patent and trademark registration, partnership agreements, company registration certificate.
10 mistakes when writing a business plan
According to professional project managers, there are, there are 10 things that should not be written in a business plan.
- "Dead Souls". A common mistake entrepreneurs make when preparing a business plan is that it contains information about certain executive members who, in fact, have nothing to do with the team. Information about the consultants should be given reliable, because the investor may wish to communicate with them personally.
- "Homework". There is no need to be zealous with confusing descriptions of the entire range of products and services. This will only overload your plan with a large size, which does not suit you at all, because the investor must grasp the very essence from the first pages, otherwise further reading will not make sense for him.
- "Fictional Characters". All biographies of board members, founders should be extremely honest and not embellished.
- "Who, when and how you want." In marketing plans, you need to rely only on the proposals that actually exist.
- "Year after year". You cannot submit financial plans in a business plan broken down exclusively by years. As mentioned above, the forecast for the first year should be made on a monthly basis and show seed funding and then a quarterly breakdown for the next period. The investor must see when the full return on investment will take place and whether the investment will pay off.
- "Monopoly". There is always competition and similar products or services, the consumer market is not so large, and it takes a lot of effort to implement a business plan. Therefore, in the text, it is necessary to abandon phrases about the absence of competition, a huge market that has no analogues, products or services, and the simple implementation of the project.
- "Hockey stick". Financial indicators categorically cannot, when viewed graphically, constitute a curve in the form of a hockey stick, that is, profit falling from the very beginning and infinitely striving upward in the future. The most ingenious idea, with its payback, will generate competition for itself, so incomes cannot grow indefinitely.
- "No scores for metrics." The market should be assessed by you from different sides in quantitative terms: perspective, market share, customers. Otherwise, you are incompetent.
- "Promises". You should not stipulate in the business plan possible financial injections that are at an unfinished stage. Funding is either there or not.
- "Somewhere like that." Your business plan must be in hard numbers. It is your responsibility to clearly understand the scope of fixed, variable, direct, indirect and outsourcing costs.
Print your business plan. Set aside all pages starting with the third. Reread the first two pages - do they make you want to read the rest of the document? Brevity, simplicity, clarity - cross out all that is unnecessary.
Having polished your plan to a shine, do not send it collecting dust in a distant drawer. “The business plan is just the beginning of the process. Planning a business is like navigating a ship at sea: you have to constantly adjust your course. The plan itself is of little value. It's important to go back to it and see where you were wrong and what it cost you.
We wish you every success! All in your hands!
Short briefing
You have an idea. You want to create your own business. Fine. What's next? Next, you need to "put everything on the shelves", think over the details (as far as possible), in order, first of all, to understand: is it worth developing this project? Perhaps after researching the market, you will understand that the service or product is not in demand, or you do not have sufficient funds to develop your business. Maybe the project should be slightly improved, abandon unnecessary elements, or, on the contrary, introduce something?
A business plan will help you consider the viability of your venture.
End justifies the means?
When starting to write a business plan, keep in mind its purpose and function. First of all, you carry out preparatory work in order to understand how realistic it is to achieve the planned results, how much time and money is needed to implement the plan.
In addition, a business plan is required to attract investors, obtain a grant or a bank loan. That is, it must include information about the potential profit of the project, the necessary costs and the timing of its payback. Think about what is important and interesting for your recipients to hear.
Use a little cheat sheet for yourself:
- Analyze the market you intend to enter. What company leaders exist in this direction. Explore their experiences and work.
- Identify the strengths and weaknesses of your project, future opportunities and risks. In short, do a SWOT analysis *.
SWOT analysis - (eng.)Strengths,Weaknesses,Opportunities,Threats - Strengths, Weaknesses, Opportunities and Threats. The method of planning, strategy development, allowing to identify the main factors affecting business development.
- Decide clearly what you expect from the project. Set a specific goal.
The main thing the business plan is aimed at is helping, first of all, to you yourself in developing the company's strategy and planning its development, as well as assistance in attracting investments.
So any plan has a structure. Regardless of the specifics of the project and the requirements of investors, a business plan, as a rule, contains the following elements:
1. Company CV(short business plan)
- Product description
- Description of the market situation
- Competitive advantages and disadvantages
- Brief description of the organizational structure
- Distribution of funds (investment and own)
2. Marketing plan
- Definition of the "problem" and your solution
- Determining the target audience
- Market and Competition Analysis
- Free niche, unique selling proposition
- Ways and cost of attracting customers
- Sales channels
- Stages and timing of market conquest
3. Plan for the production of goods or services
- Organization of production
- Infrastructure features
- Production resources and areas
- Production equipment
- Manufacturing process
- Quality control
- Calculation of investments and depreciation
4.Workflow organization
- Organizational structure of the enterprise
- Distribution of powers and responsibilities
- Control system
5. Financial plan and risk forecast
- Cost estimation
- Calculation of the cost of a product or service
- Calculation of profit and loss
- Investment period
- Break-even point and payback point
- Cash flow forecast
- Risk forecast
- Ways to minimize risks
It is clear that a business plan is one whole and its parts are inextricably linked with each other. However, a well-designed structure will help you not to forget the important, as well as take a deeper look at each of the aspects.
Summary of the firm. Briefly about the main thing
Marketing plan. There are empty seats?
When drawing up your marketing plan, you will need to analyze the market you are about to enter. Thus, you will identify trends for yourself, collect information about competitors and get to know your consumer, your target audience better.
After evaluating a potential client, his interests and preferences, you must determine the optimal location for an office, retail outlet, etc. It should be comfortable. Calculate the number of clients you need to pay off your business and compare with the audience living or working around the proposed business location. For example, for a business in the field of services to the population, the number of this audience should not be less than 2% of the number of people living within a radius of a short walk or a five-minute car trip.
It is possible that the market you were going to conquer is oversaturated at the moment. Analyze the actions of competitors, create your strategy, focus on your uniqueness, bring something new to occupy an empty niche in a certain area.
Of course, creating something that is not yet on the market is quite difficult. However, you can carefully analyze the situation and open, for example, a point where the consumer really needs it or play on the difference in prices and the level of services provided relative to nearby competitors.
Also, you will definitely have to decide on the sales channels. After reviewing the methods existing on the market, find the best ones for yourself. Calculate how much it costs you to acquire each customer.
Finally, when deciding on pricing, you will need to calculate: which is more profitable? A high price with a small number of sales or a price lower than that of competitors, but a large customer flow. Service should not be forgotten either, because for many consumers it is critical. They are willing to pay a price higher than the market average, but receive a high quality of service.
Production plan. What are we selling?
This is where you finally go into detail about the essence of your business: what do you do?
For example, let's say you decide to manufacture dresses and sell them. In the production plan, indicate the suppliers of fabric and equipment, where you will locate the sewing workshop, what the volume of production will be. You will write down the stages of manufacturing products, the necessary qualifications of employees, calculate the necessary deductions to the depreciation fund, as well as logistics. The costs of the future business will also depend on many factors: from the cost of threads to the cost of labor.
Prescribing the technology for creating your course product, you will pay attention to many little things that you have not thought about before. You may have questions with the storage of goods or difficulties with imported raw materials, problems with finding employees of the necessary qualifications, etc.
When you have finally prescribed the entire path of creating a product or service, it's time to calculate how much your project will cost you. It may well be that later, drawing up financial calculations, you will understand that you need to make adjustments to the production plan: reduce some costs or radically change the technology itself.
Organization of the workflow. How will it work?
Will you manage the business alone or with partners? How will decisions be made? You need to answer these and many more questions in the section "Organization of the workflow".
Here you can write down the entire structure of the enterprise and identify duplication of authority, mutual exclusion, etc. Having seen the whole organization chart, it will be easier for you to optimally distribute rights and responsibilities between departments and employees.
Having understood, first of all, for yourself, how your company functions, it will be possible to more effectively develop a system of interaction between structures, a system for monitoring employees and the entire personnel policy.
The importance of this section is that it describes who and how will implement the project in reality.
Financial plan. Main section
The financial section is directly related to all points of the business plan. Therefore, if changes or additions are made to one of the sections, then financial calculations also change. The reverse process is also possible, if adjustments are made to the financial plan - this means changes in other structures. So, if you understand that you will have to cut costs in order to meet the amount of funds that you have at your disposal, think over how you will carry out this optimization.
Of course, a business plan is a rough model of how your project will develop and function. It must be remembered that unforeseen situations will arise, because you start a business in real time, and in life it is impossible without surprises. However, if you adhere to the recommendations from BIBOSS, you will be able to draw up a detailed and working business plan that will avoid you many problems.
Starting a business, an entrepreneur must take into account all the risks, as well as be aware of costs and profits. How to do this if the company has not yet been established and your firm is not selling anything yet. A clearly and competently drawn up business plan will help to assess the profitability of a particular business.
There are many business plans. For each type of enterprise, its own plan should be developed, which takes into account the nuances of this type of business. However, each document has sections and structure that can be used in preparing any type of business plan.
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Sections of a business plan: a rough example
Here we provide the basic structure of a business plan so you can make it yourself. A quality document should contain the following categories and sections:
1. Title page.
- name and address of the company or full name and address of the entrepreneur;
- the names and addresses of the founders, if any;
- name and description of the project; objective of the project;
- The total cost of the project.
2. Overview section.
- Name;
- organizational and legal form of the enterprise;
- form of ownership (state, municipal, private, general joint, shared);
- authorized capital (for organizations);
- average headcount (determined according to the rules established by Rosstat);
- annual turnover (last year is taken into account);
- postal address of the actual place of business, telephone;
- bank details (including, ruble, currency, deposit accounts);
- surname, name, patronymic, characteristics of the project manager (age, qualifications, etc.).
3. Summary (introductory part).
- main provisions of the project;
- a description of the state of the company;
- indication of goods and services that are offered for sale;
- potential consumers;
- benefits for the organization (entrepreneur) and buyers;
- financial forecast and general goals of the company for 3 - 7 years;
- the amount of investment required;
- investment return period;
- net profit for the investor from the project.
4. Schedule.
- project implementation - time plan (table).
5. Description of the business (firm).
- company status;
- planned activity;
- tasks for a period of up to 3 years;
- tasks for a period of 5 - 7 years;
- the reason for the decision to organize this type of commercial activity;
- indication of existing partners (supply and distribution);
- the goals of the company and the means to achieve them;
- characteristics of the leading link.
6. Organizational plan.
- information about partners (shareholders), form of ownership;
- the degree of responsibility of partners;
- the composition of the governing bodies of the company;
- organizational structure of the company;
- redistribution of responsibilities and functions within the organization.
7. Essence of the project.
- products, works and services;
- premises;
- equipment;
- staff.
8. Competition.
- assessment of the state of the sales market at the present time (regional, all-Russian, international);
- customer benefit;
- expected demand;
- demand for products, works, services in the future;
- planned market share and sales volume;
- prospective customers and competitors;
- solvency of buyers.
11. Products.
- example of product application;
- conformity of products to standards;
- competitive advantages of the product in comparison with similar ones;
- the state in which the products are at the stage of drawing up a business plan (development, creation of prototypes, production, etc.);
- forecast of the impact of an increase in production volume on the cost of products;
- patents, know-how that the organization (entrepreneur) possesses for this product.
12. Production plan.
- calculation of the required area for project implementation;
- equipment;
- fixed assets, their cost;
- nomenclature, volume of commercial output;
- subcontractors;
- list of materials;
- the constituent parts of the product planned for production by the company and the parts that will be purchased;
- suppliers of raw materials;
- reserve sources of raw materials, materials;
- methods to improve quality and reduce costs;
- ensuring control over the production cycle;
- production personnel;
- planned changes in the staffing table in connection with the possible expansion of production.
13. Plan for the sale of products or services.
- sales tools and channels at this stage and in the future;
- costs of contractual work;
- prices;
- marketing policy (pricing issues, discounts, promotions, etc.);
- guarantee period;
- forecasting the release of new types of products.
- media plan of the company (types of promotions, quantity, timing, cost).
13. Investments.
- the required amount of investment;
- form of investment investment;
- directions of use;
- conditions for the provision of investments, the benefit of the investor;
- lending terms;
- warranty obligations.
- weaknesses of the company;
- the possibility of the emergence of more modern technologies;
- alternative directions of activity;
- reliability of partners;
- inflation;
- new competitors;
- other risks;
- ways to reduce risks;
- SWOT analysis.
15. Costs of the company.
- one-time and recurring expenses;
- expenses for the creation, acquisition, rental of fixed assets;
- costs of raw materials, materials;
- operating costs;
- remuneration of personnel;
- taxes;
- registration, licensing, permits, admissions, presentations;
- interest, dividends;
- methodology for assessing the cost of the company's finished products.
16. Revenue.
- income from the sale of products, works, services;
- proceeds from other sources of income;
- calculation method.
17. Financial and economic assessment.
- financial results;
- structure of assets (non-current and circulating);
- structure of liabilities;
- the effectiveness of the activities carried out;
- financial stability indicators;
- comprehensive assessment of the company's financial condition.
18. Indicators of the organization.
- predictive assessment of the financial results of the company;
- forecast estimate of cash flows;
- break-even level;
- factor analysis of the planned profit relative to the base period;
- structure of the planned cost;
- expected profitability indicators;
- prospective comprehensive assessment of the company's financial condition.
19. Sensitivity of the project.
- the stability of the project to changes in the economic situation and to changes in internal indicators;
- break-even point.
20. Environmental and Regulatory Information
- location of objects;
- the use of land under objects earlier and at the moment;
- construction work, other physical changes associated with the project;
- environmental policy of the company;
- the impact of the project on the environment;
- a list of licenses, permits required for the implementation of the project (terms and costs),
- utility rates.
21. Additional information.
- important information about the manager and leading employees (business, contact and other).
22. Applications.
- marketing research results;
- technical characteristics of the product;
- letters of guarantee, contracts with suppliers and buyers;
- lease agreement, hire, etc.
- conclusion of sanitary and epidemiological supervision, fire supervision, environmental and safety supervision services;
- an inventory of the main documents;
- financial and accounting information (copies of balance sheets, income statements, etc.);
- quality certificates;
- regulations;
- articles on the activities of the enterprise (mass media);
- reviews from other organizations;
- other important information.
And now let's move on to advice on how to draw up a business plan.
If, nevertheless, you have chosen a niche where competition could not be avoided, try to find an opportunity to make your product or service more unique and inimitable. Then you will be able to set your own price, and the buyer will not compare it with the prices of other sellers.
How can you find something special in your business?
1. To improve a product or service as compared to a product or service that your competitor represents.
2. To draw the attention of the client to the special quality of the product.
3. Convince the buyer of the need for your product or service.
SWOT analysis
To assess the competitiveness of a future business, you need to make a list of benefits. This will help you leave your competitors behind. Marketers always assess risks and opportunities. In the language of specialists, this is called a SWOT analysis. This abbreviation translates as:
- strengths (strengths and advantages of your business, your advantages over competitors);
- weaknesses (weaknesses, your weaknesses are listed here, what should be paid attention to, and what should be corrected);
- opportunities (opportunities - make a list of all the opportunities for your business);
- threats (threats - what can threaten your business, and what needs to be corrected to reduce the risks).
To make it easier to understand what is at stake, let's take a look at an example of an activity such as a store. The following factors can become an advantage of a future entrepreneur in this area:
- if you do not have your own car, it is better if the distance between the house and the store is not large;
- in order to understand the assortment and advise clients, it would be nice to have the appropriate education or in a similar matter.
- the price tags should be large so that it is convenient to view, and the windows should be uncluttered (then the goods will be clearly visible).
Weaknesses, for example, can be:
- not very large initial capital;
- a limited number of suppliers of the desired product.
Possibilities:
- expansion of the store from one department to several;
- the ability to conclude deals with several suppliers.
- there is a successful competitor's store in the next block;
- the competitor also has an online store;
- a competitor has a successful deal with a supplier.
If you adhere to these tips, then you can make it easier for yourself, since every time you will not be asked again for the prices of the goods. Buyers love to take a good look at everything, but rather to touch it. If the client leaves happy, then this is a guarantee that he will come back to you. It is very important to provide the client with all the necessary information, the more complete it is, the better.
No business is done without risk. There are circumstances that can impair the course of the business, for example, a decrease in the number of clients or losses.
It is necessary to take deliberate risks in order to:
1. Assess the possibility of failing or not reaching the planned number of clients;
2. Note what the danger is and find a way to neutralize them.
It is difficult to assess the chance of breakage, but if preventive maintenance is carried out regularly, it is possible to exclude it. The rest of the risks can be predicted and neutralized, both the risk itself and its consequences.
Equipment for the enterprise
Also, you should consider in detail what kind of technique and equipment you need, be it production or services. If you are engaged in the production of something, find out what characteristics the technique should have to make your job easier. It is also necessary to clarify whether the power supply system can withstand the load.
It is necessary to draw up a complete list of not only equipment, but also a list of works on its adjustment and connection, obtaining the necessary registrations and other work. Having created such a list, mark what you have, and what will be missing in the table, evaluate at its cost and write down the deadlines for implementation.
It will also be nice if some purchases are made later, when your business is getting better and the business starts to make a profit. Not everything is necessary at first: there are things you can do without.
Initial capital
Anything you need to buy or pay for will be the main cost to start your business. Those expenses that must be taken into account to start the operation of the enterprise are called initial capital.
To start your business, it is better to rely on personal money, because the loan funds will need to be paid back with interest. There is a certain risk in this: since you are a budding businessman, there is always the possibility of bankruptcy. By investing only your own funds, you only risk them. If you take out a loan, then, regardless of the success of your business, you will have to return this money as soon as possible.
However, many banks offer user-friendly programs. Try to contact your bank, maybe he can offer you a loan on favorable terms.
We recommend that you start your business with something simple, do not plan complex schemes. Starting small will make it easier for you to build up your strength. For a small business, accordingly, less goods and workers are needed, and this is a significant saving.
Calculation of costs and profits
Have you included all the costs? Typically, a budding businessman invests almost all of his money in business. However, here you need to be careful, calculate all the subtleties so that you have enough money not only to start your own business, but also to live. The fact is that profits will begin to flow only after the opening, and even then - not immediately.
A prerequisite is the preparatory period, but the calculation of financial indicators, the possible income of your company for a month, remains important. How to make a calculation if you have not started selling yet? Your competitors will help you with this.
First, we calculate the monthly income of such enterprises. It is advisable to find out his profit, the number of clients and calculate the approximate monthly income. Do not overestimate the income of competitors in the calculations, this can lead you astray. If you take 100 clients per day as a basis, you might be wrong, because the number of buyers depends on many factors, for example, profit on weekends and weekdays, as a rule, is different for most companies. An adequate estimate of the number of buyers will help you to more accurately calculate the potential profit.
If your assortment has several products, estimate the demand for each of them. This is necessary for a detailed calculation of the possible income. When calculating, you need to take into account only fixed costs, all the rest, one-time ones, must be taken into account when calculating the necessary funds for starting a business.
For convenience, group your expenses:
- salary to employees;
- purchase of goods;
- insurance payments;
- rent;
- communal payments;
- repair of equipment.
One-off costs must be calculated separately. This is, for example, the repair of equipment, or - replacement of parts. Repair of the premises can be added to such expenses. It is necessary to consider when exactly this work needs to be done and how much money it will take.
When calculating costs, you need to divide them into different categories. After that, we summarize all the expenses, the received monthly expenses must be deducted from the monthly income, and we will get a net profit, without paying tax. Only after that we calculate the tax.
There are several options for paying taxes, these are:
- standard taxation;
- simplified taxation system;
- single tax on temporary income.
For example, your net income is 20,000 rubles, your expense is 40,000 rubles, and your annual income is 60,000 rubles. In this case, VAT is not paid, and the financial system works according to the following scheme:
- sales tax 60 thousand x 5%: 105%;
- social tax: 20,000 x 22%: 100%;
- personal income tax (20,000 - 9120 (unified social tax)) x 13%: 100%.
After all calculations, we can deduct the net profit after taxes. For this, the amount of taxes is subtracted from the profit, the resulting number is earnings.
When it comes to seasonal work, where the profit is not constant, we make a monthly calculation. Then we can track the turnover of funds.
Another tip: even if an accountant is in charge of your business, we advise you to keep a table of expenses and profits. Constant monitoring of the dynamics of income and expenses will help to avoid a situation when you need to pay taxes, or make any other payment, and a sufficient amount of funds will not be on the account. After all, you need to pay, sometimes, before the receipt of money from clients. When the movement of funds is controlled, you can quickly and, most importantly, solve your problems in time and avoid troubles.
Each business plan is drawn up for a specific person, copying someone else's business plans is a bad idea, because everything depends only on the capabilities of a specific businessman. When composing a business project, you need to focus on the fact that it answers the main questions:
1. Will it be viable?