Written by Christopher on July 14, 2017

Business Plan: Is it a must or a waste of time?

Business

A business plan, also known as a business plan or business project, is a document that explains in an exhaustive and summarized way everything related to the business idea that is intended to be executed. It identifies and analyzes a business opportunity valuing its viability.

For many people it is an essential tool when you want to launch a project, as well as when you are going to launch a new line of business or when the company wants to expand into a new market.

However, business plans also have detractors who argue that its realization is a real waste of time since it is not until when the company begins to function when the future is envisioned and the viability of it.

Objectives Of A Business Plan

If we want to determine the usefulness or not of a business plan, it is essential that we be very clear which are the objectives that are pursued with the same, which can be summarized in these four:

• Plan: A business plan allows us to reflect on the resources that are going to be needed in the company, the situation of the sector, future clients, potential suppliers, legal framework, the situation of competition … This allows us to know the weaknesses and The threats of the project, as well as discover the strengths.
• Reduce risk: The business plan includes an accounting analysis of the expected risks of the project. Studying the technical viability of the idea reduces uncertainty and minimizes the possibility of failure. In addition, as it also foresees the possible income and expenses, an estimation of the profitability that the company can be made.
• Facilitate management: A business plan helps corporate managers in decision making. The different departments (finance, marketing …) are also supported by the forecasts of the business plan. In addition, this is an element of control and evaluation, since it allows comparing the results obtained with those predicted.
• Search for funding: When the company needs financing, with a business plan under the arm it is easier to convince financial institutions and investors to lend their money to the business, as it allows to show the future projection of the company in detail.

These four reasons seem more than definitive to justify the need for a business plan. Do you need more reasons? We summarize them below …

7 Reasons To Write A Business Plan

1. It serves as a road map and strategic analysis.
2. Knows the sector and the competition.
3. Check the internal consistency of the project.
4. Communicates the idea to potential investors, suppliers, customers, partners …
5. Study technical and economic feasibility.
6. Cohesion of the team regarding the progress of the project.
7. It serves to envision the future in the short term.

You may also like to read: 5 keys and common elements having all successful brands

Elements Of A Business Plan

The projects of companies or business plans all have a more or less common structure that integrates different elements …

• Executive summary: It is a synthesis of the whole business plan and functions as an introduction. It usually includes a brief description of the business, the reasons it has been put in place, the investment required and the expected profitability.
• Definition of business: Here are the signs of business identity: name, logo, slogan, location and list of products or services that will offer.
• Market study: It is an analysis of the situation of the sector and the target public of the company. Includes strategies to compete and marketing plan.
• Production plan: It includes a technical study on the production process, the necessary infrastructure, the local, the production capacity, and the distribution channels.
• Marketing plan: It presents the means of advertising and promotion with which the company intends to become known in the market to attract customers.
• Human resources plan: It includes a forecast on jobs, expected competencies, departments, internal hierarchy.
• Financial economic plan: It includes the estimation on the investment required, anticipation of income and expenses, expected benefits, economic and financial viability.

Logically, this scheme lends itself to modifications according to the needs of each company.

Lean canvas and elevator pitch

In recent times have appeared new formats of business plans, characterized by being very brief and visual. The most popular is the lean canvas, which is a single sheet document in which all the information of the business idea is dumped.

The popularity of lean canvas is because it is a very useful tool to innovate about the business model, putting it all in a very synthetic but at the same time coherent. Companies in different degrees of development are using being a support so schematic and visual,, as many firms consolidated as new start-ups.

Along the lean canvas has become very popular elevator pitch. This is an Anglicism used to refer to a short but pleasant presentation speech about a business project to potential investors or partners. The ideas are exposed in a clear and concise way in less than two minutes, time that takes a trip in elevator.