What is a business plan for?

The transition to market relations brings internal planning to a new level. Planning is vital to any highly competitive business. First of all, internal planning is necessary for the management of enterprises to make the most effective management decisions.

In other words, one of the key elements of a successful business is planning. And you can’t do without drawing up a good business plan.

What is a business plan?

A business plan is a detailed program of your company’s activities. The business plan must contain comprehensive information about the company (an assessment of its need for resources: material, labor, land, energy, etc.), information about the goods or services produced by the enterprise, a detailed description of existing and prospective sales markets, information about marketing events, analysis of the company’s development prospects, etc. Therefore, in most cases, business plans are strictly confidential documents and the subject of a company’s trade secret.

In the right hands, planning becomes a very serious tool for enterprise management. Through good planning, you can proactively identify emerging problems, identify bottlenecks, and ultimately help your business grow more efficiently. Thus, a professionally drawn up business plan should not only describe the main aspects of the enterprise, but also analyze the risks that the enterprise may face in the future, and also give recommendations to minimize these risks. A business plan for attracting an investor must necessarily include the calculation of integral indicators of the project’s efficiency, since these indicators are of interest to potential investors.

Of course, as the business develops, any business plan becomes outdated and requires certain adjustments. But this is not a reason to argue that business planning is not necessary at all and is just a waste of time.

Business plan objectives

The overall goal of creating a business plan is to plan the business of the company in the short and long term. The goals of creating a business plan can be conditionally divided into two groups: external goals and internal ones.

External goals are the substantiation of the company’s needs in attracting funds and investments; demonstration to interested parties of the potential of your business; presentation of the project; attracting attention from investors and the bank to the project, convincing investors of the effectiveness of the project and the high level of qualifications of the management of your company. Most often, business plans are designed to achieve two external goals:

  • Attraction of investments.
  • Getting a loan from a bank.

Internal goals are business planning or staff training to help executives understand the current situation of the company and the level of competition. For example:

  • Determine how realistic it is to achieve the strategic and tactical goals set for the company. Strategic goals, as a rule, are focused on solving promising tasks, for example, such as achieving leading positions in the market, entering the international market, updating the production base, developing personnel, etc. Tactical goals are operational (for example, the goals of the annual plan) and current ( i.e. current tasks); reflect the individual stages of achieving strategic goals.
  • Find and substantiate arguments in favor of the expediency of reorganizing an existing enterprise or creating a new one.
  • To convince the company’s personnel of the reality of achieving the qualitative and quantitative indicators set for the company.
  • Determine promising markets for products and assess what place your company occupies in them.
  • Estimate the costs of the company for the production and marketing of products. Compare costs with the prices at which the goods or services will be sold and determine the potential profitability of the goods and services.
  • Analyze and evaluate in detail the financial and material position of the enterprise.
  • Determine what risks the implementation of the business plan may be associated with.