But why do we always talk about a business plan?

In 2020, the business plan will continue to be the preferred tool for entrepreneurs when setting up their business. If it’s been criticized for its often lack of realism, it’s clear that it can be helpful, whether it’s for you or anything related to finance. It is often a must-have for a variety of reasons.

It forces you to know your market better

The business plan usually starts with a market research. Many creators generally find this part uninteresting, but stick to the practice. However, if it appears first, it’s for good reason, as the other parts often remain consequences of this one. You are already starting to study the trends of your market to know whether it is in decline or in growth, prompting you to take into account the innovations that mean that this sector may not have the coast or just the opposite that it a trend. In this way, you take into account the new applications that you cannot ignore in your business plan. Then you analyze your market potential and get the maximum number of sales you could make, knowing that it can be a niche and unless you cover 100% of the needs, you can never grow enough to live off it, knowing that in In general, nobody gets the whole of a potential market and we generally only get a few percent of it. Your market research allows you, especially after these two pieces of data have been verified, to take an interest in and position yourself in your direct and indirect competition. You need assets to break through and price rarely represents a real competitive advantage because in the price war you will most likely lose to established competitors who may have a stronger back than you. The company gives you the opportunity to determine how you position yourself to penetrate your market and what benefits you need to bring to your customer to break through and ultimately determine your strategy.

It helps you clarify your vision and strategy

Another reason why the Business Plan is a real success: it gives you the opportunity to clarify your strategy and your vision. A job that can be especially useful if you have partners and can check if you’re planning on going in the right direction. This gives you a clear guideline that you can divide into intermediate goals and actions. These same actions will lead you to check that the necessary resources are in place and that the team covers all the needs related to it. So you may be missing a skill and need to quickly acquire it through recruiting, bringing in a new employee, or simply using a supplier. This way you can determine which resources are needed to achieve your goal and know how you will achieve it. Taking a step back from the strategy gives you the opportunity to consider all the necessary resources and not forget about certain practices that may seem trivial, but that determine your success. Its creation from the beginning is fundamental because you risk spending time on operations and not taking a step back in certain periods. So you might as well do it from scratch!

Very useful financial forecasts

Although they are rarely realistic three years from now, financial forecasts at various levels remain very useful. They are already guiding you now to determine the base capital needed to start the adventure and at the same time to know your breakeven point, in other words when you will be profitable. This can take some time and often depends on the growth of your business. This will allow you to check whether your resources, in particular financial resources, are sufficient to achieve this. Then the finance part leads you to look at data such as the margin of each product/service you sell, its inherent costs, and determine what you will sell. If many want to sell a lot of products and have as wide a range as possible in the beginning, it turns out that a specialization strategy often takes place with products that attract and others that offer margin, for example. So many avoid selling what gets them nothing or emphasize what gets them the most or repair their stock of products so as not to amputate the margin and make money. It also generates the fact that questions are raised about the cost of acquiring a customer who often faces the margin. Most importantly, this section allows you to clearly identify the sales you need to make, in other words your goals. Depending on your resources you can generally last for a certain amount of time and it is good to know how much time you have ahead of you, often to plan the capital but also the effort you will have to make according to the resources you can invoke. If they are generally unrealistic, over time they will encourage you to also establish your valuation and check that your progress is on the planned line. For example, you can sometimes take corrective actions, such as communicating more than you planned.

A fundraising tool

Whether we are talking about opening a bank account or raising money or even enlisting some financial aid that requires you to project yourself in time, there is no denying that this will be helpful to you. Of course you have to expose your vision to yourself, but often convince (especially financial) partners to join you in the adventure. It is also helpful to you in most competitions that often represent financial and communication opportunities. However, it is not enough to have the best idea and strategy for everyone to run to the gate to invest in you. This document reassures and explains your vision, your strategy and your financing needs. So it is also not negligible because in certain cases it may be necessary and you cannot do it quickly: it takes time.

It will be clear that the business plan is certainly useful in the financial field, but above all for you to formalize the whole of the knowledge, to check that your strategy holds the road and that you have the necessary resources, to clarify your vision and to monitor its application and, if necessary, take corrective action. A whole lot of usability that’s hard to put aside.

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