A business plan discourages many start-ups because it is mistakenly viewed as a formal evil in order to divert external financiers or banks from their own business idea to convince. Ultimately, however, a business plan is an extremely success-critical instrument in order to optimally align your business strategically, in the long term. A good business plan should be easy to understand and clearly structured. The presentations on the various contents that are compactly highlighted in this article are not intended to be a specialist presentation on technical details, but rather present one’s own entrepreneurial know-how in a convincing way. In addition to convincing content, a clear structure helps to present the sometimes complex content in a very accessible form.
Which questions about the business plan this article provides practical answers to
This post explains all the topics / elements that should be part of a complete and ultimately convincing business plan. A summary that usually precedes it should allow readers to quickly get an overview. The following components of a business plan are dealt with in the article: Background of the founder, presentation of the product / service, market overview, marketing (strategy), organization of the company, opportunities and risks, financing and documents to confirm the project.
Summary of the business plan: everything you need to know about starting a business at a glance
The summary at the beginning should be a kind of brief portrait of the business model. All essential factors should be explained in a compact way so that you have access to details that are critical to success right from the start. The spice lies in the brevity: In the summary, start-ups should focus on the essentials, after all there will be enough space later to explain details. The following elements usually belong in a summary:
- the name of the company (brief explanation if necessary) and the founder
- compact formulation of the business idea (good ideas allow this!)
- What is the unique selling point ?
- Experience and professional qualifications of the founder?
- What does the potential target group look like ?
- What means should be used to reach customers ?
- Which overall need for capital is to be expected?
- What sales can be expected in the next few years?
- How many employees should be employed after 2 or 3 years?
- Where are the greatest risks ?
- What is the main goal ?
- When should the idea be implemented ?
The founder introduces himself: Who wants to get started in business?
In this block, start-ups have the chance to get to the heart of their own strengths, qualifications and experience. It is important that there is always a specific reference to the business idea. All contents of the business plan should be relevant, everything else can be left out. The following questions will help to prepare the content in a structured form:
- What professional qualifications and professional experience (possibly also approvals) do you have?
- What is your own knowledge of the industry like?
- How good is the commercial knowledge (bookkeeping, price calculation, etc.)?
- Where are the greatest strengths?
- What deficits does the founder see? How does he want to get this under control?
- Which product or service should be sold at all?
The product or service as the core of the business idea
In this thematic block the entrepreneur has the opportunity to present his actual product and its benefits / added value . Ideally, the product should stand out from the competition with an innovative unique selling point, which can also establish itself in the perception of customers. It should be clear that without a good product that is needed on the market and thus in demand, there can be no sustainable business success. A good business plan provides convincing answers to the following questions:
- What is the added value or the USP (unique selling proposition) of the product?
- What is the development status of the product?
- When should / can production start?
- Which hurdles / development steps still have to be overcome before the start and in which period?
- Have all the necessary legal formalities been completed (think of permits and permits, etc.)?
- if very development-intensive products are manufactured: Which development steps are still necessary? With which resources? Who carries out a test procedure? When will a pilot series be launched? If there is a patenting process, when will it be completed?
- Applying for patent or utility model rights?
Market overview: What are the sales opportunities? Where do entrepreneurial opportunities and risks lurk?
If you want to describe your product, you first and foremost have to know your target group exactly, also in order to strategically coordinate marketing measures with it. This section should start with an analysis of the relevant customer segments (age, gender, occupation and income as central variables) in order to focus on the target group. The decision whether to target private or business customers or both, if necessary, is of fundamental strategic scope. If there are already reference customers, a meaningful sales potential can be derived from this. Anyone who describes their target group must of course also have precise knowledge of their problems and needs. The following factors should also be addressed in this part:
- Competitive situation: where is the greatest competition lurking? What is their sales potential / price structure? How do the products differ? What strengths and weaknesses do the competitors reveal? In contrast, what are the strengths and weaknesses of your own company (=> SWOT analysis)? Which strategic measures are expedient in order to use strengths in a targeted manner and to remedy weaknesses?
- Location (analysis): What are the advantages of this location (infrastructure,trade tax, potential for skilled workers, etc.)? Do the advantages outweigh any disadvantages in the long term?
Marketing: How should the product reach / convince the customers?
At the beginning, the benefits of the offer for potential customers should be described clearly and convincingly: Why will customers prefer this product over the competition? What is specifically or objectively better? Then the central contents of the marketing mix should be presented in a compact way:
- Price: Which general price strategy should be used? What profit margins are possible? Which price can be achieved on the market?
- Show entrepreneurial know-how: How were prices specifically calculated? Are all costs under control?
- Sales: How should the product be sold (online / stationary)? Which target areas (Germany, Europe or worldwide) should be served? Which cooperations and sales partners can be included? How do distribution costs affect possible profit margins?
- Advertising: What kind of advertising is planned? How effective is it? What budget is made available for this? Which advertising measures are planned in the long term?
Organization of the company / personnel structure: How should entrepreneurial success be shaped specifically?
All relevant factors are to be described here, which later reveal room for maneuver and thus entrepreneurial potential. In particular, the following should be considered:
- Choosing a legal form : justification and opportunities
- Organization and powers: How are processes structured ? Is there an effective controlling? How does the entrepreneur see his specific role here?
- Employees : number, payment, type of employment, qualifications (criteria for recruitment), planned training measures, etc.?
The heart of any professional business plan: finances
In practice, finances make the difference between success and failure. Only when sufficient liquid funds are available can the operative business be driven forward with full force. Last but not least, the business plan is intended to convince financiers: If this has succeeded so far, the explanations on finances should not disappoint, as these are often decisive. A high degree of realistic planning is required here:
- Cost of living: How high are your own costs (particularly relevant in the start-up phase)? Are there reserves / safeguards?
- Capital requirements according to the investment plan: How much capital is required at the start for acquisitions and necessary upfront costs? How much for a necessary liquidity reserve? Can the investment planning be supported by cost estimates etc.?
- detailed financing plan: how much equity is available? Are there any other securities that are brought in? So how high is the need for outside capital in the coming financial years? Are participation funders eligible? If so, under what specific conditions?
- detailed liquidity planning (realistic estimates are a must here): How high are the monthly costs estimated? How high are the payments in the first few years? What are the monthly costs for debt servicing (interest and repayments)? What monthly liquidity reserve can be expected? What costs and what profit are expected in the first 3 years?
For the sake of clarity, such plans should be presented in tabular form. If possible, comparative figures from the industry should be used for the estimates (the Chamber of Commerce and Industry may be able to help here).
Where is the entrepreneurial journey heading: compact assessment of opportunities and risks
A business idea can only be meaningfully evaluated from the outside if the greatest opportunities and dangers are tangible. It goes without saying that the business opportunities must be greater than the potential weaknesses. Ultimately, weaknesses cannot be avoided, but they must be known and controllable.
- Where are the 3 most promising opportunities for sustainable, positive corporate development?
- What are the 3 most serious problems ? How are these specifically controlled?
Summary and outlook: What a business plan must be able to do
A business plan is, if you will, a written business card for your own business idea: it must be clear, structured and easy to understand so that no questions remain unanswered. A healthy entrepreneurial optimism is certainly not wrong, but positive estimates should always have a verifiable background. Fantasy calculations beyond reality become every investors care off. Of course, it also includes being open about weaknesses and risks, because prudent entrepreneurs always keep them firmly in view. Ultimately, the real strength is to strategically control such dangers. The business idea as the core of the business plan should be conveyed convincingly without general or pseudo-scientific formulations. A tangible added value for customers (unique selling proposition) as well as a very good qualification of the founder are central factors to convince external donors. The section on finances is of central importance because it shows whether the entrepreneur has done his homework or whether he has a realistic idea of the capital requirements in the first few years.
Compact summary: which documents should be attached to a professional business plan?
- Tabular CV
- Draft of the articles of association (if already available)
- Drafts for any lease, lease or cooperation agreements
- Market analyzes (prepared graphically, including source information)
- relevant key figures of the industry (benchmarks)
- relevant reports that convincingly support the project
- Documents relating to any property rights
- Overview of the securities to be contributed