The Business Plan … What it is and How to Build It
Let’s find out together the importance of this Strategic Tool and how to prepare it …
The start-up of any entrepreneurial activity requires facing a series of more or less complex problems, not only of a “bureaucratic” or “administrative” nature, but more often than not related to the procurement of financial resources (Financing, Loans, Mortgages or also State-European Calls) or Access to the Capital Market (in the case of recourse to the Credit System, Lenders or even “Business Angels” in the case of Start-Ups).
In all these situations, in addition to those related to the Financing of other Entrepreneurial Initiatives in the course of the Company, it is necessary to prepare the “Business Plan”, or the Feasibility Plan of the Company Business.
For which subjects is the Business Plan useful?
The Business Plan is not only useful for the Entrepreneur to understand the Probability of Success of his Business Project, but also for the Lenders (e.g. Banks, Financial Companies, etc.) to decide whether to allocate Financial Resources for the Business Idea proposal, as well as for Investors (e.g. Individuals, Private Entities, etc.) to evaluate whether to enter the Company’s Share Capital or to Lend Money at a predetermined Remuneration Rate.
How the Business Plan is prepared
Even if the Form is free, it is important that the Business Plan contains:
- Business Idea: with general information on the Business Project;
- Market and Competition Analysis: highlighting the Strengths related to the Business Idea;
- Description of the Product or Service: underlining the Benefits that the Buyers would derive;
- Marketing Plan: describing the ways to acquire customers;
- Organizational Plan: with details of the Legal Form and Structure of the Company;
- Economic-Financial Plan: with Economic, Financial and Investment Forecast Prospectuses.
These documents must be drawn up in chronological and sequential order, starting from the development of the so-called “Business Idea” (ie the Mental Representation of a Product, Service or a Combination between The Same), then analyzing the “Market and Competition” up to get to the “Operational Plan” of Business development.
From an economic-financial point of view, the Business Plan should contain the last two Financial Statements (in case the Company was already operational) and three Forecast Budgets (including the Current Year Forecast).
In summary we can say that the Business Plan represents a “Business Card” of the Company, but only those who know how to read it in depth and analytically can understand the Future Potential of the Idea or Business Projects, supported by a careful and scrupulous Numerical Analysis of the Data (past, present and future) contained therein.