The composition, structure and volume of the business plan are determined by the specific nature of the activity,the size of the company and the purpose of the making. Obviously, the larger company, the more complex its functional activity, the more information is entered into the sections. The business plan of a small company is much simpler in terms of composition,structure and volume.The main sections of this document are and what information should be reflected in them – in the following.
Front page of business plan
The preparation of a business plan begins with the correct front page design, which must necessarily include the following information:
1) full official name of the company under which it is listed in the registration documents. If the firm has a brand name, then it should be placed on the front page after the company name;
2) name of the organizational and legal form of the company;
3) address specified in the registration documents of the company;
4) telephone numbers, faxes, e-mail;
5) names and positions of employees of the firm, who will act as contact persons.
Representing of objectives in business plan
It is necessary to set out the objectives of the company on the first page of the business plan in the simplest form. If the plan, in addition, is intended for obtaining a loan, then the representing of objectives should have a more complex form. Further, it is necessary to describe the long-term and short-term objectives of the company in the context of economic and social policies. It should also be indicated whether the company plans to develop new business lines, change the form of ownership, whether it seeks to be absorbed by another company or is planned to expand through the acquisition of other companies. Representing of objectives should be brief in form and business-like in content.
Table of contents
The table of contents should be placed after the representing of objective, which is disclosed and justified in the rest of the business plan.
Most often, the business plan consists of three main parts:
— information about the company;
— financial information;
— supporting documents.
Sections are divided into subsections. This is due to the fact that the size of the smallest business plan reaches 25 or more pages, and therefore it becomes necessary that those to whom it is addressed can easily find the sections and subsections of interest to them.
“Section 1.Company”
This section of the business plan is not only the most important, but also the most difficult. Its purpose is to give a clear definition to the following fundamental points:
— type of activity: trade, production, services, client base;
— organizational and economic state of the company;
— justification of its prospects;
— terms of commencement of activities;
— organizational and legal form;
— proposed products, goods, services;
— sales markets;
— seasonality;
— advantages over competitors;
— justification of the choice of location;
— availability of personnel;
— need to attract loan capital to increase profits.
Subsections
“1.1. Description of the company” and “1.2.Products, goods, services”
Appointment of subsection “1.1.Description of the company” is to reflect the realism of the proposed project, to describe not only own company, but also the situation that has developed in the chosen field of business. In this subsection, we should clearly and briefly explain on what the successful activity of the company will be based.
In the subsection “1.2.Products, goods, services” it is necessary to provide information about the products, goods (or services) of the company, and also to describe their advantages in the market.
“1.3. Marketing research”
Never rely on the superiority of your product or service. Initially, try to meet the needs of the market around you. When writing the subsection “1.3. Marketing research”, remember that if you do not want to lose a sales market, then you must:
— minimize the likelihood that the customer will be dissatisfied;
— completely exclude marketing wars in your activity.
“Section 2.Financial Information”
“Section 2.Financial Information” consists of the following subsections:
— “2.1. Sources of funds and their use”;
— “2.2. List of fixed assets”;
— “2.3. Financial statements”;
— “2.4. Break-even analysis”;
— “2.5. Planned income”;
— “2.6. Expected money turnover”.
If necessary, this list can be expanded.
Subsections
“2.1. Sources of funds and their use”
Every entrepreneur in his/her activity mainly uses his/her own funds. However, they may not be enough for the development of the company. In order to ensure an additional inflow of money most often the company attracts an investor or contracts a bank loan.
It is necessary to specify in this subsection how and for what bank loan and attracted investments will be spent.
“2.2. List of fixed assets”
The business plan should contain a list of fixed assets. The fixed assets include buildings, structures, equipment, transfer devices, vehicles, inventory, etc.
“2.3. Financial statements”
The first step towards achieving a good financial condition (sustainable paying capacity) is the organization of an accounting system that provides the initial data for five control documents. They include:
— balance;
— break-even analysis;
— profits and losses report;
— cash flow statement (cash turnover analysis);
— analysis of deviations, if necessary.
These five control documents form the framework of activities for the making of a business plan.
“2.4. Break-even analysis”
Break-even analysis allows determining the volume of sales, expressed in monetary units or sales units, in which the company becomes breakeven. Having determined the break-even point (equilibrium), it is possible to set a goal and carefully plan the measures to achieve it.
“2.5. Planned income”
Five control documents - balance sheet, breakeven analysis, profit and loss statement, cash flow statement and deviation analysis - are the basis for forecasting possible future profits and losses. They give an idea of the financial expectations of the company, based on a set of assumptions that take into account various factors. Long-term forecasts are less accurate, with all the ensuing consequences. And although no predictions are accurate for 100%, the expert’s experience helps to bring them to reality as close as possible.
“2.6. Expected money turnover”
The forecast cash flow statement is the most important financial planning tool available to the company. The purpose of forecasting money turnover is to plan needs of the company for cash. In other words, the cash flow analysis will show what their volume is necessary for the company and when they become necessary. Should you rely on your own funds, borrowed funds, operating income or the sale of fixed assets?
“Section 3.Supporting Documents”
Copies of all the documents referenced in the business plan can be placed here.
When making a business plan, you should always remember: if you do not control the ongoing processes in the company, you will regret this one day. After all, it could end up as there is nothing to be controlled.
