Home page -> Learning area
Learning area
What is a business plan?
Business plans are describing a business opportunity and medium-term strategies to seize this opportunity. Usually, a marketing plan is the starting point. It is complemented by a market overview and conclusions concerning the operation of the enterprise. A financial plan includes an estimate of the necessary financial and human resources and the expected revenues. A business plan is a document that determines the goals of the enterprises for internal purposes and at the same time can be used as means of communication to convince private or public investors such as banks or foundations etc. So a business plan can be essential for the survival of an enterprise.

The following competences, as listed by a "Business Angel", will support you in your work:
  1. Staying on strategy: A business plan can be used to summarize the main points of the enterprise strategy. It functions as a reminder of what it both includes and rules out.
  2. Business objectives are being made clear: A business plan can be used to define and manage specific measurable objectives like web visitors, sales, margins or new product launches.
  3. Educated guesses will improve: A business plan can be used to refine educated guesses about potential market, sales, costs of sales, sales drivers, lead processing and business processes etc.
  4. Priorities will make more sense: A business plan can set priorities for other factors like growth, management and financial health, which are revised at predefined intervals as the business evolves.
  5. Interdependencies will be understood: The plan can be used to keep track of what needs to happen and in what order.
  6. Milestones will keep on track: A business plan helps to keep track of dates and deadlines in one place being valuable even for a one-person business and vital for teams.
  7. Delegating will be easier: The business plan is an ideal place to clarify who is responsible for what. Every important task should have one person in charge. 
  8. Managing team members and tracking results will be easier: The plan fixes objectives in writing and follows up on the difference between expectations and results with course corrections.
  9. Planning and managing cash flow will be easier: A cash flow plan can tie together educated guesses on sales, costs, expenses, assets that need to be bought and debts that have to be paid.
  10. Course corrections will keep businesses from flopping: Having a business plan gives a way to be proactive -- not reactive -- about business. A business plan sets expectations and establishes as-sumptions to allow future developments being managed with course corrections.

Jason Nazar, Founder and CEO of Docstoc, takes on a broad topic that most people over-complicate: starting and running a successful business. He breaks entrepreneurship down into various simple ideas, insights, and self-reflection.

Wharton Entrepreneurship Workshop, “Business Plan Writing 101,” featuring Patrick FitzGerald, C’97, Managing Director of DreamIt Ventures. FitzGerald discusses what is required to write an effective business plan.

Dr. Steven Gedeon talks about the challenges of writing a business plan as well as the best practices for writing different sections of the business plan, how you should write the financial section, executive summary, how to create a marketing plan.
Questions for you
Before you start writing your business plan you should be clear about some essential questions:
What mission and goals does your business pursue?
Why is the business idea a convincing one?
What are your specific products or services?
Why are the products / services provided by this business necessary?

"Business plans appear in different compositions. However, a typical structure of a business plan is shown underneath. Potential readers can vary from bankers to Venture Capitalists. Although this group may be diverse, it’s definitely not a finite one. Each type of reader has their own typical interests and have to be taken into account when formulating the plan for your audience. Bankers tend to be more formal than angel investors and place greater emphasis on financial strength, whereas angel investors need more emphasis on proof of concept. Therefore, business plans have enough sections to cater for all audience and are around 15-30 pages (without the appendices).
When you click on a topic you will get further information as well as exercises which will help you to write your own business plan.

1. Customer and clients: How to reach them
To be able to reach your customers or clients and to manage your company's interaction with them it is necessary to know who they are and to be aware of upcoming costs.
Please insert information in key words for each relevant customer group, e.g. parents with small children, young people or seniors. When describing why and how they are targeted – remember that you are planning a social enterprise and may make use of special cost-saving, but efficients means (social media, press articles, volunteers etc.).
• Profile of your customers:
• Why this particular target group:
• How do you get their attention:
• Measures to convince them to buy or use your product:
• Costs of these measures durin the first business year:

2. Competitors: How to beat them
An assessment of the strengths and weaknesses of current and potential competitors helps you to identify opportunities and thretas.
Please insert information in key words for each relevant competitor group, e.g. branches of big chains or internet trade. Again, when developing competition strategies, your status of a social enterprise may be of advantage.
• Profile of your competitors:
• In what way are they competing with you:
• Why do customers buy from them:
• Why are customers going to switch to you:
• Measures to be taken in order to convince them to switch to you:
• Costs of these measures during the first business year:

3. Operations plan: Clarify your day-to-day business
If you want to run your day-to-day-business successfully you need to figure out what requirements are necessary to bring your product to the market and what structures need to be implemented to make a grade.
For this please elaborate a process scheme or a flow chart by regarding the following questions:
• How will be product be produced / your service be carried out?
• Which external parties are going to be involved in the implementation of your day-to-day business?
• What distribution channels are you going to use in order to reach your customers? At what cost?
• How will quality by assured?
• Which kind and how much staff is needed?

4. Marketing: Your sound strategic foundation
What will be your marketing strategy?
Remember the usually applied marketing mix: product policy (characteristics of the product), pricing policy (level of price), communication policy (information to customers) and distribution policy (attracting and retaining customers).
• What is your marketing message?
• What are your marketing strategies?
• What marketing instruments are you going to use?

5. Sales: The key to long-term survival
Try to be realistic. One of the most fatal mistakes in trying to convince sponsors is to overestimate one’s future turnover.
• Which price will you charge?
• Why is your price set at this level?
• Are you planning to use discounting?
• If yes, what will it be, and how will it be offered?
• Which quantities will be sold?

6. Start-up expenses
Calculate your initial investments. Which activities are needed to get the enterprise off the ground? Which costs are associated with them?
Fill in the following table. You should neither be too modest nor exaggerate on what you need for a good start. (Comment: The table below should be designed in a calculation format.)

7. Finances: Where do you want your enterprise to be in 12 months from now?
State which income and expenditures are to be expected for the first 12 months. (Comment: The table below should be designed in a calucation format.)

8. Projections: And where will your company be beyond the first year?
Please answer the following questions. Positive thinking is wanted!
• Where will the enterprise be in 1 year?
• In 3 years?
• In 5 years?

9. Executive Summary: Capture the investor's attention
Professional venture capitalists see hundreds of business plans every year and most receive no more than a brief glance before being rejected. It’s important for the Executive Summary, which is regarded as the teaser to your business plan, to be written in a way that will generate first-impact interest. Nevertheless the Executive Summary is the final part to be written in your business plan....
State the following topics:
• What are the mission and objectives of the enterprise?
• Why is the business idea a convincing one?
• What are your specific products and services?
• Why are the outcomes of the enterprise needed?

Useful resources
Business plan for art school museum “Hands On! Children’s Art Museum”: http://www.bplans.com/art_school_museum_business_plan/executive_summary_fc.php
Business plan for organic food store “Last Frontier Market”: http://www.bplans.com/organic_food_store_business_plan/executive_summary_fc.php
Business plan for non-profit law firm “Advocates for Legal Equal Access”: http://www.bplans.com/nonprofit_law_firm_business_plan/executive_summary_fc.php
More than 500 exemplary business plans: http://www.bplans.com/sample_business_plans.php
Diverse business plan templates: http://www.inc.com/larry-kim/top-10-business-plan-templates-you-can-download-free.html
In particular: Business plan template for start-ups by SCORE, a non-profit small business resource: https://www.score.org/resources/business-plan-template-startup-business
Business plan tools for start-ups and small businesses (templates, software, apps, services): http://www.businessnewsdaily.com/6818-business-plan-tools.html