Creating Business Plan
At the beginning of the own enterprise stands the business idea. The core of the implementation is an elaborated business plan, which shows options for action and critically reflects the own business idea. Learn in this article the 5 reasons why you need a business plan.
Planning the future
A business plan is not only necessary to secure financing in the start-up phase, but also to manage your own business more effectively. By writing down one’s own ideas, one’s own company can be better understood and specific scenarios can be developed that are necessary to further develop one’s own company. This plan combines the desired goals with the required resources.
By developing a better understanding of your company and the market and developing a strategic plan, you lay the foundation for long-term business success.
Developing and communicating a clear sequence of actions
A business plan helps the prospective entrepreneur to evaluate potential opportunities and draw up an action plan. In addition, the establishment of milestones is helpful in order to provide guideline values on which one can orient oneself. Once written, the business plan can be flexibly adapted to changes.
Pursuing the same vision
Most start-up companies have other founders on board. The start-up phase can be better survived by a team. In particular the high expenditure of work can be distributed on several shoulders and the founders can bring in different abilities. If the founder has no partners, usually family, friends and councellors are involved. It is particularly important that everyone works towards the same goal and is guided by the same objectives. This has the consequence that everyone pulls in the same direction and misunderstandings are cleared up. This significantly increases the chances of success.
Support growth and secure financing
Most companies have to deal with investment decisions. The investments can often not be made exclusively through the operating cash flow, so that the company needs external financing. Despite the increasing possibilities for start-up financing, potential investors require the balance sheet, the income statement and a current business plan. This is particularly important for the chance of financing, as the current situation of the company is depicted and on the other hand an outlook on the future of the company is given.
A precise and stringent business plan helps to convince potential investors of their idea. In particular, it is important to clearly explain to the investor that sufficient cash flows will be generated in the future to repay the investment.
Managing cash flows
Prudent cash flow management is a key consideration for all start-ups. This is particularly important in the start-up phase, as capital is always in short supply.
Adequate cash flow management is therefore of central importance in order not to endanger the core business of the company. The business model of the company also plays an important role here, as this has a considerable influence on incoming and outgoing payments.
Create business plan: yes or no?
The planning and strategy instrument should serve as an orientation aid for young entrepreneurs. However, drawing up a business plan requires a lot of time and effort. While some people spend months working on the business plan, others do without it and are already making sales in the same time. Many founders therefore ask themselves the question: Create a business plan – yes or no?
The business plan sets out the business idea and customer benefits, identifies opportunities and risks and serves as a roadmap for the company. The intensive discussion with his company is the prophylaxis against planless mismanagement and can solve problems in advance.
Winners have a plan
According to the motto “Winners have a plan”, the business plan serves as a foundation on which the realization and positive development should bear fruit. Werner Haring (co-founder of 3DPrinting-Files) knows that “it is especially helpful when, thanks to the business plan, all those involved always know whether and when investments are required in order to achieve the net profit in line with the calculations”.
The vertical start-up TableConnect has invested a lot of time and energy in the business plan. It took 8 months alone to implement it. The work paid off and was rewarded with second place in the i2B business plan competition. TableConnect’s business plan is regularly consulted when it comes to business plan competitions, funding submissions or start-up events.
Johann Rath, CEO of TableConnect, on the advantages of the business plan: “The business plan helps to deal holistically with the business idea in a very early phase of the company and shows potentials as well as risks. In this way, gross mistakes or hopeless market situations can be prevented at an early stage. Before you simply start to found a company, you are much more structured and therefore more effective.”
The business plan as a time and energy guzzler
Thomas Jackl, initiator of the Idea Camp, mentions in an interview that Internet start-ups in particular can do without a business plan because a lot of energy and time is lost during the start-up phase and a lot of the business plans disappear into the drawer unread anyway. In that time they could have tested the market long ago to see if the idea would work.
If banks, funding agencies or venture capitalists require a business plan, it must also be submitted in an attractive form. Founders or freelancers who can finance themselves (in the jargon “bootstrapping”) often do without a regular business plan. Otherwise at least the “business plan light” – i.e. the business model, the lean start-up framework or the canvas business model – is a profitable instrument for orienting oneself according to a timetable even after the foundation.