Business plan - what it is and why you need it in your business

Maybe you've heard of the idea of ​​a business plan and wondered what it is and why you need it. After all, if you have a very good business idea and give it a shot with the opening of the online store, what do all these plans matter?

Or maybe, on the contrary, you even made a business plan for your business. And maybe you not only did it, but you use it to bring clarity and focus to your daily activity, something that requires discipline.

Whatever your current situation, let's see what this business plan is and why it matters, especially when starting a business from scratch. 

Why do you need a business plan?

• Without a business plan, it is much more difficult to define the value proposition, that is, what your business concretely offers and brings something of value to the market.
• The business plan helps you set clear, measurable objectives that have a purpose defined by the aspirations of your business.
• Without a business plan, you don't know where to direct your promotion and marketing efforts, and there is a risk of getting lost in the details.
• It will be very difficult for you to get to work and, above all, to stick to it. Without an initial plan on how to do things, which contains a final goal of where you want to get to, it's like setting off on a trip without a map and a compass. 

Let me give you a real example from the activity of one of my students. He had a business idea that he was very excited about. He wanted to produce an assortment of healthy drinks made from a combination of exotic fruits that have become very popular lately. He knew how to procure the necessary fruits and what processing process to set up to obtain those juices. 

He got down to business almost immediately, without a concrete plan and without putting on paper the steps necessary to have continuous production, through which his online store would constantly sell and ensure the cash flow for the business's survival. Unfortunately, the result of this way of working was that the launch of his business took much longer than necessary. 

This is because, as he started various activities, he realized that there was still something to be done that he had not foreseen or that things were taking much longer than he had expected, and thus everything was delayed. 

If he had a plan from the beginning, he would have prepared in time to obtain authorization (producing food-type juices) before proposing to some supermarket chains to sell the juice in question in their stores. Or he would have created an optimized process to ensure that the fruits are used as efficiently as possible before they spoil, considering that he was working with perishable products. 

Finally, all these are lessons learned, valuable and necessary on the path of any entrepreneur. However, I want to say that this road can be much smoother if a business plan is prepared at the beginning.

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How to make a business plan?

Now that we understand why it is so important to have a business plan let's see how you can make one. I highly recommend a very popular tool for creating the plan: Business Model Canvas.

This model appeared around 2005; since then, it has become the most well-known type of business plan worldwide. Start-ups used it at the beginning of the journey and established companies that need to list their processes and plans for the future. 

It looks like a drawing, like a canvas (hence its name) on which you project your plans:

Photo source: strategyzer.com

It is important to remember that the business plan is not the same thing as the financial plan. It is not a budget on which to project income and expenses and calculates profit.

The business plan is a narrative document. A story in which you detail the nine quadrants you see in the image above and what you want to do with your business on several levels.

How do you complete the business plan?

The Business Model Canvas is divided into nine sections structured into two large categories. These categories help you understand how these sections interact in a business:

Category 1: Value and Revenue Generators

Category 2: Operations and Costs

Let's see what is in Category 1: Value and Revenue Generators:

1. Definition of customer segments - to whom you address with your product and what are the characteristics of these customers
2. The value proposition - what you sell, which will bring value to the market
3. Relationship and creating a positive experience with your customers - how do you interact with customers, and what methods do you choose to offer them a good experience that will make them loyal
4. Delivery channels - both actual delivery, i.e., what you have to do to get the product to your customer, and delivery from the point of view of communication and marketing, i.e., how and where to transmit the messages about your product to generate sales. 
5. Sources and streams of income - how do you intend to make money, not only from the actual sale of your product but also through other methods (if you are interested in this topic, give me a sign in the comments, and maybe I will prepare material on this subject)

Now that we have gone through the income-generating sections, let's go to the quadrants of Category 2: Operations and Costs:

1. Key activities: what you do concretely to get the product you sell
2. Resources: which you need to carry out the activities of your business
3. Cost structure: what you spend your money on
4. Partners: with whom you associate with growing the business and ensuring productive, profitable activity

Practically, all these components form a plan that must answer the question:

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How do you do business? 

They have the role of clarifying each section of your business and giving you a structure for all subsequent activities. Practically, with the nine quadrants well established, you will be prepared to start implementing and scheduling the business's launch in a reasonable and realistic time.

What do you have to do now?

I tell all my students that what they do is more important than what they know. So I advise you not to read this article and move on, but to get a piece of paper and a pen now and start with the Business Model Canvas. You don't have to use the format from the image above, nor do anything complicated on paper or computer. 

You just have to take the time to think of 3-5 elements for each quadrant, elements that describe your business and clarify what you have to do next. If you spend even a single hour doing this exercise, you will be better off than doing nothing. 

The biggest mistake of entrepreneurs is that they don't plan. They jump straight into work and drown in small activities, which later turn out unproductive. We often think we are wasting time making plans, and it is better to go straight to the action. But it is not like that. 

Planning saves you, in fact, a lot of lost time and wasted resources and gives you that feeling of well-being that you are in control and know what you have to do.