Structure and model of a business plan

This article is intended to assist in developing a business plan. In it, we present a typical structure and a model of a business plan that you can use as a basis or reference to developing yours.

Structure of a business plan

For the preparation of a business plan there is no standard structure or format used for all plans alike, but one must adopt the structure that best sees fit according to your type of business and the needs or objectives of its plan either to serve as a guide for implementation, assess the viability of a business, getting financing, etc.

Structure and model of a business plan

For example, if the main objective of a business plan is to obtain a loan, the plan should have well supported arguments and enough information to convince the feasibility of the project and that one will be able to repay the debt on time, although it could obviate some parts of the market study and the technical study to give greater emphasis to the financial study.

A commonly used in the development of a business plan structure is composed of the following parts:

  1. Executive Summary.
  2. Definition of business.
  3. Market study.
  4. Technical study.
  5. Business organization.
  6. Study investment.
  7. Study of income and expenses.
  8. Financial study.

Below is a brief explanation of each of these parties, as well as the elements that make up:

1. Executive Summary

The executive summary is a summary of the other parts that make up the business plan, so despite going at the beginning of the plan should be developed after having completed the other parties.

An executive summary usually includes the following elements:

  • The basic data of the business: The business name to be performed, its location, type of company (EIRL, SC, SA, etc.), etc.
  • Business description: A brief description of the business to be performed and / or the product or service that is being offered.
  • The distinguishing features: The innovative features that will have the business, product or service, and that will allow one to differentiate them from the competition.
  • Competitive advantages: The aspects which will have a sustainable advantage over other competitors.
  • The vision and mission: The statements of vision and mission of the business.
  • The idea of the business need or opportunity: The reasons for the proposal or choice of business.
  • Business objectives: The goals they seek to achieve once launched the business.
  • Business strategies: The strategies to be used to achieve the objectives.
  • The executive team: People who are responsible for implementing and managing the business later.
  • The required investment: The investment that will be needed to start the business and run it for the first production cycle.
  • The expected return: The results of the profitability indicators used.
  • The environmental impact: A summary of the environmental impact that business.
  • The project’s conclusions: The conclusions that have been reached after completion of the development of the business plan.

An executive summary should be effectively able to display a summary in a single reading what the business plan, which is why their development should cover no more than three pages.

2. Definition of business

Business in defining the business that is to be performed is described, as well as other aspects related to this, such as the reasons for its proposal, its objectives, and strategies.

The definition of business usually includes the following elements:

  • The basic data of the business: The business name to be performed, its location, type of company (EIRL, SC, SA, etc.), etc.
  • The description of the business: The business description to be performed and / or the product or service that is being offered.
  • The distinguishing features: The innovative features that will have the business, product or service, and that will allow one to differentiate them from the competition.
  • The competitive advantages: Aspects where it will have a sustainable advantage over other competitors.
  • The target market: The market or target audience which is to run the business.
  • The vision and mission: The statements of vision and mission of the business.
  • The idea of the business need or opportunity: The reasons for the proposal or choice of business.
  • The business objectives: The goals they seek to achieve once launched the business.
  • The business strategies: The strategies to be used to achieve the objectives.

The definition of business should be able to explain clearly what the business is to be performed and / or the product or service that is being offered, but also be able to generate interest in these.

3. Market

In the market research industry analysis, target market analysis, forecasting demand and another related market where it will operate the business develops elements.

Market research usually involves the following elements:

  • Industry analysis: The analysis and description of the industry or sector in which the business will operate (history, evolution, size, growth prospects, key players, etc.).
  • Definition and analysis of the target market: Market definition which is to run the business, and the analysis and description of the consumer who conforms (location, age range, tastes, preferences, wishes, purchasing behavior, consumption habits, customs, attitudes, etc.).
  • Competitive Analysis: Analysis and description of future business competitors (quantity, leaders or major, location, experience, production capacity, strategies, pricing, sales outlets, advertising media, strengths, weaknesses, etc.).
  • Analysis and demand forecasting: Analysis and forecasting demand will business for the period of time that is projected business plan.
  • Marketing analysis: Analysis and development of business strategies or marketing strategies that will be used to meet the target market.
  • Market analysis provider: The analysis and description of the providers that have or could have a business (location, levels of production or supply, credit, rates, guarantees, payment facilities, etc.).

For the development of market research, it is necessary to conduct a market research where used techniques for gathering information such as survey and focus group.

4. Technical Study

In the technical study the physical requirements necessary for the operation of the business, its production process and infrastructure, size and other characteristics of the premises where work described.

The technical study usually comprises the following elements:

  • Physical requirements: The physical elements that are necessary for the operation of the business (land, buildings, machinery, equipment, tools, vehicles, furniture, supplies, etc.).
  • The business process: The phases or stages that make up the processor business processes (processes of purchasing, storage, production, distribution, sales, etc.).
  • Local business: The description of the premises where the business work (infrastructure, size, location, production capacity, plant layout, etc.).

For a better description of the elements of the technical study, it is advisable to make use of tools such as charts, graphs, flow charts or flow charts, maps, etc.

5. Business Organization

A business organization in the legal and organizational structure of the business described, areas or departments that make up, and other elements related to these.

Business organization usually includes the following elements:

  • The legal structure: The legal form under which the business is legally constituted (natural person or legal entity), the type of company (EIRL, SC, SA, etc.), etc.
  • The organizational structure: The type of organization that will have the business (functional, by product, matrix, etc.), areas or departments that make up, and hierarchical relationships that will occur between them.
  • Charges and functions: The positions or positions that will each area or department of business, and the functions, tasks, responsibilities, bosses and subordinates who will each.
  • The requirement of staff personnel who will be required for each office or place of business, and the profile that a person should have to apply for each of these (experience, knowledge, skills, etc.).
  • Staff costs Salaries, wages, and benefits that will be assigned to each position or office.
  • Information systems: How to be recorded, process and distribute information in the business.
  • Executive Team profile: The profile of the people already has to put up and then manage the business (experience, achievements, knowledge, skills, etc.).

For a better description of the elements of the business organization, it is also recommended to make use of tools such as pictures, charts, flowcharts, etc.

6. Study of investment

In the study of investment that will be required to launch and operate the business during the first production cycle, and funding to be used or need notes.

The study of investment usually includes the following elements:

  • Fixed assets: Fixed or tangible assets that are required before starting operations (land, buildings, constructions, infrastructure, machinery, equipment, tools, vehicles, furniture, etc.), and the investment made in them.
  • Intangible assets: Intangible assets that will be required before starting operations (market research, product design, the legal constitution of the business, obtaining permits and licenses, selection and training of personnel, opening marketing, etc.), and the investment made in them.
  • Working capital: The elements that make working capital (inputs, work in process, finished products, packaging, stationery, utilities, payroll and sales management, maintenance, municipal taxes, advertising, insurance, etc.), and the investment made in them.
  • Total investment: The total investment of the project (the sum of investment in fixed assets, intangible assets and working capital).
  • Financing structure: The amount or percentage of the investment will be financed with equity and the amount or percentage to be financed with foreign capital.
  • Funding sources: The description of sources of external financing will be used and these credits awarded (amount, term, cost, etc.).

Overall, the study shows what the investment capital that will be needed to operate the business, in which such capital will be used and how to obtain or attempt to obtain.

7. Study of income and expenses

In the study of income and expenditure projections of business income and expenses for the period of time that is projected business plan developed.

The study of income and expenses usually include the following elements:

  • The budgets of income (sales budget, budget billing, etc.).
  • The expenditure budgets (procurement budget, payment budget, the administrative budget, budget sales expenses, debt payment budget, etc.).
  • The calculation of break-even.
  • The cash budget or cash flow projected.
  • The operating budget or profit and projected losses.
  • The balance sheet projected.

The time is projected a business plan often depends on its objectives and the type of business that is to be performed, being the usual business plans with projections to 1, 3 or 5 years.

8. Financial Study

In the financial study calculating the period of payback and profitability of the business develops.

The financial study usually comprises the following elements:

  • The payback period of investment: Calculating the time it will take to recover the capital invested.
  • The return on investment: Profitability as the financial index return on investment (ROI).
  • The NPV and IRR: Profitability according to financial indices Net (NPV) and Internal Rate of Return (IRR) Present Value.

The idea of the financial study is to show that the project is profitable, how long the investment will recover, and how much is what is expected for this.

Model of a business plan

The model business plan that we will present them used as a base structure described above. The business developed in the plan is a business dedicated to the manufacture and sale of a new brand of jeans for ladies which has among its main features using external workshops for making garments and middleman for selling them.

It should be noted that this model or business plan example is a simple plan that uses dummy data because its sole purpose is to serve as a model, example or reference, which is why it is recommended not directly apply or use it as academic work.