Keep calm and create your Business Plan!
Here you are in one of the most significant Step of this Guide: making your business idea concrete.
Since we are dealing with Business planning, here you will find some topics that will be developed more in detail in the following steps.
Ready? Let’s get it started!
What is a Business Plan?
The business plan has the objective to guide the enterprise in the right direction and to describe the entrepreneur’s thoughts and ideas. It is a fundamental tool that can keep the entrepreneur, the employees and the business on the correct path.
Its aim is to:
- Identify the business aspirations;
- Determine if these aspirations are feasible in the current economic situation;
- Outline the steps that the entrepreneur will take to reach the main objective.
In other words, for a social enterprise the business model is the channel through which the social entrepreneur converts inputs into outcomes, by generating social value (measurable impact) and economic value (revenues).
Before starting the entrepreneurial process
Do you want to be sure about the effectiveness of your business purpose? Try to focus on the problem you are aiming to solve and, at the same time, on the opportunity your idea represents. Which are the market needs? Is your mission achievable? Can you foresee any risks?
Think about it…
Business Planning: how to approach it
Once you are sure that your idea could have a real impact on society, it’s time to connect your VISION with ACTION.
Let’s focus on financial resources!
The revenue model
This is one of the key points of starting a business: be sure to have enough resources to launch it and sustain it in the future.
In order to know that, it is crucial to focus on different aspects related to start-up and full activity stages and concerning also measurement and impact evaluation.
Measuring impact is a key activity for an enterprise and we will discuss it more in one of the following steps of this Guide. In fact, how do you think to make the difference in society if you are not able to know which are the activities you are doing well and which are the ones that could be implemented?
For these reason, it could be useful to select some impact indicators strictly related to your mission. Be sure to choose:
- Just critical indicators;
- Adapt measures and process to the stage of the organization;
- Set and measure interim milestones on the way to longer-term goals;
- Use measures to improve your programme and organization.
The 5 truths you need to know about Business Planning
Do you want to be sure that your Business plan is really interesting for investors?
Take a look to this video and prick up your ears!
How to write a Business Plan?
What should the entrepreneurial plan contain?
Business Plans may not have the same contents and that is because each institution (banks, fund and financial organisations) sets their own requirements for the development and the content of the entrepreneurial plan. But, in general, some crucial aspects must be always taken into account. These may include:
To answer each of these questions, you may need services of consultants and/or specialists but when creating the business plan itself, external assistance is unthinkable.
In fact, the idea of the product/service and its implementation is strictly personal and, as a consequence, the plan itself can’t be developed by another person. Business plan is always personal, therefore its content depends on entrepreneur’s experience, knowledge and skills.
For this reason, strictly standardised principles for business plan creation cannot be mentioned.
Just before starting…
When start writing the plan you should have completed answering the majority of crucial questions such as: the new product/service, the financial sources, the specific market, the competitors, who and why they will buy the product etc. Everything should be explained in a very clear way.
One of the most practical approaches to start writing a business plan is as follows:
Develop each section of the plan separately
Apply all the facts, data, comments, assessments and opinions of the relevant item
Classify the information
Check for credibility and consistency
Arrange the information in logical order
Edit and merge the plan together
Therefore, at this level the most important is to present the contents of the plan in a logical sequence. It means that each step of the plan should be based on contents and problem resolutions of the previous one.
The Business plan Structure
Below you can find an exemplary structure of a business plan for establishing a social enterprise.
- Cover page
- Summary of the business plan
The Executive Summary provides the most important information for readers that need to understand and support the concept without necessarily knowing the details. This is usually written once all the sections of the plan are completed.
- Business plan content
- Description of the company
This section summarizes the organisation’s history and programmes.
Most social enterprises operate as an activity or programme within a non-profit, though some are legally structured as a separate non-profit, a for-profit subsidiary, or an independent organisation.
Form should follow functions and the legal structure should support the purpose and activities of the enterprise. Advices from an expert lawyer may be needed.
To sum up, you should describe:
- The legal structure, including context and programmes;
- How the business venture will be structured and organised;
- Governance (Boards, advisory committees, reporting).
- The product/service
Here you can find a summary of the product or service that will meet the demand in the market. It does not need to include detailed descriptions, price lists or other materials.
It should contain:
- Product/service description;
- Positioning of product/service in the market.
- Future products/services?
- The market
The market analysis is the heart of the business plan and it is too often inadequately explored when planning a social enterprise! Solid research is necessary to understand the target customers and how the enterprise will meet gaps and demand in the market.
Try to provide:
- Summary of current market situation;
- Target market and customers;
- Customer characteristics, unmet demands and buying factors.
In this section you can include a picture of competitors, both non-profit and for-profit, and the value proposition, or market advantage, of your business.
Try to investigate:
- Primary competitors:
- Competitive products/services;
- Risks and opportunities in competitive market;
- Recent or emerging changes in the industry;
- Specific description of competitive advantage of proposed product/service.
In the Customer Analysis section of the business plan you should identify the customer segments you aim to serve, analyse their needs and describe how products and services satisfy these needs.
Everybody knows how important is marketing in a business venture! In this section you will find a description on how the organisation will reach the target market and turn potential customers into paying ones.
- Marketing strategy;
- Sales tactics;
- Advertising, public relations and promotion;
- Summary of sales forecasts.
You can split this section into 3 different sub-sections:
- Production and organisation of those activities that will bring to the development of the product/service;
- Management - through this section the entrepreneur has to convince that he/she has the necessary knowledge and skills to manage the company;
- Development of the activity - this section is not always present, especially when the plan is made for own use. Rarely, the developer makes previsions for years forward, because of rapid changes in external environment.
At this point you should give an idea about your awareness of the economic environment, considering and observing specific economical, political and social factors.
For this reason, the entrepreneur should, on a daily basis, monitor the market, the financial, social and political aspects of the external working environment. The better the entrepreneur is informed, the greater probability for the business to survive.
Of course, you cannot avoid financial planning!
The financial section includes projections for revenues and expenses for at least three years with a summary narrative of the key assumptions. This section also provide details about the start-up costs for capital equipment, inventory, initial marketing and staffing, and subsidy needed to cover losses during the launching period. These capital requirements may be funded from a combination of contribution from the non-profit, grants for the enterprise, and/or debt financing.
In the last part of your business plan, you should focus on identifying and explaining the commercial strategies of the company, their implementation and the foreseen results.
A useful and complete guide on how to write a business plan for social enterprises and non-profits can be found here.
Isn’t enough for you…? Then spend 2 minutes of your time to watch this video on the Business Model Canvas, that can add value to a totally new business or to an existing one to improve its weaknesses!