Business Plan Handbook

Practical guide to create a business plan

Arthur Lämmle

• Publisher: Books on Demand
• Year: 2020
• ISBN:
  9783751941365
• Edition: 1
• Topic: Business
• Subtopic: Gestione
• Index: Business

The Business Plan Handbook serves as a guide to create a holistic and professional business plan.The manual describes basic requirements on a business plan and guides the reader step by step during the elaboration.The requirements are oriented around scientifically recognized methods, dominant approaches in practice and the legislator.As a result of the elaboration, one receives a detailed assessment of the feasibility of a particular project.

1. Introduction

The creation of a business concept (business plan) for a business idea is not only reserved for large companies or corporate consultations but also for small enterprises and private individuals. In addition, the elaboration of such a business concept is not bound to any industry.

This results in countless application possibilities for business concepts and just as broadly as the different possibilities are, is the scope laid down in the elaboration.

The overall plan includes a complete view of input, output, performance, profitability, liquidity, legal and tax-related aspects, as well as an assessment of the potential, the business opportunities, and risks over a long period of time.¹

A business plan applies not only to internal but also to external stakeholder groups as a complete and plausible concept to check the feasibility of a business idea or project.

If business concepts (business plans) are feasible, then they are also being used as standard instruments to attract lenders, employees, customers, long-term business partners, or successors.

In practice, there are countless books that can be used in the editing process, but only a few manuals which provide a clear overview of the topics and are able to guide you through the process.

But when it comes to successfully implementing a project with the immense use of time, resources, and human workforce, it is important to have a manual that briefly presents the necessary requirements and also describes important recommendations for action.

The following document is a business plan handbook which not only guides the reader step by step through the process in order to create a holistic business concept but also taking professional standards into account.

Professional standards are understood as scientifically recognized methods, or are based on dominant approaches in practice, or orientate themself on the legislator's guidelines. Therefor one will asure an objetive and a realistic approach.

At the beginning general requirements or so-called principles which are essential for a business plan are clarified in order to deal with the actual requirements of a business plan in the main part. The business plan can be divided into three areas.

The first part describes the company and consists of the following chapters: company presentation, factory and operating equipment, management and organization, market and competitors.

In the second part the right strategies are developed by using a marketing concept and a SWOT-Analysis.

In the third part an economic approach takes place. The so-called financial plan consist of a opening balance sheet, profit and loss account, as well as liquidity planning.

In the end all relevant information and facts are presented in an Executive Summary.

The requirements for a business plan are described using the following central questions which are addressed in each chapter as required:

• What needs to be done?
• Why does it have to be done?
• How is it done?
• What is the result?
• Where is the result taken into account in the business plan or financial plan?
• What further literature can be used?

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¹ Kubicek, Herbert; Brückner, Steffen (2009): p. 1

2. General requirements²

General requirements are not tied to the content but rather define principles that a business plan has to fulfill in order to be a professional and meaningful business concept. In the following are nine general requirements briefly described.

At the external appearance a great deal of care and accuracy is given. In order to preserve the external form one should not only think about spelling mistakes, font, and size, but also about the title page, a detailed structure, and how it should ultimately be bound. The viewer or reader quickly gets such details and these details have a positive or negative impact on the assessment of the concept as well as the performance of the founding team.

In order for a business plan to be understandable to everyone it is important to ensure that the context is presented in a comprehensible manner. Note that, a clear structure and short sentences makes it easier to read. In addition, the entire business plan must not be too long. A range from about 30 to 40 pages is standard. This ensures the attention of the reader to the last sentence.

The completeness of a business plan is not easy to achieve. It is therefore recommended to complete the business plan as extensively as possible on the basis of literature, experts, or checklists. If there are gaps, make sure that they are also being described. Appropriate sub planning or partial aspects shall be attached to the appendix.

In order to convey credibility it is necessary to argue objectively, to name weaknesses, and risks. The information or data generated through the process should be well-founded and verifiable. Once again, identified gaps need be addressed in order to ensure greater transparency and promote trust.

Flexibility means adaptability to changing initial conditions. Even, if one assumes that all the information which the calculations and forecasts are based on are correct, it can nevertheless happen that the initial conditions such as buyer behavior or competitive structure develop differently. That is why it is extremely important that the company concept and the assumptions are constantly questioned.

A business concept always orientates itself on the targeted group. It means, that one creates a business plan with the goal to convince a specific group of a business idea. If someone want to convince, for example, a stratigic partner, then topics like common cooperation or common service creation are brought to the fore. Or someone want to win new investors or lenders, then the focus switches to the financial planning. On the other hand, if someone is trying to reach potential customers, then the right arguments are found in the chapter „marketing concept“. At any case, one will ensure an appropriate argumentation by presenting the relevant information from the targeted group´s point of view.

A business concept not only relays on high quality information and data but also on estimations and forecasts. Therefore, it is recommended to point out, how specific values are put together. If one has laid down reliable information and data, then the credibility and the chance of realization rises.

The Timeframe is another important aspect in the editing process of a business plan. Normally, a planning horizon between three and five years is appropriate. Periods between ten and fifteen years are conceivable if the business plan does require it. In a large timeframe it is checked whether the business concept can be realized in a fixed timeframe and also has the possibility to exist at the market long term.

The last general requirement on a business concept refers to the financial planning. It is important to include a revenue plan and a liquidity plan. The revenue plan shows whether the company´s earnings are positive or negative. The liquidity plan on the other hand gives information whether one can handle payment obligations on schedule. A precis view at the deposits and payments gives one the opportunity to anticipate payment bottlenecks that can lead to bankruptcy and failure.

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² Klandt, Heinz ; Finke-Schürmann, Tanja (2000): p. 57 - 63

Requirements on a company presentation

Step 1: As a first step, the initial situation is described in detail and aptly. It mentions authors, founders, and involved parties. In this context it is also important to describe why the business idea was developed. Instructions for an elaboration can be found in chapter 3.1 „starting point“.

Step 2: The second step describes the actual business idea (chapter 3.2). These includes the product, service, as well as the customer benefits. The presentation of the business idea can also be facilitated by embedding it into a value chain, or by describing relevant strategic partners and market participants.

Step 3: Description and presentation of a company´s vision that moves between three and five years. In addition, all important company´s milestones necessary to achieve the vision are recorded. The exact procedure can be found in chapter 3.3 „company´s vision and missions“.

3. Company presentation

Basically, the presentation of the company consists of the description of the starting situation, business idea, and company´s vision.³ The Goal is to indicate that it is possible to transfer the competences and experiences of the past into the future.⁴

If necessary, the company presentation can also be extended by two chapters. On the one hand, the business idea can be arranged in a customary value-added chain, or on the other hand describe important and relevant business partners. Thereby the commercial or business idea can be described more easily.

3.1 Starting point

The description of the starting point can concern two initial scenarios. Either an already existing company which w...