PHOTO GALLERY. Right now, you may find yourself in this situation: you have a good idea, but you cannot convince any investor that your business is worth it. Meanwhile, your marketing plan is stagnant and you cannot develop any action to publicize your company. And so it is difficult for you to get clients. And so it is difficult for you to get any investor to trust you. And start again. You begin to despair and think that you have not succeeded with your business idea, according to Emprendedores.
Have you ever stopped to think that maybe there is nothing wrong with your business model and that you have simply developed a business plan that is not convincing? It seems incredible, but many entrepreneurs have a good project, but they are not able to present it well when they prepare their business plan to request financing. In most business plans that come to me, the entrepreneurs either don't explain who they are, or don't explain how much money they need, or don't explain how they're going to make money, or aren't able to explain what their idea is. And an investor is not an NGO.
A first warning sign that it is not working is when it ensures that it does not have competition in the market or, if it recognizes that there is, it does not explain what that competition is like.
1. Make sure you include a clear definition of the product or service and how the idea came about
This is the main flaw of a business plan. A plan has to make clear its advantages for the consumer-client. Keep in mind that investors will look at your product definition closely to define strengths and weaknesses in the business plan as a whole. An investor is unnerved by commonplaces. Try to get to the point when explaining what you do, how you came up with it and where you want to go. An investor wants the entrepreneur to be an entrepreneur.
INCORRECT
Business idea. “There are more and more users on the Internet. E-commerce is also one of the most advanced sales channels. This strategy will allow us to save structure costs when going out to other countries. We want to position ourselves as leaders in the delicatessen sector on the Internet with a website that provides real value to the potential consumers we are targeting. We have a product of proven quality in the national territory, which will serve as a guarantee for the international market – we will have to request quality certificates in different countries in order to support the commercialization of products on the Internet”.
Motivation. "To expand the business, we are committed to expanding the universe of consumers by internationalizing the marketing of our products."
CORRECT
Business idea. “Sale of artisan sausages to wholesalers, retailers and final customers in Spain and Europe, focusing on the German market. In a market, that of charcuterie, where manufacturing processes have become so industrialized, and large companies present almost identical products with few differentiating factors, we propose to market an artisan product, where the quality of the raw materials, the process craftsmanship of its manufacture, the exact information on the composition of the products and the traceability of the raw materials that make up the product are sufficient differential values to convince a select clientele, who value above all the quality of the final product, and the safety of consuming a product that complies with all hygienic and sanitary measures. The priority market is final consumers, regular consumers of quality food products, eco-consumers or gourmets. It has been decided to use the Internet for sales because the target consumers are advanced Internet users and they favorably accept the possibility of making purchases through this means. The website will be www.embutidos-salchichon.com, for which we have already requested the domain”.
Motivation. “The reasons are several. On the one hand, expanding markets in the EU and making available to customers a product with 'traceability' that is having a great acceptance in those markets where it arrives. Specifically, customers from northern and central Europe, who demand great information about the products they consume and who have a higher purchasing power, are potential consumers of our products, and at this time we do not have access to them. All this encourages us to make a marketing effort to get our products to physically distant markets that we can access thanks to the Internet”.
2. Don't forget to calculate your break-even point
In too many plans, the experts with whom we have spoken agree, the balance point is missing. This calculation allows the company to know where it should locate its production volume, with the intention of obtaining benefits because its income is greater than its total costs and, therefore, producing more than the level at which it reaches the dead point. When calculating how much you will sell, you also have to make a sales forecast per day, week, month and year. And it is convenient to mark the sales forecasts by seller.
CORRECT
Operating result
First year: 33,500 euros Second year: 35,950 euros Third year: 59,585 euros
Net result
First year: 33,500 euros Second year: 25,165 euros Third year: 41,709 euros
Cash flow
First year: 36,500 euros Second year: 135,165 euros Third year: 179,709 euros
Break-even point: It is reached in the fifth month of the first year.
3. It includes an 'exit plan' in the event that you have an idea from the first moment of setting up the company and then selling it
It is important that the entrepreneur knows, from the start, what are his possibilities of exit. Sell this one, for this. That is important. This is for a startup, not for a company that already invoices 2 million euros. An entrepreneur does have to be aware of whether it is a comprable company if it works.
Your ‘exit plan’, if brief…
This section does not have to be long. It is necessary to include how it is going to disinvest, arguing the exits.
4. Includes an executive summary of one or two pages
You must include basic information about the project, the necessary investment and the equipment. It's your business card, but enlarged. What capital do I look for and why do I look for it. You may even want to talk about the team earlier in your business plan and tweak the order slightly.
This is the latest thing
Don't write it at the beginning. Leave it for the end, for when you have already written the bulk of the business plan. Although it is the shortest part, it is the most important when it comes to selling your idea/project. It is the block of your business plan that will enter through the eyes and it is what will attract attention for an investor to read it. Maximum two pages... three, at the most. You have less than two minutes to get the attention of an investor who has to read more than one project.
Say it with a letter
It is also useful to add a cover letter next to the executive summary. You always have to think about the person you are addressing, what your project is like and how your project adapts to whoever is reading you. If your project, for example, is technology-based and you request financing from venture capital, highlight the patents you have already signed and those in which your business is going to stand out technologically. If, for example, someone on your team is respected by investors, take advantage of this space as well.
5. The business plan has to be realistic, without false expectations
Avoid any exaggeration of the style: "We are going to be world leaders, we will conquer 1% of the Chinese market, we have no competition, our technology is unique." You always have to offer a realistic vision in the business plan to investors, without exaggeration, of your project. The issue of exaggerations is also very important. You have to sell in moderation. On many occasions you will meet people who know what they are talking about and who know the sector in which you are going to enter. And if you don't know it, you should never create false expectations.
CORRECT
Aspects to assess:
◗ “Sausages for export are subject to similar treatment, packaging and labeling standards throughout Europe”.
◗ “Food traceability begins to be implemented, scheduled for the year…”.
◗ "In Germany, 44% of artisan sausages are sold directly and the basic factor is trust."
◗ “In Europe, Spanish food products are considered to be of high quality and have prestige”.
◗ "In Spain, artisan products are sold in specialized stores (60%) and in specific areas of department stores (20%)."
Positioning:
◗ "Our packaging and labeling process complies with the regulations, in addition, we will add detailed information on the artisan curing treatments used and the exact composition of the raw materials used."
◗ "We have already incorporated traceability into production processes, and it can be an important distinguishing element and allows us to access sales channels for organic products."
◗ “Selling food on the Internet is not yet customary, but we will try to generate a brand and we will place the products in typical product stores in German tourist areas so that they are recognized brands when they return to Germany. We want to position ourselves as a gourmet store on the Internet, which will allow us to compete as a specialized store”.
6. Incorporate a contingency plan
It is essential to develop a contingency plan. Everyone thinks that everything will come out the first time. Your business plan has to have a plan B. How the problems will be solved. It gives an investor confidence.
Before, during and after
Experts recommend dividing your contingency plan into three sections:
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A backup plan. In which you analyze preventive countermeasures before a threat materializes.
An emergency plan. Consider what you will need when a threat materializes, or immediately after.
A recovery plan. What measures will be necessary after controlling it.
7. Define what the management team will be like and what tasks and responsibilities each one will have
It is essential for me that the team appears. At a minimum, there has to be a commercial profile and a more technical profile. Or, at the very least, a technician who has commercial notions and knows what he wants to do. With forecasts, of course, to expand the team.
Who will be who
Before you start writing the plan, first design a complete organization chart – even if it is forecasts for the future – with a table of responsibilities.
CORRECT
Partner A: Antonio Marín Ortega
Duties to perform: Manager and commercial director.
Academic education: Baccalaureate. Courses in business administration and commercial management.
Technology expertise: You are a regular user of the Internet, using it at work to search for suppliers, contact them, and send emails to potential customers.
Professional experience: With more than ten years of experience in the meat sector, where he has held administrative and commercial management positions in small companies in the meat sector in Murcia.
Partner B: Francisco García López
Duties to perform: Technical director.
Academic background: Primary studies.
Technological experience: Total ignorance of the Internet and its advantages as a competitive tool.
Professional experience: He has been manufacturing sausages, both fresh and cured, for more than 20 years.
8. If you have the advice of a weight expert, do not forget to include it right away in your summary and in the plan
Who you are, who you work with, and who you know works to impress an investor. In very initial phases, success has to do with the degree of specialization of the entrepreneur. Your cover letter will be your previous experience, your specialization.
If you get funding from a person of a certain name or prestige, you have to put that in your plan.
Don't be left out...
It is recommended to add in the annexes information regarding:
◗ Curriculum for managers and advisors.
◗ Copies of contracts.
◗ Letters of intent to purchase from potential customers.
◗ Official documentation: licences, permits, concessions…
◗ Reports prepared by external consultants.
9. Do you know what you are going to do with the money? Not only do you have to make clear how much you need, but also what you will spend it on
You have to make it clear how long it will take the investor, according to the calculations, to recover their investment. Also specify in your business plan how much time you give yourself for your business to succeed. Say: I need 400,000 euros because I have to create this application, I have to invest in a marketing strategy, I have to go to these fairs. It can be understood that the financial plan is not perfect, but not that this is missing.
CORRECT
Promotion and advertising actions
◗ Advertising inserts with information about our company will be made in local magazines in the area of influence: Murcia capital, and towns in the Mar Menor: 1 insert in five monthly magazines over the next six months. Investment: 3,000 euros.
◗ Radio spots on regional stations in the next six months. Part of these wedges will be made in German, to capture the attention of these customers. Investment: 4,000 euros.
◗ Presentation and positioning actions.
◗ Design and develop a new version of the company's website: focus on the main characteristics of our products.
◗ Index the most common words in Internet search processes on web pages.
◗ Positioning in the most important search engines in Spanish with the following keywords: sausages, charcuterie, artisanal. Investment in the next year: 1,500 euros.
◗ Position ourselves in the most important German search engines. Investment in the next year: 1,500 euros.
◗ Register in the twenty most important directories of our sector in Spain and Germany.
◗ Customer acquisition and loyalty actions.
◗ Promote Internet sales for European markets. Offer raffles for trips to the Costa Cálida for customers who buy online in European markets. A bimonthly trip for two people in the next six months. Cost of the action: 7,200 euros.
◗ Special actions to attract European customers who have found out about us through the traditional market. Present the virtual store that we have on the Internet on the product labels, and offer free shipping.
10. Includes a realistic implementation schedule. It is not so important that the deadlines are met to the letter as it is to be proactive
It's interesting that he's here. The degree of detail is not important, in the end the calendar is not met more than 20%. There are investors who consider it positive. It is not so important that it be met, as that all the milestones and reasonable deadlines are set to undertake them. So what should you include? There are entrepreneurs who register ahead of time. If you go through it first in a business plan, you'll know when it's necessary to do it.
Too soon, or too late
There are also entrepreneurs who start doing commercial work without having previously registered the name of the company. They have to be careful, especially individual entrepreneurs, who also have to make a business plan. It also happens that there are entrepreneurs who register a company name in the commercial registry, but do not first look at the availability of domains on the Internet. Others do not register patents... So, what should you include?
How far do you want to go?
Experts propose drawing a map of the future… but backwards. This is what you have to do: start imagining your company at the finish line –where you want to get to– and go backwards, thinking about everything you have to do to achieve it and consider all the scenarios that you could find in each of the steps you are going to take. Do you know what are all the combinations that can be produced along the way? Think about it.
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