How to prepare a good business plan?

This article is intended for people who have an idea for a business and want to plan their activities accordingly in order to implement it.

It can also be addressed to budding entrepreneurs intending to launch a new product or service on the market, as well as those looking for sources of funding for an ongoing or planned business activity. In each of these cases, it will be necessary to develop a business plan to support the development of the business on the market.

The article discusses fundamental concepts, rules and objectives of creating a business plan. It presents the elements of a standard business plan and the criteria determining its adequacy.

The concept, functions and aims of a business plan

The more there are conditions and factors increasing the uncertainty of actors in the market economy, the greater is the role of planning. The right focus of a company’s activities depends on a well-drafted plan in which the objectives and the means of achieving them are defined on the basis of a thorough analysis of the market, the company’s environment, the industry, customers, etc.

The business plan aims to turn the entrepreneur’s ideas into reality, reduce the uncertainty of operations and lower the risk of making wrong decisions¹. According to Szukalski, a business plan is a set of documents which, on the basis of historical data (in the case of existing entities) and the assessment of the company’s strategic situation, include a projection of its objectives and ways of achieving them, taking into account all existing conditions, i.e. financial, market-related, marketing, organisational, personnel and technological aspects.²

The business plan should provide answers to the questions as to what the enterprise wants to achieve and when, how it wants to achieve it and who should do it, and what the sources and ways of financing the venture will be.³ 

The business plan is a planning and decision-making tool, both within the enterprise, e.g. for managers or owners, and for external parties, such as banks, investment funds or business partners. A summary of business plan functions and example aims of can be found below.

Example aims of a business plan

Elements of a business plan

There is no single standard for the construction of a business plan. The structure of the business plan depends on the type of business, including its life phase (organisation, product, process) and the purpose of the plan.

Sometimes, business plan authors are required to strictly adhere to the formal and substantive requirements set by institutions which demand such documents, e.g. structural fund granting agencies, labour offices, etc.

In the situation when such formal rigour is not required, you should follow general principles of a business plan construction. Standard elements of a business plan include:

1. Business plan executive summary
2. General characteristics of the enterprise
3. Business model
4. Strategic plan
5. Specific plans (marketing, technical, operational)
6. Financial plan
7. Conclusions and summary

One element of the above list which is worthy of particular attention is the executive summary. Many investors acknowledge that this is a major determinant of their continued interest in the idea presented in the business plan. Ann Winbland, a representative of Venture Capital, says: ‘A good executive summary tells me why it is an interesting venture. I look for any clear statements about the long-term mission, the introduction of people, information about the technology and market fit.’⁴

The business plan element that allows you to properly conceptualise your business idea and assess its coherence is a business model. A recognised method for developing it is the Business Model Canvas created by A. Osterwalder and Y. Pigneur.⁵

The development of detailed plans should be preceded by market research (e.g. consumer opinions), financial analyses (balance sheet, profit and loss account, cash flow statement) and the analysis of the micro and macro environment of the enterprise performed using such methods as SWOT, Porter’s five forces, BCG matrix, etc. Each of the detailed plans should include cost estimates of the task implementation, which should then be summarised in the financial plan. This part of a business plan requires specialist knowledge, which, however, can be gained even by a novice entrepreneur without a degree in business studies by consulting appropriate sources. It is also possible to outsource the preparation of individual parts of the business plan, e.g. to an accountant who will prepare its financial components.

Criteria for an adequate business plan

A business plan should, through its reliability, inspire confidence in the contractor responsible for its implementation. Therefore, it is important to evaluate the business plan in terms of compliance with the fundamental adequacy criteria. According to S. M. Szukalski, the business plan adequacy criteria are as follows:

• the plan is developed in accordance with accepted and required standards,
• it precisely defines objectives and the means to achieve them,
• it has internal consistency, i.e. there are no contradictions between the assumptions of detailed plans,
• it is operable, i.e. it includes simple, well-communicated, clear and comprehensible assumptions which enable its implementation,
• the plan is realistic (feasible), i.e. there is a realistic assessment of the measures planned,
• details are limited, which is related to the timeline (the plan becomes less detailed for events planned further along the timeline)
• the plan is complete as it includes an exhaustive description of the project and the factors determining its execution,
• it is multivariate, i.e. several variants of the plan have been prepared (probable, pessimistic and optimistic),
• its credibility has been confirmed by references to appropriate sources and the application of sound analyses.⁶

Preparing a business plan is time-consuming, labour-intensive and costly process which requires adequate competencies, but getting it right can bring the expected results in terms of winning a business partner or an investor, or validating a business idea. The real value of the business plan is the decisions taken as a consequence of it.

Footnotes:

¹A. Tokarski M. Tokarski, J. Wójcik, Biznesplan w praktyce, CeDeWu, Warszawa, 2014, s. 7-8.

²S. M. Szukalski, Procedury budowy planów biznesowych i ocena wiarygodności planów, Difin, Warszawa, 2016, s. 20.

³J. Michalak, W. Kozłowski, Przewodnik krok po kroku, czyli jak przygotować dobry biznesplan, UWM w Olsztynie, Olsztyn, 2010, s. 6-7.

⁴Sukces Plan 2002. Konkurs przedsiębiorczości. Podręcznik dla uczestników konkursu, Fundacja „Sukces plan”, Warszawa 2002, s. 31.

⁵A. Osterwalder, Y. Pigneur, Tworzenie modeli biznesowych. Podręcznik wizjonera, Helion, Gliwice 2012.

⁶S. M. Szukalski, Op. Cit. s. 33-35.

Reference literature

Michalak J., Kozłowski W., Przewodnik krok po kroku, czyli jak przygotować dobry biznesplan, UWM w Olsztynie, Olsztyn, 2010

Osterwalder A., Pigneur Y., Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, Wiley, 2010.

Sukces Plan 2002. Konkurs przedsiębiorczości. Podręcznik dla uczestników konkursu, Fundacja „Sukces plan”, Warszawa 2002,

Szukalski S. M., Procedury budowy planów biznesowych i ocena wiarygodności planów, Difin, Warszawa, 2016

Tokarski A., Tokarski M., Wójcik J., Biznesplan w praktyce, CeDeWu, Warszawa, 2014

About the author

Aneta Lipińska holds a doctoral degree in management sciences and works as a researcher and academic teacher at the Institute of Economics, Finance and Management of the Jagiellonian University in Krakow. Her major research interests focus on the activity and ecosystem of startups, e-business, social media and the development of information society. Through her work at the Jagiellonian University, which involves research, teaching and organisational tasks, she can share her knowledge and gain new competences, thus combining her passion and professional activity.