Business plan – What is a business plan?
In business, the business plan is a written document detailing a business idea and detailing the measures needed for successful implementation. It serves to rethink the actual idea with all opportunities and risks and in certain cases to convince potential investors of an investment.
A business plan is considered indispensable for entrepreneurs
Business start-ups, in particular, who want to make a professional idea a reality, usually find themselves confronted with the fact of having to draw up such a plan in the early phase of their corporate development.
The business plan, which in German also bears the name business plan, usually has a length of ten to 50 pages. First, the idea is first described as such, and then given a forecast on the market opportunities. It is important to know who the potential customers of the described product or service could be and who is still working on the desired market. Are there other actors, ie competitors, in the direct market environment? And if so, how can one stand out from them?
In another point, the exact ability of one’s own person in connection with the idea should be examined. Only if the idea can be implemented by the one who has it, is it sustainable. Furthermore, a financial plan should be drawn up. What sales and profits are possible in the short, medium and long term?
Finally, it should be discussed in what form additional staff is needed and how high the initial investment must be. This should be compared with the sums of equity available and the sums of debt needed. Anyone who has difficulties in drawing up a business plan can avail themselves of the help of so-called business start-up consultants in many cities and municipalities.
A startup is a young company that wants to realize an innovative business idea. The founders operate in markets that have not been around for a long time or serve newly created markets with their products and services. They aim for above-average growth and a rapid increase in value. At the same time, there is a considerable risk that business start-ups will fail. Due to the lack of establishment of the respective market, the success can hardly be predicted. That makes a startup different from other companies. A master craftsman or a retailer commit well-known economic paths: the growth potential is manageable and the risks are the same.
Typical industries for a startup
Basically, startups can be found in all sectors, innovations can be realized everywhere. But there is a strong concentration in the future industries. As examples, the following areas deserve mention:
>more internet-based deals like social media
>Development of software
The world’s best-known, now well-established and multi-billion dollar start-ups such as Facebook, PayPal and Tesla come from the aforementioned sectors.
Financing a Startup: The Options
Ordinary bank loans are usually out of the question for a startup; the institutions shy away from the risk. Therefore, founders need to tap alternative sources of finance. Three options play the most important role:
Development loans: The state supports startups, as it hopes for economic momentum, tax revenues and jobs. In Germany, for example, KfW-Bank offers attractive promotional loans. In addition to low interest rates, start-ups benefit from liberal lending.
Venture Capital: Private and institutional investors act as investors in a startup. Accordingly, they acquire a say, they are not satisfied with the position of the lender. Investors are selling their shares after only a few years, they are aiming for a higher-than-average return with these short- to medium-term investments. Mostly they have a broad know-how as well as contacts to potential customers and business partners, these bring them into the startup.
Crowdfunding: In this type of financing, a large number of private investors are financing the founding of a company or the need for funds after its founding. There are different forms such as crowdinvesting, crowdlending and crowdddonation.
The further development of startups
The startup is financed in the same way as the company development in several stages. The first step is primarily to do tasks such as creating market studies and designing prototypes. In the next stages, challenges such as marketing, market introduction, broadening supply and opening up foreign markets will follow. The need for capital is increasing, which is why a startup usually finances the levels differently. Equity and a development loan are often sufficient first, then private investors such as the business angels help, followed by financially strong major investors. Going public is also an option, which is often the last step.