1.1. What is a business plan?

The business plan is a tool to develop a business concept. The business concept defines the strategic goals and operational issues that make a company successful. In order to achieve this, the business plan instrument is used as a procedure with the help of which a certain result can be generated. In order to develop a business concept in its conceptual, legal, organisational, personnel, prognostic, operational and financial dimensions, the business plan is developed with its individual modules. The conceptual view of the entrepreneur must ensure the integration of the modules. A medium-sized enterprise is a holistic and complex entity.

The business plan is increasingly gaining acceptance in the economy as an instrument for the successful implementation of business plans. Business plans were used in the USA at the beginning of the 19th century as a tool for acquiring capital from private investors and venture capitalists who wanted to invest in a company with equity capital. Today, the business plan is considered a business concept without which entrepreneurial activities can no longer be entered into.

Business plans have been increasingly used as assessment tools in the context of start-up offensives in Germany for years. They are designed to get to the heart of the most important economic facts. Project-related business plans, e.g. for company expansions or new business branches, have long been used in large companies and also in SMEs for bidding and investment decisions. In economically strained times, the importance attributed to business plans is growing. "Good" business plans can prevent bad investments from being made. In this respect, the business plan can be used as a targeted instrument.

The business plan should describe the enterprise and business concept convincingly in terms of content, professionally competently and with economic expertise. This must be done from the perspective of an entrepreneur. The entrepreneur is a person who wants to carry out a commercial or freelance activity independently and with economic success. It must be directed towards sustainability and growth. It is carried out in economic life under competitive conditions. It has not only an intention to generate income, but also an intention to make a profit. The entrepreneur can be a natural or legal person.

A business plan is essentially about the conception of a successful business idea. This includes selling the business concept itself. It is particularly important to pay attention to the specific industry conditions and market requirements, which must be named in the market analysis and in the plan.

Business plans have different motivations. They are needed for different occasions and types of business. Depending on the purpose, these particular requirements must be addressed. The occasions are based on different motives and reasons. 

1. Business plans for setting up a company

2. Business plans for company takeovers (family succession / company acquisition)

3. Business plans for operational business concepts 

4. Business plans for franchising

All business plans have in common that they should justify the prospects of success of the business idea in the market. Moreover, they should be written and composed in such a way that they are convincing. After all, the intention is to start a business, take over one or expand it in operation. To do this, the decision-makers or lenders need solid basic data. The business plan should provide this.  

a)   Substantive justification:
The business concept must be marketable, plausible and realistic; it must be substantiated in terms of content.

b)   Convincing presentation:The
business concept must be presented in a self-confident, qualified and competent manner, it must be convincing.

The business plan must make and justify the most important assumptions for the implementation of the business concept. It must describe which business goals are aimed at and how the goals can be achieved. It must seek to grasp the opportunities and risks of the enterprise in competition.

The business plan represents a self-presentation of the person who prepares it and who presents it.

This means:

The service description must define the offer, set the price and determine the quality. This simultaneously defines the target customers and makes decisions for marketing. The sales price must take into account the market price and the cost price. The market forecast lays the foundations for the sales targets. With the financial planning, it is determined what the capital structure of the company should look like and to what extent investments can be made. With the planned profit and loss account (P&L), the economic success is planned. Finally, it must be stated how the liquidity of the enterprise is to be ensured in the "best case" and "worst case".

The business plan is a tool. The modules in the business plan function according to the principle of "communicating tubes". Every change has effects on the other parts. Without a precise definition of the service, no precise sales planning is possible. Without a definition of the target customers, no marketing plan can be drawn up. Without knowledge of the market, competitors remain unknown. The special challenge is to conceptualise the inner context of a successful company. 

The development of a business plan aims to increase the level of professionalisation. By engaging in this process of systematically working out the modules according to this manual, the entrepreneur develops the most important areas of knowledge that are indispensable for setting up and running a business in a particular market segment. This minimum of know-how is necessary in competition in order to be able to withstand the strategies of the market currently and in the long run. The instrument of professionalisation is universal and can serve as a basic competence for the exercise of professional technical and managerial tasks.