Analysis of your environment

Business plans should not be viewed as a commitment. Forget the notion, “I need to develop a business plan because the bank asks me to, or to apply for a grant, or to convince an investment partner.” It has to be the result, not the cause. Tattoo it on fire: The business plan is a necessity, not an obligation. Repeat as many times as necessary.

Why do we insist so much? Because many entrepreneurs, when they have an idea, do not think about the real need to create a business plan before starting their project. That there are companies that are born without a prior business plan? Of course, and many work without one and start doing it when forced (finding funding, industrial partners, suppliers, etc.), but if they have a prior plan, they will have a lot of time and effort saved.

Don’t get dusty!
But be careful, it’s not enough to have one made and keep it in the drawer “in case I need it”. The business plan helps to know your company inside and out, it serves, among other things, but basically to discover and improve your weak points.
When you achieve that – through a thorough analysis of your plan – you get everything else: you know your true competitive advantages, your real financial needs… In short, you will refine to the maximum what the viable and profitable business model should be. Everything else will be smoking experiments that will give you details of your idea, but they will not help you to have a global and reliable vision of your business model.

In short, it is a reflection tool. As Pepe Ruiz, Professor of Business Organization and Director of the Chair of Entrepreneurship at the University of Cadiz, explains, here are some questions to ask yourself:

a. Does my product or service add value for customers?
two. Do I have a defined target market?
3. Is the management team experienced?
Four. Are the financial projections realistic and do they reflect the returns that investors can expect?
5. Is the business model original and difficult to copy?
6. Is the industry attractive and is it growing?
7. Will my future company have social legitimacy? In other words, which social actors can support my project, what social legitimacy does my project have? Yes, apart from being legal and ethical, it responds to rising social values. “And this is an issue that is often forgotten in business plans and is a very important intangible value: is my project responsive to changes in societal values that will reinforce it?”
8th.How will the competition react? “Because there is always and when your product is that good, the competition is not long in coming. Or do you have it and don’t know it, or can you think of it straight away if your project is very good?” says Ruiz.

“The problem with business plans – says José Luis Barbero, Associate Professor of SME Strategy and Growth at the School of Industrial Organization (EOI) – is that they are not well researched. Competitors who have very similar ideas to yours in other countries will be left behind. And that leads to a decrease in profitability. The problem is not in recognizing the competition, in many cases indirectly, ie the one that does not have the same product as you but has enormous potential to enter your segment. A company’s profitability is determined by consumer need for your product and by your competition.”

And the ninth question to ask yourself, according to Ruiz: “What are the risks and plan B if you fail?.
After the reflection, fully engage in a thorough analysis of everything that surrounds or can influence your business idea. “Without prior research to later develop hypotheses, any predictions we make would be based on mud foundations. However, more and more companies are choosing to invest in professional market research as an additional cost factor,” says Pedro García Guillamón, Business Advisory Technician at CEEIM and coordinator of the Network of Private Investors of Murcia (Murcia-Ban). .

CASE STUDY:
KIPPO: «We recognize our weaknesses»

The business plan helped us know what products we would offer to the market and how we would do it. Basically, it helped us identify weak points and cross-check the idea with many experts like Barcelona Activa. It also helped us, hand in hand with Voluntaris en Assessoria Empresarial, to present and attract partners when we didn’t even have samples,” recalls Joan Arús, co-founder with Vicki Maree, of Kippo (www.kippo.es), a company that designs, distributes and sells isothermal covers for beverages.

In retrospect, Arús emphasizes that the plan served them well to write the basics. “What we did after that is pretty much what we had planned, but there were changes.” He admits, for example, “not all product lines worked out the same (some designs did well, some not so well and again others much better). And until you go to market, you don’t know the real adoption. Also, we intended to do a lot of designs, to segment the market, but in the end the market took us where it wanted. And we had to adapt and offer fewer and more neutral designs,” says Arús, emphasizing that even if it may seem different, “knowing how to adapt to the market” is an advantage.

sales channels
“The sales channels have also changed compared to the original planning. We thought we’d enter a few and there are others that are more interesting. For example, we included Horeca (hotels, bars and restaurants) as an alternative channel in the plan and now it is gaining strength compared to the others.”

More advice is needed on the financial part of the plan, “and where more differences from the forecasts that we pointed out. We have to be very careful because we had difficult cash flow moments, but thanks to the support of the investment partner and the lines of credit, we didn’t have a bad time.” Interestingly, Kippo had not foreseen the need for an investment partner, “but over time we realized that it was because of economies of scale: to get the cheapest product we needed to have more volume. We didn’t realize it at first and as you go into development you realize you need that support.”