The Business Plan
The Business Plan: What is it?
The business plan (or strategic plan) is the document that presents in a detailed manner the strategic policies of the company, the main economic and financial goals, the actions that are to be taken to attain the expected results, new initiatives or planned investments and the related impacts on company performance.
In general listed companies submit a strategic plan for the next three years to the financial community once a year. The business plan is also one of the key documents accompanying the listing of a company, or extraordinary merger transactions or significant acquisitions.
The contents of a business plan may be grouped into the following main categories:
- market analysis: a view of the external environment and the sector (demand, distribution structure, competition and suppliers), focusing on the market, market size and evolution in time and changes of customer needs;
- strategic guidelines: a presentation of the strategic positioning of the company, critical success factors, competitive advantages, internal or external growth lines (acquisitions of other companies or business units);
- economic objectives: identification of the objectives in terms of revenues, profits, costs, etc., both at a consolidated level and by areas of activity;
- marketing decisions, relating to geographical areas, business segments, price choices, expected volumes, chosen distribution channels;
- organisational aspects, relating to staff and the company structure, assessing the need for human resources and the required necessary skills and expertise, and the final organisational structure;
- financing decisions: this is the investment plan giving the operational repercussions, an indication of the costs related to production capacity, the consistency of planned investments with respect to production goals and cost optimisation criteria.
Unlike other equally important documents, for example, the financial statements, there are no precise rules for drawing up the business plan, nor a standardised structure. In general however, the business plan should include detailed information that make it possible to:
- Focus on the creation of long-term value;
- The use of the business plan as a guide for the management of the company's business;
- The company's preparation with respect to the financial market.
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