Entrepreneurship: how to write a good business plan?

This article is from Management magazine

Let’s be frank: no one will ever read your business plan from A to Z. Neither the bankers, nor the funds, no one. “Investors get so many that they can’t study them all. At best, they fly over them”, assures a young designer. But that’s no reason to skip this step. “At the start of a creative project, writing one is even essential,” insists Jérôme Masurel, director of the Parisian accelerators 50 Partners.

Indeed, working for several months on this thirty-page document allows entrepreneurs to properly measure the business they are embarking on: after rigorous analysis, will the turnover of their box be closer to 1 million or 10 million euros? And is it worth expending mad energy just for a million? Before arriving at the conclusion, the file is structured around five parts, each detailing one of the ingredients of your success.

The market

This is the first point to address. Catering, household products or funeral directors, precisely outline your market segment and its size. Thus, with Alanna, a social platform for bereaved families, Marie Salmon launched this year in the funeral business, estimated at 2.5 billion euros. “Number of deaths (600,000 per year), average expenditure per funeral (3,815 euros), annual growth (3%), etc. In the sector, the available data are abundant. It helps to build strong hypotheses,” she says. Very often, however, “the indicators do not exist. It’s up to the creator to collect information from its future competitors, suppliers and partners, and to calculate its exact scope of activity”, resumes Jérôme Masurel.

The strategy

This is the paragraph where the founder makes investors want to finance him. “In Great Britain, Denmark, Portugal, new types of places dedicated to catering are exploding, but not yet in France. But it won’t be long. So there are places to take right now,” says Geoffroy Marticou, co-founder of Grand Scène, a food court in Lille. An argument that hit the mark since between fundraising, loans and grants, the young CEO who aims to open several other addresses in France has raised 4 million euros.

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The team

“This passage counts a lot because the financiers rely on a duo or a trio of complementary profiles”, underlines Agathe Chapelais, incubator director within the EuraTechnologies accelerator. Write a text in which you show how your experience gives you credibility: you have already worked in the sector or in a company with the same model; you have successfully conducted large-scale projects; and you have strong enough shoulders not to give up in six months.

Thus, Marie Salmon is completely legitimate at the head of Alanna because, before launching her young shoot, she managed the French subsidiary of two British scale-ups: Made.com (furniture) and Bloom & Wild (flowers). Nothing to do with funerals, but they are digital platforms. “I’m used to these companies”, assures the one who raised 200,000 euros in pre-seed, partly thanks to her CV

The production

On 4 or 5 pages, describe your product. Is it a good or a service, is it offered for sale in a shop or by subscription on the Net? Give details. “If you do delivery, say for example how much the logistics cost you each time and how you finance it”, advises Agathe Chapelais. Also include a paragraph about your competitors.

In total, this meticulous work will allow you to imagine your activity in a concrete way. “By projecting oneself into reality, any problem can be anticipated. For example, Chic Types (clothing for men) could have saved its skin, in 2016, if it had measured that it would suffer so many thefts”, swears Jérôme Masurel.

The forecast

This is the quantified part of your business plan. It takes up 4 pages and as many tables. “If your market is stable, like the restaurant market, with known margin and growth rates, your three-year turnover assumptions will be realistic, explains Jérôme Ledig, chartered accountant and president of In Extenso Côte. of Azure. But if it’s recent, or even new, as is the case with start-ups, your projections will sound like science fiction. In this case, it is better to present a forecast at the break-even point.”

To do this, list all of your costs (expenses, rents, salaries, taxes, etc.) and determine your “breakeven point”, i.e. the turnover beyond which you start earning money. Above all, “the income statement is an essential management tool, underlines Nicolas Simon, the co-founder of La Marque en less (household products sold online). Updated weekly, it indicates the minimum number of sales to be made to avoid falling into the red. This is valuable for managing cash.”

With Maxime Deguine, his partner, they added two tables: an annual income statement and an Excel file detailing the cost price and profit margin of each product. “Our business plan has mainly served to reassure investors. Thanks to him, they were able to verify that we had mastered our subject.” And be confident enough to grant them 2 million euros. On good terms…

Marianne Barbier and Geoffroy Marticou, founders of Grand Scène

“Before opening our food court bringing together 10 restaurants and 2 bars in the former premises of Galeries Lafayette, in the city center of Lille, we spent six months writing our “data room”. This 50-page electronic document includes our strategic vision, our costed forecast, our architecture that carried out the work, the commercial lease and the administrative documents of the company, the logo, etc. All these elements allow our interlocutors to imagine our activity in a very concrete way. This data room helped us convince banks and investors to provide us with 4 million euros.”

grand-scene.com

The 8 key points

Your provisional business plan must include at least the following elements.

  • A presentation of your course and your motivations.
  • The means of the company: its buildings, its equipment, future investments.
  • Human resources: the amount of compensation and social charges for the manager and employees.
  • WCR (working capital requirement): expenses to be incurred while waiting for cash to come in.
  • Needs to be financed: investments, stocks, start-up costs (advertising, training, etc.), WCR.
  • Resources: your contribution, aid received, bank loans.
  • The result: turnover minus purchases, overheads, personnel costs, depreciation and interest on debt.
  • The three-year financing plan. It is the summary document and the final verdict which confirms – or not – your forecasts, in terms of free cash flow.

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