How and Why Should You Create a Business Plan?

Creating a business plan is a crucial step for all entrepreneurs. It provides a detailed roadmap for your company, presenting your mission, products, market, and financial forecasts. This plan not only helps you stay on track but also convinces potential investors of your company’s profitability. From understanding your target audience to calculating startup costs—each section of the business plan serves a specific purpose. Whether you choose to create it yourself or seek professional support, a well-structured business plan can be the key to securing funding and ensuring long-term success.

If you’d rather not put together your business plan and numbers alone, we support you in Strategy Consulting.

The Foundation for Every Business Plan

Sooner or later, anyone considering starting a company will encounter the term “business plan.” But what exactly is behind it? In short, a business plan helps you, future employees, investors, and other stakeholders better understand your startup. While the term “Geschäftsplan” also exists, “Business Plan” has become the established terminology in German-speaking countries. Below, we examine some aspects that should be included in your business plan. It can also make sense to have it created externally. If you prefer to create it yourself, you’ll find templates online.

What Should a Business Plan Cover?

A business plan consists of several parts that should credibly represent different aspects of your company. This includes both short-term planning and the long-term planning process. Some central elements need to be implemented relatively quickly, while others require more time. It’s therefore important for (prospective) entrepreneurs to keep both the present and future in mind. Founders of a new company must be introduced just as much as the company’s objectives, including a clear mission. This is not just about names and academic qualifications, but also about practical experience and talents. Of course, it’s also possible to become self-employed directly after graduation. However, it’s generally a good idea to gain some professional experience first to avoid making all mistakes at your own expense. A summary should be included in a traditional business plan that concisely consolidates all these aspects.

Of course, your business plan should also present the products and/or services your company offers, along with their value and competitive advantage. Some companies offer only one product, others only services, and some offer a combination of both. It’s a good idea to not only offer product lines but also services around your products, such as coaching or product maintenance. For digital products, for example, you could offer optimizations as a service. The products and services of a startup should be viewed from various perspectives. What are the strengths of your offering, particularly compared to other products already available on the market? It makes sense to examine how these might be superior. Of course, there’s a tendency to present your own product or service in a rosy light. However, potential investors will conduct due diligence to verify the extent to which the claims in your business plan match reality. It’s therefore advisable to provide factual arguments in your business plan rather than ignoring your own weaknesses. The financial plan should constitute a large and important part of the business plan. This addresses various important financial goals and aspects.

Who Can Create My Business Plan?

Since a business plan is a written document with tremendous impact, it makes sense to seek support in creating it. On the one hand, this support is often available from local chambers of commerce (IHK) and startup consulting services. Additionally, it can be helpful to seek external support from a company or freelancers who have already created multiple business plans and possibly founded a company themselves. They bring practical experience that helps question the feasibility of some assumptions in your business plan. In this case, it’s particularly helpful if advisors also bring industry-specific experience and therefore know what realistic metrics look like. It can also make sense to have the business plan professionally created, especially if you’re founding a small company and need to convince investors to provide you with capital.

Who Is on Your Team?

Of course, it’s very important to know who is part of your startup. Every company is built on people. Assessing the professional and personal skills of these individuals is of great importance to investors and lenders. University degrees certainly play a role here, and a degree from a well-known university provides a small advantage. However, professional and life experience are equally important. There are founders who start a company in an industry where they haven’t worked before. This isn’t fundamentally a problem. However, they should bring perseverance and a strong desire to learn, as they’ll need to acquire much new knowledge and will likely make more mistakes at the beginning.

What Is the Market Situation?

In addition to the product, the market situation should also be addressed. This concerns both the general market conditions and the specific market in which your product or service is positioned, which can be determined through market analysis. A country’s economy goes through different cycles; some products sell better during a boom, others during a recession, and some products sell regardless of economic conditions. It’s also extremely important to analyze the market situation in your industry, which can be done through market research. The target audience, also known as the ideal customer, is a crucial point here. What is the gender of your ideal customers, what is the average income, and what hobbies do they pursue? The better you know your target audience, the more efficiently you can reach them and convince them of your product.

Location can also play a role, but doesn’t have to. When searching for suitable employees, it’s often important to be located in an attractive location. These can be large cities, but also more rural areas that are still in acceptable proximity to major cities. There are now many companies that work entirely remotely and consist of colleagues working worldwide. If you’re uncertain about any of these points, it can make sense to have your business plan created externally, including thorough market analysis.

What Can Your Product Do?

Your product is, of course, the heart of your company. It should therefore be described in detail when creating your business plan. You should often go into detail. How did you come up with the idea for your new product and how does it work? What problem does it solve and can it do so better than other products already on the market? Can your product be legally protected, for example, by registering it as a utility model or patent to secure your intellectual property? Where do you have it manufactured, how much does your product cost, and what is your margin?

These are just some of the many important product questions that your business plan section should provide good answers to and explain why your product has a good place in the current market. Additionally, your company description should explain the competitive advantages that will make your company successful and list which consumers, organizations, or companies your company wants to serve.

Do You Have a Strategy?

Strategies are extremely important. After all, you’re usually not the only entrepreneur in your particular industry. It’s therefore all the more important that you know your competition and understand their strengths and weaknesses. This allows you to build your own business strategy around this and perhaps turn one of their weaknesses to your advantage. A strategy doesn’t have to be static; as a dynamic undertaking, it can evolve over time and adapt to changing market conditions. What’s important is that it works.

What Opportunities and Risks Exist?

Of course, opportunities and risks must also be analyzed and presented in detail. This makes it clear to both founders and investors what risks they’re taking on, but also what rewards they can potentially expect for their risk. Risks can take many different forms. A tax refund or advance payment can represent a financial risk. If someone is injured while using your product, this could mean liability risk as well as reputational risk. However, you shouldn’t focus only on the negative aspects. The opportunities of your company should also be given sufficient space. It’s important to know your competition very well to plausibly explain how your own product or company is superior to the competition.

Never Underestimate the Power of Marketing!

A company’s marketing is of enormous importance. It can make a product or service incredibly popular. However, good marketing is harder than you might think. Here too, it’s important to know your target audience well. Then comes the question of where and how you reach them. Although we live in a highly digitalized age, it can sometimes make sense to reach an audience through print, TV, or radio—either in addition to digital channels or instead of them. This depends entirely on where your particular target audience is (probably or verifiably) located.

If you’re doing online marketing, the question becomes what you should focus on. Your newsletter? SEO and SEA? Or rather your social media channels? Ideally, you’d test all channels and see which ones resonate best and lead to conversions. The advantage of online marketing is that it’s usually easy to track with numbers, for example through tracking. This allows you to find out which channel your website visitors came from, how long they stayed on your website, and which channel generated the most sales. Make sure to describe these in detail when creating your business plan.

Which Sales Channel Will You Choose?

Depending on your product, it can also make sense to sell it offline, for example, in supermarkets or specialty stores. Even though you’ll sacrifice part of your margin, you can sell higher volumes and increase brand awareness—both important for your company’s long-term growth. Additionally, it’s certainly a good idea to have a sales department in your company. Trade fairs are also a valuable touchpoint, both for networking with other companies and with specialist audiences and the general public. Feel free to test different trade fairs and track some metrics (how many contacts did you make, did you get leads at the fair) to compare how effective different trade fair visits were.

Which Business Structure Should You Choose?

Of course, the way your company is organized also plays a role. Founders with limited financial resources often start with an entrepreneurial company (UG) or a general partnership (GbR). This means you don’t have to tie up much capital immediately that you might not have yet. To establish a limited liability company (GmbH), you need share capital of €25,000; half of this must be available in your business account at the time of founding. If the €25,000 hasn’t been fully paid in, the founders can also be held liable with their personal assets. Establishing a GmbH involves some bureaucratic tasks. You need a partnership agreement and articles of association, as well as notarization, entry in the commercial register, and business registration. There’s also a strict obligation to keep records, which isn’t always easy to navigate. It may therefore make sense to seek external help here. Although a GmbH generally means more work, establishing one can be worthwhile for reasons of prestige and liability. Make sure to explain in your business plan which business structure you choose and why.

Does a Stock Corporation (AG) Make Sense?

If you want a little more prestige, you can also consider establishing a stock corporation (AG). By the way, this is also an option for companies that don’t want to go public. An AG can either be founded from scratch or converted from, for example, a GmbH. Interestingly, an AG can also be founded by a single person. The founder doesn’t even have to be a natural person; a legal entity can also found an AG. However, it is necessary to appoint at least three members to the supervisory board. These must approve important decisions. An AG must hold a general meeting at least once a year. The share capital of an AG must be €50,000. However, this doesn’t have to be fully available at the time of founding. Depending on which country you want to establish your company in, there may be other business structures that are also suitable. In England, for example, the Limited (Ltd.) is widespread; there are also companies in Germany that operate as Limited companies.

The Financial Plan Is an Essential Part of Your Business Plan

To better understand your risks, it’s very important to create a solid financial plan. This type of plan is often the most important part of a business plan because it works with concrete figures. If it’s solid and well-thought-out, it can convince banks, investors, and venture capital firms to provide you with money. A major challenge here is certainly forecasting some figures, as you often have to work with assumptions. However, it makes sense to make more conservative estimates, and you should definitely not make exaggerated or false claims. Banks, investors, and venture capital firms are primarily interested in whether you’re able to repay your loan or provide a return on their investment. It makes perfect sense to seek external help for your financial plan, including creating a pitch deck as supplementary material to your business plan. A pitch deck is a short and informative presentation that can convince potential investors to support your company with capital.

What Key Points Should the Financial Plan Actually Cover?

It goes without saying that revenue planning is extremely important. It’s very helpful if your company already has revenue to show. This makes it much easier to create a realistic revenue plan. It’s entirely possible that banks and investors will ask what assumption your revenue plan is based on. If it’s based on past revenue and not simply a product of your imagination, the chances are better that you’ll get external financing.

In addition to revenue, you should, of course, also list your costs; otherwise, it’s difficult to calculate your company’s profit. This applies to both variable costs and ongoing costs such as wages and rent. Startup costs should also be factored in. Especially if you’re establishing a GmbH or AG, these can reach four-figure amounts. Your company’s liquidity and capital requirements are also important key points that should be considered in your calculations. The so-called profit and loss statement is also an important part of your financial plan.

Depending on the industry your company operates in, it can also make sense to look for suitable insurance policies. This could be, for example, liability insurance that protects you if you or one of your employees makes a mistake that results in financial losses. Beyond the past, it’s certainly also a good idea to look toward the future. This is important insofar as investments in the future can provide long-term added value to your company, for example, through automating certain tasks or making them significantly easier to execute. If you need expensive equipment such as industrial machines or tractors to start your company, investments are naturally much more relevant earlier. However, it’s not wrong to still have some financial reserves available for emergencies.

Once your investments are recorded, you should, of course, also consider your capital requirement forecasts. After all, it’s important to ensure that this is covered in a timely manner and that you can acquire the necessary resources. Both available equity and required debt capital should be listed here, along with your financial reports such as balance sheet, profit and loss statement, cash flow statement, and statement of changes in equity. At the end of your financial plan, it’s highly recommended to include a profitability calculation to determine how much money you need to establish your company and finance the startup phase. This helps investors estimate how long they need to wait before your company becomes profitable. Make sure your financial plan is also visually appealing and clearly structured. After all, visual presentation also plays a crucial role.

Are There Funding Opportunities?

In addition to investments and loans, your company might also have access to subsidies or grants. These are usually provided by foundations as well as government agencies. Subsidies are usually tied to specific requirements and objectives. Often there are specific funding priorities. If your company fits well with these, the chances increase that you’ll actually receive subsidies. They’re often granted to promote and accelerate certain social developments. Subsidies come in various forms. They can be paid out as subsidized loans, guarantees, or direct grants. Some must be repaid, others don’t. We recommend that you carefully read the respective conditions or guidelines of the subsidy providers. They state what kind of support you can expect and what conditions are attached.

How Do You Write a Business Plan for a Startup?

For founders in the early stage, writing a business plan includes presenting your business idea, target audience, competitive analysis, marketing strategy, financial forecasts, and operational plan. It serves as a roadmap for your company’s success and helps secure financing from investors or lenders.

Conclusion

As you can see, creating a business plan is a detailed and demanding task. That’s why it can be a good idea to seek external help. We’d like to support you on your journey to building a successful company with our expertise!

Book your free initial consultation now.