Piani Industriali e Piani Finanziari

The key words for business strategy and growth

What is the Business Plan?

Synonymous with "business plan", the Industrial Plan is the document that explains, in detail, the business management strategy: it is in the business plan that the strategic objectives and, backwards, the competitive strategies for achieving of the same. The Industrial Plan also has the task of giving an estimate of the results. It is, therefore, not only the identification of point A (departure) and point B (arrival) but it is also the design of the path to take to get from one point to the other.

The business plan is nothing more than the strategic vision of the company, made possible by a study of the sector, the market and the competitive arena to which it belongs. It is the document through which management "speaks" to its interlocutors, both internal (e.g. shareholders) and external (e.g. financiers) to explain the reasons for some decisions and the basis on which these were taken.

The Business Plan is of fundamental importance because this is the document on which the company's growth prospects are based, it is from here that it is possible to understand what the advantages will be for investors and the value created for shareholders.

What must the Business Plan contain?

There are 4 key points in the business plan in particular:

1. Market Analysis: it is absolutely the starting point, the evaluation of the trends of your market or industry. It is from this analysis that some fundamental considerations arise: what are the current preferences of consumers/users/users? What are competitors focusing/investing on? Which projects are investors focusing on the most?

2. Production Strategies: once the necessary data has been collected and the overall vision has been consolidated, it is possible to trace a path towards a strategic line. This part of the business plan is designed to plan the actions to be taken, i.e. the allocation of resources, the review of internal processes, the exploitation of technologies currently in use for the production or the acquisition of new technologies. In short, the production strategy includes all the actions aimed at moving the company towards the objective, with the deployment of all resources (human and otherwise) to pursue it

3. Long-Term Objectives: the production strategy is aimed at reaching a point (point B, which we previously defined as the arrival point). With a projective analysis, the business plan must define where the company will arrive with the implementation of the previously exposed strategy, by when. It is in this part that it is possible to highlight the value that management will bring to investors and shareholders

4. Risks and Mitigations: it is important to underline that the production strategy, like any type of investment strategy, poses risks, both internal and external. Internal risks are, for example, the impossibility of reorganizing procedures and resources to achieve the result; the external ones are, by way of example, sudden and unpredictable market changes that shift preferences and resources towards other markets. It is, therefore, necessary for the business plan, in order for it to work and convince, to explain what are the possible risks that the plan faces and, on the other hand, what are the plans to mitigate them and prevent them from irreparably affecting thethe company.

What is meant by Financial Plan?

For completeness also called Economic Financial Plan. In short, it is the answer, often contained in the Business Plan, to where to find the funds for the implementation of the strategy. This document, that is, describes in detail the financial strategy of an organisation, including not only the liquidity - i.e. the immediate economic availability - but also any sources of financing, the type of capital management and any other information aimed at explaining where to find the funds for the implementation of the strategy.

What does the Economic and Financial Plan include?

For the Financial Plan to be a good tool to support the strategy outlined by the Business Plan it is necessary that it includes some information and statements including:

• Evaluation Metrics: they could also be understood as KPIs, literally Key Performance Indicators, translated as Key Performance Indicators. These are values that must be defined ex ante with respect to the start of the operation, measurable values through which it is possible to measure the effectiveness of the Plan in terms of effectiveness (achievement of the result) and efficiency (relationship between the achievement of the result and the investment made to achieve it)
• Provisional Budgets: these are detailed forecasts not only of how much is expected to be spent to start and complete the plan but also, and above all, how much is expected to be collected (the revenue). Cash flows, profits etc. refer to this.
• Investment Strategies: how much will it be necessary to invest in the short term, what is the expenditure expected in the medium-long term to give substance to the Plan? These are all questions that must be answered in this chapter of the Plan
• Risks and Management: specifically, it is necessary to outline the policies for managing financial risks. In this regard, not only investment risks must be foreseen but also related ones such as exchange rate risk (currency devaluation) and interest risk (especially in the case of financing obtained from external bodies) which could significantly increase costs

Relationship between the Industrial Plan and the Financial Plan

At this point, the connection between the two types of Plans is clear. On the one hand, with the Industrial Plan, it is possible to have an overall vision not only of the current situation (As-Is) of the company but also where it wants to go in terms of market positioning and growth; on the other hand, with the Economic and Financial Plan, the financial action aimed at finding and managing the funds necessary to pursue the strategy is structured.

In short, the management's vision is expressed by the Industrial Plan, the possibility of financially implementing the strategy and protecting ourselves from any negative consequences is given by the Financial Plan.

Together these two Plans represent the strategic pillars of business growth, a sort of light to highlight the potential of the company within the market and also any problems or risks that could damage it. This, today, is the way to resist market changes and exploit them for your medium-long term growth.