Business plan refers to the selling document that communicates the practicability and the promise of someone’s business to potential backers or stakeholders. This document usually is written to convincingly demonstrate the ability of the proposed or existing business to sell enough of its product or services to generate enough profit and to be a viable opportunity to potential funders (Crookston, 2012). Business plan can be written at various levels of the business to serve various purposes such as: at start, to give rough ideas on the viability of the proposed business; purchasing a new business to test how to run the new business by understanding what level of risk one will be accepting; for ongoing review of the business against the changing environment and or when making a major decision which shall bring a major changes into the organization.
Business plan benefits various stakeholders involved in the following ways: the managers of the firm, when they are involved in the preparation, they own it as they understand the owners mission and vision for the future growth; owners of the business help the entrepreneur write his thought and aspiration and what is required to achieve such as whether he will carry out the investments alone or external investor is required. For the lenders and investors, they will evaluate the viability of the proposed business before committing their resources.
Business plan is written to serve various purposes for the owner(s) and stakeholders involved such as to estimate the capital investment required for the intended business; to set the business vision, mission, objectives, and budget; to assess how feasible and viable the business idea is and what is the likelihood of the said business succeeding; to raise capital from the financial institution or through a venture capital; to assess the overall qualification of the proposed employees and their roles; to clarify the ideas by having them put down in writing, thus making them concrete; to assist in making decision on investment on an existing business and to define the roles of the various manpower capital required and their various roles (Crookston, 2012).
In coming up with a business plan, the following items constitute what should be captured in the business plan template. The executive summary is written as the last part in the business plan, it appears as the first part and captures the attention of the person reading it, and so it should be able to give the person an idea about the planned business. The following are details contained in the executive summary; business title or name, business opportunities as determined by the business location and market need to be satisfied, competitive environment by analyzing the existing competitors, challenges and how the proposed business will penetrate the market and acquire a profitable market share; viability of the business: how to reach the market and price the product, and how long the business will be profitable; financial capital requirement, how much capitalization is required, and the source.
Business description describes the following about the business: the name of the company, the vision and mission, the management goals, the form of ownership such as the sole proprietorship, general partnership, limited partnership, Limited Liability Company, cooperative and corporation; the business location chosen after analyzing necessary factors; the nature of the business and trends in the industry; products or services that the business will offer; justification of the business opportunity after analysing the above factors; business objectives and analyzing the strengths and weaknesses, the opportunities and the threat eminent in the industry.
Market analysis and marketing plan is a key part in business plan as it analyzes the current market satisfaction level by the existing firm and whether there is an unsatisfied portion of the market the proposed business can tap (Crookston, 2012). The following are considered: company product or services, major customers and competitors, estimated market share and size, the price and the pricing strategy, marketing plan such as promotional and advertisement strategy, location of the target customers and the distribution plan, and the overall marketing strategy. Competitive analysis involves analyzing key strengths and weaknesses of the existing firms. The key factors to consider include the key competitors, competitive products, the opportunity to explore, and the threat to the whole industry.
The part of business plan talking about product and services on offer should outline clearly what the proposed business will offer and how it will be ahead of its peers in the market. It also discusses the pricing strategy and the projected growth in the market share of the product. Strategy is chosen by analyzing the company’s competitive capacity, its strengths, the available competitive opportunities and the ways how to capture it. Market share and the projected growth involves analyzing the available market share and how to grow it according to the firm’s goals and objectives. There is an analysis of the company’s product and promotional and advertisement strategy to get the product to the targeted customers.
Organizational and management structure is a drawing of the key staffs needed, the structure of the chain of reporting and their roles. There should be duties of the persons in the customers and the mode of reporting and appraisal. The qualification of these staffs should also be set, and the amount of their remuneration should be defined.
Financial analysis and plan is a key part and should clearly state the following: the proposed company financing (this is the financial requirement, sources and proposed usage); financial projection, which includes projected income, projected cash flow statement and projected balance sheet all for three years; financial analysis of major fixed and variable cost, gross and operating margins, break even analysis and profitability ratios. There should also be an analysis of the eminent risks and ways to manage them. The last portion of the business plan is the appendix which lists the attached documents, the research and study that was carried, the map sketch of the location of the proposed business among other things.
A business plan is a key document for any organization whether in profit making or non-profit making as it assists in making the ideas more concrete and thus aids in their implementation. For a business looking for external finances, a well-presented business plan is a major tool. The owners should involve the management staff in coming up with the business plan that will help in its implementation.