The business plan describes about all the aspects of the business, which are intended to convince the owners and the outsiders like investors or the banks of the legitimacy of the business and where the business is going. The business plan gives the information about what the business is about, who owns it, business strategy, the management and all other people involved in making the business operate. Tells about the target market, the size of the target market, the type of customer the business would like to attract, the location of the business and the most important thing the competitor analysis.
The most important part of the business plan is the competitor analysis where the business plan answers the questions like; why is somebody going to buy something fromÂ yourÂ business? Who are your competitors? What is the competition good at? What are their weaknesses? How can you satisfy the needs that competitors can't? A business plan also gives a financial plan for the business. The total start up cost, sales and revenue forecast and expected break even time and the cash flows are the important information which are needed to be planned.
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A business plan is a road map for where the business is going and where it needs to go in the future. There is a saying, "If you don't know where you are going, any road will get you there." Therefore a well thought out business plan is the basic requirement for a business to be successful.
If an idea is there which seems to be very good and different, to make it successful the first thing that needs to be done is to start working on the business plan. The business plan is very important as it serves as a compass for the direction the business will go in the future.
One of the reasons that makes it very important to have a business plan is that it will help to consider the details of the business and its' future. While working on the business plan there is an opportunity to find many different aspects of the business that might have not been considered. Planning can also help in dealing with the issues before they become a problem as we are foreseeing.
Another great advantage of having a good plan of the business is that it can get the interest of the banks and the investors from the outside. Banks and investors would like to see that if you have a clear business plan before they take a risk on your business.
A business plan can also be a good management tool. Managing the business is difficult but a business plan can help you to keep your daily tasks well managed and will also help you to accomplish long term goals as well and will also help you find where you are and where you want to be in the future. Going without a business plan can result your business in a disaster. It's not only important at the start up stage but is also important throughout all the stages of the business.
Whether your business is large or small, a start up or long established, developing a business plan enables you to,
Make the crucial business decisions that focus you activities and maximise your resources.
Understand the financial aspects of your business including cash flows and break even requirements
Gather crucial industry and market information
Anticipate and avoid obstacles your business is likely to encounter
Set specific goals and measurements to assess progress over time
Be more persuasive to funding resources
Rhonda abrams, 2003, 4th edition, the successful business plan, secrets and strategies.
Does it really important to have a business plan? Entrepreneurs having a wonderful idea of a business possibly can let this go. The business plan is made for somebody else (banks and investors) but actually it is for the business. It's always good to be proactive rather than dealing with the issues when they already have happened. To be proactive there should be some foreseeing and that is planning. A business plan should be aimed at addressing the long term needs of the business as well. Some important factors that successful business plan needs to have are;
The business concept:
Always on Time
Marked to Standard
"Anything that won't sell, I won't invent it" (Thomas Edison). The business idea should one that can satisfy a need in the market. It's not always like finding an unsatisfied need but it's about creating new needs. If you have invented very good machine or anything, if it doesn't satisfy a need, the business will fail. It can be a new product or a better form of some product etc.
Understanding the market:
You need to have enough number of potential buyers that is sufficiently large, accessible and responsive. Understanding the market is very important. Areas like buying behaviours, potential income levels of the market etc need to be focused.
Industry health and trends:
The plan should also respond to the industry wide factors affecting your own company's performance. The overall industry patterns will definitely affect your business as well.
Consistent business focus and clear strategic position:
The most crucial factor for a business is to create a strategic differentiating position that differentiates it from the competition. It is always important to have a unique selling point which makes you stand out of the competition.
In reference to the consultancy project:
I and my group members had a great experience of practically making a business plan for a small business. This is where we realized that what a well thought out business plan can do for a business and why those businesses who don't plan can't meet the heights of success. The owner of the business didn't have a proper business plan before and we were assigned to help her in this regard. When we finished all our team work and gave a presentation of the plan, she found out that how intensely populated is the market with the competition. And what are the ways and means she has to stand out of the competition.
Photography market is saturated and there is a little margin for the new entrants. With the help of the business plan she can find out new markets to enter. She didn't have a vision before and once she was into the planning she actually developed a vision and a mission statement for the business. Now she knows that what she want to do and where she wants to see her business in the nearest future. The business plan also helped in finding out the current industry health. The photography business is based on technology and skills to use it. If you can do magic with your camera and skills, you are in. Business plan helped her find out that how the industry is dominated by the latest technology and how she can cope up with the competition.
The financial side of the plan helped in finding out the estimated start up cost and capital required to own the latest equipments.
Overall the business plan has proved to be immensely helpful. If she had gone in without doing the planning before hand, situation might have been lot more worse than this.