10 Elements of Business Plan & Business Plan Preparation

P. Malathy

epgp books

 

 

 

1.1 INTRODUCTION

 

A business plan is a precise outline sketch of the entire business to be pursued. The size of a business plan varies with respect to the nature, purpose and investment plans of a business. While some business plans run to 10 pages quite a few business plans run to even 100 pages. This corresponds to the holistic structure of the business proposed for progress. Whether small or big every business necessitates a perfect strategic plan for two significant reasons namely comprehension and validation prior to execution. This helps both the entrepreneur and the financier to understand the scope and potentiality of the business plan.

 

1.2. FUNDAMENTALS OF A BUSINESS PLAN

 

The Entrepreneur Magazine states that a typical business plan comprises 15 to 20 pages on the whole. All business plans consist of formal portions like table of contents and the title page. A complete business plan constitutes three phases namely, Business Concept, Target Market and Finance Generation.

 

1.3. NECESSITY OF A BUSINESS PLAN

 

A business plan is an inevitable mandate drafted with an aim of self-explorative analysis of all facets of the entire business. The utility of a business plan has a few parametric progresses.

  1. Primarily it focuses on the business objectives using appropriate information and reassurance of analysis.
  2. It serves as the best marketing tool of a business especially in getting accustomed to business relationships like investors, share holders, bank personnel and target customers or clients.
  3. It is the best possible means of unveiling the lacuna of the business planning
  4. Business plans are the best way to consult experts’ advice from successful entrepreneurs of the same prospects.

  1.4. FUNDAMENTALS OF A BUSINESS PLAN

 

Every business plan sprouts from a Business Vision which further with the assistance of Right Financiers delves into Team Dynamics for Corporate Management. Therefore, it becomes mandatory to discuss the building blocks of a business plan namely, Business Vision, Business Investments, Team Dynamics and Corporate Management.

 

1.4.1. Business Vision

 

Generally, any business gains momentum in due course of time. The prime factor of this aspired effectiveness combined with the progress of a business has its strong foundation on its vision. As a matter of fact, the business vision paves the way for the progress of the business by setting incessant goals and parameters for incessant observation of the existing societal trends besides the bridging methods of catering to the customers’ interests. Perhaps, this helps the company to implement innovative metrics for continual growth assessment of the business in addition to its prospective extensions on a global perspective. Precisely the business vision serves to be the blue print of the entire business and its progress.

 

1.4.2. Business Investments

 

Bare words buy no barely is a saying. Similarly, the utility of a business vision shall be observed only through its explicit execution rooted on the requisite financial support and investments. The best financial plan is the secret of achieving the anticipated annual turnover of the business. The other benefit of a financial plan is the acquired foresight of its potential profits besides its growth chart. Usually all innovative financial planning curtails the outflow of finance from the firm. Instead, the best investment plan procures all targeted in flow of finance through its phenomenal strategies. The best finance plan of a business investment perhaps even widens the scope of the business by attracting the attention of the additional financial partners, investors and share holders.

 

1.4.3. Team Dynamics

 

The members of the organizational chart starting from the employer to the employee need to possess the spirit of unanimous team dynamics for uplifting the business profile of an organization. The coordination of the workers, the appropriate assistance of team leaders, proper guidance from management representatives, regular feedback from the Human Resource department, immediate execution of remedial measures in case of set-backs when informed by product quality assurance department, the expertise of marketing and sales department, the care and concern of customer care division or client service department are the essential functionalities of the team dynamics of a business. Each worker of every section mentioned here is like an essential brick of colossal building called a business organization. If there is a defect found in a single brick the entire citadel called business will crumble down into pieces. Precisely, team dynamics rely obviously on the holistic coordination of the entire organization from the layman to the entrepreneur.

 

1.4.4. Corporate Management

 

Corporate Management is the promising part of the success of one’s business. It exhibits a streamlined administration of a business besides giving reliable input on managing the company resources and practicing cost cutting proximities of a corporate. The effective managerial adeptness of an entrepreneur perhaps gets reinstated by the preparation of a winning business plan. The phenomenal progress of the business actually depends on the magic wand called a business plan which in fact assumes an indispensable portion of the corporate management. Therefore, a business plan has to be well prepared after gathering adequate data and essential authentication for a promising future of the business. Such a plan, indeed, is generally built on a sound business concept that gets simplified through necessary graphical representations compiled with the help of confidential business advisors. The strength of the corporate management of a company shows its proportionate progress in the achievement of the company objectives from the top level to the bottom.

 

1.5. SEGMENTS OF A BUSINESS PLAN

 

The significant concept of a business plan is to embark on the business potentialities and its targeted progress over a period of time. The plan is ought to be comprehensive besides, showing clarity on its intentions. Therefore, simplifying the objectives of the business opens an avenue for a person to gain momentum with all dimensions of the business progress. This description sets a foreground which further promotes a clear cut understanding of the entire business. Moreover, it widens the scope of the business as it explicitly presents the indispensable facets of business like Products, Services and Targeted Customers. These facets are further simplified under seven indispensable elements of business namely, Business Summary Business Description Market Strategies Competition Analysis Design & Development Operation & Management Finance plans At this point the focus shall be laid on the strategies of preparing an individualized business plan further to the elements to be briefed in the consecutive sections of this lecture to make it easily understandable.

 

1.6. PREPARATION OF A BUSINESS PLAN

 

A business plan is an official agenda written in a formal language. It is entwined with business objectives in addition to the description on their attainable methods. It also constitutes the vital data of the entire organization. It comprises three phases namely, Business Summary, Business Plan and Appendix. While the first phase titled Business Summary presents a preamble to the business, the second phase called Business Plan concentrates on Business Description, Market Strategies, Competition Analysis, Design and Development and Operation Management. Ultimately the third phase projects the Financial Plans of the business to be pursued. On the whole, these three phases gives an overt emphasis on all facets of the business.

 

1.6.1 Business Summary:

 

This portion generally serves an introduction to the entire business plan. It usually runs from 2 to 3 pages. This portion shall comfortably fix the introductory arena for propagandizing the entire business plan. This is also one of the sales strategies to attract the share holders or stake holders, clients or customers, employees at all levels and funding agencies or financiers. The 3’I’ formula shall be adapted to draft this portion successfully. Here the first ‘I’ stand for Innovative business concepts, second ‘I’ represents Interesting presentation of business concepts and the third ‘I’ implies the Indispensability of business concept narrated. Hence, the effectiveness of a Business Summary depends on Innovation, Interest and Indispensability of the potential business to be pursued.

 

1.6.2 Business Description

 

A Business Description is the crucial portion of a Business Plan. This portion runs to 15 – 50 pages based on the capacity of business plan made. This narrative segment comprises quite a few minute functionalities of the business plan namely, Market Strategies, Competition Analysis, Design & Development in addition to Operation & Management. This section exhibits the organizational structure of the proposed business. The designation of each employee from top to bottom is primarily described with a title in this section. Moreover, the duties of each employee are briefed in a simple language for better understanding of everyone who reads the business plan. The hierarchy of the entire business structure is titled including the board of directors and members of the management team. The share holder particulars are also explicitly mentioned in this section. There are certain instructions to be followed during the preparation of a business description. They are

 

§   Practicing the appropriate formatting procedure of the document

§    Narrating the company particulars in the prime sections

§    Giving the perspectives of the market analysis

§    Pronouncing the company’s organizational structure

§    Revealing the particulars of top management representatives

§    Briefing on the products and services to be rendered

§    Exhibiting the marketing nuances to be followed

§    Expressing the fund request particulars if necessary

 

The components of a business description namely market strategies, competition analysis, design & development further to the operation & management shall be discussed further for better understanding.

 

Market Strategies – A Business Description is three fourth portion of a business plan. Its prime success depends on its marketing strategies of the business. The systematic practice of marketing strategies to be practiced is to be clearly elaborated in this section. The inevitable criteria of a business description have to re-assure the innovative business concepts based on the demand and supply justification to be appreciably supported by its marketing strategies. Whether there is a necessity for advertising of the business product has to be well-explained in this section if the marketing strategy is pursued through advertisements. In such case the type of advertisement, the impact aspired by the advertisement mechanism on the target customers shall be appropriately addressed in this section. Irrespective of low and high budget marketing tools the precision of mode of marketing have to be necessarily described at this point.

 

Competition Analysis is another component of a business description. This portion is to clarify the maximum awareness of the existing and futuristic competitors of one’s business. This section has to written with the help of expert business analysts who possess the corporate ingenuity of prediction of competition market corresponding to their potential analysis of the business to be pursued. The foresights of the business analysts actually prove to be a boon for the corporate to be emerged in full fledge. This section needs adequate justification for each argument to be put forth in support of the business. Graphical representation of existing competition and expected competition to emerge in future shall also be presented in this section.

 

Design & Development perhaps is a crucial portion of any business. The appropriate methodologies of the business design to be practiced combined with the development avenues of the business are to be notified here. This portion as a matter of fact gives overt clues on the investment plans in the ways of infrastructure, machinery or tools purchase, investment plans on raw materials and consumables. The percentage proportion of investments from the capital investor and the distributed percentage of share holders are precisely estimated in this section. In case of the extension services the funding organizations are utilized, it becomes a mandate to provide all requisite data about the funding procedure along with the benefactor and beneficiary roles in the business.

 

Operation & Management gains equal importance as design and development of a business. The functionalities of the entire business have to be explained with the help of the organization chart presented in the business description section. However, this section possibly narrates the powers vests with each essential head of the corporate from top to bottom. This section draws a clear cut distinction between the employer’s powers and the employee rights bridged by the human resource policies of the entire business. Company Finance Policies like Pay roll fixation provision of Health insurance policies, Provident Fund, Gratuity & Pension particulars of each employee shall be mentioned in this section.

 

1.6.7 Finance Plans

 

This is the third phase of a business plan. This phase exclusively deals with the finance particulars of the entire business to be taken up. Generally, businesses rely on funding agencies or financiers. In such situations all necessary particulars about the fund generating plan of the business have to be discussed in this section. If the mode of business capital generation is banks, then the details about the loan particulars are to be mentioned under finance plans. The type of loan taken along with the bank particulars which readily sanctions the loan have to be notified in this section for any futuristic clarification, if arises. Particulars like whether the investor is solely availing the loan or he takes a co-applicant shall also be briefed in this portion. The mode and spells of repayment of the business loan in addition to insurance claim particulars in case of mishaps are to be clearly drafted in this section.

 

1.7. CONCLUSION

 

The actual purpose of a business plan is to make an empirical analysis about the pros and cons of the business to be pursued. It may not be an exaggeration to consider a business plan to be a management tool which ensures all operational milestones of a business. Factually speaking a business plan shall be treated as generic business analytic framework applicable for any business before its absolute establishment. However, it may be devised according to the uniqueness of any business proposed. This is indeed observed as a systematic avenue for pondering over the planned business prospects. It would be appreciable if the business plan is drafted in a formal usage of language. In some cases it may ensure several weeks to draft the best business plan. This happens due to the modifications of the business ideas conceived in the mind previously. This leads to the redrafting of the business proposal when the unexpected lapses are observed after drafting the entire structure of the business. It is always a desirable practice to make a checklist and re-examine the prepared business plan. The points to be focused in the checklist after redefining and reassuring them are

  1. Whether the business plan prepared possesses a holistic approach?
  2. Are there any traces of sample business plans adapted from Google?
  3. Does the business plan act as a selling tool?
  4. Have the business plan taken the experts’ suggestions?
  5. Have the business competitors identified?
  6. Are the lapses of the plan notified?
  7. Whether there is a foresight of adversities and a mention of addressing methods?
  8. Does the business plan declare the strength and weakness of the top management?
  9. How frequently the plan has been modified to suit the need?
  10. Is there a mention of appropriate finance plans

 

These ten questions certainly help the one who drafts a business plan to reassure the quality of the business through the strategic measures discussed.

 

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Web links

  • https://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agp4957/$file/elements-of-a-business-plan.pdf?OpenElement
  • http://leedsfaculty.colorado.edu/moyes/bplan/Plan/Writing%20a%20Successful%20Bus iness%20Plan%202004v4.pdf
  • https://www.extension.purdue.edu/extmedia/ec/ec-735.pdf
  • http://www.nedco.gov.tt/Portals/0/Key%20elements%20of%20a%20Business%20Plan. pdf
  • http://www.consultgsi.com/docs/Essential%20Elements%20of%20a%20Good%20Busi ness%20Plan.pdf
  • http://www.southappfund.com/template_assets/downloads/bus_plan.pdf
  • https://www.va.gov/osdbu/docs/vepbusinessplanoutline.pdf
  • https://www.khda.gov.ae/CMS/WebParts/TextEditor/Documents/Elements%20of%20t he%20Business%20Plan%20-%20Training%20Center.pdf