What is a business plan?
A business plan is a written document concerned with what the entrepreneurs want to do. It is a comprehensive statement consisting of the goals, objectives, strategies, job description, resource allocation, and financial management of a business. It provides a roadmap for the business people, guiding them through starting, developing, managing, and stabilizing the business. A business plan serves through evaluating their inner capacity, recognizing their limitations, avoiding threats, and adopting opportunities. It is the most prominent statement of the business.
David H. Holt “We define a business plan as a comprehensive set of guidelines for a new venture.”
Marc J. Dollinger “The business plan is the formal written expression of the entrepreneurial vision, describing the strategy and operations of the proposed venture.”
Rebecca Jones “A business plan is a roadmap for the organization, showing the destination it seeks, the path it will follow to get there, and the supplies and wherewithal required to complete the journey.”
Robert D. Hisrich and Michael P. Peters “The business plan is a written document prepared by the entrepreneur that describes all the relevant external and internal elements involved in starting a new venture.”
Importance of a Business Plan
The business plan is far better for the new business people. Its basic functions could help the commence the business and growth of the business. The important business plan is shown as follows.
Strategic Direction
A well-crafted business plan clearly outlines the strategies, which entrepreneurs use to achieve goals. Every step of the business venture is set up according to the strategy. It helps to make correct decisions, whether they are going in the right direction or not. Supporting factors may influence the pace of the businesses, but business plans provide a roadmap for how the business runs.
Risk Management
Venture creation is a risky project for business people. All the aspects of the venture are prominent to run the business and it also challenging to manage them. One minor mistake may ruin the business. A business plan helps to identify risks and challenges that arise in the future, through inner and outer analysis.
Resource Allocation
Different sorts of resources are needed to commence the business. Every resource is important to the demand of the business environment. A business plan helps prioritize investments and manage resources for best utilization. It ensures that capital is placed appropriate manner to quality products, and maximizes the profit and growth of the business.
Measuring Progress
A business plan establishes key performance indicators, it helps to evaluate the progress of the strategies. Without measuring the task of the business could not meet the defined goal of the business. It provides a blueprint of the business and helps to track the performance whether it going in the right direction or not. It gives a chance for correction of the mistakes.
Elements of a Business Plan
A business plan includes various elements as necessary for the business environment. It is described in this manner.
Executive Summary
This section provides a designed statement to capture the attention and interest in the venture. It is a concise overview of the entire business. It is the most important part of the business plan. It includes the organization’s goals, objectives, mission, financial requirements, target market, funding requirements, etc. It provides focus on the projections. Business ideas generation for the venture creation increase the better plan.
Company Description
It describes the business vision, mission, prospectus, and legal geography. It provides all the scripts of the functions of a company. It includes a details description of company products or services, market capacity, customer satisfaction, goodwill of the company, financial status, and so on.
Market Analysis
Market analysis examines the company’s market trend, sales status, and marketing plans. It consists of market size, market growth, competitors, customer satisfaction, customer demand, and supply of goods and services. The competitive market analysis provides details information about competitors’ abilities and weaknesses, threats, and opportunities. Resolving the threats and accepting the opportunities entrepreneurs run the businesses.