business plan business essay example

business plan business essay example

Developing a Comprehensive Business Plan: A Practical Guide for Entrepreneurs

1. Introduction to Business Planning

The business plan focuses on the business The business plan focuses on the business, not the investment opportunity as such. The plan describes the enterprise’s activities, products, results, nature of management, history, markets, strengths and weaknesses and why the enterprise needs the proposed funding, and how it expects to succeed. While investors always focus on the bottom line (return on their investment), they understand that all successful enterprises place priority on their business before the interests of any one investor. A business plan should not be written to deceive. Many approaches to business and investment planning are based on maximizing the appearance of short-term profitability, sometimes even to the point of fraud. The business plan is the place to present an honest, comprehensive assessment of the business. The investors want to be able to evaluate the business, warts and all. The business plan should be clear, hype-free, and written to provide maximum useful information to the target audience.

The business plan An enterprise seeking capital for business operations must prepare and show potential investors a comprehensive business plan. A comprehensive business plan is a document which provides detailed, factual information in an easily readable format, and which enables potential investors to evaluate the opportunity. The business plan should contain all material information that an investor would need in order to reach an informed investment decision. The goal of the business plan is to inform potential investors about the enterprise and the advantages of funding it, and to excite the investors about the opportunity.

2. Key Components of a Business Plan

2.5 Marketing/Sales Plan In regards to sales and knowing the marketplace, how will the company or firm deal with rivalry? The goal of advertising would help the business and focus on the target market. Additionally, advertising campaigns generally happen in different stages and can take place at various points in a customer’s decision-making process. Different forms of media such as the Internet, promotional sales, press launches, and advertising will also take place. Provide comprehensive information and data on the current and inventory market growth expectations. Your marketing plan is a continuing effort and tends to grow more customer value an excellent system over time.

2.4 Market Analysis Researching the market is the central question. How are products or services performing in the current and future markets, particularly in today’s market? This portion of a business plan offers a comprehensive analysis of consumers, analysis of your sales possibilities, competitive review of the industry, and the market for marketing and distribution plans.

2.3 Company Description Your company’s mission, vision, objectives, and culture make up your company’s core elements. What is your company passionate about? What about company strategy or positioning is unique to your company? These crucial questions are addressed in the company description area. Lastly, there is a formal list of the owners or formation of your corporation, a business title, and the team’s business skills.

2.2 Business Description This section provides a complete picture of the company and its plans. It looks in detail at what the business will do and how it will be done. It also provides a general overview of the company’s financials. Providing a company’s business description, owners, management team, overall strategy, and daily operations is part of this section.

2.1 Executive Summary The executive summary is often considered the most important section of the business plan. This section outlines the company and includes the mission statement along with any information about the company’s leadership, employees, operations, and location. The company’s strategic plan and how it will succeed in the marketplace is also provided in the executive summary. On average, this section is usually about one to two pages long.

Your business plan should be specific to your business, as well as help you prioritize your objectives. Building a business plan for your company is a complete and detailed process. You must analyze several features and research many sections of the business plan. The following are some of the key components of a comprehensive business plan.

3. Market Research and Analysis

Before launching a business, the entrepreneur needs to know whether the market exists, how large it is, and who the customers are. In other words, the entrepreneur should determine who is going to buy the product or service, and where and how the product or service will reach them. This information is contained in a market study or market research and analysis, and the result is the writing of a comprehensive business plan, which can be considered a “blueprint” for the new business. No one in business should take risks without first understanding the potential rewards. The business plan provides the risk and return measurement that every entrepreneur must have before committing to a business enterprise. Without a business plan, the likelihood of business success decreases at a rapid rate.

Since the primary aim in a new venture is not just to create a business and make a profit, but to create a successful business, the first and most essential task in starting a new business is to establish a comprehensive business plan. A good business plan makes the entrepreneur aware of the essential elements that have to be addressed in starting a new business. Small business advisor and author, Joel Clavey, suggests that the process of formulating a comprehensive business plan forces the entrepreneur to analyze the market and competition, evaluate financing needs, and set goals. He stresses that the business plan is a “hallmark of the seriousness of your intention.”

4. Financial Projections and Budgeting

Costs: Once you have projected sales, the next step in budgeting and financial projectioning is estimating costs. The major areas of concern are Manufacturing Costs (salaries, wages, benefits, outside services, materials and supplies, utilities, and depreciation) and Non-manufacturing Costs (salaries, wages, bonuses, taxes, benefits, outside services, travel and entertainment, postage and printing, advertising, legal and accounting fees, rent, telephone, insurance, interest, and depreciation).

Price: Next is figuring out the selling price for each product or service. You must look closely at costs and profit objectives.

Sales Unit Projections: The next step is to project the number of each product or service you plan to sell. The easiest way is to base the estimate on past trends. Using comparable results from other companies can provide some results.

Sales Projections: Forecasts of sales need to be developed. Often, sales projections are made by assuming a particular growth rate for the market and then projecting sales assuming the firm will grow at the same rate. Another methodology is to estimate the number of potential customers and multiply these customers by the percentage of those you believe will buy your product, often called the “market share”. Often one can validate sales projections by talking to industry experts, customers, or vendors to gauge the level of interest in your product.

Financial projections contain a few assumptions and deal primarily with numerical facts. Here are the fundamental steps you might wish to follow when developing financial projections:

5. Implementation and Monitoring Strategies

A comprehensive business plan should lead to the development of well-managed and financially sound business activities. A comprehensive business plan enhances the likelihood that the entrepreneur will be able to acquire the necessary resources. A comprehensive business plan provides a means to put thought into completing the purchase of resources and choosing an order in which resources will be acquired. An entrepreneur that understands the components of a comprehensive business plan will recognize changes to strategic assumptions and to capital strategies. Growth of the small business does not usually proceed smoothly, nor does it always occur in line with the concepts developed in the plan. As the entrepreneur interacts with suppliers, customers, competitors, employees, legislation, etc., adjustments to the original business plan are often warranted. The monitoring and control portion of the business plan explains the process through which the entrepreneur is able to obtain timely financial and non-financial information that is related to plan success. The financial institution that helped develop the business plan is often interested in participating in the monitoring efforts as a means through which to contain financial problems before they threaten the viability of the organization.

One of the most devastating mistakes made during the business plan process is the belief that the development of a business plan facilitates implementation of the program. Many business plans are written and then simply filed, never to be looked at again in any detail. A comprehensive understanding of the firm’s business plan, including marketing, operations, finance, and planning aspects, by the entrepreneur is essential. The business plan explains what the entrepreneur should do to grow the business, how the business should grow, and why the business should grow. If the entrepreneur has committed thoughts to the development of the business plan, the entrepreneur has a foundation upon which to base growth decisions as the venture increases in size and complexity.