example business plan

example business plan

Developing an Effective Business Plan

1. Introduction

This book is designed to teach you how to write a business plan. This book is written for any entrepreneur or business manager, and can be utilized from an existing business to a startup. Developing an Effective Business Plan will take you through every step in the process from generating a great business idea to writing and presenting a great business plan. The book is neutral to anyone in any industry, and is just as useful to those just starting a business course, as those with years of business experience. From reading this, you will learn how to carry out a solid business idea, move that idea of a product or a service into writing, through extensive planning, and then being able to write and present a convincing business plan to banks and potential investors in order to gain the finances of reaching the intended business goal. By following the sequences shown throughout each chapter, this book will outline the cost and the planning of an efficient business move. Throughout, you will have the opportunity to practice your chosen plan of action on a real or a hypothetical business of your choice. In the current climate of rapid-fire change, uncertainty, and resource constraints, it is difficult to write a business plan. This book shows you how to write a plan that is the right length, focuses on the essential outcomes, and generates decisions that lead to intended results. In short, this plan will help any entrepreneur make a better business move. The book is organized into 12 chapters. Each chapter is given a number of suggested exercises, which should be adapted to a specific business that you have in mind. Step 1. Prepare to Plan Step 2. Generate a Business Idea Step 3. Develop a Marketing Strategy Step 4. Make a Financial Plan Step 5. Develop a Money-Making Strategy Step 6. Develop an Action Plan Step 7. Forecast the Plan’s Viability Step 8. Write the Plan Step 9. Know When and How to Stop Planning and Start Doing Step 10. Write a Plan for the Bank Step 11. Present the Plan to Investors Step 12. Conclusion: Review and Decide What to do Next Each chapter is written in a clear and broad style. This book can be used as a self-learning tool or as a manual. If you do have any business experience, you may want to breeze through the early chapters and read the later ones more carefully. We provide extensive examples from both successful and unsuccessful companies, small and large, and from service, manufacturing, and high-technology businesses. We show each concept in a specific, easy-to-understand event and believe that this is much more helpful than giving a vague port of a concept as many business books tend to do. As with learning any other process, the key to improving planning skill is setting clear goals and working hard to achieve them. This book is designed to help you throughout the entire plan-writing process, in the belief that better planning in the early stage of the company will increase the chances of its success. It demands hard work but offers the potential for great satisfaction in creating and growing a company to achieve a future vision.

2. Executive Summary

A compelling single-page executive summary is perhaps the most important element of the business plan. It is a stand-alone document, in that no one reads a business plan to get to the just summary. But many people begin to browse a plan when they are trying to make up their minds about buying from a company. The summary is also a very important communication tool for employees and external stakeholders. When an executive writes their summary, they should assume that the reader has not read the entire business plan. The objective is simply to generate interest, so that a follow-up meeting will be scheduled to learn more about the company. This means that the summary must answer the following questions: What does the company want to become? What is the best market for the company to enter? What does the company have to do to occupy its chosen place in the market as it defines? A good summary can answer the proposed four questions in less than half a page. This leaves room for a tight two-column summary of the SWOT, and a single-column list of the key strategic objectives. All of this should fit onto the second side, with the first side presenting the vision from the imagined future.

The executive summary is a brief outline of the company’s purpose and goals. While it can be tough to fit on one or two pages, a good summary includes: a brief description of the company’s history, the company or business unit’s current situation, a SWOT analysis – a detailed analysis of the company’s strengths, weaknesses, opportunities, threats, and trends. Key strategic objectives – these are usually very focused and define the concrete goals the company plans to achieve. In particular, the most important strategies specify what the company plans to do about price, product, promotion, and place.

3. Market Analysis

There are some important steps to market entry. First, it’s necessary to assess the possible profit that can be obtained. This is important because the ultimate goal in doing business is to get the maximum profit with minimum capital. Then it can be assessed how the profit can be maximized and how much it will cost the company. If the difference between the two is good, it can be said that high profit can be implemented with minimum capital. Second, it’s necessary to assess the start-up costs in marketing. This can be viewed from the possibility of economies of scale and scope in doing production. Third, it’s necessary to assess how many competitors there are and the current condition of the market. If the competitors are too many, it could hinder the sale of products, so it might need to be a change of plan to get the maximum results. A thorough analysis undoubtedly has risks. If the risk is considered damaging to the company, it may be advisable not to take control of the market due to unstable conditions.

This market analysis is utilized to evaluate how great it’s going to be to enter a certain market area and to develop a clearer understanding of the risks that will be faced. Creating an effective business in a market area will need to take control of the market, and it can only happen if the company has enough marketing planning. Marketing planning is essentially looking forward to the steps that will be taken in marketing and the allocation of resources to achieve marketing objectives and also within a certain time.

Market analysis in a business plan is a study that is performed because of the single reason to help the business to grow successfully. This study begins with the recognition of consumer needs and extends to finding out who is going to be the group of potential customers. There are various customer needs, consumer groups, and ways of satisfying the needs. All of these consumers have different need thresholds and buying power. Ever-changing conditions, both internally and externally, have prompted some companies to look over their financial position to review their capital and decide what financing is really needed. It also makes it difficult for new companies to find success in gaining consumers. With all these problems, competition from one company to another can be really tight, so tight that it can make companies have to be ready to take measures if income does not meet expectations.

4. Business Strategy

The distribution of the product ties in with this and whether the product is tangible or intangible. A tangible product will be sold using channel intermediaries with the most cost-effective method in mind to keep the price of the product down. With an intangible product, the company may have to sell directly to the consumer, and even if the product is a free service, spending will be required on the best way to convince a large amount of people. For example, an internet business offering a free online advertisement for car sales would have to heavily advertise this more effective service at car yards. A possible branding strategy may be required when the product is the first of its kind in a market and a special image is wanted to be created. This is for a long-term plan, and a new business may not always have the capabilities for this.

A key area that needs to be addressed in the business plan is how the product will be placed in the market, meaning its price, distribution, and any branding that is necessary. Developing a marketing plan is a complex task that involves a high level of strategic planning. Should the new product be placed with a low price to gain high sales quickly or a higher price to give off a high-quality image? This is an important decision that depends on the nature of the product being sold. Electronics would generally be price and sales-driven products, but this isn’t always the case. For example, a small business is started up to sell a new innovative padded machinery part that fits into a market that hasn’t been explored. The market for this is small and sales would be slow, but over time the image built by this product will create customer awareness and give them a high reputation.

5. Financial Projections

Our firm’s show combined annual sales of over $300,000. Thus, we cannot project significant growth in the market as sales for similar products sold by competitors in the same geographic region have roughly equalled our own over the past three quarters. In order to consider the potential success in the global market, it is assumed that percent cumulative sales growth will increase with success in the industry. Pricing strategies may vary greatly depending on volume of success in a particular niche in the industry. High sales volume in the OEM sales sector will amount to very little price change from current pricing strategies. However, success in the global market in either of our product lines will create a demand shift allowing for price increases. To project net profits generated by these price-centric changes in the market, we assume that the increased price is sustained over a period equivalent to the sector’s global market success duration. Since the company has yet to secure any concrete long-term contractual agreements in the international project or service industry, we cannot directly project the potential success in the global market. However, our company has a wealth of experience in various industry sectors with standard service and or project agreements. We assume that success in a particular industry sector with a given product line will create a demand for said product line from the same sector in the international project or service industry. By considering the product to be of similar importance to the sector, we treat its potential sales as a market share and approach it with a percent incremental profitability and cumulative annual rate of return. The projected financial impact from the global product demand will be roughly estimated by comparing the sector specific net profits to net profits current.