Business plan

A business plan is a document that describes many aspects of a new business. It explains the organization, management, offerings, and goals of the business. In addition, it analyzes the market in which the business will operate and the ways the business intends to succeed in that market. Business plans are generally written before a business is created to provide a blueprint for the growth and success of the business and sometimes to build interest among investors who might want to fund the venture. Many experts view these plans as road maps by which businesses can chart and pursue their goals. Business plans are living documents, however, meaning that they can be changed and altered as necessary for the good of the personnel, investors, and consumers.

Background

Starting a business, big or small, can be a difficult and complicated process. Businesses offer goods or services, but much more is involved beyond this basic function. To start a business, a person must consider a wide range of factors. These factors include financial considerations, management organization setups, plans for marketing products, and the future goals of the company. To address these many essential factors, experts recommend that entrepreneurs create a business plan before they attempt to launch a new business.

Many business experts compare business plans to road maps. Just as most vacationers would consult maps before beginning their journey, so too should businesspeople use business plans. Like road maps, business plans help people determine where they want to go and how they intend to get there. They provide options, such as different routes and destinations, and identify potential obstacles before they are encountered in real life.

A business plan is intended to propose a clear objective for a business to follow. It provides a strategy for reaching that objective. A business plan should address many questions. The main questions pertain to what the company is meant to accomplish and what sort of progress is expected at different points in the future. The answers to these questions should help determine the best route for the new business to take.

While the business plan is extremely important for the early life of the business, it is meant to be a living document, or a plan that is open to revision and improvement over time. As such, the business plan can be a lasting guide that keeps a business focused on its goals in the most effective ways.

Overview

Business plans may take many sizes and forms, but most follow a basic setup that provides information about several essential points. The main points involve descriptions of the business's organization and offerings and explanations of how the business intends to operate within its market. Other categories of information, such as those dealing with fund-raising efforts, are optional but often helpful. Generally, the categories of necessary sections include executive summary, company description, organization and management, market analysis, and marketing and sales analysis.

Many experts consider the most important feature of a business plan to be the executive summary. The executive summary provides a synopsis of the most important points of the whole business plan. It explains the basic and most fundamental ideas: what the business is, what it will accomplish, and why it is set up to be effective. It may explain the business creator's qualifications or motivations for starting the business. Although the summary is usually written last, it is generally presented first on the completed document.

Next on the business plan are sections that elaborate on the ideas mentioned in the executive summary. These include the company description and the organization and management structure. The company description should explain, in detail, the actions and abilities of the business. In what market will the business operate, and how will the business outdo its competition? This section should project the future goals of the business. Where should the business be in one, three, or five years?

The organization and management section describes the human element of the business. Who is filling which roles in the business, and why? This section should identify any current leaders in the business and explain their qualifications. It should detail the overall structure of the leadership. For instance, is the company run by one director, two directors, or a board of directors? What departments will the business have, and who will work in each department? This section should show that the business is structured in a tight and efficient manner and staffed with the most qualified people.

The next information in the business plan involves the business's products and markets. First, business leaders must clearly identify the product they intend to provide. The product may be a good or a service, but it should be in demand among consumers. The business plan should identify the target demographic for the product, or the people who should be most interested in the product, and explain how this demographic will be reached.

Demographic information will figure into the marketing plan and market analysis. In these sections of the business plan, the writer must outline the workings of the current market and explain how the business intends to succeed in it. These sections must answer some questions that are crucial to the success of the company. What is the nature of the market, and who are the competitors? How is the business going to show that it is better than its competitors and win over consumers? The marketing plan should outline the business's plans for promoting and pricing its goods or services.

Once that information has been clearly and accurately presented, an opportunity exists to add other optional elements to the business plan. For example, if the business plan is intended to win the support of investors, it should include a funding request. This section will provide a financial plan for the business, including its current assets and intended revenues, and an appeal meant to entice investors into getting involved financially.

Finally, a business plan may include an appendix with related supplementary materials, such as business permits and leader résumés. This material is not always necessary, but it may be helpful in strengthening the qualifications of the business or its personnel in readers' eyes.

Bibliography

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