Introduction to a business plan
A plan is essential for success in anything. You should prepare to start up and implement your business. In fact, drawing up a plan to transform a business idea into a real business, and implementing it, is a main function of an entrepreneur.
Before making a business plan, you should study
the business environment well. If you prepare
your business plan that way, it would guide you
to succeed in your business through using limited
resources and suitable strategies. If not, you may
not achieve your goals and the resources could
be wasted as well.
A business plan is a formal document that presents, in a structured
and well-organized manner, the targets you expect to reach and the
various activities that you will carry out at the start-up of a business
and while running the business.
Composition of a business plan
There are several elements of a business plan. Out of them, let us focus on the
following elements.
- Executive summary
- Marketing plan
- Production plan
- Administrative plan
- Financial plan
01. Executive summary
The executive summary is a summary of the entire business plan. It summarizes the most important information regarding the business for the benefit of the reader. When a person reads the executive summary, he/she should be able to create a mental picture of the business based on the information presented there. The executive summary is usually about one page in length.
The executive summary is a summary of the entire business plan. It summarizes the most important information regarding the business for the benefit of the reader. When a person reads the executive summary, he/she should be able to create a mental picture of the business based on the information presented there. The executive summary is usually about one page in length.
The following information is summarized in an executive summary:
The name of the business, the industry that it belongs to, etc. (described very briefly)
The name of the business that the entrepreneur wishes to start, and information
regarding the nature of the business.
A summary of the Marketing plan, highlighting its most important points
Target customers, expected demand and supply, price of the product, unique
features in distribution and promotion, strategies for gaining competitive
advantage, etc.
A summary of the Production plan, highlighting its most important points
Production process, production cost, unique features of the production
process, etc.
A summary of the Administrative plan, highlighting its most important points
Administrative structure, administrative processes, etc.
A summary of the Financial plan, highlighting its most important points
Funds needed by the business, how the funds will be acquired, expected
profitability of the business, etc.
Uniqueness of the business (described very briefly)
How the business organization is different from its competitors in terms of
the uniqueness of the product, uniqueness of distribution, etc.
Goals and objectives of presenting the business plan (in brief)
Whether the entrepreneur wants to start a new business venture, to get a
bank loan to expand an existing business, or to manage the future activities
in a methodical way through a self-investment should be included.
After the executive summary, the very next page should have a detailed description
giving general information regarding the business. It will give information about
the business and its owner or owners.
02. Marketing plan
This section details how the sales targets will be achieved. The following forecasted information has to be included here: the goods or service expected to be sold, the demand for the goods or service, marketing strategies, sales expenditure and sales income.
This section details how the sales targets will be achieved. The following forecasted information has to be included here: the goods or service expected to be sold, the demand for the goods or service, marketing strategies, sales expenditure and sales income.
03. Production plan
Marketing plan mentions the quantity of goods or service that will be offered to the market. Production plan estimates the cost needs to be incurred when producing that quantity of goods or service.
Marketing plan mentions the quantity of goods or service that will be offered to the market. Production plan estimates the cost needs to be incurred when producing that quantity of goods or service.
04. Administrative plan
This section includes information on the human resources required for the business and the related costs.
This section includes information on the human resources required for the business and the related costs.
05. Financial plan
Financial plan gives details regarding the sourcing of funds. It also includes estimates of income, expenses and profit.
Financial plan gives details regarding the sourcing of funds. It also includes estimates of income, expenses and profit.
