Business plan
Having a business plan is important when starting a business. An entrepreneur needs to formulate objectives for the managers of the business. All employees will have their focus on achieving the objectives. Having a business plan, will enable an entrepreneur have strategies for the business. Strategies are guidelines meant to lead the business to success. A business budget helps the entrepreneur to asses all the requirements of a business. For example, the required number of employees, machinery and other requirements. Using business plan will enable the businessperson to identify some requirements, which are not obvious[1].
An entrepreneur may want to finance the business using other sources apart from personal income. A Business plan is required to acquire a loan. Investors also need to see the business plan before they commit their investments to the business. It assists them to determine whether the business is viable. Every detail of how the business will be run is contained in business plan. It will act as a guide in case any employee deviates from the goals of the business. It enables the stakeholders to analyze their performance using the objectives. They will make adjustments according the specific objectives of the business[2].
There are key elements of a business plan are an executive summary and the statement of purpose. The statement purpose includes sub topics like business concept, financial features and requirements, market analysis, management and appendix. The executive summary explains the intention of the business. The business desires and what the entrepreneur wants should be in the executive summary. Since it should be brief, it is supposed to be half of a page. The business concept part defines the business in general. It discusses about the products, which will be produced and the target market. It also explains why the business has chosen the product and what will be the benefits of producing it[3].
Financial features and requirements will show vital aspects like expected returns from the business, profitability, cash flows, sales volume. Financial requirements include the capital required to start the business. Market analysis is about the industry a business will belong. This section should describe the current position of the target market. It should mention the competitive advantage of the business and marketing of products. The management section will show the intended number of employees for the business. It should clearly show how the entrepreneur intends to manage the business. The appendix is an optional section. It explains terminology used in the business plan[4].
A business plan includes a financial plan. It outlines all the requirements and the costs. An estimated budget is created and later an actual budget follows. The estimated budget gives an idea of the money required. An actual budget is made after all figures for costs have been confirmed. A financial plan is important when seeking for funds in loaning facilities. They need to see the amount required by the business. They also need to see how the money will be utilized. A financial plan helps to avoid inconveniences. Since all the requirements are listed, none will be left out hence good planning will be implemented. Unlike when there is no business plan, some vital requirements are left out and later remembered[5].
There are both internal and external users of a business plan. In a vehicle manufacturing company, internal users are employees, managers and the board of governors. They use it for different reasons. For example, it is useful in reviewing the performance of the company. The users go through the objectives and determine whether they are being achieved. The external users are investors and creditors. For instance, the company may need a loan from a bank. The bank will have to use the business plan to approve it. Investors cannot direct their investments to a company without seeing the business plan. Therefore, it is important for a business to have a business plan[6].
References
Abrams, Rhonda M., and Eugene Kleiner. 2003. The successful business plan: secrets & strategies. Palo Alto, CA: ThePlanningshop.
McKeever, Mike P. 2002. How to write a business plan. Berkeley, CA: Nolo.
Osterwalder, Alexander, Yves Pigneur, and Tim Clark. 2010. Business model generation: a handbook for visionaries, game changers, and challengers. Hoboken, NJ: Wiley
[1] Abrams, Rhonda M., and Eugene Kleiner. 2003. The successful business plan: secrets & strategies. Palo Alto, Calif: ThePlanningshop.
[2] Osterwalder, Alexander, Yves Pigneur, and Tim Clark. 2010. Business model generation: a handbook for visionaries, game changers, and challengers. Hoboken, NJ: Wiley
[3] Abrams, Rhonda M., and Eugene Kleiner. 2003. The successful business plan: secrets & strategies. Palo Alto, CA: ThePlanningshop.
[4] McKeever, Mike P. 2002. How to write a business plan. Berkeley, CA: Nolo.
[5] Abrams, Rhonda M., and Eugene Kleiner. 2003. The successful business plan: secrets & strategies. Palo Alto, Calif: ThePlanningshop.
[6] McKeever, Mike P. 2002. How to write a business plan. Berkeley, CA: Nolo.
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