6.1 Business Plan (Business Proposal)
A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals.
Business plans may target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their annual return in that timeframe.
Business plans are decision-making tools. The content and format of the business plan is determined by the goals and audience. For example, a business plan for a non-profit might discuss the fit between the business plan and the organization’s mission. Banks are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organization’s ability to repay the loan. Venture capitalists are primarily concerned about initial investment, feasibility, and exit valuation. A business plan for a project requiring equity financing will need to explain why current resources, upcoming growth opportunities, and sustainable competitive advantage will lead to a high exit valuation.
Preparing a business plan draws on a wide range of knowledge from many different business disciplines: finance, human resource management, intellectual property management, supply chain management, operations management, and marketing, among others. It can be helpful to view the business plan as a collection of sub-plans, one for each of the main business disciplines.
"... a good business plan can help to make a good business credible, understandable, and attractive to someone who is unfamiliar with the business. Writing a good business plan can’t guarantee success, but it can go a long way toward reducing the odds of failure.
Fundraising is the primary purpose for many business plans, since they are related to the inherent probable success/failure of the company risk through three areas:
· Total quality management (TQM) is a business management strategy aimed at embedding awareness of quality in all organizational processes. TQM has been widely used in manufacturing, education, call canters, government, and service industries, as well as NASA space and science programs.
· Management by objectives (MBO) is a process of agreeing upon objectives (as can be detailed within business plans) within an organization so that management and employees agree to the objectives and understand what they are in the organization.
· Strategic planning (SP) is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Business plans can help decision makers see how specific projects relate to the organization's strategic plan.
6.1.1 Structure of Business Plan
Typical structure for a business plan for a start up venture
· Cover page and table of contents
· Business description
· Business environment analysis
· Operations plan
· Management summary
· Attachments and milestones
Executive Summary
Your executive summary is a snapshot (picture) of your business plan as a whole and touches on your company profile and goals. Read these tips about what to include.
Company Description
Your company description provides information on what you do, what differentiates your business from others, and the markets your business serves.
Market Analysis
Before launching your business, it is essential for you to research your business industry, market and competitors.
Organization & Management
Every business is structured differently. Find out the best organization and management structure for your business.
Service or Product Line
What do you sell? How does it benefit your customers? What is the product lifecycle? Get tips on how to tell the story about your product or service.
Marketing & Sales
How do you plan to market your business? What is your sales strategy? Read more about how to include this information in your plan.
Funding Request
If you are seeking funding for your business, find out about the necessary information you should include in your plan.
Financial Projections
If you need funding, providing financial projections to back up your request is critical. Find out what information you need to include in your financial projections for your small business.
Appendix
An appendix is optional, but a useful place to include information such as resumes, permits and leases. Find additional information you should include in your appendix.
6.1.2 How to Make Your Business Plan Stand Out
What makes your business unique? Determining this could help you stand out from the crowd (mass) and give you advantages over your competitors ask the below questions:
Typical questions addressed by a business plan for a start up venture
· What problem does the company's product or service solve? What niche will it fill?
· What is the company's solution to the problem?
· Who are the company's customers, and how will the company market and sell its products to them?
· What is the size of the market for this solution?
· How does the company plan to manage its operations as it grows?
· Who will run the company and what makes them qualified to do so?
· What are the risks and threats confronting the business and what can be done to mitigate them?
· What are the company's capital and resource requirements?
· What are the company's historical and projected financial statements?
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