By Christina Pomoni, Yahoo Contributor Network
Jul 10, 2009
http://voices.yahoo.com/how-come-successful-business-plan-3779758.html
The actual value of creating a business plan lies in the process of approaching a business idea in a systematic and controlled way. Rather than getting the final product at hand, researching and planning about a business idea enables future entrepreneurs to obtain a critical approach at their ideas. Thinking through their ideas may be time-consuming in the beginning, but in the long run, it can save a business from fatal mistakes.
Typically, a business plan is a standard model that describes all the necessary steps to the establishment of the new venture idea. However, depending on the type of the business, a business plan is refined in order to emphasize certain areas. For instance, if the venture idea is a retail business, the business plan emphasizes on the prospects of the retail industry; if it is a manufacturing business, the industry analysis refers to the manufacturing sector and its prospects.
Most of the time spent for developing a business plan is for research and revising the original ideas and assumptions. However, in order to be able to move on a road map and develop a well-structured business plan, it is required to follow some standard steps. These are:
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Introductory Page
The introductory page includes a brief description of the nature of the business, business contact information, a statement of financial need and contact information for owners. For instance, if the new venture is a fast food store, the introductory page will state retail food and beverage supplier in the nature of business, the business address in the business contact information, how much money is required to start the business in the statement of financial need and home address and phone numbers in the contact information for owners. Additionally, a table of proforma sources and uses of funds for year one is included in the introductory page as a break down of the total amount of money required for starting up the business.
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Executive Summary
In no more than two pages, the executive summary provides information about the venture idea, what the business is about, the target audience, the product, the qualitative and quantitative objectives, and the background of the owners. The most important part of the executive summary is to explain the opportunity that lies behind the new venture because this shapes the ground to estimate the future position of the business in the industry.
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Business Description
In the venture description, the business plan should primarily describe the vision, mission and values of the business. By stating the business philosophy in no more than a 30-word mission statement and by clearly sharing their values with their customers aiming to maximize their customers' value, many businesses explain their reason of existing in the market and their guiding principles. Besides, a venture description includes information about locations, operations, equipment, products & services, suppliers, target audience, and a general opportunity assessment explaining why the business is significant in relation to the industry.
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Industry Analysis
Industry analysis include all up-to-date statistical data that support the business idea. Proper evaluation of the industry forces is a key factor in developing a concise and well-structured industry analysis that will depict the potential of the venture idea to investors as a result of favourable industry trends. Typically, industry analysis includes an upside-down pyramid that starts from the general environmental and demographics trends and narrows down to local competition, a Porter Five Forces Analysis that assesses the industry structure, a SWOT analysis that identifies the strengths and weaknesses of the venture as well as the threats and opportunities of the industry, and a competitive analysis that portrays the positioning of the new venture in relation to competition.
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Operational Plan
Operational plan provides analytical information on the physical requirements of location (amount of space, type of building, zoning, facilities, and utilities), production (production techniques and costs, quality control, inventory control, product development, customer service), suppliers, credit policies, equipment, personnel responsibilities, operation schedule, and pay structure.
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Marketing Plan
Marketing plan includes all the marketing and advertising efforts that take place in order to promote the venture idea to a broader audience. Product, price, place, promotion is the marketing mix mode, also known as 4 P's, that is typically used in the marketing plan section of a business plan. Besides, the marketing plan involves product forecasting methods and estimates for the first three years of operation as well as control patterns of business processes to ensure a constant flow of business.
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Organizational Plan
The organizational plan includes the description of the legal form of the venture (Sole Proprietorship, Partnership, Corporation, Limited Liability Company - LLC), short bios of the management team, and roles and responsibilities of personnel.
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Funding Request & Financial Projections
The financial plan includes any start-up expenses that occur before operating the new business. For an accurate estimation of these expenses, it is important to perform accurate financial assumptions that are based on the forecasts provided in the marketing plan section, but also on the industry analysis section and the trends that are expected to have an impact on the business. Accurate estimates are important for accurate funding of the venture. Besides, the financial plan includes analysis of the sources and uses of funds, financial ratio analysis, as well as income statement, cash flow and balance sheet proforma statements.
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Risk Assessment
Risk assessment presents any contingency plans prepared after identification of areas that carry significant risk for the successful operations of the venture. Contingency plans are implemented for the anticipation of unexpected and threatening events.
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Appendix
Appendix includes any statistical tables; graphs from the industry analysis section; market research studies; blueprints and floor plans; advertising materials; location photos; equipment lists; copies of operating agreements; management team bios; anything that can ruin the flow of the business plan with redundant information.
In effect, a good plan undertakes three important responsibilities. First, it aligns the management team toward a common set of objectives, expressed on organizational vision. Once the vision is expressed on paper, the management team is forced to investigate the feasibility of the business. Finally, the business plan is a sales document that intends to attract professional investors.
In conclusion, a winning business plan should be professional, enthusiastic, and concise. The great difference between a successful businessman and a mediocre entrepreneur is the ability to admit own weaknesses. Combining a good business idea with a well-structured business is a profitable joint venture that will bring money in the business and will attract more customers in the future.
