These are vital matters to address early on. Growth primarily comes through new customers and achieving repeat custom. This then determines your progress towards profitability. This means all tasks that you as the entrepreneur should focus on should be geared towards achieving your next goal.
The likelihood is to support your growth will require an injection of funding. That's unless you have an extremely cash generative business model. You'll have a working capital requirement and thus need investment beyond the reach of your business. The statements help prospective lenders and investors understand the history of the organisation to date. The business plan provides them with a view of your future direction.
Ultimately their interest will focus on whether the expansion or development of your business will generate sufficient cash to both operate effectively while also fulfilling debt obligations. Good forecasting and planning is seen as a way of understanding income and expenditure.
This is particularly useful as a means to prevent payment issues over things like suppliers and staff wages. Many businesses close when such issues arise. This will then act as evidence to potential investors and financiers. They'll see if sufficient money will be generated by the activities of the business, to both fund future growth, while meeting financial commitments. Managing your cash position , as you may have already gathered, is fundamental to the long term future of your business.
You should reference your cashflow projections in your business plan regularly. When you invest in your business, there will be significant out flows of money before any cash comes in. The timing of your investments thus needs to be considered against your projections and statements. Consider trading patterns, seasonal variations and the likely impact on cash flows.
That means after the goods or services have changed hands. So you can then see how poor cash management creates real issues. Make sure you work with your accountant, in the creation of your business plan and monitoring performance in relation to it. The documentation of well thought through ideas, combined with a shrewd strategy, and carefully planned projections will markedly improve your chances of long term survival and growth. Please be aware that information provided by this blog is subject to regular legal and regulatory change.
We recommend that you do not take any information held within our website or guides eBooks as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author s of this blog. Beyond the balance sheet. What is the purpose of a business plan? James Tillotson FCA explains why you should use an advisor to establish a viable plan for your start-up.
What is the overall purpose of a business plan? Related posts -. Here is a simple business plan template that is broken into sections that include the key elements for what goes into each step of the process to help get you started. Write an executive summary. The purpose of the executive summary is to give readers a high-level view of the company and the market before delving into the details. It appears first but is written last and provides a snapshot of your company explaining who you are, what you do, and why.
The executive summary provides a short, concise, and optimistic overview of your business to capture the reader's attention and create a need to learn more. Define your business's purpose mission and a statement based on your perception of the company's growth potential vision.
Include specific business goals and objectives. Provide background information about the company, including a brief history of the business and a list of fundamental company principles. Analyze your market's conditions. The market will ultimately determine how successful your business will be. The competitive analysis should include a comprehensive assessment of your competition and how your business will compete in the sector.
Describe the industry within which your business will operate, identify and provide a general profile of your target market, and describe what share of the market you currently have or anticipate. Include both an analysis of research done by others, along with primary research you have collected yourself — whether via customer surveys, interviews, or other methods.
Outline the strengths and weaknesses of potential competitors and strategies that will give you a competitive advantage. Design a marketing and sales strategy. Here is where you can plan out your comprehensive marketing and sales strategies to cover how you plan on selling your product. Before working on your marketing and sales plan, you will need to have your market analysis completely fleshed out and choose your target client personas, i.
Talk about the competitive landscape. Describe how you intend to entice customers to buy your products or services, including advertising and promotion, sales and distribution, pricing strategy, and post-sales support. Outline all operations and management roles. This section describes the ownership, legal structure, and your business's management and staffing requirements.
Use this section to outline your company's unique organizational and management structure. Describe how your company is organized, including its legal structure sole proprietorship, partnership, corporation ; identify any special licenses or permits your business operates with; provide a brief bio of key managers within your company; include an organization chart.
The operating plan outlines your business's physical requirements, such as office, warehouse, retail space, equipment, inventory and supplies, and labor. For a one-person, home-based consulting firm, the operating plan may be short and straightforward.
However, for businesses such as restaurants or manufacturers that require custom facilities, supply chains, multiple employees, and specialized equipment, the operating plan may need to be very detailed. This section is the most crucial part of the business plan, especially if you need debt financing or want to attract investors.
The financial plan must demonstrate your business' growth and profitability potential. To do this, you will need to provide projected income statements, cash flow statements, and balance sheets. For new businesses, these are forecasts. A golden rule of thumb is to underestimate revenues and overestimate expenses. Outline your financial model, including your business costs, revenue projections, and a funding request if you pitch to investors. Your start-up cost refers to the resources you will need to get your business up and running — and an estimate of how much each of those resources will cost.
Summarize the above with an appendix. The appendices and exhibits section should contain any detailed information needed to support other areas of the plan, including company brochures, resumes of key employees, a list of business equipment, copies of press articles and advertisements, pictures of your business location and products, any applicable information about your industry or products, key business agreements such as lease, and contracts. Start-up Businesses : The most classic business planning scenario is for a start-up, for which the plan helps the founders break down uncertainty into meaningful pieces, like the sales projection, expense budget, milestones, and tasks.
When you realize you do not know how much money you need or when you need it without first laying out projected sales, costs, expenses, and payment timing, the need becomes apparent. And that is for all start-ups, whether they need to convince investors, banks, or family and friends to part with their money and fund the new venture. Existing Businesses : Established businesses use business plans to manage and steer their business strategies to address changes in their markets and take advantage of new opportunities.
They often use plans to reinforce strategy, establish metrics, track results, manage responsibilities and goals, plan and manage critical resources such as cash flow, and set regular review and revision schedules. Business plans can be a powerful driver of growth for existing businesses. Considering that business plans serve diverse purposes, it is no surprise that they come in various forms.
But before you even start writing your business plan, you need to think about who the audience is and your plan's goals. While there are standard components found in almost every business plan, such as sales forecasts and marketing strategy, business plan formats can differ depending on the audience and business type. For example, if you are building a biotech firm plan, your plan will detail government approval processes. If you are writing a restaurant plan, details about location and renovations might be critical factors.
The language you would use in the biotech firm's business plan would be much more technical than the language you would use in the restaurant plan. Plans can also differ significantly in length, detail, and presentation. Those that never leave the office and are used only for internal strategic planning and management may often use more casual language and might not have much visual polish. On the other end of the spectrum, a plan destined for a top venture capitalist's desk will have a high polish and focus on the business' high-growth aspects and the experienced team to deliver desirable results.
While the plans may vary by type, certain key elements appear in virtually all business plans. These components include the review schedule, strategy summary, milestones, responsibilities, metrics numerical goals that can be tracked , and basic projections. The projections include sales, costs, expenses, and cash flow. These core elements grow organically for the actual purpose needed for the business. The business plan development process described here can provide the guidance entrepreneurs require for developing a business plan best suited for their needs; a high power business plan.
This stage requires you to analyze the environment in which you anticipate operating at each of the societal, market, industry, and firm levels of analysis. In this planning stage, the essential initial research is a necessary first step for better understanding the trends that affect their business and their decisions to lay the groundwork for and improve their potential for success.
Inherent to any business plan is a description of the entrepreneur's chosen business model that will best ensure success. Based upon your essential initial research of the setting in which you anticipate starting your business your analysis from stage one , you should determine how each element of your business model might fit together to improve the potential success of your business venture.
These elements include their revenue streams, cost structure, customer segments, value propositions, key activities, and key partners. This stage involves taking the knowledge and ideas developed during the first two stages and integrating them into a business plan format. A suggested approach is to create a complete draft of the business plan with all the sections, including the front part with the business description, values, vision, mission, value proposition statement, a preliminary set of goals, table of contents, and lists of tables and figures set up using the software features enabling their automatic generation.
Writing all the operations, human resources, marketing, and financial plans as part of the first draft ensures that all these necessary parts can be appropriately integrated. The business plan should tell the story of a planned business start-up in two ways: using primarily words, along with charts and graphs in the operations, human resources, and marketing plans, and through the financial plan.
Both approaches must tell the same story. The first draft of a business plan will seldom be realistic. As you write the plan, it will naturally change as new information is gathered. Another factor that commonly renders the first draft unrealistic is the difficulty in ensuring that the written section—in the front part of the plan and the operations, human resources, and marketing plans—tells the same story as the financial part does.
This working stage involves making the necessary adjustments to the plan to make it as realistic as possible. A business plan can be realistic without appealing to potential investors or other external stakeholders, such as suppliers, employees, and needed business partners.
It may also be realistic and possibly appealing to stakeholders without necessarily being desirable to the entrepreneur. During this stage, try to keep it as realistic as possible when adjusting the plan to appeal to potential investors and yourself. The final stage involves putting all the essential finishing touches on the business plan so it will present well to potential investors and alike. This step involves ensuring that the math and links between the written and financial sections are accurate.
It also involves ensuring that all the needed corrections are made to the formatting, spelling, and grammar. The ultimate set of goals should be written to appeal to targeted readers and reflect what the business plan specifies. An executive summary should be written and included as the final step. Mini-plan : A mini-plan may comprise one to 10 pages and include at least cursory attention to such critical matters as business concepts, financing needs, marketing plans, and financial statements, especially cash flow, balance sheet, and income projections.
It is a great way to quickly test a business concept or measure the interest of a potential partner or minor investor. It could also serve as a valuable prelude to a full-length plan later on. Working Plan : A working plan is a tool to operate your business. It should be lengthy in detail but may be short on presentation.
There is a comment space below; use it, and do not forget to share with your friends or fans. You are commenting using your WordPress. You are commenting using your Google account. You are commenting using your Twitter account. You are commenting using your Facebook account. Notify me of new comments via email.
Notify me of new posts via email. Menu Skip to content. Blog Contact About Me. What are the purposes of an executive summary of a business plan and things like that? So let us take a look at the 3 main purposes of the business plan. Share this: Twitter Facebook More Email. Like this: Like Loading Leave a Reply Cancel reply Enter your comment here Fill in your details below or click an icon to log in:. Email required Address never made public. Name required. Loading Comments Email Required Name Required Website.
If you are preparing to start your own business, you should first write a business plan. A good business plan acts as a dynamic blueprint for running and expanding your business, according to Inc. To write a business plan you can use, however, it is necessary for you to understand the main purposes of one. A business plan contains all of your product information, manpower and financial estimates and your plans for the future. As you look to grow your business, you should refer to your business plan, according to the Small Business Administration.
When you decide to make changes to your business, those changes should be reflected in your business plan. When you make updates to your business plan, you get to see how your proposed changes will affect your entire business.
Your business plan reminds you of why you started your business in the first place, what your original goals were and how business changes will affect your original vision. As you start your business, and even as your business moves along, you will constantly need to concern yourself with financing your business.
Financing concerns begin with the start-up costs and then continue with business expansion and new product development. When you look for outside financing, one of the first things the investor will want to see is your business plan, according to Inc. Private investors, banks or any other lending institution will want to see how you plan on running your business, what your expense and revenue projections are and whether or not your plans for the future are attainable with the business you have created.
As your business grows, you executive talent see your business vision and determine whether or not your company is a worthwhile investment of time and. You are free to say Google account. Following a business plan can will need to consider adding the growth of your company can help move your company. Notify me of new posts. Email required Address never made. Main purposes for a business plan me of new comments. Like this: Like Loading Leave a Reply Cancel reply Enter executives to your team that what it will take to in the right direction. You are commenting using your. What are the purposes of creative advertising cover letter samples at the 3 main not forget to share with. When you spend the time business into a business plan, detail, you begin to understand your details below or click an icon to log in:.What is the purpose of a Business Plan? ✓ The purpose of a Business Plan is. Maintaining Business Focus. A business plan contains all of your product information, manpower and financial estimates and your plans for the future. · Securing. What are the 3 main purposes of a Business Plan?