Business Plan definition
A business plan is a document setting out the business idea and showing how it is to be financed, marketed and put into practice. It is likely to be a crucial part of an attempt to raise finance from outside sources such as a bank.
Benefits of Business plans.
+ If the plan is well received by investors, the may compete to offer attractive terms for obtaining capital.
+ Forces the entrepreneur to think carefully about every aspect of the start-up..(however could over think and cause panic! (-).
+ May encourage entrepreneur to employ experts and advisers if they realise they lack the skills needed for the business to reach its potential.
+ Many entrepreneurs have the whole plan in their head not on paper; if illness or accident strikes, plans allow others to keep things going.
PROBLEMS WITH BUSINESS PLANS
-- Business success is often about people not paper; an over focus on a perfect plan may mean too little time spent visiting suppliers or talking to shoppers.
-- Problems arise if planning is too rigid; needs to be flexible, so that a business is prepared for the amount of sales.
-- Plans based on high sales will induce lots of staff to meet demands.
-- MAKING A FORECAST DOESN'T MAKE IT HAPPEN! Entrepreneurs sometimes confuse plans with reality, this can come as a shock.
() Clarify objectives
() Provide a sense of DIRECTION and FOCUS.
() Help run and control business
() Monitor progress and success.
() Improve performance
() Improve MOTIVATION and COMMUNICATION
() Allocate responsibility
Contents of a simple business plan
WHERE the IDEA came from and WHY it's a good one.
KEY TARGETS: SALES, PROFIT, GROWTH (DIRECTION)
FINANCE REQUIRED- SOURCES of finance from founder and external sources, period of time.
MARKET OVERVIEW: Main segments, market size (value and quantity)
HOW THE BUSINESS WILL OPERATE-LOCATION, STAFF, DISTRIBUTION
CASH FLOW forecasts+Trading..
Sources of information and GUIDANCE.
.....Offer own business plan packages.
business link- gov. funded guidance on planning.
BT have websites dedicated to start-ups.
BUSINESS PLANS GIVE A COMPETITIVE ADVANTAGE
Why have business plans for start-ups...??
*Helps test FINANCIAL VIABILITY- Can it achieve the required level of profitability.
*Raise finance from external sources.
MARKETING.. (Market research)