What is a business plan?
The business plan is a written document prepared by the entrepreneur that describes all the relevant external and internal elements involved in starting a new venture. It is often an integration of functional plans such as marketing, finance, manufacturing, and human resources.
If we think of the business plan as a road map, we might better understand its significance.
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 plan for a new venture
A good business plan must be developed in order to exploit the defined opportunity this is a very time-consuming phase of the entrepreneurial process.
An entrepreneur usually has not prepared a business plan before and does not have the resources available to do a good job.
Who should write the plan?
The business plan should be prepared by the entrepreneur, however, he or she may consult with many other sources in its preparations. For the formed business, Business Managers can write the plan or the lead person can write the plan to lead or whatever they are planning to execute.
Scope and value of the business
The business plan may be read by employee investors, bankers, venture capitalists, suppliers, customer advisors, and consultants.
Each and every group reads the plan for different purposes, the entrepreneur must be prepared to address all their issues and concerns. In some ways, the business plan must try to satisfy the needs of everyone; whereas in the actual marketplace the entrepreneur’s product will be trying to meet the needs of selected groups of customers.
There are three perspectives that should be considered in preparing the plan.
First is the perspective of an entrepreneur, who understands better than anyone else the creativity and technology involved in the new venture. The entrepreneur must be able to clearly articulate what the venture is all about.
The second is the marketing perspective. Too often, an entrepreneur will consider only the product or technology and not whether someone would buy it. An entrepreneur should try to view his or her business through the eyes of their customer.
Third, the entrepreneur should try to view his or her business through the eyes of the investor. A financial projection is required.
The business plan is valuable to the entrepreneur, potential inventor, or even new personnel, who are trying to familiarize themselves with the venture, its goals, and objectives. The business plan is important to these people because
- Helps to determine the viability of the venture in a designated market.
- Provides guidance to the entrepreneur in the organization for planning activities.
- Serves as an important tool in helping to obtain financing.