Business plan
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A business plan is a summary of how a business owner, manager, or entrepreneur intends to organize an entrepreneurial endeavor and implement activities necessary and sufficient for the venture to succeed. It is a written explanation of the company's business model.
Business plans are used internally for management and planning and are also used to convince outsiders such as banks or venture capitalists to invest money into a venture.
Business plans are noted for often quickly becoming out of date. One common belief within business circles is that the actual plan may have little value, but what is more important is the process of planning, through which the manager gains a greater understanding of the business and of the options available.
Example of the Content of a business plan
A business plan can be seen as a collection of sub-plans including a marketing plan, financial plan, production plan, and human resource plan.The business plan has many forms. There is however a format that is typical:
- Executive summary
- * explains the basic business model
- * gives rationale for the strategy
- Background
- * gives short history of company (unless it is a new company)
- * provides background details such as:
- ** age of company
- ** number of employees
- ** annual sales figures
- ** location of facilities
- ** form of ownership including
- ***sole proprietor
- ***partnership
- ***entrepreneurial startup
- ***private corporate startup
- ***publicly traded corporation
- ***limited liability company
- ***public utility
- ***non-profit organization
- * background of key personnel including
- ** owners
- ** senior managers
- ** managing partners
- ** head scientists and researchers
- Marketing
- * the macroenvironment
- * the competitive environment
- * the industry
- * the customer priorities
- * product strategy
- * pricing strategy
- * promotion strategy
- * distribution strategy
- Production and manufacturing
- * describe all processes
- * production facility requirements - size, layout, capacity, location
- * inventory requirements - raw materials inventory, finished goods inventory, warehouse space requirements
- * equipment requirements
- * supply chain requirements
- * fixed cost allocation
- Finance
- * source of funds
- * existing loans and liabilities
- * projected sales and costs
- * break even analysis
- * expected return
- * monthly pro-forma cash flow statement
- Human resources
- * assign responsibilities
- * training required
- * skills required
- * union issues
- * compensation
- * skills availability
- * new hiring
See also
- Marketing plan
- Plan, Project, Project management
- strategic management, strategic planning
- Underpants Gnomes (Satire about poor business plans)
External links
- [United States Small Business Administration] - How to Write a Business Plan
- [How do I write a business plan?] - Australian Government guide to writing a Business Plan
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