| The Business Plan:
A Road Map to Success
By Nancy Arnold
The business plan is like a road map. The process
of writing a business plan helps the business owner make good
decisions and reach his or her goal or destination. The number
one reason businesses fail is lack of planning! Instead of making
mistakes on paper, business owners too often make them with real
money and real customers. That is why many, but not all, business
funding institutions and agencies require business plans and may
be reluctant to fund business start-ups that cannot provide a
well-developed plan.
Benefits of Planning
It requires that the business owner evaluate the entire business.
The business plan contains written information that can be useful
to employees, investors, creditors, and other interested parties.
The business world increasingly is becoming competitive. In
order to survive, a small business owner must find a well-defined
market niche.
Planning is a systematic way to identify and capitalize on new
opportunities.
Planning does not end with completion of a written plan—the
process is continuous.
The steps in the business planning process
are the same for all businesses, but the results differ for each
one. A manufacturing company specializing in high-quality custom
orders, a fast-food restaurant, a clothing retailer, and an organic
herb farm all have very different plans. Each business plan is
tailored to the individual business and business owner.
Parts of the Plan
Every business plan should include the following
information.
Executive Summary
This is the first and most important section of a business
plan. Its purpose is to convince the audience that this business
is worthwhile. This "opening argument" must capture
and hold the intended reader's attention and direct it to a
specific purpose.
Business Description
This section describes the business, its history, form
of ownership, percentages of ownership, the industry and industry
trends, and provides background information about the owners.
Marketing Plan
The marketing plan convinces the reader that an opportunity
exists and that the proposed enterprise can capitalize on it.
In this section, the business owner demonstrates a thorough
knowledge of market demands, trends, competition, and customers.
This section of the plan discusses the business's products and
services, the target market, the business's location, its competition,
and its advertising and promotion strategies.
Operations Plan
The operations plan explains how the work will be done,
how the business will be managed, and the business's location.
This section describes:
-
business inputs;
-
facilities;
-
operating costs;
-
licenses, permits, zoning, insurance;
-
capital equipment;
-
methods for producing the business's product
or service;
-
need for and types of employees; and
-
outside services used by the business.
Financial Plan
This section discusses the investment required, sources
of funds for the business, and financial statements including
need for and sources of cash, equipment list, income statement,
break-even analysis, cash flow projections, balance sheet, personal
financial statement, and other supporting documents. Developing
these financial statements is one of the most difficult tasks
facing a fledgling business owner, because in most cases there
is no history for reference, and these statements will be based
on projections.
Attachments
These might include resumes, a rental agreement or lease,
a business license, schematics, product sample, or other items
mentioned in the body of the business plan.
Nancy Arnold is Research
Director for Rural Employment and Economic Development at the
Rural Institute's Research and Training Center on Rural Rehabilitation
Services.
|
