A business enterprise, no matter how small, has better chances of success if it starts with an appropriate business plan. Some owners of small business, like those starting small projects from home, fail to think about formulating a business plan first before the actual launching of the project. Starting the operations of a business without the business plan to guide its development is a gross mistake one should avoid.
The process of making a business plan is, in fact, the best education for the business beginner. Therefore, the beginner is actually learning on their own how to go about creating the business that they have in mind. It is advantageous because the beginner can get the assistance of more knowledgeable people to ensure the correctness of his or her planning.
A business plan normally has the following components:
1. Executive Summary
This is a brief summary of the plan where you can get the overall idea of the business plan in a capsulated form; designed for readers who may not have much time to go over the entire document.
2. Description of the Business Organization
For a small business, this consists of one or two paragraphs, describing the type of organization. Those starting from the home normally start as single proprietorships, because the beginning is just a small store, perhaps selling a few different types of goods.
3. Product or Service Description
This part of the plan describes the product(s) or service the business owner plans to sell or the service he intends to provide to prospective customers or clients.
4. Market Analysis
The market analysis will be a vital portion of the plan. This is where some data must be gathered, even if informally, but must be gathered just the same. This information on the possible buyers/users (market) of the goods for sale or the service to be provided cannot just be imagined or produced from thin air. The information used in this analysis must be factual and if there are assumptions made as part of the analysis, they must be realistic enough. The market for any business is what makes the business a viable undertaking, so the plan should include a thorough and careful study of this aspect.
5. Strategy and Implementation
This outlines the main idea of how to carry out the business, and how to implement it in the most practical and economical way. The owner should subject the business idea to the many pros and cons possible to ferret out the best choice of the many possible courses of action.
6. Management
This portion of the plan is as important as the study of the market for the business envisioned. The business owner must identify the many tasks related to the operation of the business, and the corresponding people in the management team, as well as the owner, need to be responsible enough to attend to all of those tasks.
7. Financial Plan
This last portion of the business plan will determine whether the owner can go ahead with creating the business or not. This is the discussion in detail of where the capital needed for starting the business will come from, and how to ensure that the sales projected will reap a reasonable return for the capital invested.
The easier portion of this financial plan to understand, especially for the new owner, is the cash flow statement. For the non-accountant and for the new business owner, this simple presentation of the sourcing and the use of cash in the business will tell him the status and continued viability of his business operation. Many business owners ensure that their cash flow remains positive all the time because a business running out of cash will not last and it can be in serious trouble anytime. |
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