Is the flexibility for a start-up enterprise to make changes a good thing? Those start-up companies that have a business plan aren’t as adaptable as those enterprises without a business plan and the cost of creating the business plan often outweighs the benefit gained from creating it. A business plan means that it has to be adhered to, especially if borrowed capital is involved for the purchase of assets. So why are business plans created by entrepreneurs who already know what they’re doing? In this case, the business plan can be considered as a repository for all knowledge of the business.
There is still a case for creating a business plan for a minority of businesses. Business school students still demand knowledge of how to create a business plan, in the absence of any real experience of managing a business. The creation of a business plan is an ideal tool to educate business school students in the preliminary principles of running of a business. Still, for some quickly expanding companies, some form of business plan can be an important management tool. It can be used for financing, partnering, strategy, standardisation, SWOT analysis and succession planning.
A typical business plan has nine sections from the Executive Summary to Appendices:
The Executive Summary is contained within the first two to three pages of the business plan and, yet, it is always written last. Not everybody will read the entire business plan but everybody reads the Executive Summary.
The Vision Statement is the declaration of the organization's objectives based on economic foresight that is intended to guide the internal decision-making.
The Market Analysis is one of the most important parts of the business plan. A good market analysis enables pitfalls to be avoided and customers to be attracted.
The Competitive Analysis establishes what makes the product or service unique and what attributes are highlighted to attract the target market.
The Business Strategy is a summary of how the enterprise will achieve its goals, meet the expectations of its customers, and sustain a competitive advantage in the marketplace.
The Products/Services Benefits are actual factors, like cost effectiveness, design, and performance. They can also be perceived factors, like image, popularity, and reputation that satisfies what a customer needs or wants.
The Marketing and Sales Segmentation involves dividing a broad target market into subsets of consumers, businesses, or countries that have common needs, interests, and priorities, and then designing and implementing strategies to target them.
The Operations Management oversees the design, production control and redesigning business operations in the production of goods or services.
At the back of the business plan are Appendices with financial tables, background information and program details.