Firstly, let's define a small business plan. A small business plan is a summary of how a business owner, manager, or entrepreneur intends to organize an entrepreneur endeavor and adequate activities for the business to succeed. It is a written explanation of its business model.
Business plans are used internationally by management and are also used to convince outsiders such as banks or venture capitalists to invest money into a small business.
Business plans often quickly become out of date.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.
Here's An Example Of A Business Plan
Most business plans 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 a format that is typical:
* Executive summary
– explains the basic business model
– gives rationale for the strategy
* Background
– gives short history of company (without 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
head scientists and researchers
* Marketing & Sales
– the macro environment
– the competitive environment
– the industry
– the customers priorities
– product strategy
– pricing strategy
– promotion strategy
– distribution strategy
* Production and Manufacturing / Operations
– 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
Other specialized sections such as product research and development, legal strategies, marketing research, or inter-company collaborations, are added to deal with unique features or characteristics of the business or its markets.
