Introduction
A business plan is the blueprint of the tactics and flow of activities prepared before starting a business venture. The study will present the components of a business plan and the importance of its preparation.
Preparing a Business Plan
A business plan is a blueprint for the upcoming business venture. A business plan is a roadmap, a program of actions for the near future, describing the stages of business development and everything that is needed. This document discloses the prospects for developing an enterprise or project, reflecting the main stages and all significant risks (Rose, 2021). Information about the company- initiator of the project will be included in the document. Description of manufactured products, goods sold, and services rendered. Analysis of the prospect’s sales markets. Additionally, this document may include appendices that detail the calculations and confirm the data. For example, various charts, detailed income and expense reports, cash flow, photographs of objects, and marketing research results are brought into applications.
Before writing down the business venture’s business plan, some decisions will be made. The first step is to choose the taxation system, the composition, and the interest rates of taxes paid. Then, compile a list of investment costs, indicating their size and implementation periods. For example, investment costs include the construction purchase of equipment and machinery (Kuo 2021). Then decide on a list of other costs, such as office rent and utility costs. Collect data on the planned sources of financing, as well as the volume, cost, and period of return of the funds raised.
A summary is needed to convey the most important information about the project briefly. The summary will be readable in a few minutes and already roughly understand the business’s essence and prospects, financing sources, the required investment amount, and the launch time frame (Conrad et al., 2019). Next, the company that organizes the project needs to be described in detail. This description includes information about the industry, company assets, management system, and several employees. In the next section, the document will talk about the products and services that the company offers or will offer (Conrad et al., 2019). Additionally, the production plan may include information about the number of workers needed and their qualifications as well as a comprehensive calculation of the cost of production that includes both fixed and variable costs.
In the section with the organizational plan, the timing of the project, management structure, composition, and leadership qualifications are prescribed. The next section is the financial plan. It contains financial calculations, revenue forecasts, and costs of sales. Here it is necessary to bring: Information about funding needs; and estimated costs for the project implementation. An excellent component of the business is preparing the so-called financial plan (Leavy, 2019). It will help to determine and analyze all items of foreseen and unforeseen expenses and incomes. It determines the periods when additional project financing or the possibility of using a loan is needed. A financial plan will help determine the periods when the full financial risk for the enterprise may occur and help predict when it will be necessary to use a loan (McKeever, 2018) urgently. If such costs arise unexpectedly, they can negatively impact the operation of the business as a whole. They must be prevented or minimize losses. This can be done through the use of additional finance obtained from investors.
The financial section will include information about the sources and conditions for attracting and returning the money. The profit and loss statement’s predictive calculation will consider cash flow. The project’s efficiency will be evaluated in the following step. This section will include the following: Payback time, profitability, and net income around the point where the business reaches break-even (Wang, 2020). The company’s guarantees and risks are an important section. In this section, details are provided regarding the company’s guarantee of the financing’s return (Leavy, 2019). Additionally, it is important to provide a thorough explanation of the risks and situations of force majeure that have the potential to hinder the project’s execution. Regardless of the remuneration system used, whether piecework or salary, additional labor incentives will improve the emotional background of employees (Richards, 2019). Furthermore, Applications is the final section, where they put information that isn’t in the other sections.
SWOT analysis helps to understand what factors of the external and internal environment affect the business venture and what to do about it. The essence of the analysis is that all the factors that can affect the company are evaluated and divided into four groups: S, W, O, and T. SWOT analysis is universal, flexible, and simple (Lee, 2019). SWOT is an abbreviation of S, strengths, due to which the company opposes competitors. W represents weaknesses, which include the shortcomings that prevent increasing production volumes and market share. O stands for opportunities, which include chances that the business venture can improve its position in the market. Lastly, T is a representation of threats, which entail the menaces a company is at risk of facing (Peek, 2019). Nevertheless, there are disadvantages – the subjectivity of assessments and the lack of numerical indicators.
The business plan will include a description of the idea and marketing, organizational, and financial sections. In applications, it is worth placing auxiliary visual material: graphs, tables, diagrams, and photographs of objects. Visual elements will grab the attention of the person reading this and help him quickly understand the essence of the project. All other requirements depend on document formatting standards. The plan will include a customer section: nowadays, it is possible to stratify clientele differently. Age, social class, and profession are some of the standard classification requirements. However, it is possible to observe data such as purchase profiles, frequent places, or social network engagement to identify the customer. The communication section is where communication comes in: from the first contact with the company through a social network to the logistics of delivering the final product. The relations section will reflect and define how the interaction with customers will be, looking at the channels he has defined (Lee, 2019). The activity section intends to clearly define the main motto of the business, which will allow the defined Value to be delivered.
Considering the Value that will be delivered, the Customers, and the entire structure, it is necessary to understand how the offer of the service or product will generate a return for the business. It seems obvious to think about this when someone sells a simple product, like a cake, that is delivered in exchange for a certain amount of money (Pusparajan et al., 2020). Things can, however, be much more complex: Startup services often need attention in this regard to be effectively profitable. For fuel and energy resources, it is necessary to consider the costs of electricity for office buildings and other daily operations (McKeever, 2018). It is important to understand depreciation charges so these expenses are independent of cash flow. However, correctly calculated depreciation affects the cost of finished products and participates in calculating project performance indicators, such as net discounted flow and project payback periods. It is important to calculate the cost of fixed assets correctly.
Conclusion
The study presented a description of making a business plan for a new venture. The components of the business plan were a summary, activity description, market analysis, customer description, and financial analysis. Building and growing a successful business is almost always a well-thought-out process, and writing a business plan is one of the most important steps. Such a document allows someone to understand all the intricacies of the future business even before the start, avoid possible mistakes, and assess growth prospects.
References
Conrad, M., Chan, V. and Miller, L. (2019) ‘Writing business plans for a life science startup or clinical program’, Academic Entrepreneurship for Medical and Health Scientists, 1(2), p.2.
Kuo, T.N. (2021) ‘Business model of competitive advantage’, Journal of Advanced Management Science Vol, 9(1).
Leavy, B. (2019) ‘Alibaba strategist Ming Zeng: Smart business in the era of business ecosystems’, Strategy & Leadership, 9(4), 23-42.
Lee, J.S. (2019) ‘Writing and presenting your business plan’, Being a Biomedical Entrepreneur: Growth of the Biomedical Industry. Los Angeles: SAGE Publishing.
McKeever, M. P. (2018) How to write a business plan. Nolo. SAGE Publishing.
Peek, S. (2019) The dos and don’ts of writing a great business plan. Manchester University Press.
Pusparajan, A., Das, L. A., Kee, D. M. H., Amirah, N., Alrashidi, A., Quttainah, M. A., and Pandey, R. (2020) ‘The rise and fall Ali Baba Company has encountered throughout their success’, Asia Pacific Journal of Management and Education (APJME), 3(2), 11-21.
Richards, D. (2019) ‘Writing a business plan–financial projections’, The Balance Small Business, Entrepreneurship, updated, 13(1).
Rose, M.E. (2021) Writing a business plan for a small business. London: Manchester University Press.
Wang, T. (2020) The impact of organizational culture on the success of the company: The case of Alibaba company. London: Manchester University Press.