Management Notes

Reference Notes for Management

Key elements of a Business Plan – Components of a Business lan | Parts of a business plan

What is a Business Plan 

A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them.It is a written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement. A business plan is also regarded as a business roadmap that provides directions so a business can plan its future and helps it avoid bumps in the road.

Key elements of a Business Plan

Following are the key elements of the business plan.

  • Introduction Page

This is the title of cover page that contains brief summary of the business plan’s content which includes the information like name and address of the company ,name of the entrepreneur,telephone number,fax number,e-mail address and , a paragraph describing the company and the nature of business.

  • Executive Summary

An executive summary of your business plan provides the reader with a snapshot of your company profile and goals. It’s often the most neglected element of the business plan, but it may be the most important, because it tells investors why your business will be successful in very few words.

It should include a mission statement, a brief history of your business,market opportunities,target customers,operations,financial needs, technology,project management,profit and future plans. It also should explain why you are seeking financing and information about your banking and currency investors.

  • Environmental and Industry Analysis

Environmental analysis should be made to identify trends and changes occurring on a national and international level that may impact the new venture.It considers the following factors like Political,Legal,Socio-cultural, Economic and Technological factors.

  • Business Description Element

It provides complete overview of product,service and operation of new venture.Current status and future trend in the industry are presented.Goals and potential of business are described.The product is described.

  • Production plan

It describes how product will be manufactured.It covers various aspects like Location of new venture and its appropriateness,facilities required,technology needs for manufacturing,tax benefits,proximity to supplier,cost of transportation and accessibility,labor supply and labor cost.

  • Operational Element

It describes the flow of goods and services from production to the customer.It includes various factors like inventory or storage of products,Shipping,inventory control procedures and Customer support services.It is prepared by both manufacturing and service organisations.

  • Marketing Element

Market analysis forces the entrepreneur to become familiar with all aspects of the market so that the target market can be defined and the company can be positioned in order to garner its share of sales.It enables the entrepreneur to establish pricing, distribution and promotional strategies that will allow the company to become profitable within a competitive environment.

The marketing and sales element of the business plan should discuss your business’s marketing penetration strategy, a strategy for growing the business once market penetration has been achieved, the subsequent channels of distribution and a communications strategy suitable for reaching your customers.

  • Finance Element

It describes the financial viability of the venture which involves projected cash flow statement,income statement and balance sheet,break even analysis,key financial ratios,Cost control and budgeting plan.etc.The financial data will include both historical information.

  • Management Plan

It describes forms of business. It identifies key persons in the management team with their position, responsibilities and authority.The experience and role of entrepreneur is outlined. Forms of business is clarified.

  • Critical risk element

In this page effect of potential risks are assessed.They can be price cutting,unfavorable industry trend,greater innovation costs,new advances in technology,higher production costs and long lead times.Alternative courses of action are also presented.

  • Harvest Strategy Element

It provides insights into plan about orderly transition of the venture.It deals with management succession and investor exit strategies. Change management is also considered in case the ownership of venture changes.

  • Milestone schedule

It provides realistic time table for various key activities to be accomplished. Deadline are set for fimely implementation of the venture.Detail schedules are presented.

  • Appendix

It is provided at the end to give detailed back up information about the above elements.Letters from the customers, distributors or subcontractors are examples of information that should be included in the appendix.Price list from supplier and competitor may also be added.

This provides a blueprint for translating a business strategy into a plan for is.


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