Advantages of writing a business plan

Writing the Franchise business Plan - buying

advantages of writing a business plan

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(Michael hays, costas Markides) Cost Allocation Model edit If variable costs play an important role in the business plan, it may be helpful to include a cost allocation model. This is particularly true if one has a unique business model that creates competitive advantage by transforming traditionally fixed costs into variable costs citation needed. Fixed cost Variable costs Financial Plan edit for more information, see financial plan. Current Financing edit key investors or owners Investment company (private equity) corporate investors angels, friends, and family existing loans and liabilities terms, obligations Funding needs edit funding Plan edit potential sources of new funding Financial History edit financial Forecasts edit sometimes called pro formas balance. A six month loan doesn't need seven year forecasts for investments point at which returns stabilize ( terminal value ) determines length of forecast annual, quarterly, and monthly versions should be provided graphs of key values often helpful: gross revenue, ebitda, npv, etc. Financial portions of the marketing, asset development, and operations are often placed in this section rather than in the section discussing th plan.

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Against this background, the intellectual property plan will set out: an intellectual property inventory a portfolio development plan The intellectual property inventory will list the intellectual property that will support business growth. This could include trade marks, domain names, confidential customer lists, trade secrets and know-how, copyright items, designs, patents or plant breeders rights. The portfolio development plan will explain how the intellectual property will be protected, developed and used to wallpaper create value for the business. Acquisition Plan edit some business plans gain competitive advantage by buying companies up and down the value chain. Some gain competitive advantage by buying up companies and consolidating them. Sometimes a business plan will seek to earn a superior return by adding superior management talent to an existing weak company. For more information see mergers and Acquisitions. When acquisitions form a major part of the business strategy, the acquisition plan needs to be included in the business plan. Acquisition strategy proposed acquisition targets effect on market structure (if consolidation plan is being proposed) Organizational learning Plan edit The organizational learning plan discusses what lessons will be learned from the marketing, operational, and finance plans and how those lessons will be consolidated to gain. Market sensing - organization's method for collecting information about customers (George day) Strategic Staircase - the accumulation of future competencies by building on existing competencies.

For each significant substitute product one must explain: name, features, why substitute, why proposed product better switching costs and why new product justifies switching expected adoption dynamics expected role once market begins to develop (see above for existing products) Pricing edit chosen price points proposed. As soon as the patent of the same expires, others will start to manufacture the product abc. Companies will now attempt to gain an upperhand either by associating more benefits to it, or else will outsource its manufacture to some organization which has cost cutting benefits. The company writers xyz, if it has invested on r d, enough, will now start to produce another product and kill off the earlier product, abc. Asset development Plan edit Intellectual Property Plan edit An intellectual property plan should specify key intellectual property assets and deliverables. It will be both an inventory of existing intellectual property and a roadmap for the development of the business intellectual property portfolio. The most effective intellectual property plans usually link the intellectual property to the way in which the business is going to create value.

advantages of writing a business plan

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To define marketing goals. To define a set of concrete steps for reaching those goals. To describe current progress towards those goals, if any. The rationale behind revenue projections is developed by describing the market associated with each product covered by the business plan. In addition the business's current and bill likely future competitive position must be discussed. Specific marketing goals and the steps involved in achieving them are covered by describing plans for pricing, promotion, demand management, distribution, and brand development. For more information, see marketing Plan. Product Portfolio edit core product lines relevant to venture or project For each relevant product line, market size and Structure edit allied markets (substitute products) major players: customers, vendors, regulatory agencies, etc balance of power among vendors, customers, regulatory agencies, other Competitive analysis: Existing Markets. Patents, exclusive contracts richness of alliances novel and hard to copy business process/culture time line for growth in market share competitive analysis: New Markets edit If the product is a new product with no existing market, one must identify all substitute products.

For instance, both start-ups and internal projects need staff and facilities. However the staffing and facilities needs are considered details in a plan for start-up financing. In a plan for internal projects they are key elements and, in fact, may be the only resources needed. Organizational Background edit In a written plan information may appear in a separate section, an appendix, or may be omitted altogether depending on the nature of the plan. If the plan is directed at people outside of the company, a brief synopsis may appear in the executive summary. This will be supplemented with a more detailed discussion elsewhere in the plan. Mission Statement edit current Status edit number of employees annual sales figures key product lines location of facilities current stage of development (start-ups) corporate structure (options are: names of the majority investor, if any history edit founding date major successes strategically valuable learning experiences Management.

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advantages of writing a business plan

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Some of these content areas may be more or less important depending on the kind of business plan. Once a business plan has been developed, the key decision making points are usually summarized in an executive summary. Executive summary edit, the executive summary summarizes the key points of the business plan. It should define the decision to be made and the reasons for approval. The specific content will be highly dependent on the core purpose and target audience. To get a sense of the difference the purpose and target audience can make, here are three different sets of key points for an executive summary - one for a loan request, one for a start-up seeking venture finance, and one for an internal plan. Items unique to a particular kind of plan are highlighted in bold: A loan request executive summary might movement contain the following information citation needed : company information: name of company, years in business, legal structure, minority and majority owners brief description of project amount and.

This likely will include financial track record the future revenue stream any contracts in place that might guarantee the revenue stream is more than just a forecast. For a new venture, the executive summary might contain citation needed : company information: name of company, proposed legal structure, current legal structure, minority and majority investors. Amount of investment requested expected terminal value description of market opportunity objective reasons why the market opportunity can be exploited by this particular team For an internal project plan, the executive summary might look like this citation needed : company information: not applicable description. For example, some of the reasons why a loan is likely to be repaid might equally as well be used as justification for the kind of extraordinary return expected by venture capitalists. In some cases the business plan as a whole contains similar information, but for one type of plan it is mere detail and for another it is a key decision making factor.

An internal operational plan - a detailed plan describing planning details that are needed by management but may not be of interest to external stakeholders. Such plans have a somewhat higher degree of candor and informality than the version targeted at external stakeholders. Cost and revenue estimates are central to any business plan for deciding the viability of the planned venture. But costs are often underestimated and revenues overestimated resulting in later cost overruns, revenue shortfalls, and possibly non-viability. During the dot-com bubble this was a problem for many technology start-ups. However, the problem is not limited to technology or the private sector; public works projects also routinely suffer from cost overruns and/or revenue shortfalls.

The main causes of cost overruns and revenue shortfalls are optimism bias and strategic misrepresentation. This article explains what goes into a business plan and why. It is not specific to any particular kind of business plan. Nor does it presume any specific layout. Please do not read the section headings as titles of business plan sections. For information on the various presentation formats of a business plan see the main article business plan. Though business plans have many different presentation formats, business plans typically cover five major content areas: background information a marketing plan an operational plan a financial plan a discussion of the decision making criteria that should be used to approve the plan.

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Preparing a business plan draws on a wide range of resume knowledge from many different business disciplines: finance, human resource management, intellectual property management, supply chain management, operations management, and marketing, among others. It can be helpful to view the business plan as a collection of sub-plans, one for each of the main business disciplines. The format of a business plan depends on its presentation context. It is not uncommon for businesses, especially start-ups to have three dillard or four formats for the same business plan: an "elevator pitch" - a three minute summary of the business plan's executive summary. This is often used as a teaser to awaken the interest of potential funders, customers, or strategic partners. An oral presentation - a hopefully entertaining slide show and oral narrative that is meant to trigger discussion and interest potential investors in reading the written presentation. The content of the presentation is usually limited to the executive summary and a few key graphs showing financial trends and key decision making benchmarks. If a new product is being proposed and time permits a demonstration of the product may also be included. A written presentation for external stakeholders - a detailed, well written, and pleasingly formatted plan targeted at external stakeholders.

advantages of writing a business plan

There is no fixed content for a business plan. Rather the content and format of the business plan is determined by the goals and audience. A business plan should contain whatever information is needed to decide whether or not to pursue a goal. For example, a business plan for a non-profit might discuss the fit between the business plan and the organizations mission. Banks are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organizations ability to repay the loan. Venture capitalists are primarily concerned about initial investment, ssis feasibility, and exit valuation. A business plan for a project requiring equity financing will need to explain why current resources, upcoming growth opportunities, and sustainable competitive advantage will lead to a high exit valuation.

goals required to reach the external goals. They may cover the development of a new product, a new service, a new it system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An internal business plan will often be developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans. Operational plans describe the goals of an internal organization, working group or department. Project plans, sometimes known as project frameworks, describe the goals of a particular project. They may also address the project's place within the organization's larger strategic goals. Business plans are decision making tools.

Business analysis plans may also target changes in perception and branding by the customer, client, tax-payer, or larger community. A business plan that has changes in perception and branding as its primary goals is called a marketing plan. Business plans may also be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. In the case of for-profit entities, external stakeholders would include investors and customers. External stake-holders of non-profits include donors and the clients of the non-profit's services.

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This book will guide house you through the process of writing a business plan. Having a business plan and running your business according to that plan can be fundamental to a business's success. It is also important to have enough capital so you can run your business at a loss until it can turn profitable without going under. Contents, introduction edit, a business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. The business goals being attempted may be for-profit or non-profit. For-profit business plans typically focus on financial goals. Non-profit and government agency business plans tend to focus on service goals.

advantages of writing a business plan
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How to write a business Plan. We previously wrote about the importance of writing an eye catching executive summary.

4 Comment

  1. Before we detail how to write a business plan, we should figure out what a business plan. Your competition: Who are your direct/indirect competitors? Dont be shy — tell them you are better and why.

  2. Address changes in the market. To take advantage of new opportunities. Visit ou quick free forms page to download our free business plan template. How to Write a business Plan What you should Know.

  3. There are many reasons why businesses, despite their apparent potential for success, fail. Chief among these is lack of a viable business plan. Advantages of a well Prepared Business Plan. Manage and steer the business.

  4. A company's business plan is one of its most important documents. Different labour laws affecting the demand and supply of labour. Pressure from trade unions, politicians etc. Advantages of Human Resource Planning.

  5. Writing The business Plan: Section. What are the benefits of writing a business plan? You and your partners bring to the business. Identify the advantages you and your business have over.

  6. Advantages of writing a business plan for your small business. Why is creating a business plan an important step for an entrepreneur? Actually, there is no business law or decree anywhere that requires a new or an existing business to write a business plan. Learn how to find out about your competition and develop a competitive advantage when writing the competitor Analysis section of the business plan.

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