COMPONENTS OF A BUSINESS PLAN
A cover page contains the name of the business, its address, managers’ contacts, and the date the plan was issued. It guides potential investors to the firm. A table of content helps readers to turn to desired sections quickly. An executive summary gives a review of the entire plan. The body contains background facts of the company, choice of legal business form, reasons for the establishment, and how the goods for business are determined. An environmental and industry analysis shows trends and changes happening that may influence the future of the company and the nature of the operation. The product and services clause describes the competitive advantage of the product. A market research and evaluation component show evidence that there is a market for your product. A manufacturing and operations plan indicates the needs in terms of space, capital, labor requirements, and inventory control. A management team ensures the team should balance in terms of experience and technical skills. There is a timeline showing the timing of significant events planned in an organization. Critical risks and assumptions explain how to deal with potential changes in the economy. The benefit to the community and exits strategy shows how the business will help to improve the community around it and its succession plan, respectively. A financial plan demonstrates how all sections of the project come together to do a viable business. The appendix contains supplementary information that is not crucial but of potential interest to readers like management resumes.
IMPORTANCE OF A BUSINESS PLAN
A business plan helps prevent costly oversight by allowing you to critically look at the means, expectations, and goals of the business, thus proving feasibility. Bankers are very conservative with money and therefore require your business plan to see if the projections are realistic. A business plan provides direction which helps you concentrate on the overall needs of the business and not only the present issues.