Preparing a Business Plan ( Importance and Types of Business Plans )
What are the two (2) important reasons for writing a business plan.
1• Internal reason -exemplifies the entrepreneur's way of thinking systematically for every aspect related to its venture. This includes analyzing the business's present and future, focusing on the internal factors such as whom the people to employ or work with, where to get resources, the possible sources of funds, and the likes. 2• External reason exemplifies the qualities of the business that will appeal to its consumer. This will help an entrepreneur plan accordingly, answering the questions such as what kind of market the business will serve, the current demands of the people, who are the possible competitors, among others. Aside from preparing an entrepreneur for any possible drawbacks, writing a business plan can also help analyze the business and its overall performance from planning to development.
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Components of the organizational plan: Q: This will discuss the set-up for periodic financial statement analysis and the person-in-charge. This also includes the need for a legal lawyer just if there will be a need for anything that can or will go wrong.
Accounting and legal
Guidelines in Writing a Business Plan UNDER - V. PART II - Marketing plan Q: This will be the method a company will be using after a quarter evaluation.
Assessment of marketing effectiveness
Guidelines in Writing a Business Plan UNDER - VI. PART III - Financial documents Q: The break-even point is the equal matching of expenses to its sales and service volume. This section can be presented by total revenue offsetting exactly or equally the expenses or presenting the total production units in which the income and the cost match.
Break-even analysis
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Q: (its distinction to other companies and uniqueness to the industry);
Business model
Guidelines in Writing a Business Plan UNDER - V. PART II - Marketing plan Q: This will give details about the customer service activities and expected outcomes of achieving excellence through the lenses of the consumers.
Customer service
This is One of the important reasons for writing a business plan THAT exemplifies the qualities of the business that will appeal to its consumer. This will help an entrepreneur plan accordingly, answering the questions such as what kind of market the business will serve, the current demands of the people, who are the possible competitors, among others.
External reason
One of the Three (3) types of business plans THAT is the kind of business plan usually used for investor's opinion. They are usually composed of 25 to 35 pages explaining further details regarding the companies' operations and plans. This one is like their blueprint.
Full business plan
# 01 in Guidelines in Writing a Business Plan This will serve as your title page. This includes the name, address, and contact details of the company. This also includes the month and year it was established. The name of the one who prepared it and the number of copies prepared should also be mentioned.
I. Cover sheet
THESE ARE The following outlines the content of a business plan:
I. Cover sheet - This will serve as your title page. This includes the name, address, and contact details of the company. This also includes the month and year it was established. The name of the one who prepared it and the number of copies prepared should also be mentioned. II. Executive summary - This explains the purpose of the business, the management, and the strengths of the company. This section summarizes the objectives and the purpose of why a company wants to be successful. This contains the financing details, if needed, where it explains further why a company needs funding, how much money they need, and how they will pay back or be of benefits to the investors. An entrepreneur must accomplish this latter part upon completing the business plan as this part will present the components of a finished business plan. III. Table of contents - This includes the details of the page references or the outline of the topics in the business plan. IV. PART I - The organizational plan - This is the summary description of the business. This will explain the broad overview of the business - the origin, the date, and the purpose of the company's formation. • This section also elaborates the: o Mission of the company (explaining both short- and long-term goals); o Business model (its distinction to other companies and uniqueness to the industry); o Strategic relationships (related companies or parenting company); and o SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats - both internal and external) of the company. • Components of the organizational plan: o Products or services - This contains the description of the product the entrepreneur either manufacture or sell, depending on what business they are proposing. If providing service, this contains the description of the service and lists of future services the business is planning to provide. o Intellectual property - This section addresses the copyrights, trademarks, and patents with supporting documents of registration. o Location - This will showcase the desired, planned, or current location along with the costings, legal agreements, and utility forecasts. o Legal structure - This will describe the advantage of the legal structure composed of owners and corporate officers describing strengths. o Management - This includes the people who manage or will manage the business, their responsibilities and abilities, and even salaries. o Personnel - This will give details regarding the number of employees needed, the necessary qualifications, working hours and salaries. This will also include any possible project that will highlight the need for future employees. o Accounting and legal - This will discuss the set-up for periodic financial statement analysis and the person-in-charge. This also includes the need for a legal lawyer just if there will be a need for anything that can or will go wrong. o Insurance - This section will discuss the insurance a company will implement, its cost, and the people covered by it. o Security - This section will discuss the company's security regarding inventory control and theft of information - online or offline. V. PART II - Marketing plan - This section of the business plan will describe all the marketing strategies the company will use, including their market analysis. This will also explain the advertising and public relations campaigns, traditional programs, and the new technological strategies. • Overview and goals of your marketing strategy - This is the summary of the objectives of the marketing plan. This includes the general information of how the business plans to conduct its analysis and strategy. • Market analysis - This will explain the target market, competitors, market trends, and research regarding the product a company will either manufacture or produce or the services that they will provide. • Marketing strategy - This is the general description of sales and distribution methods, packaging, pricing, branding, and database marketing. This will also define the sales strategies, incentives or promotions, advertising strategies, public relations, and networking. • Customer service - This will give details about the customer service activities and expected outcomes of achieving excellence through the lenses of the consumers. • Implementation of marketing strategy - This will define the in-house responsibilities and out-sourced functions like how advertising, its network, public relations, and marketing firms will be conducted. • Assessment of marketing effectiveness - This will be the method a company will be using after a quarter evaluation. VI. PART III - Financial documents - This section of the business plan exemplifies the quantitative details of marketing plans. This will showcase the past if it is already existing, current for the present financial reports, and future finances projected for the company. • Summary of financial needs - This part is only needed if the company is seeking funding. This will highlight the reason for applying for financial needs and the amount the company is in need. • Loan fund dispersal statement - Likewise, with the summary of financial needs, this part is only needed if the company is seeking funding. This will need the details regarding the process of dispersal of the loan fund with supporting data. • Pro-forma cash flow statement (budget) - This part describes the business plan details regarding money, the cash inflow and outflow in each time frame, and how it is used for internal planning. • Three-year income projection - This is only applicable to companies that were already established. This serves to foresee pro forma cash flow for the next three (3) years depending on the 1st year's revenue and expenses, along with the possible economic and industry changes in the following year. • Projected balance sheet - This is the presentation of the foreseen assets, liabilities, and net worth of the company at the end of the next fiscal year. • Break-even analysis - The break-even point is the equal matching of expenses to its sales and service volume. This section can be presented by total revenue offsetting exactly or equally the expenses or presenting the total production units in which the income and the cost match. VII. PART IV- Supporting documents - This section presents the supporting documents as a backup for the main parts of the business plan. • Personal resumes - This part includes all the resumes of the people who are facilitating or will facilitate the venture. • Owner's financial statements - This part includes the company owner's assets and liabilities. If the entrepreneur is just starting, this must be included under the financial section (Part III). VIII. Credit reports - This part includes all the related credits from any suppliers, wholesalers, credit bureaus, and banks. IX. Copies of leases, mortgages, purchase agreements, etc. - This part includes all the agreements related to the company leasing or mortgage. X. Letters of References - This part includes the recommendations from business or personal references for being reputable and reliable. XI. Contracts - This part includes all the business contracts duly signed and completed and even those currently processed. XII. Other legal documents - This includes all legal papers, including legal structure, proprietary rights, insurance papers, partnership agreements, and even those shipping-related papers. XIII. Miscellaneous documents - This includes those documents that are not exemplified in the main body. Examples are those location plans and demographics, competition, and cost analysis. This also includes the advertising rate sheet. An entrepreneur must analyze the importance of each part and its components. Presenting a business plan is not just presenting a paper. It is presenting an emerging enterprise that should not only reflect success but a clear platform too.
# 02 in Guidelines in Writing a Business Plan This explains the purpose of the business, the management, and the strengths of the company. This section summarizes the objectives and the purpose of why a company wants to be successful. This contains the financing details, if needed, where it explains further why a company needs funding, how much money they need, and how they will pay back or be of benefits to the investors. An entrepreneur must accomplish this latter part upon completing the business plan as this part will present the components of a finished business plan.
II. Executive summary
# 03 in Guidelines in Writing a Business Plan This includes the details of the page references or the outline of the topics in the business plan.
III. Table of contents
# 04 in Guidelines in Writing a Business Plan This is the summary description of the business. This will explain the broad overview of the business - the origin, the date, and the purpose of the company's formation.
IV. PART I - The organizational plan
# 09 in Guidelines in Writing a Business Plan This part includes all the agreements related to the company leasing or mortgage.
IX. Copies of leases, mortgages, purchase agreements, etc.
Guidelines in Writing a Business Plan UNDER - V. PART II - Marketing plan Q: This will define the in-house responsibilities and out-sourced functions like how advertising, its network, public relations, and marketing firms will be conducted.
Implementation of marketing strategy
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Components of the organizational plan: Q: This section will discuss the insurance a company will implement, its cost, and the people covered by it.
Insurance
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Components of the organizational plan: Q: This section addresses the copyrights, trademarks, and patents with supporting documents of registration.
Intellectual property
This is One of the important reasons for writing a business plan THAT exemplifies the entrepreneur's way of thinking systematically for every aspect related to its venture. This includes analyzing the business's present and future, focusing on the internal factors such as whom the people to employ or work with, where to get resources, the possible sources of funds, and the likes.
Internal reason
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Components of the organizational plan: Q: This will describe the advantage of the legal structure composed of owners and corporate officers describing strengths.Guidelines in Writing a Business Plan
Legal structure
Guidelines in Writing a Business Plan UNDER - VI. PART III - Financial documents Q: Likewise, with the summary of financial needs, this part is only needed if the company is seeking funding. This will need the details regarding the process of dispersal of the loan fund with supporting data.
Loan fund dispersal statement
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Components of the organizational plan: Q: This will showcase the desired, planned, or current location along with the costings, legal agreements, and utility forecasts.
Location
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Components of the organizational plan: Q: This includes the people who manage or will manage the business, their responsibilities and abilities, and even salaries.
Management -
Guidelines in Writing a Business Plan UNDER - V. PART II - Marketing plan Q: This will explain the target market, competitors, market trends, and research regarding the product a company will either manufacture or produce or the services that they will provide.
Market analysis
Guidelines in Writing a Business Plan UNDER - V. PART II - Marketing plan Q: This is the general description of sales and distribution methods, packaging, pricing, branding, and database marketing. This will also define the sales strategies, incentives or promotions, advertising strategies, public relations, and networking.
Marketing strategy
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Q: (explaining both short- and long-term goals);
Mission of the company
One of the Three (3) types of business plans THAT is the kind of business plan prepared for existing businesses for internal purposes. This kind handles 40 to 100 pages that include many details regarding the venture and serves as a guide to operational managers.
Operational business plan
Guidelines in Writing a Business Plan UNDER - V. PART II - Marketing plan Q: This is the summary of the objectives of the marketing plan. This includes the general information of how the business plans to conduct its analysis and strategy.
Overview and goals of your marketing strategy
Guidelines in Writing a Business Plan UNDER - VII. PART IV- Supporting documents Q: This part includes the company owner's assets and liabilities. If the entrepreneur is just starting, this must be included under the financial section (Part III).
Owner's financial statements
Guidelines in Writing a Business Plan UNDER - VII. PART IV- Supporting documents Q: This part includes all the resumes of the people who are facilitating or will facilitate the venture.
Personal resumes
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Components of the organizational plan: Q: This will give details regarding the number of employees needed, the necessary qualifications, working hours and salaries. This will also include any possible project that will highlight the need for future employees.
Personnel
Guidelines in Writing a Business Plan UNDER - VI. PART III - Financial documents Q: This part describes the business plan details regarding money, the cash inflow and outflow in each time frame, and how it is used for internal planning.
Pro-forma cash flow statement (budget)
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Components of the organizational plan: Q: This contains the description of the product the entrepreneur either manufacture or sell, depending on what business they are proposing. If providing service, this contains the description of the service and lists of future services the business is planning to provide.
Products or services -
Guidelines in Writing a Business Plan UNDER - VI. PART III - Financial documents Q: This is the presentation of the foreseen assets, liabilities, and net worth of the company at the end of the next fiscal year.
Projected balance sheet
Anatomy of a Business Plan
READ: A well-researched business plan to be more appealing needs to follow a series of structures. It must be well-presented through an outline basis to prevent overloaded and unnecessary details.
Guidelines in Writing a Business Plan
READ: Analyzing the importance, types, and anatomy of a business plan, an entrepreneur must write his business plan following a set of outlines to present the business accordingly.
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Q: (Strengths, Weaknesses, Opportunities, and Threats - both internal and external) of the company.
SWOT analysis
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Components of the organizational plan: Q: This section will discuss the company's security regarding inventory control and theft of information - online or offline.
Security
Guidelines in Writing a Business Plan UNDER - IV. PART I - The organizational plan Q: (related companies or parenting company); and
Strategic relationships
One of the Three (3) types of business plans THAT presents only 10 to 15 pages, usually used by first-timers or pioneers. On the side of those first-timers, this works if they are not ready yet to go for a full business plan presentation as they are just starting and adjusting. For pioneers, they are using this if they are preparing for a new business and want to spend minimal time in writing a business plan.
Summary business plan
Guidelines in Writing a Business Plan UNDER - VI. PART III - Financial documents Q: This part is only needed if the company is seeking funding. This will highlight the reason for applying for financial needs and the amount the company is in need.
Summary of financial needs
Guidelines in Writing a Business Plan UNDER - VI. PART III - Financial documents Q: This is only applicable to companies that were already established. This serves to foresee pro forma cash flow for the next three (3) years depending on the 1st year's revenue and expenses, along with the possible economic and industry changes in the following year.
Three-year income projection
# 05 in Guidelines in Writing a Business Plan This section of the business plan will describe all the marketing strategies the company will use, including their market analysis. This will also explain the advertising and public relations campaigns, traditional programs, and the new technological strategies.
V. PART II - Marketing plan
# 06 in Guidelines in Writing a Business Plan This section of the business plan exemplifies the quantitative details of marketing plans. This will showcase the past if it is already existing, current for the present financial reports, and future finances projected for the company.
VI. PART III - Financial documents
# 07 in Guidelines in Writing a Business Plan This section presents the supporting documents as a backup for the main parts of the business plan.
VII. PART IV- Supporting documents
# 08 in Guidelines in Writing a Business Plan This part includes all the related credits from any suppliers, wholesalers, credit bureaus, and banks.
VIII. Credit reports
# 10 in Guidelines in Writing a Business Plan This part includes the recommendations from business or personal references for being reputable and reliable.
X. Letters of References
# 11 in Guidelines in Writing a Business Plan This part includes all the business contracts duly signed and completed and even those currently processed.
XI. Contracts
# 12 in Guidelines in Writing a Business Plan This includes all legal papers, including legal structure, proprietary rights, insurance papers, partnership agreements, and even those shipping-related papers.
XII. Other legal documents
# 13 in Guidelines in Writing a Business Plan This includes those documents that are not exemplified in the main body. Examples are those location plans and demographics, competition, and cost analysis. This also includes the advertising rate sheet.
XIII. Miscellaneous documents
Importance and Types of Business Plans
read: Entrepreneurship and its every essential factor, as thoroughly discussed, will lead to the preparation of a business plan. After understanding the need to undergo feasibility analysis and how it should be conducted, an entrepreneur will now create a brief business plan. Analyzing its importance and types is important to write one. It will reflect how an entrepreneur visualizes his goals and the way they should be accomplished.
Four (4) important principles of a business plan
• It must be realistic - A business plan must be feasible in the sense that everything that will be written will be based on the availability of the resources needed to push through with the business. May it be human, financial, or physical resources, what is important is that upon writing a business plan, these factors are available and existing to support the start and run of the business. • It must be based on felt needs - As entrepreneurship is defined to exist to produce products or services of value and enough to support the market's need. It is important for a business plan that its objective or goals were anchored in producing something that will help people and the community they belong to. • It must be flexible - A business plan must adapt to any possible changes responding to the consumers changing preferences. It must withstand the adjustments of the policies and economic conditions that can be changed in no time. • It must start with simple projects - In the Philippines, resources are not always available. An entrepreneur needs to have a business plan to reach few markets at first, operated by simple management and existing technologies. Requiring few resources like funds or money, materials, and equipment to be used is better than trying to play it big time and lose it along the way.
Other importance of a business plan that an entrepreneur should consider
• More companies stay in business - Since there is a direction to follow, businesses with a business plan have coordinated ways and organizations that promote beneficial actions that lead to more market and profit gains, making them see a great future, so they stay in business. • An entrepreneur is more certain of what to do - This will help to analyze one's business. This will let an entrepreneur determine why customers do not go after the product or service and the things competitors offer to make them better. Knowing all these factors can help an entrepreneur what to do when things go wrong. • An entrepreneur can provide resources better - Since business planning is knowing the operations of the venture to be put up, it can determine if the existing resources are enough. This will also help an entrepreneur provide enough resources by finding skilled-people beneficial to work with. • An entrepreneur can understand and manage his finances well - A business plan includes even the financial capability of a business to keep running in a span of a year or two. This is a relevant factor of a business plan as this will present how a business must forecast its sales and expenses or costs. • Everyone is aware of the plan - Everyone related to the venture needs to know about the business plan; thus, the people are drawn together in the same direction and become united. This is not only promoting teamwork but also setting limitations for people to be aware of the things to be done toward attaining a goal.
Three (3) types of business plans
• Summary business plan - This is the kind of business plan that presents only 10 to 15 pages, usually used by first-timers or pioneers. On the side of those first-timers, this works if they are not ready yet to go for a full business plan presentation as they are just starting and adjusting. For pioneers, they are using this if they are preparing for a new business and want to spend minimal time in writing a business plan. • Full business plan - This is the kind of business plan usually used for investor's opinion. They are usually composed of 25 to 35 pages explaining further details regarding the companies' operations and plans. This one is like their blueprint. • Operational business plan - This is the kind of business plan prepared for existing businesses for internal purposes. This kind handles 40 to 100 pages that include many details regarding the venture and serves as a guide to operational managers.