Business Plans

Although business plans can be of use throughout the life of commercial venture, a significant portion of their value lies towards the start up phase of an operation.

The first glimpses of the feasibility of a project are usually gained from the initial business plan, where the focus is on the how and eventually why a person should engage in this activity and in this particular way.

Many external investors to a business start-up might expect to see a plan drawn up which details both the financial and physical aspects of the proposal.

Elements of a Business Plan

The key elements of many business plans provide clarification of the original idea and might contain some of the following:

Specific Objectives

Initial ideas on starting a business are often vague and non specific. “I want to work for myself and sell widgets”, is not untypical.

Drawing up a business plan requires that the “how” is added to the desire to sell widgets and, not only that, sufficient and convincing detail are required to add credibility.

This provides an opportunity for the entrepreneur to honestly and effectively evaluate the likely success of their ambitions and to gather the required information on how they might achieve it.

Financing and Business Plans

Even the simplest business start up requires some financing in order to get off the ground, even if the amount is small.

Depending of the levels of investment needed in the initial stages of the business, the person planning to become self employed will need to provide information both on the sources and the application of such funds.

Generally, the greater the complexity of the proposed business, the more detailed will be the descriptions and analysis of its financing.

The use of cash flow software and business planning tools might be employed to not only prepare the most likely scenarios but also provide contingencies and “what if” examples.

Personnel

Key operators of the business are usually detailed in the plan together with their experience and qualification which are relevant to the proposal.

Risk assessments associated with key personnel might reveal that the business is exposed and overly reliant on one or two employees. The owner might then make contingencies should they depart or consider providing them with options on part of the business’ equity.

Market Analysis

Business plans often detail the main markets which the operations will be centred around. Analysis of the main competition, the market size in terms of volume and value, the number of suppliers and any geographical significant data are usually included.

This can provide useful information to the proprietor and any potential investors on the sort of industry they might be entering. In conjunction with the business objectives, reasonable conclusions can then be drawn on the likelihood of success.