What is a Business Plan? 

For every business, it is the vital first step. It is the blueprint that sets you going towards your goals. Look upon it as the roadmap that tells you and the world how you expect your company to achieve its stated objectives. 

A business plan has been described as a comprehensive document that clearly describes how the owner will operate his business. You can also define a business plan as an important communication tool that details the financial strategy and goals of the organization. This definition is true for both existing and proposed business:

A business plan should give you a detailed outline of the resources needed to achieve the objectives of the business: what they are, how will they be put together and where will they come from.

A business plan should include identification of markets, a list of customers, calculation of expenses and overheads and an estimate of the required investment for the business, based on projected revenues and costs over a specified period, usually 3-5 years.  

A business plan is designed to attract capital investment. Every time you approach an institution or an investor for assistance, take your business plan. Many banks insist on seeing the business plan before they consider your loan application.  Potential investors and bank managers study the plan of proposed business activities over the coming year, or stated time period. They will look at projected figures for sales, profits, turnover and trends contained in the plan, to help them decide if your company is suitable for investment. They may also look for the way the company ownership is distributed and the skills and experience of the key personnel in the company.

“Cash Flow was a big issue. EveryMan Consulting reviewed our invoicing and credit control methods, prices, cost, and margins. Following implementation of the suggested changes, the business is now generating positive cash flow and profits.” Aris Jewellers   www.arisjewellers.co.uk

In the case of small business, the business plan should include an examination of proposed products, target markets, competition, management and marketing policies, production and financial requirements.

Business Plan Definition

There are many definitions and many aspects to a good business plan. Here are some of them. A business plan is…

• A plan laying out the objectives of a proposed business venture, its financial strategy, the products or service to be produced or supplied, and the estimated market, turnover, profits, return for investors, etc..   

• A blueprint and communication tool for your business. A device to help you, the owner, set out how you intend to operate your business. A road map to tell others how you expect to get there...

• A comprehensive planning document which clearly describes the business development objectives of an existing or proposed business. The plan outlines what and how and from where the resources needed to accomplish the objective will be obtained and utilised...  

• A document prepared by a company's management, detailing the past, present, and future of the company, usually designed to attract capital investment...  

• A document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement...

All the above statements are true and every business plan will contain some elements of them. Depending on the main reason for writing it, a different emphasis will be found in an individual plan.

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