Business plans describe the strategies and goals of a company. For those just starting an enterprise, business plans define the business and service being provided, outline sales and marketing objectives, and estimate profits and losses the company expects to encounter. For established ventures, business plans summarize the annual operating costs and assess any market changes that may affect the company. Business plans help companies outline their future endeavors and provide a detailed description of their operations for those seeking additional information about the venture, particularly investors or financers.
Business Plans of Small Businesses
Management experts encourage all types of companies to prepare annual business plans. Corporations and other large enterprises are more prone to devising continual business plans to offer to shareholders and potential investors. Small businesses rarely compile such plans unless under special circumstances. Apart from lacking the basic resources to put together an annual business plan, small companies are usually attentive to their markets and consistently plan to meet their customers’ needs. Small enterprises may prepare a business plan when seeking investors or financing, or when selling the business. Business plans of small companies tend to be more detailed than corporate plans and often focus on the means by which the business intends to succeed in its market.
Most business plans consist of the same general components. They begin with an executive summary, or statement of purpose, which identifies the reason for the plan and highlights what will be discussed in the coming pages. They also provide a description of the company and the industry it serves. The plans then analyze the market and discuss where changes should be implemented to promote continued growth. For existing businesses, plans tend to focus on how past, present, and future changes may affect ongoing business operations. New businesses mainly emphasize the need for their service in an ever-changing market, examining how their strategies will surpass the existing strategies of competitors.
Once the plans have assessed the current market environment, they explain how businesses will adapt to any issues and changes listed. Studies show that premeditative formulation of business objectives is linked to a higher success rate in achieving overall goals. Success rates can also be improved with good benchmarking techniques, which assess a business’s accomplishments on a periodic basis. Good business plans will have several alternative actions outlined in the event that one strategy fails to uphold or improve operations. After the market analysis and business objectives have been reviewed, the plans then turn to budgeting and calculate all possible costs and potential revenue. Comprehensive business plans may not be necessary for all ventures, but outlining relevant and realistic goals can be very helpful to both new and established enterprises.