The Successful Business Plan: Secrets and Strategies - Assignment Example

?Part INTRODUCTION Business plan is an important business document that defines the basic concept of the business, what and how the business should be able to achieve success, its industry and also the direct and indirect competitors of the company. Business planning is helpful in determining whether the management or the entrepreneur should go ahead and start the business or not and whether the business would be profitable or not. Business plans help investors to analyse whether their investment would yield sufficient amount of profits or the amount of profits that they desire. Not only business plan is helpful for investors to analyse whether they should invest or not but it gives a foundation and a basic building blocks to the entrepreneur to start the business (Mason, 2001). With proper business planning, an entrepreneur is able to identify different risks and factors that could influence the performance and profitability of the business and thus by taking necessary steps, risks of the business can be mitigated and chances of achieving success can be enhanced. ELEMENTS There are different elements which are included in a business plan though there is no exact requirement or format to be followed but some elements are so important that they must be included in a formal business plan (Pinson, 2008). The most important elements of a business plan are: Idea generation Idea generation section of the business plan basically explains the general concept or idea of the project or business. It explains what the organisation would do and what would be its basic purpose. The idea generation helps in identifying what the company should aim and how they should operate. The basic idea generation section is very important in explaining and giving the basic background of the business and its operations to the investors or readers of the business plan (McKeever, 2008). Strategic objectives Strategic objectives section of the business plan defines the goals and objectives that the organisation would like to achieve in future (Porter, 1980). Strategic objectives is an important section as it gives the direction to the entrepreneur that what he would like to achieve and where he would like to see the company in next five years or ten years or any other specific time period. It is important to have a time frame for achieving these objectives because by having a target in mind to achieve the goals, entrepreneur would be able to motivate himself and his team otherwise he would become lethargic (McKeever, 2008).. This section also includes the mission and vision of the company which are important in not only giving directions to the entrepreneur but to everyone in the origination as well. Mission and vision defines what the organisation should be able to achieve in the years to come and about the basic purpose for the existence of the company (Walker, 2000). A good mission statement should not only define the objectives of the company but it should reflect concerns regarding employees, customers, environment, public, and other stakeholders of the organisation. Market analysis and research Market analysis is one of the important elements included in every business plan and without this section the business plan would be incomplete (Deshpande, & Zaltman, 1982). Market analysis section includes the definition of the industry in which the industry in which the company is operating along with the trends of the industry (Lehmann, 1985). A growing trend would forecast better future for company and it would also mean that more competitors would be attracted in the industry and thus a positive future for the company can be reflected. In addition to this, this section of the business plan defines the behaviour of the consumers. Therefore this element of the business plan helps in analysing the behaviour and preferences of the potential customers to the entrepreneur and investors. A good industry analysis and market research can be helpful in preparing an effective business plan that could help the investors and the entrepreneur to analyse important factors affecting the business and thus measures can be taken to minimise the influence of these factors so that the overall performance of the organisation can be improved (Barrett, 1996). Understanding the competition It is important to analyse what the competitors are offering so that in business plan the company is able to identify reasons and basis on which it would differentiate the products or services of the company against the products or services offered by the competing firms in the industry (Parolini, 1999). Analysing the competitors is important as it would be helpful in analysing what price they are offering, what marketing strategies they are using to win the competition, which promotional tools and marketing channels they have used to gain attention of the customers (Abrams, & Kleiner, 2003). An entrepreneur before introducing the product in the market should analyse from the perspective of a customer whether the products or services offer by the company can be successful or not. By analysing and viewing the situation from the perspective of a customer, he would be able to analyse the potential of the business as he would analyse and compare the offerings of his company against the offerings of competing firms. Therefore competitors section in the business plan is critical in defining the success of the organisation as it would be helpful in comparing the company’s offerings against the offerings of the competitors. Understanding of financial numbers and projections The main purpose of any profit making business is to earn profits therefore financial numbers and projections are crucial for any business as these projections would reflect whether the business can earn substantial profits or not (Smith, Grimm, & Gannon, 1992). Financial projects are helpful as it would determine the forecasted sales or revenue of the company, forecasted costs and expenses and thus it would be able to forecast the profitability of the business. Analysing profitability of the business before the business has started is helpful for an investor to analyse and choose the best available and profitable option. For instance, if a business yield only 5% annual profits on the investment after taking risk then an investor could invest in a risk free security which might yield him 4% annual returns without taking any risk. Not only financial projects and forecasting are important in analysing different investment opportunities but it is also important in identifying different costs and expense and the time at which these costs will be incurred therefore an entrepreneur or the management of the company can have sufficient working capital at that particular time to meet these needs. Competitive strategy Analysing the competitors’ strategy is an important part before an entrepreneur starts his own business because by analysing the strategies used by competitors, he can come up with better strategies with which he can be able to compete well in the industry against competing firms. Competition is one of the major threats for any business and by analysing the competitors’ strategy (Verdin, & Williamson, 1994); one can identify strategies that can be successful in the industry and strategies that could be unsuccessful in the industry. Therefore analysing the competitors’ strategies is very important as it will help in laying the foundation and in devising the strategy of the business. Scenario analysis In addition to this, another important element that is used in the business plan is scenario analysis in which different scenarios are presented and their impact on the performance of the business has been analysed. Usually three scenarios are presented in a business plan and their impact on the financial statements is then analysed. Therefore investor and entrepreneur would be able to analyse the profitability of the company if all things go as planned, or if all things do not go as what has been planned. Thus, management of the company can take measures to improve profitability of the company in different scenarios (McKeever, 2008). SUMMARY Business plan is a document that describes how the business is going to be managed by the management and whether the company would be able to make profits or not. Business plan is not only used by entrepreneurs for investors but it is also used by entrepreneurs as a foundation with the help of which they are able to identify and figure out different issues, risks and problems that they would be going to face and thus they can formulate strategies to cope up with such issues in advance. Although, there are no fixed elements that a business plan should contain and it is up to the entrepreneur to include which element he would like to considering the demands of investors, the nature of business etc however the abovementioned elements are included in most of the business plans. Part 2: An individual who not only conceives and manages his ventures but also frequently takes risks in doing so is an entrepreneur. How much independence they show, how much responsibility they bear, the level of innovation and leadership they demonstrate and how creative they become in envisioning and implementing their business plan makes them true entrepreneurs. CHARACTERISTICS OF AN ENTREPRENEUR An entrepreneur has different set of character skills that are not found in everyone and therefore this makes an entrepreneur different from a normal individual. An entrepreneur is able to differentiate itself from a normal individual with the following set of characteristics that have been described by many scholars and authors: 1. Risk takers: The one of the most important characteristics that differentiates an entrepreneur is his ability to take risks. Entrepreneurs are not afraid of taking risks but they do take calculated risks. They do not limit themselves and go beyond the boundaries. They are open to new challenges and they grab every chance that comes their way. They have the ability to perform multitask and try to do as much as possible (Kuratko, & Hodgetts, 2008). Entrepreneurs must have a good tolerance for risks in order to deal with unexpected things without developing sore. They should be willing to accept big risks with some level of comfort. Entrepreneurs are able to priorities their approach towards life so that the fear of failure, tedium, frustration and dissatisfaction far overweighs the lasting fear of success. Entrepreneurs have good decision making skills. They must be rational and methodical in making decisions. They are able to identify and calculate risk of different alternatives and take actions accordingly. 2. Continuous learning: Entrepreneurs are passionate about learning. They continuously search for information, ask questions and do personal reading and research. They strive to learn more and surround themselves with people who either know things that are different from what they know or have more information and knowledge than them. They enrich themselves with knowledge and make efforts to increase their knowledge by sharing it with others (Bygrave, & Zacharakis, 2007). Entrepreneurs are quick learners, they lean from their own mistakes and they are less prone to keep repeating them due to their egotism, overconfidence or blindness to own shortcomings, faults or errors in judgment. This quality of an entrepreneur makes them different from others. 3. Focus on Mission, Objectives and Vision: Entrepreneurs focus on their goals and objectives to ensure they are attained as well as they should focus on employees so that they are motivated along with customers to ensure they are satisfied. Entrepreneurs should have a clear vision of where they want their company to be in future. Further, they must be able to communicate the vision to their employees and shareholders so that they share vision and are motivated to achieve it (Khan, 1986). Hard work is a key to success and to become a successful entrepreneur one must work hard. Working hard may be easy for them if they have a clear vision, goals and are passionate about their work. In addition to this, entrepreneurs are very commitment and dedicated to their objectives, visions and mission (Kuratko, & Hodgetts, 2008). Because entrepreneurs are confident and hard working therefore an important attribute of entrepreneurs is that they love their work. They must be passionate about what they are trying to achieve. 4. Confidence: One of the most important characteristics of an entrepreneur is their confidence level. Entrepreneurs have faith in oneself and capability to achieve goals. Confidence is a trademark of entrepreneur. Many positive people gain their sense of self esteem and belief in their talent to meet challenges by acting and then gaining strength and belief in them by seeing the outcome and gaining the praise and respect of others. Everyone has their own strengths and weaknesses. To be successful, entrepreneurs need to identify their strengths and must concentrate on it. They must put their efforts in the areas where they can perform the best and transform their weaknesses into strengths by learning and training. An entrepreneur is able to identify his strengths and weaknesses and he tries to make the most of his strengths by focusing on them and at the same time entrepreneurs try to overcome their weaknesses. Seeing things positively is an essential characteristic of Entrepreneurs. Past failures, dissatisfactions and shortcomings are transferred to the past and they cannot continue to disturb them in present or future. They are very optimistic in their approach and this is because of they are highly confident and they trust their own abilities. 5. Planning: Entrepreneur focuses of advance business planning which helps them to analyse each business situation in a better way. They have their plans which are divided into short term plans as well as long term plans and they work to achieve these plans (Khan, 1986). Entrepreneurs are able to take responsibility and pay attention to the details which is important in increasing the chances of success. They keep their eye on long term vision and work hard to achieve it. They plan things according to their vision and objectives and by proper and effective planning entrepreneurs are able to attain their goals (Littunen, 2000). It is the ability of an entrepreneur that they set different challenging but realistic goals for themselves and then plan their things accordingly. They know what they want to achieve and do their best to achieve these objectives. Entrepreneurs make good use of resources and ensure that all the resources are properly and efficiently utilised so that the objectives are achieved. Entrepreneurs act as wise money managers to ensure that the cash keeps flowing and bills get paid. Their planning skills are not only restricted to achievement of goals but it can be reflected in their lives as well as they also know how to balance their personal and work life (Khan, 1986). 6. Leadership skills: Entrepreneurs must have leadership skills. They not only lead themselves through self motivation but they also lead others. They know the importance of appreciating others and understand the need of supporting and rewarding others. They must be able to identify employees’ needs, expertly fill them and direct the team to success (Littunen, 2000). Very much similar to leaders, entrepreneurs influence teamwork to get the important things done without breaking pace. They know how to succeed by utilising the physics of interpersonal synergy and dynamic relationships (Littunen, 2000). Also like leaders, entrepreneurs recognise people as an important asset and communication as an essential key to successful relationships with the people. They work hard to polish communication skills whether those are spoken, written or non-verbal messages expressed through body language. They have the ability to listen and hear what others are trying to say and they use tools and resources to support communication (Littunen, 2000). One cannot be effective and successful in business unless he or she believes in his or her work and takes it seriously. Entrepreneurs and leaders take each and every task very seriously and they have full confidence and believe in their work. Entrepreneurs are also innovative in their approach (Ducker, 1993). They are able to stay calm in all situations even when things go wrong in their business. They have the ability to keep them cool in disaster or emergency. Even in failure they stay calm which helps them to move forward and find success. CHARACTERISTICS FOUND IN MY OWN SKILL SET There are several characteristics that are common in an entrepreneur and in my personality. The common characteristics found in entrepreneurs and me are as follows: The ability to take calculated risks High confidence level in my own abilities Focus on the objectives, mission and vision of my life Learning continuously and Leadership skills. Though, I still need to improve my leadership skills and prove myself as a competent leader but the qualities and characteristics required by an entrepreneur and a leader truly suits my personality and this would help me throughout my life. SUMMARY Not necessarily a person is born with the characteristics listed above. Some people may have capability to those qualities that make up the entrepreneurial spirit but they can be learned. These are not the easiest things to learn but it’s not impossible. The emergence of new entrepreneurs in the industry leads us to conclude that many have proper values, many would like and have courage to take risk, many are well educated regarding business and many have the guts to improve and innovate. This is beneficial to the society as many people can be open to choices and suit their preference. References Abrams, R, & Kleiner, E 2003, The successful business plan: secrets & strategies, The Planning Shop, Canada. 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Littunen, H 2000, ‘Entrepreneurship and the characteristics of the entrepreneurial personality’, International Journal of Entrepreneurial Behaviour & Research, Vol. 6 Iss: 6, pp.295 – 310 Mason, C 2001, ‘What do Investors Look for in a Business Plan?’, International Small Business Journal. Available from: [accessed 30 November 2011] McKeever, M 2008, How to write a business plan, Nolo, California Parolini, C 1999, The value net: A tool for competitive strategy, Wiley, New York. Pinson, L 2008, Anatomy of a business plan: the step-by-step guide to building your business, White Sand Drive, Tustin. Porter, M 1980, Competitive strategy: techniques for analyzing industries and competitors, The Free Press, New York. Smith, K, Grimm, M, & Gannon, J 1992, Dynamics of competitive strategy, Sage Publications, Thousand Oaks, CA, US. Verdin, P J, & Williamson, P J 1994, ‘Core Competencies, Competitive Advantage and Market Analysis: Forging the Links’, Wiley & Sons. 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