Three Strongest Components of Each Plan - Essay Example

University Name Department Business Plans Student name & Admission number Date of Submission A brief description A business plan refers to a written sketch of a business's roadmap or strategy. Some call it as a document that illustrate what one intend to do with his or her business in future. Business plans may help an entrepreneur perform several tasks as highlighted in the document, for example they may pass investment information to potential investors (Bridges, 2008). Similarly, companies that are seeking to catch the attention of prospective business deals with suppliers and new business as well as attract key employees may use business plans. Business plans sites bump into increasing competitive pressure fueled by globalization, legislation and relaxed trade barriers, along with increase in market expansion as a result to emerging technologies and innovation and the information about all this is obtained online and via international media. We have leading websites that offer professional guidance in writing business plans, they include http://www.businessplanarchive.org and http://www.bplans.com. The complexity of each business operation in modern world requires firms to have good roadmap to help understand the demand and strategy context that impact time after time the operations of firms. Businesses in the entire world today are facing a number of challenges. The operating environment factors persist to challenge general performance and revenue growth of various organizations (Conner, 2011). To continue being profitable in the greatly changing, challenging and competitive surroundings, all the factors of production should be prudently managed with a well-devised business plan. The business plans obtained from bplans.com have been presumed to sound impressive compared to those from businessplanarchive.org. Both the sites have incorporated generally accepted guidelines in form and content of their business plans, stating the intended business goals and potential strategies to help attain them. The plans have further highlighted the likely problems that may face the business and suggested ways of solving them. Additional, the plans from both sites have also focused on the organizational structure of the business factoring in the responsibilities and capital structure. A clear distinction of the two, which has positioned the bplans to have superior business plans, is clarity on primary sections. Three strongest components of each plan The three components that makes bplans sound impressive when compared to businessplanarchive.org is coined into three sections of a business plan. First, the business concept where the industry is based is made clear highlighting business structure of the product and ways in which the plan intend to make business a success (http://www.bplans.com). Secondly, the market illustrates and evaluates the potential clients, where they are located and what motivates them to buy along with the likely competition to be faced at the market and how to outwit the competitors. Thirdly, the income and cash flow part that illustrates the balance sheet and breakeven point of the business, along with the financial ratios. Business plans from businessplanarchive.org have their strongest elements which comprises of detailed executive summary that sums up the business plan. The second element is the illustrative market strategies that incorporate business description and full analysis of competition. The third component entails illustrative business design and development plan. A descriptive development plan is vital in bringing out the planned growth of business in future and how is supposed to be executed. Establishing a successful business calls for a clear knowledge of the business purpose and the principles guiding its management. Development plan at all levels make the company complex to manage so as to attain efficient communication and attainment of set goals. For instance, an organizational chart will enable better understanding of the business at this stage. Besides, all the strongest components of each site, both the business plan have a cover page, with table of content which highlight sections of the plan. The three weakest components of each plan Based on what a business plan is intend for, will determine the length and its usefulness. A normal business plan will cover between 15-20 pages, but there have been room for a further variation from stipulated guideline (http://www.bplans.com). The clarity of Bplans have been viewed as the drawback of business plans obtained from this particular sites, for they are believed to summarize the content and not giving a detailed view of how business is expected to be managed, designed and developed (Bridges, 2008). Even though, much of the business plans will depend on the nature and industry of a business, but a descriptive plan expound on the business and industry is preferred. As the plans are meant to seek for thousands of dollars either as seed capital or for development, and thus need to explain and convince the potential investors or partners. The technology revolution in modern business should be illustrated on operation of businesses, ideas that Bplans have neglected in its business plan. Seems the latter disputed the well-established truth that is championed by experts also fundamentally influenced by technology. The scientific belief of repeatability in confirming the experimental outcomes spread with the fast and wide distribution of scientific imminent and inventions that business plans permit is not put into consideration. The fabrication of business plans via online information is speeded up noticeably (Conner, 2011). The easy with free exchange of thoughts offer an emergency to a scientific community that operates with no geographical restraints. This result to a possible spread of standardizes methodologies as well as to append classiness to the development of coherent idea. As easily accessible business plans assist enlarge the shared body of knowledge, and of building innovative associations connecting apparently unconnected ideas sometimes exhibited in Bplans makes it hard to understand the ideas of business. The businessplanarchive.org has not factored in the sustainability part in businesses as this is meant to implement practices that support and enhance economic safety, social wellbeing and environmental protection as they work hard improved performance. To achieve this, Bplans on its side has formulated sustainable business strategy which is enclosed in sustainability section which entails three components, namely, environmental protection, social equity, and economic prosperity. Generally, a business cannot function without the economic, social and philanthropic benefits that it offers. Businessplanarchive.org plans seems not to employ a stakeholder approach committed to serving broader goals, in addition to economic and financial interests, of those whom the business intend to serve, including public (http://www.businessplanarchive.org). There is also a rising trend of spending in the social sector and improving the company’s reputation as firms that are socially responsible. Any business draws its sustenance decisions from the society in form of inputs. Therefore, there has to be a socially responsible behavior which would help to maintain this relationship. The business decisions which the company takes have an impact on the society, where it operates its businesses. Suggestions on way the business plans could be improved Majority of business plans tend to share several components in common, such as the executive summary, cash flow bit, projections and marketing strategies. And most of these components share particular objectives and goals as well, like the raising of money or convincing an investor to venture into the firm. Nevertheless, not every part of business plan is all the same compared to the way all business are. Based on the business and what it intend to be used for, may call for a unique business plan for the site or entrepreneur. Conner (2011) assert that business plans always vary widely in terms of their length, their look, the detail of their contents and the variation focuses on the position of a number of aspects of the business. The business plans should incorporate the set norm in the business circles. As such, business plans need to be script within a manner that society considers responsible will lose it. This is the iron law of responsibility. The social responsibility legitimizes and promotes economic objectives of business. When the social life is improved, the business can have good customers, employees and community (http://www.bplans.com). Even though a number of business plans may offer favorable information, regarding business surroundings appropriate for successful venture capital operations. Aylware (2008) points out that some of the plans have few openings for the right investment, whereas other does not offer a good background for new opportunities. Small or medium firms, that are growing slowly and are privately oriented economies as well as the having fairly unrefined entrepreneurial background are unlikely to offer much scope for the development of investments in their business plans that offer the high returns that venture capital firms look after (Egan, 2008). Though turn around for such firms may provide some openings for business, creating a flow of attractive investments large enough to justify venture capitalists are important. The business description of all the plans needs to start with a brief illustration of the industry. When featuring the industry, the plans should have described the present outlook and the future possibilities of businesses. The Bplans should also have provided detailed information of the various markets in the industry, comprising any new products or developments that are likely to benefit the business or adversely affect it. In describing the industry, the observations should be based on reliable data and offer footnote such sources of information as suitable. This is vital if the plan is meant to seek, funding since the investors will prefer to understand how dependable the information availed in the plan is rather than risking their hard earned money on assumptions or conjecture. In illustrating the business, the plans could have focused more on structure that is the form of operation which may either be service-oriented, wholesale, retail and manufacturing as well as stating whether it’s a new business or already in existence. Additionally, the business structure should highlight the legal form of the business, details on whether it’s a partnership, company or a sole proprietorship showing that the principals are so and so as well as their contribution to the business (http://www.businessplanarchive.org). After the description of the business, product description is also important, how it will be distributed to relevant channels and illustration of business support systems. The support may either be in form of advertising, promotion, after sale services and customer care service. The description statement of the product was supposed plan intentions by focusing on unique features that are typically found in the industry. The issue of risk management has not been explored in business plans. Kaplan and Stromberg (2004) affirm that the integral elements that cause risk are price and interest. Risk is as well caused by internal and external factors that surround a business. In any industry or market, there is strong connection between risk and return, as the investors saying goes, “the higher the risk, the higher and the return”. Risk management is an economic term referring to a process employed by entrepreneur or investors to identify and analyze the financial risks there investment may be associated with, and then develop mechanisms to manage and minimize such risks while they maximize the returns. If the risks on the share market can be described using another term, then it is “volatility”. Majority of the well-known investors in the share market, have used risk management mechanisms to minimize the risk in their investment so as to maximize on their returns. But in this particular business plans, issues of risk management were not highlighted clearly. Additionally, the business plans should have shown the way of offering a competitive edge. For example, the business plan of Bplans will be better since if supplied a full line of products, as Competitor I does not avail full line. Provision of after sale service is advantageous as Competitor II does not any after sale service to clients. Also when working on a business plan for financial purposes, one is expected to illustrate the importance of added equity or debt and how business stand to gain from it (Egan, 2008). Equity in business encompasses three stages of investing-seed, start-up and expansion, which excludes buyouts. Seed capital is commonly used to finance initial product research and development, whereas start up investments are availed to firms that have excelled the idea stage and are moving into production, marketing and sale stage as indicated in their business plans. Together seed and startup stages are known as early stage investments. After this primary stage, the firm graduates to expansion stage where the firm requires additional capital to finance its growing manufacturing, distribution and research and development capacity (Conner, 2011). Buyouts are usually applied to more mature firms. In private equity investments, there are different kinds of buyouts such as leveraged buyouts and management buyouts and should be clearly illustrated in the business plans. The former is used as to acquire a firm and minimize its equity base, where as the latter is a leveraged buyout where existing management takes control of the firm. As such, a business seeking for potential investors should come up with sound business plan with updated projections of revenues and profits and well-thought out market strategy Challenges faced and how you overcame them Business these days are facing a number of challenges, something that has forced them to stipulate plans of moving forward. The changing climate in business world, social stratification and political arenas in society are already initiating sea of changes in the quality of service companies offers to their customers. The challenges that affect businesses are almost similar no matter the size of business. The major challenges that business plans are facing are: a) Uncertainty The present economic climate is uncertain something that makes it hard on what to expect or push forward for because it is not experienced by business owners. Unluckily, it’s not possible to create certainty in the economy, but it’s imperative business plans incorporate a strategic long-term development plan. The plans will help business owners perceive the future and help them create business value despite how rocky the economy landscape may appear, as such enable the business overcome the challenges. Also, recording keeping will help in curving out a more certain future for the business (http://www.businessplanarchive.org). b) Attracting new business Recent studies have shown that attracting new businesses especially in this rocky economy as people is looking to spend their money in safer grounds, meaning that the appealing market of new custom has shrunk (Cumming & Huse, 2009). As such, customer retention and developing of customer base which originates from customer treatment, showing customers that business care through the service it offers. The market is full of infightings of businesses to seize new custom, so it’s upon the business to ensure that business image is the best in the market. c) Financing The majority of policy makers are more concerned with private equity. Both practical and academic interventions reveal that private equity investing adds value to business or economy. Though, academic research tends not to focus on the direct economic impact of business plans, private equity investment and key determinants of venture, several scholars have explored the significant setbacks involved while funding entrepreneurial growth firms in developing nations. According to Bridges (2008) this is because, the firms experience difficulties in acquiring external financing as a result of venturing in precarious growth opportunities (subtle assets) furthermore also for the reason that all-encompassing informational asymmetry involving entrepreneur and financier. With limited funding opportunities available and the existing schemes being extremely hard to secure because lenders being risk-averse, many businesses have struggled to administer their cash flow profitably and keep their heads above the turbulent waters (Egan, 2008). Entrepreneurs’ ability to coin their business plans and operate within their means is important as overspending to any level could be harmful to a business, thus need to stay in control. d) Competition Most businesses are being established to compete with existing ones. These imply that business plans must not get complacent may be because marketing strategy or advertising tactics worked for it in the past. The marketing is changing and each business to be competitive. Taking a step back and reviewing both the set up and plan as well as keeping a glance to competition is helpful in taking control and building business image that is key in the market. Five lessons learnt about Business planning Create a business plan: every business owners will narrate the significance of a solid business plan. Whether one creates his or her own business plan or obtains it from leading sites, it serves as a first set up of establishing a business. The plan serves big picture goals detailed enough to give instructions on how to attain these goals. Assemble “Fab Five”: To succeed in a business venture, an entrepreneur needs a mentor to nurture him or her in business endeavors. The mentor may help to council the entrepreneur while facing adversity. When tremendous challenges hit the business, entrepreneur needs to have an arsenal of individuals to lean on to tramp in the course of those tough times.” Managing decline: Managing decline is a difficult task-regardless of whether that decline is part of a cyclical industry pattern or business plan, permanent erosion, or even a collapse of the market niche. Decline usually forces managers to struggle with a pair of competing tasks: reducing the size of the business and managing the remaining portion of the business effectively. Invest in professional development: entrepreneur should spend time on own personal development. This helps in acquiring relevant knowledge and skills that come in handy during the day-to-day operation of the business. General administration: which would aim at evaluating whether the business and management arranges for executing business operation is logical and in place. Business goals are accomplished through various activities or tasks which are performed by groups or individuals. References Bridges, W. 2008. Business Plans and Managing Organizational Transitions. Organizational Dynamics, 15 (1), 24 Conner, D. 2011. The Business Planning (Handout materials). Atlanta: ODR, Inc. Cumming, T. G., & Huse, E. F. 2009. Organizational development and change (4th ed.) St. Paul, MN: West Publishing. Egan, G. 2008. 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