Business Planning as Essential Element of Any Business - Essay Example

Business planning Student’s Name: Instructor’s Name: Course Code: Date of Submission: Description A business is an outline of operations of an organization when starting a business. a business plan enables an individual or an organization to plan well on how to achieve the goals and objectives set by planning various events carefully. For any business to succeed and gain competitive advantage, it must have a good business plan which will help it to work towards achieving the goals by allocating various activities and resources effectively (Finch 2005). The components of a business plan include the mission statement, company description, market analysis, management team, the plan for marketing, analyzing the company’s SWOT, financial statement and the summery. Business planning enables a business person to easily start a business as it acts as guide to the procedures of starting the business. Business planning also enables businesses to allocate various resources effectively by following the breakdown as indicated in the business plan. It also helps the management to understand what they want to achieve and best they can achieve it by integrating their personal objectives into those of the organization (Pinson 2001). Finally, the business plan enables a business to identify a viable opportunity to exploit and make profit. In this report therefore, I will discuss the comparisons and contrasts between the two business plans of Magnolia Inn and Lowland Heights Roadhouse. To start with, there are many comparisons between these two business plans. The first one is that both business plans have the same competitive advantage in that they can gain competitive advantage through their location. They are located at strategic points where the customers can be attracted to enjoy viewing the nature in the Pacific Ocean while Lowland Heights Roadhouse is located in a way that it has a motel in that the visitors do not leave (Business plans 2012). The rooms at magnolia are decorated the same way the rooms at Lowland Heights Roadhouse are decorated. This gives them the same competitive advantage. They also both give their customers the first priority hence they could achieve competitive advantage through giving their customers the best service. On the other hand, there are also similarities and differences between these two business plans especially in the marketing description. The first similarity is that Magnolia Inn will use yellow pages to advertise their products as well as designing a web design where the customers can read all the information concerning the resort. On the other hand, the Lowland heights Roadhouse also uses the yellow pages to market the business and also designing web designs which will provide customers with the information they require concerning the hotel (Business plans 2012). On the contrary, Lowland Heights Roadhouse uses big screens to advertise their business and they believe these screens will create awareness of the business among many people while Magnolia does not use these screens. The company also uses the most recent and mostly used internet sites like the Yahoo and AOL to market their resort. They further market their business through magazines which are common in the cities hence can attract many people. Strengths and weaknesses The two business plans have different strengths and weaknesses. To begin with, Lowland Heights Roadhouse has the strength of financial base of $311,791. This is because it has the largest capital base which implies that it can be able to implement its strategies with less constrains. Unlike Magnolia which has little financial base implying that the business will have constraints when implementing its strategies like the marketing of the business on costly medias like the magazines. Strength of Lowland Height Roadhouse is the ability to conduct effective market analysis. The business plan has managed to give clear guidelines on how the market will be segmented. In this regard, the market will be segmented according to the beauty, the quality of the services and the customers’ services (Finch 2005). This will give the organization a competitive advantage hence performs better in the business. Finally, this business plan has the strength of management. This is because it is being managed by the owners who have the experience in management and therefore they can work hard towards achieving their goals. However, there are also the weaknesses of Lowland Heights Roadhouse which include poor differentiation of its services from other business. This is a weakness because same services will increase the competition thus it will be difficult to attract and maintain customers. Another weakness is that there is inadequate marketing of the organization (Finch 2005). Yellow pages and web design are not enough to market the facility but also should use social networks like the facebook and twitter. This marketing will reach many people worldwide. Finally it is the weakness of ineffective SWOT analysis. This is a weakness because the business has not managed to distinguish its strengths from those of the competitors (Business plans 2012). For instance the differences between its services have not been differentiated from those of the competitors which imply that there will be high competition hence difficult to attract customers and maintain them. On the side of Magnolia Inn, the strengths include the clear differentiation of its services and products from those of the competitors. This is strength because it will enable the hotel to attract and maintain the customers and as a result it will it will gain competitive advantage. Another advantage is the effective market analysis (Zimmerer 2005. The business has clear strategies for promoting the products than the competitors for instance by offering discounts which will entice customers to visit the resort. It is also located in a place where the customers can enjoy viewing the nature from the Ocean. This is strength because many customers rarely have the opportunity to view and enjoy the good climate on the shores of the Ocean. Another strength of Magnolia Inn is the revenue projection of the organization’s revenues (Business plans 2012). The management has the strategies of projecting the income of the resort by applying various tools like the break even analysis. This is strength because it helps the management do forecasting and come up with better strategies to achieve the goals hence gain competitive advantage through effective management. The weaknesses include lack of effective market analysis. The business has not managed to segment the market into various segments like the quality of services offered and the financial base of the customers. This is a weakness because the market needs to be segmented in order to cater for the different needs of the customers and their financial strengths (Debelak 2006). Another weakness is the limited financial base of $38,000 excluding the liabilities. This is a weakness because with limited financial base, the business cannot be able to implement its strategies effectively hence cannot gain the competitive advantage leading to low performance in the market. Finally, there is the weakness of inappropriate mission statement. It is not clear what the business wants to achieve and at what period of time. A mission statement needs to be clear as it acts as a guide to the policies by the management therefore if the mission statement is not clear, then it will be hard to design appropriate policies and strategies. Ways of improving business plans The first strategy to improve business planning is to use the strategic planning to act as a guideline to all other sections of the business planning (Finch 2005). Without having along term plan, the business cannot set long terms objectives hence can only apply to a short period of time. This could have improved the above business plans better. There is need to identify the issues that are involved in business planning and develop strategies on how to handle them. For instance, there is need to understand the legal procedures which are mandatory to start the kind of business one wants to venture into (Griffin 2005). This will improve the business plan because it will lay down all the requirements needed to start the business and operate so that it cannot be held illegal. Another way to improve the business plan is by collecting and gathering ideas from entrepreneurs who have already ventured into the business. The information collected should be limited to the specific area of specialization (Pinson 2001). For instance the hotel industry one should collect information regarding the industry like the challenges which the entrepreneur is likely to face. This will help him or her to develop strategies to solve the issues hence the business plan will be more effective. Also through collecting of information, one will be able to know what to improve on the business like the marketing strategy. Challenges encountered in business planning The challenges encountered in business planning include the uncertainty of the future. This is where the scenario where the world economy keeps on changing and sometimes changes for the worst. This affects business in that the laid down policies and strategies for a period of time need to be reviewed so that they can meet the challenges of the changing economy (Debelak 2006). Another challenge is the changing technology. When designing a business plan an entrepreneur proposes what type of technology to apply in the business but for a short time the technology changes (Debelak 2006). This compels the owner of the business to redesign the business plan so as to meet the new demands in technology. Another challenge is diversity. It is not clear when designing a business plan what kind of employees to employ in the business. As the business grows diversity is inevitable and this poses a big challenge to the entrepreneur because he or she has to develop strategies to accommodate the challenges of diversity and how to improve on them (Zimmerer 2005). Finally, there is the challenge of supply chains. When designing a business plan, there are strategies set for managing supply chains but because there are variations in demands and supply, the strategies in the business plan may not work hence there is need to design other strategies. This renders the business plan ineffective. Lessons learnt The lesson have leant from business planning are that I have known how to prepare a business plan by including all the components. I have learnt how to raise sources of funds to start a business which can either through personal savings, contributions or bank loans. I have also learnt the long term and short planning processes to ensure business progresses well and managing finance through balance sheets. I have also learnt the strategies to recognize an opportunity for a business by analyzing the market and finally, have leant the skills of analyzing the competitive advantage by using SWOT analysis (Zimmerer 2005). Conclusion Business planning is essential for any business. It helps organizations to start and operate businesses better by allocating resources effectively. The components of a business plan include the mission, business description, marketing analysis and planning, SWOT analysis, resource projection and the cash flow statements. Business planning can be improved by applying strategic planning, identifying the issues and collecting data from the existing entrepreneurs. The challenges of business planning include uncertainty future, changes in technology, changing supply chains and diversity. The lesson have leant include business planning skills, sources of revenue, planning process skills and managing financial resources. References Business plans. (2012). Bed and Breakfast inn Business plan. Retrieved on August 24, 2013 http://www.bplans.com/bed_and_breakfast_inn_business_plan/executive_summary_fc.php#.UhiAeH8e4wo Business plans. (2012). Motel Hunting Lodge Business Plan. Retrieved on August 24, 2013 http://www.bplans.com/motel_-_hunting_lodge_business_plan/executive_summary_fc.php#.UhiBZn8e4wo Debelak, D. (2006). Perfect phrases for business proposals and business plans.  New York: McGraw-Hill. Finch, B. (2005). How to write a Business Plan. Philadelphia: Kogan Page. Griffin, R. W., Ebert J. R & Starke A. F. (2005). Business. Boston: Pearson Custom Publishing. Pinson, P. (2001). Anatomy of a Business Plan. Chicago: Dearborn Trade Publishing. Zimmerer, T. (2005) Essentials of entrepreneurship and small business management. New Jersey. Pearson Prentice Hall. Read More