HOW TO PLAN YOUR BUSINESS!!!

 

" Failing to plan is planning to fail" 

The above statement shows the importance of planning with regard to success in the field of Management. A plan is essential for success in anything. In Grade 10, you studied how to select a business opportunity through various methods of assessment. Now you should prepare to start up and implement your business. In fact, drawing up a plan to transform a business idea into a real business is a main function of an entrepreneur. This chapter will give you a basic understanding of what business plans are.

Before making a business plan, you should study the business environment well. If you prepare your business plan that way, it would guide you to succeed in your business through using limited resources and suitable strategies. If not, you may not achieve your goals and the resources could be wasted as well. Your school is an educational institution where various plans are being implemented. You would have seen the Year Planner in the main office of your school. It is a plan that includes the activities scheduled by your school for the relevant year. Your class time table is another example for a plan. A business plan is a formal document that presents, in a structured and well-organized manner, the targets you expect to reach and the various activities that you will carry out at the start-up of a business and while running the business.

 Composition of a business plan

There are several elements of a business plan. Out of them, let us focus on the following elements. 

Elements of a business plan

1. Executive summary 

2. Marketing plan 

3. Production plan

4. Administrative plan 

5. Financial plan

01. Executive summary 

The executive summary is a summary of the entire business plan. It summarizes the most important information regarding the business for the benefit of the reader. When a person reads the executive summary, he/she should be able to create a mental picture of the business based on the information presented there. The executive summary is usually about one page in length. 

 The following information is summarized in an executive summary: 

• The name of the business, the industry that it belongs to, etc. (described very briefly) The name of the business that the entrepreneur wishes to start and information regarding the nature of the business. 
• A summary of the Marketing plan, highlighting its most important points Target customers, expected demand and supply, price of the product, unique features in distribution and promotion, strategies for gaining competitive advantage, etc. 
• A summary of the Production plan, highlighting its most important points Production process, production cost, unique features of the production process, etc. 
• A summary of the Administrative plan, highlighting its most important points Administrative structure, administrative processes, etc. 
• A summary of the Financial plan, highlighting its most important points Funds needed by the business, how the funds will be acquired, expected profitability of the business, etc.
• Uniqueness of the business (described very briefly) How the business organization is different from its competitors in terms of the uniqueness of the product, uniqueness of distribution, etc. 
• Goals and objectives of presenting the business plan (in brief) Whether the entrepreneur wants to start a new business venture, to get a bank loan to expand an existing business or to manage the future activities in a methodical way through a self-investment should be included.

02. Marketing plan 

This section details how the sales targets will be achieved. The following forecaster information has to be included here: the goods or service expected to be sold, the demand for the goods or service, marketing strategies, sales expenditure and sales income. 

03. Production plan 

Marketing plan mentions the quantity of goods or service that will be offered to the market. Production plan estimates the cost needs to be incurred when producing that quantity of goods or service. 

04. Administrative plan

 

This section includes information on the human resources required for the business and the related costs. 

05. Financial plan 

Financial plan gives details regarding the sources of funds. It also includes estimates of income, expenses and profit.

Need for a business plan

01. To make the business idea clear 

A business plan gives details about the proposed goods or service to be offered and its uniqueness, to the persons who are interested of the business. 

02. To understand the business environment 

Business environment keeps on changing all the time. Changes occur in the internal environment of a business, as well as in the external environment including economic, social, political and technological and the natural environment. All of these changes can be identified early through business planning.

03. To guide the business 

It indicates what activities should be done by each party involved in the business. 

04. To indicate the future direction of the business 

The business plan clarifies what status the business should achieve in future.

 

05. To raise the necessary funds Investors prefer to put their money into profitable ventures.

 A business plan displays the proposed activities and expected benefits of the business. A business plan is essential for organizations such as banks when making investment-related decisions. 

06. To make a good estimate of the demand 

The market demand is a main factor determining the success or failure of a business. It is necessary to be well aware of the competitors and substitutes, as well as their market share and strategies; and to form suitable strategies to face them. All of these require planning. 

07. To identify the resources required for the business 

A business plan identifies the physical and human resources necessary for business activities. 

08. To find out the success of the business 

If you forecast your business activities before starting up the business, you can see what outcome you will be getting by the end of a given period of time. If you have successfully fore casted your business plan, you can understand today whether your business will be a success or a failure in future. This will help you to face future uncertainties successfully. 

09. To get an overall image of the business

 A business plan gives details about the various activities of the business for a given period of time in future. So it provides a clear view of how the business will be in future.

SOURCE: Entrepreneurial Studies- Grade 11 (English Medium-2019-Third Print)