Business Plan-

Business Plan-

The Business Plan is but one exercise in the Processes of Management

Writing a business plan may never be a more important exercise than in the context of today’s rapidly changing environment. Even if you are not an entrepreneur and do not wish to develop a new original idea and bring it to market, developing a business plan is still a valuable exercise in practicing the management processes.  It provides a crucial foundation for managing an organization.  In this section of the text, we will treat developing a business plan as an exercise in the management processes of planning, organizing, leading and controlling. By doing the exercises at the end of each chapter, you will have the foundation to put together a plan that will help you develop as a manager.  The experience you will gain is valid for profit and not-for-profit organizations as well as new and existing ventures. Writing a business plan gives you practice in thinking about managing activities such as:

?    Developing an idea to solve a problem
?    Tapping into opportunities and countering threats in competitive conditions
?    How to organize resources to achieve goals
?    How to target potential customers with promotional opportunities
?    How to design an effective organizational structure
?    How to secure sources of finance
?    How to control for risk

What is a Business Plan?

A business plan is a recognized management tool used to document the organization’s objectives and to set out how these objectives will be achieved within a specific timeframe. It is a written document that describes who you are, what you intend to accomplish, how you will organize resources to attain your goals, and how you will overcome the risks involved to provide the anticipated returns. In general, a business plan is comprised of several elements, each gives the reader a piece of the overall picture of the project you are undertaking and provide convincing reasons why you will be successful in this undertaking. Managers and entrepreneurs use a business plan to seek support and financing to expand an existing business or to finance a new venture.

Within the framework of this course you will be introduced to an “academic” business plan providing you with the basic elements necessary to ensure adequate information to make any plan useful. When completed, your “academic” business plan exercise will have provided you a very good understanding of many of the elements that go make up a good plan. No two business plans are created in the same way. Each plan takes on a life of its own. The elements contained herein, however, to which you are being introduced, are found in every one.
Putting it all together
Throughout this course you may have been asked to complete the end-of-chapter exercises on developing a business plan.  Now is the time to start to put all the pieces together to create your comprehensive plan. Draw on the work that you have already done to write the major components of the business plan.

?    At this point, you should familiarize yourself with various ‘business planning’ software. There are several on the market (in fact most banks provide their individual versions of a business plan reflecting the elements they prefer most to see. The software will help you compile the main elements in your plan and help calculate financial statements. The plan you will create should contain the following elements:

Major Business Plan Components    Check off and date when completed and add any notes of interest **
1.    Non-Disclosure Statement    ?
2.    Executive Summary    ?
3.    Profile of the Organization    ?
4.    Profile of the Industry or Sector     ?
5.    Profile of the Product or Service    ?
6.    Marketing Plan    ?
7.    Organization Plan    ?
8.    Operating and Control Systems Plan    ?
9.    Financial Plan     ?
10.    Appendices    ?
** refer to your Gantt chart exercise often
1.    Non-Disclosure Statement:
When your business plan document will be presented to an outside party, a non-disclosure agreement is highly recommended especially when confidential information is disclosed. Something like this is required for your project.  When used, it states that the information in the plan is proprietary and not to be shared, copied or disclosed. The agreement should have a unique “copy number” that is the same as a number on the title page of the plan and a place for the recipient’s signature. The agreement should be either a loose-leaf page or a page that can be torn out of the plan and retained by you.  See the following example:
Copy Number  _____123_________

FFP Consulting, Inc.’s business plan is confidential, containing information proprietary to FFP Consulting, Inc.  None of the information contained in this plan may be reproduced or disclosed to any person under any circumstances without express written permission of FFP Consulting, Inc. I have accepted and will protect the confidentiality of this business plan.
Mr. John Doe_________________________________________
Recipient’s signature
2.    Executive Summary:
The executive summary is the first thing, besides the Table of Contents and Title page, that the reader will view, but it is the last thing the writer creates.  The executive summary is a maximum one-and-a-half page précis of your business plan.  It is probably the most important part of your plan because readers will make a judgment as to whether or not they want to continue to examine your plan based on this summary. The executive summary tells the reader all of the following information:

?    Who you are and what your company/organization does
?    The products and/or services that you provide or intend to provide
?    Your target markets; i.e., who are or will be your customers
?    How you will promote your product/service to your customers
?    What your financial projections are for a given period of time
?    How you will achieve your goals, i.e., your strategy for gaining a competitive advantage
?    The strengths of your management team as they relate to the proposed business venture
?    Identify the major risks you expect and your solutions to minimize these threats
The major effort in writing an Executive summary is in keeping it short, i.e. getting it down to a page or a page and a half. (Most business people who are reading business plans for the purpose of providing loans or making an investment do not have the time to read the whole plan before making a decision. In order to ensure as much as possible the interest of your reader, the business plan writer must provide all of the above noted information within the first moments of reading).
3.    Profile of the Organization:
This section of the business plan tells the reader your vision, mission and goals for the organization.

Consider the following questions when preparing this section.

?    What is the name of your company/organization?
?    What is the legal structure and form of ownership?
?    What are your reasons for going into business?
?    What problem or needs gap does your product or service fulfill/solve?
?    What experience do you have that would enable you to pursue this venture successfully?
?    Who makes up your management team and what roles and responsibilities will they have?
?    Vision Statement:
The vision for your company/organization is set out in a written statement telling the reader what direction or dream you wish your company to pursue.  The vision statement is intended to inspire and generate enthusiasm. A vision statement is not easily achievable and written in the future tense. Vision statements are not given time frames and therefore not stated as goals but more so as aspirations. As stated in chapter 5, Bill Gate’s vision for Microsoft when it first began was to have “a computer on every desk, in every company, in every country.”  The vision of the TD Bank is simply, “To be the better bank.”  Cara Operations Ltd., founded by the Phelan family in 1883, is a privately owned Canadian company and the largest operator of full service restaurants and the leading caterer to the travel industry in Canada. Cara’s vision is “to be Canada’s leading integrated restaurant company.”   The vision of Renée’s, a Canadian gourmet food products company, is “To be the market leader in developing and delivering superior quality, innovative fresh food products.”
For additional examples, refer to Chapter 5: Managing Planning and Strategy.

?    Write the vision statement for your venture. Keep it to 25 words or less.
?    Mission Statement:
The mission statement tells the reader what the purpose of your organization is. Refer to the mission statement of The Body Shop outlined below.  Ask yourself what the essence of your business is. What will the business really be doing day to day? Why does it exist? What values is it premised on? Every noun, adjective and verb in the statement is important and should explain the problem that will be solved or the need that will be fulfilled. Your mission statement should reflect your basic beliefs, values and principles as well as what you intend to achieve in the short term. They can and many times are stated as goals with a specific time frame. The absence of a specific timeframe implies immediate action.

?    Write the mission statement for your venture. Point form is very common.
?    Keep it to 150 words or less.

?    Organizational Goals:
The goals and objectives of the organization follow from the vision and mission. Organizational goals must be made for the business as a whole and for each functional area. Organization-wide goals are longer term and are strategic in nature, while functional level goals are shorter term and are more operational in nature. For example, corporate and divisional-level goals are generally made in the areas of market share, profitability and ROI. Functional-level goals include how departments will add value for the customer and reduce costs in the production of a good or service.
The objectives of the organization focus on the realization of the vision and mission statements (these should be shared with every employee of the company).
Goals and objectives are statements of the level of performance desired within a certain timeframe. Goals must be S.M.A.R.T. They must be formulated so that they are:
?    Specific
?    Measurable
?    Attainable
?    Realistic within a
?    Timeframe
An example of a smart goal relating to market share might look like the following:
?    “By the end of the first year of operation, ABC company will have a 20% market share for it’s product Xxx.”
?    The Body Shop might formulate the goal of “giving 5% of gross profits to the major charitable organizations in the environmental movement by the year 2015.”
This goal is consistent with the company’s mission and strategic vision as stated above.  Once goals are developed, plans must be formulated to achieve the objectives. These plans are generally referred to as strategies. The formulation of strategy depends upon the opportunities and threats facing your company from the forces in the organizational environment. You will formulate your strategy after doing an analysis of the current situation. The competitive analysis and strategy is analyzed in the context of the industry as a whole and detailed in the Marketing Plan component of the business plan.
?    Formulate the major goal for the venture as a whole, using a one-year timeframe.
?    Form of Ownership
If you are writing a business plan for an existing organization, the legal entity has no doubt already been established, however, it may make sense to consider a separate legal entity for the new product/service. If you are an entrepreneur or a group of entrepreneurs, you must decide what form of legal entity (form of ownership) will best suit the nature of the business, the competitive strategy and the organizational structure of the business. Will you need or want a partner?  Should you incorporate or operate as a sole proprietor? What advantages, if any, would there be in forming a cooperative structure? Refresh your memory about the advantages and disadvantages of each legal structure by reviewing an introductory business textbook.  Now that you have developed your ideas and business plan up to this point, carefully weigh your options and describe the intended (desired)  legal form of your organization.
?    Which legal structure do you think is most appropriate and why?
?    The Management Team
In the case that several people are involved in the management team, the positions they will hold and roles they will play should be described and justified based on their experience and expertise.
?    Provide a brief biography  of each member of the management team and describe their roles and responsibilities in the venture. For the purposes of your business plan assignment you will provide details of each members life skills as they have been developed and how these attained skills will aid that member in the execution of his/her duties within the new enterprise. For example, someone may have had to take care of children or done the shopping for their household. In this case they would have developed organizational skills as well as some financial acumen. These are desired skill sets for a CEO or CFO.

4.    Profile of the Industry or Sector:


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