How to Prepare a Business Plan?

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Table of Contents

Introduction
Outline of Key Elements
Financial Plan
Conclusion
References

Introduction

Kyle and Chad need a business plan to guide them on how they will allocate resources for various purposes in their business. A business plan will help them identify opportunities, and other problems that they are likely to encounter in their future operations. A business plan will help them set goals they want their business to achieve in the future which will guide their business strategy.

This will make them understand what they need to do to make their business competitive to enable it attain positive growth. A suitable business plan needs to have several elements that define the purpose of a business, financing options, marketing approaches to be used and probable cash flow situations in the business. These elements make it possible for a business plan to have a clear purpose and focus (McKeeve, 2012, p. 78).

An effective plan needs to have an executive summary summing up the profile of the company and the goals it seeks to achieve in the market. This outlines all sections of the business that are relevant to how it works to make it easy for its stakeholders to understand its functions (Blackwell, 2011, p. 86).

An effective business plan also needs to describe what the company does, its target markets and how it can be distinguished from its competitors in the same industry. It also analyses the market by discussing different opportunities that exist there. A business plan should also have a marketing plan that guides the marketing approaches that will be used to market products to different types of clients. It also needs to describe the products or services the business will be selling (Rogoff, 2007, p. 86).

Outline of Key Elements

Executive Summary

It will give a brief description of the business, its target markets and other activities the firm will be engaged in. It will also give an overview of what the firm will be involved in.

Business Description

This section describes all activities the business firm will be involved in and their significance to its long term prospects in the market. It describes a firm’s target markets and opportunities in the market the firm intends to exploit. It also shows what type of an entity a firm is.

Product/Service

This section describes the nature of the products or services the firm will be selling. It outlines how these products will meet and satisfy customers’ needs in the market.

Market Analysis

This describes specific attributes about the target market, consumer behavior and strategies the firm will use to establish strong relationships with consumers.

Implementation

This section describes strategies that will be used by a business to succeed in the market. It also describes the tools a firm will use to measure if it has achieved its objectives after a specific period.

Management Team

This section describes a firm’s general organizational structure and different levels of authority. It identifies various departments and describes functions to be performed by each manager to achieve business objectives as set by a firm.

Financial Plan

This shows all financial information that will be used in planning different activities in the firm. It projects expenditures to be incurred in operations, sources of financing and cash flow projections in the firm.

Bankers normally want to see the business description and the financial plan of a firm. This makes it possible for bankers to evaluate if a business venture will be viable or not. The business description makes it possible for a bank to understand the legal description of a firm in the industry it operates. It makes it possible for a bank to formulate an agreement that is legally binding to both parties (Siegel, Ford & Bornstein, 1993, p. 67).

This also helps a bank to know the main shareholders of a particular business and their responsibilities. A financial plan makes it possible for a bank to evaluate if the firm will be able to generate enough revenue to pay its debts and other day to day expenses. It helps a bank to assess the cash flow situation of a business venture to find out if it will be able to perform well in its chosen markets (Pinson, 2004, p. 106).

Conclusion

I would advise them to formulate a budget showing expenses they are going to incur in setting up the business. Kyle and Chad need to look for other forms of financing before they present their business to a banker to enable them have a wide variety of options. They also need to observe market trends to find out business opportunities their firm can exploit to improve its prospects.

They need to readjust their business strategy to fit in with their new expansion plans which should be reflected on their business plan. Profit and loss accounts, cash flow statements and income statements should be accurate and comprehensive to show the firm’s true financial history. This will make it easy for them to show the bank that their firm conducts its operations in an effective way.

References

Blackwell, E. (2011).How to prepare a business plan. Philadelphia, PA: Kogan Page.

McKeeve, M (2012). How to write a business plan. Berkeley, CA: Nolo.

Pinson, L. (2004). Anatomy of a business plan: A step-by-step guide to building a business and securing your company’s future. Chicago, IL: Dearborn.

Rogoff, E.G. (2007). Bankable business plans. New York, NY: Rowhouse Publishing.

Siegel, E.S., Ford, B.R., & Bornstein, J.M. (1993). The Ernst & Young business plan guide. New York, NY: Wiley.

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