Business Plan Elements

Elements of a Business Plan

• There is no "one size fits all" approach to preparing a business plan, as each business must tailor its plan to its specific needs.
• Business details in a business plan include information about the firm's directors, shareholders, and legal structure (e.g., sole trader).
• Objectives in a business plan should include the overall aims and objectives of the business, including its mission statement.
• Product details in a business plan should provide a brief description of the products or services produced or sold, as well as the product's unique selling point (USP).
• Market details in a business plan should analyze market research, including market size, competitors, and target market, and outline the marketing mix used to maximize sales and market share.
• Production details in a business plan should describe the production method used, such as job or batch production, and include the type of machinery required and production targets.
• Financial details in a business plan should specify how much money is needed to set up the business, where the money will be sourced from (e.g., equity finance, loans), and include a cash flow forecast and projected profits.
• Preparing a business plan does not guarantee business success due to inherent risks and uncertainties in setting up and running a business.
• Unexpected events, such as water pollution increasing demand for bottled water, can impact a business.
• Changes in tastes/fashions are difficult for businesses to predict; for example, health concerns may lead to decreased use of deep fat fryers for cooking.
• Competition from firms like Apple and Samsung can threaten market share, as these firms compete to create the most innovative products.
• Economic changes, such as a recession, can reduce consumers' disposable income and make trading difficult, even with well-formulated plans.

Stakeholders and the Business Plan

• A business plan is important to many different stakeholders in a business.
• Employees are interested in the business plan because it can reduce concerns about job security and provide insights into future promotional opportunities.
• Equity investors are interested in projected sales figures and market research findings, which can persuade them to provide capital to the business.
• Financial institutions (e.g., banks) use the business plan to assess whether the business can repay borrowed money.
• Managers use the business plan as a benchmark to measure actual performance against the goals set out in the plan.
• Suppliers examine the business plan to ensure that the business can repay any credit facilities given.
• Government agencies like the Local Enterprise Office (LEO) use the business plan to assess eligibility for financial assistance (e.g., a grant).