Business Plans Components Quiz

Business Plan Essentials

• A business plan is a written summary of a proposed venture, including operational and financial details, marketing strategies, and management skills.
• It serves as a roadmap for entrepreneurs, guiding them toward building a successful business.
• Preparing a business plan is vital; failing to prepare is akin to preparing to fail (Benjamin Franklin).

Reasons for a Business Plan

• A business plan helps map out a business' future.
• It helps develop a marketing and sales strategy, ensuring all team members are aligned.
• A plan allows you to track progress, allocate resources effectively, and ensure you take necessary steps to achieve key achievements.
• It supports growth and secures funding, providing investors with a clear understanding of your business's past, present and future.
• Analyzing risks is essential, helping you spot potential issues and challenges before they escalate.

Key Elements of a Business Plan - Executive Summary

• Business Title: Reflects the business's purpose, vision, mission, and target audience. It guides the brand identity.
• Executive Summary: Summarizes the entire business plan in two to three pages, aimed at potential investors and financial institutions.
• Business Description: Covers products, business size, mission statement, core values, and background/ownership of the entrepreneurs. It should ideally describe the company's product line and how customers utilize its goods/services explicitly.
  • Products: Should include detailed illustrations or diagrams if necessary for highly technical products. The information should also compare the company's product(s) or service(s) with competitors, highlighting advantages and unique features. This section will include plans to create future iterations of the existing product.
  • Size of Business: Describes the organization's size, typically measured by the number of employees, revenue, or market reach, with specific examples from Table 1 (classification of enterprises and workforce levels).
  • Mission Statement & Core Values: States the company's purpose and direction.
  • Background of Business Owners/Entrepreneurs: Provides information regarding individuals who run the operations, highlighting experience, education, and skills, and demonstrating their capability, essential for investors.

Key Elements of a Business Plan - Management Aspect

• Business Leader: Includes the names and addresses of business owners/entrepreneurs.
• Nature of Business: Describes the core business activities, products/services, industry, target market, and primary goals.
• Organizational Chart: Outlines business ownership structures such as sole proprietorships, partnerships, and corporations, as well as backgrounds and roles of all involved managers to demonstrate the team's ability to manage effectively.
• Management Team Background: Details the qualifications, experience, and education of those involved in running the business, to show investors that the management team is capable of leading the business to success.

Key Elements of a Business Plan - Product and Service Description

• Product/Service Name: Includes a short description of the product.
• Production Plan: Details the specific steps for product production.
• Machinery and Equipment: Explains the tools, machines, technology required, and justification of their selection in producing goods/services.
• Supplies and Raw Materials: Outlines essential components needed for producing goods and services (e.g., raw materials, packaging, office supplies).

Key Elements of a Business Plan - Market & Marketing Aspect

• Marketing Plan: Includes relevant aspects such as target market, costing, promotion, and sales forecasts.

Key Elements of a Business Plan - Financial Aspect

• Financial Plan: Covers short-term and long-term funding sources.
• Sources of Funds: Lists capital, cash, investors, loans, and banks; specifies amounts.
• Breakeven Analysis: Determines the point at which total costs equal total revenue.
• Breakeven Analysis - Expenses: Provides details of expenses to estimate the cost of running the operations, including the salary of employees, rent, utilities, supplies, raw materials, and equipment costs.

Key Elements of a Business Plan - Technical Aspect

• Standard Operating Procedure (SOP): A detailed, step-by-step outline for performing tasks and processes, to ensure efficiency, consistency, and quality control.
• Assessment of Risk Strategies: A risk assessment involves identifying potential problems, developing prevention strategies, and implementing contingency plans.

Facilitating Supplementary Services

• Order-taking: Includes applications for orders, reservations, and check-ins, through sales personnel, phone, email, or online.
• Billing: Involves accurate and complete documentation of transactions to avoid customer issues.
• Payments: Covers a range of payment options, including self-service and direct payee options.
• Consultation: Involves probing customer requirements and designing tailored solutions.
• Hospitality: Should focus on creating positive experiences for all customers upon arrival and throughout their service.
• Safekeeping: Addresses customer requests for support managing their belongings or possessions while on-site.
• Exceptions: Handles requests that fall outside of routine service provisions, including special requests, problem solving, complaint handling, and restitution.

Core Product

• The central component that supplies the principal problem-solving benefits customers seek.