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Business Plan for Starting an SMB

The Purpose of a Business Plan

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The Purpose of a Business Plan

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1st, Identifies nature and context of business opportunity

2nd, Presents approach entrepreneur will take to exploit the opportunity

3rd, Identifies factors that most likely determine whether or not the venture will be successful

4th, Serves as a tool for raising capital



General Considerations:

  • To sell yourself on the business concept “Sanity Check”
  • To help you turn your idea into a reality --- to determine the feasibility of pursuing the difficult steps necessary to start a new company or new venture within an existing company

Operating Considerations:

  • To serve as an internal planning tool

         To guide an organization towards meeting its goals and objectives

         To keep management headed in a predetermined direction

         To tell how the company will be run over the next 3-5 years

         To serve as a tool for analyzing your business

         To provides tools to implement change

  • To give you a firm basis for developing a more detailed operating plan
  • To help you evaluate your strengths/weaknesses in order to develop viable strategies for future actions

Financing Considerations:

  • To obtain financing for the start-up or new venture
  • To help you persuade lenders and investors to back your business
  • To tell you the type of information you will need to present in raising capital from outside investors

Other Considerations:

        To form strategic alliances, joint ventures, or partnerships

        To capture large contracts from key customers

        To attract and recruit key managers

Internal Uses of a Business Plan

1st, it can improve performance by identifying the strengths and weaknesses of the company’s operations.

  • Identify any potential or emerging problem area
  • Develop strategies that simultaneously build on the company’s strengths and weaknesses
  • To provide strategic guidance, operating tactics, and objectives

2nd, it can communicate to management and staff clear expectations regarding the company’s performance and priorities.

3rd, for companies with multiple divisions/subsidiaries, or points of management responsibility, a business plan can effectively coordinate and ensure consistency in the plans and operations of the various units.

4th, a business plan provides a solid basis for measuring performance of the overall company and of individual units and managers.

        Framework for reviewing key decisions in the ongoing management of the company

        Serves as a rationale structure for evaluating new developments and opportunities

5th, a business plan and the process of developing it can be used to educate and motivate the key staff – such as managers and supervisors – of the company.

        The process gets management commitment to the plan

        The process helps define management responsibility in achieving the plan

6th, to establish the operational and financial structure of a management buy-out

External Uses for a Business Plan

1st, it can be used to educate outside parties regarding the objectives, structure, and performance of the company.

        Very important if the support of outside parties is important to the company’s success

        Examples:  Support of current or potential stockholders or investors

        To promote relationships with joint venture partners and large customers, suppliers, distributors

        To arrange strategic alliances

        To obtain large contracts

        To attract key employees

2nd, it can be used to secure funding from outside investors. 

3rd, it can be used to complete mergers and acquisitions

4th, it can communicate planned actions, deflecting competitive or regulatory moves that may be under consideration by outside parties.

        By formalizes its intentions in a business plan, a company commits itself to action

        By communicating these intentions to interested parties as appropriate, a company may preempt actions that could have a negative impact on its own plans and actions.




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