A business plan is a formal statement set business goals, the reasons why they are considered attainable and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.
Business plans can be aimed at changing perceptions and branding for consumers, customers, taxpayers or the wider community. Business plan for 3-5 years is required when it is anticipated a significant change in an existing business or when planning a new enterprise, as investors will be in the first place, to see your potential annual income in these periods.
The audience of the business plan
Business plans can be directed to internal or external audiences. Externally focused plans focused on results that are important to external stakeholders, particularly financial stakeholders. As a rule they contain detailed information about the organization or the team that is trying to achieve. In the case of commercial entities, external stakeholders include investors and customers. External stakeholders for non-profit organizations include donors and the clients of the services a non-profit sponsors. For government agencies, external stakeholders include tax payers, higher-level government agencies, and international lending organizations such as the international monetary Fund, world Bank, various economic agencies of the United Nations and development banks .
Internally focused business plans are aimed at intermediate goals required to achieve external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of Finance, the reconstruction of a factory or a restructuring of the organization. The internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows you to measure the success of the implementation of the plan through non-financial measures. Business plans that identify and represent internal goals, but provide only General guidance on how they will be met are called strategic plans .
Operational plans describe the internal goals of the organization, working group or Department. Project plans, sometimes called part of the project, describe the specific objectives of the project. They can also determine the location of the project within the larger strategic goals of the organization.
The content of the business plan
The business plans are decision-making tool. There is no fixed content for a business plan. Rather, the content and format of the business plan, is determined by the goals and audience. A business plan represents all aspects of the process of business planning, declaring vision and strategy alongside sub-plans to describe marketing, Finance, operations, human resources, and legal plan, when required. A business plan is a summary of those disciplinary plans.
For example, a business plan for a nonprofit can describe the correspondence between the business plan and mission of the organization. Banks default rather demanding to borrowers, so a business plan for a Bank loan will contain convincing arguments regarding the organization’s ability to repay the loan. Venture capitalists are primarily concerned about initial investment, opportunities and exiting. Business plan for a project requiring equity financing should explain why existing resources, upcoming growth opportunities and sustainable competitive advantage will lead to a higher estimate of output.
Preparing a business plan draws on a wide range of knowledge from different business disciplines: Finance, human resource management, intellectual property management, supply chain management, production management and marketing, etc. May be useful to consider the business plan as a collection of sub-plans, one for each of the main business disciplines.
“. A good business plan can help to make a good business credible and attractive to those who are not familiar with business. Writing a good business plan can’t guarantee success, but it can guide the organization for a long way towards reducing the chance of failure”.
Aimed at an external audience, the business plan should list all legal issues and financial obligations, which may adversely affect the income of investors. Depending on funding, task, and audience to whom the plan is submitted, failure to implement the business plan can have serious legal consequences.
Traditionally business plans are strictly confidential and are intended for a very limited audience. The business plan is generally regarded as a mystery. However, the emergence of free software and open source has opened the model and led to the emergence of the concept of an open business plan.
An open business plan is a business plan with unlimited audience. Such business plan, as a rule, is published online and accessible to all.
Business goals can be defined for both commercial and non-profit organizations. For commercial organizations business plans typically focus on financial goals such as profit or wealth creation. Business plans for nonprofit organizations and government agencies, typically focus on the “organizational mission” which is the basis for their governmental status or their non-profit activities, although non-profit organizations can also focus on optimizing revenue.