Business plan

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Business plan is a planning document associated with global activity plan of enterprise, whose task is to identify company's purposes, goals and the ways and means to achieve them. Business plan as a set of documents and analysis is widely used in many organizations. It allows the preparation and conduct of projects, is necessary to obtain funds from the investor and/or bank.

A business plan should be prepared by management or by a specialized analytical unit within organization. Managers can also use help of consultants.

A business plan is being prepared for a period of two years (short planning horizon), 2–10 years (long horizon). In the modern economy, due to advances in technology, changes in legal and social environments, business plans prepared for more than three years have little chance to prove themselves in practice. In longer periods it may be more effective to use method of strategic foresight.

It is long-term and comprehensive business plan used for execution of business enterprise, which is drawn up based on a comprehensive assessment of the strategic situation of the company. The plan is a document stating the objectives of the organization or venture, way to achieve the described objectives and the resources needed for their implementation. It clearly and legibly shows and explains the goals and strategy of a company.

Principles of planning

Creating of a business plan requires compliance with a number of basic principles of planning:

  • When creating of planning assumptions manager must refer to independent entities operating in a market economy,
  • Environment of organization determines and limits its behavior,
  • Future can not be fully predicted,
  • Planning is a way of processing information to allow the formulation of the organization's goals and increase the chance of their achievement,
  • The results of planning are: less uncertainty, assessment of probability of threats and opportunities, reduction of risk of bad decisions,
  • Adaptation of the company to the main goal causes an increase in efficiency and stabilization of its operations,
  • Control is used for checking the degree of achievement of objectives.

Preparation phases

The structure of a business plan

The structure of a business plan depends on the purpose of its use. Sample business plan might look like this:

  1. Summary
  2. Company Profile
  3. Current status of the core business (manufacturing, service)
  4. Strategic Analysis
  5. Overall distribution of tasks
  6. Preparing plan for each department of the organization
  7. Terms and conditions of modifications to the plan
  8. Annexes on the economic situation

Business plan appraisal

The criteria for evaluation of the business plan may include:

  • Quality of goals,
  • Feasibility,
  • Operability (transparency, simplicity, clarity of assumptions),
  • Large variety of variants
  • Limited detail
  • Completeness (a complete description of the entire project)
  • Rationality.

References