| Finance companies and banks demand a written | | | | will be sold and note the sensitivity of all |
| business plan before putting up financial | | | | items to unexpected events. |
| support to a new business. All medium and | | | | |
| large companies inevitably prepare a | | | | The operations and production section is |
| financial budget for the coming year. That | | | | dependent upon the type of business and will |
| should tell everyone that not producing a | | | | be variable depending on whether the new |
| written business plan is the first mistake | | | | start up business was providing services, |
| everyone starting a new business might make. | | | | retailing or manufacturing. The production |
| | | | section is basically a detailed picture of |
| Starting a new business without a proper | | | | the vehicle that will be used to generate the |
| business plan is akin to taking a blind walk | | | | products to be sold. |
| in the dark without no road or map to follow. | | | | |
| It should not come as a surprise to learn | | | | Purchasing would include an analysis of how |
| that the majority of new start ups | | | | the products to be sold would be sourced. |
| consequently fail within the first two years | | | | Volumes should be stated and sources of |
| dashing the hopes and dreams of many budding | | | | supply specifically identified with a real |
| entrepreneurs. | | | | purchase cost of all major items specified |
| | | | not guessed. |
| The benefits to an entrepreneur in producing | | | | |
| a detailed comprehensive business plan when | | | | Personnel would include the names of the |
| some-one is considering starting a new | | | | people involved with brief details of their |
| business lie strongly in the thought process | | | | knowledge, qualifications and previous |
| that goes into producing that plan rather | | | | experience. The personnel section would also |
| than the ultimate plan itself. New start ups | | | | include details of people yet to be recruited |
| should regard a business plan as a road map | | | | if the work to be performed is going to be |
| to get the show on the road. | | | | critical to the new business. |
| | | | |
| A properly thought out and written business | | | | The financial section of a business plan |
| plan for a small business should contain the | | | | should contained a forecast profit and loss |
| details of how the small business is going to | | | | account preferably each month for the first |
| get started. A typical plan might include a | | | | year at least with perhaps a summary of the |
| short synopsis of the new business with | | | | second year. In addition to the profit and |
| sections on sales and marketing, operations | | | | loss account a cash flow statement taking |
| or production, purchasing, personnel plus a | | | | into account capital introduced and stock |
| financial section evaluating those plans and | | | | levels should also be produced. |
| putting real numbers on the written text. | | | | |
| | | | The sales and production or purchasing |
| The short synopsis should briefly describe | | | | numbers including volume and prices contained |
| the main business and mention each of the | | | | within the report should be reflected in the |
| main ingredients contained within the plan to | | | | financial report. Each major critical |
| attain the objectives. The rest of the | | | | assumption within the plan should be |
| business plan should support that synopsis | | | | subjected to a financial sensitivity analysis |
| and should be factual rather than a sales | | | | that takes into account all potential risks |
| document. | | | | to volume and price levels. |
| | | | |
| Sales and marketing should include an | | | | The process of preparing a detailed |
| analysis of the potential and forecast sales, | | | | comprehensive business plan that has been |
| competition and how the sales will be | | | | properly researched has significant benefits |
| achieved. Identify the sales channels that | | | | in itself. If the business has been |
| will produce the sales and why they will | | | | researched and thought through before the new |
| produce the sales. The sales section should | | | | business starts there is a much higher can it |
| specifically state the volume of sales of | | | | will succeed and suffer fewer negative |
| each product over at least the first year and | | | | surprises once the real work of generating |
| the price at which each of those products | | | | sales and profit begins. |