A business plan is a formal plan of a set of business objectives, the factors that make the objectives attainable, and the plan for realizing those objectives. It may include background information about the firm or staff attempting to realize those objectives. Business plans may also aim at changing the insight and branding by the clients, taxpayers, and the public in general. When a business is to adopt or is expecting major changes in its operations, a 3 to 5 year business plan becomes necessary.
Business plans may center on the internal or external issues affecting the business. Externally centered plans aim at achieving goals that are vital to external stakeholders. They generally have comprehensive information about the team trying to realize the objectives while internally centered plans aim at achieving the immediate business goals. They may include the development of a new product or service, a new management information system (MIS), renovation of a firm’s premises, or reshuffling an organization’s management staff. An internally centered business plan is regularly developed in combination with a balanced scorecard, this enables the success of the plan to be assessed using non-financial quantities.
A business plan consists of several sections each tailored to match the objectives of the business plan. A sound business plan must detail the business cash flow and precise implementation procedures to ensure its success.
Idea generation is the ingenious procedure of creating, developing, and communication new ideas and is a fundamental process in the design of a business plan. A good business idea is a hybrid between different thinking perspectives, but is less valuable without the team that will turn it into a reality, and eventually success. While productivity is vital to implementing business ideas, generation of the business idea is in itself a very important process.
One of the most important factors to consider when coming up with a business idea is to keep it simple and practical. The plan should proceed in a systematic manner and touch on all aspects of the business. The entrepreneur must strive to come up with new ideas by examining current trends in consumer behavior in the field of interest. To come with a viable business idea, an entrepreneur must have enough knowledge regarding his area of interest, for example, what makes the idea viable? Is the idea new, or is it a re-invention of earlier concepts? What are the costs/benefits associated with the idea? The chance of success can be increased by forming a team to undertake case studies regarding the idea drawing from previous ventures or case studies to discover ways of improving the idea (Greiner, 1997, para. 2).
Apart from feasibility, a business idea should be based on a competitive market analysis and product/ market differentiation. This calls for a comprehensive market research. The idea must be simple practical, and where appropriate, amended from time to time before implementation.
Strategic objectives are the widely defined goals that a business venture must realize in order to transform the business idea into a reality and eventually success (Business Dictionary, 2010, para. 1). Peter Drucker, a management expert, posits that strategic objectives are normally centered on external factors, these objectives fall into eight main categories as outlined below:
- Market position: the projected share of current and new markets;
- Innovation: creativity and uniqueness in the development of products and services;
- Human resources: choice and development of staff;
- Finance: identify the sources of capital and their reliability, costs and other monetary policies;
- Physical aspects of the venture. These include offices, stores, etc;
- Productivity; profitable use of resources with respect to the output;
- Social responsibility: conscience and reaction to the effects on the wider population;
- Profit; realization of a measurable financial performance and growth (Byrne & Gerdes, 2005, para. 7).
Mission statement describes the objectives of a business venture, however, to turn the mission into a reality, strategic objectives come into play. They provide mechanisms on how the firm can move towards achieving its goals, because of this, they are normally more precise and cover a definite period (US Department of Commerce, 2007, para. 4). A perfect management process begins from the mission statement and flows down to the strategic goals and objectives as shown in the chart below:
Most strategic objectives are aimed at generating greater margins while a few others target the client and the community at large through social responsibility blueprints (Dess et al, 2005, pp. 45).
Market Analysis and Research
The aim of a market research is to identify and study market needs and competition. Market research also helps a business to have conclusive information regarding decision-making processes. The first step in undertaking a market analysis and research is to define the target market, an entrepreneur must know precisely who is interested in purchasing his products or services (Ward, 2010, para. 2). The next step is to make projections on the target market. The projection can be based on the rate at which the products or services will sell and how they will be affected by variations in market conditions.
Before coming up with the target market, a marketer needs to have detailed information regarding the market composition and trends. Factors such as demography, family structure, where the potential customers live, their income bracket, lifestyle, among others must be taken into consideration, these factors can be used to segment the market hence design different marketing strategies for each segment. Market research activities mainly use questionnaires and group chats to collect information regarding market trends.
The main function of a market research and analysis is to discover the customer’s needs and this information becomes crucial during the actual marketing process. The process also helps the business identify its competitors and devise ways of beating them, or engage in other product lines.
Competitive strategy and scenario analysis
Competitive strategy refers to the manner in which a firm positions to compete effectively with other companies, or to enhance its competitive advantage (Porter, 1998, pp. 4). A firm can gain advantage over its competitors through a number of ways, Michael Porter, a renowned economist, suggests four hybrid strategies that a firm can implement. These strategies depend on the degree to which a firm’s activities are narrow versus the degree to which it has differentiated its products (Tutor2u, 2010, para. 3). This is shown below:
Scenario analysis is a strategy that entails the evaluation of a number of possible future events and the occurrence of other scenarios because of the future events (Porter, 1998, pp. 17). This procedure is useful in several situations, for example, in business expansion. Both the businessperson and the business can benefit from scenario analysis. It help a firm when it is launching a new product or entering new markets while a businessman will find it useful when considering a variety of business operations (McLoughlin & Aaker, 2010, pp. 95).
Financial and Cash Flow Statements
Despite this section coming at the end of the business plan, it is a very important section and determines the viability of the business plan. Besides, it determines whether the business plan will draw any investment in the business idea generated. The financial and cash flow statements section is made up of three main parts:
- The income statement shows the income, expenditure, and profit for a specific trading period;
- A cash flow projection shows how money is likely to circulate in and out of the organization; and a
- Balance sheet shows the firm’s net worth during any specific time.
When preparing a business plan, an entrepreneur must identify sources of his income and expenditure. Expenses are divided into two main classes: start-up expenditure and operating expenditure, start-up expenditures include business licensing fees, opening stock, property lease fees, and repairs or fittings in business premises while operating expenses may include staff salaries, raw materials, communication expenses, utilities, and storage costs (Ward, 2010, para. 5). Many firms recognize the importance of financial planning and lay a lot of emphasis on the section, for example, Mothercare plc, an international company that deals in baby products, prepares end year financial statements and post it on their website (Mothercare PLC, 2010). The company provides all three types of financial statements on its website.
An entrepreneur is a person who has a new business venture or idea and shoulders all the the risks involved and the outcome of the process. Simply put, an entrepreneur is someone who, instead of being employed, runs his own venture while assuming all the risks involved, he is frequently seen as a business leader and pacesetter in the use of new ideas and business practices. Entrepreneurs play a vital role in our economy: they have the talent and initiative needed turn business ideas into reality, making precise decisions and eventually turning the ideas into commercial success (Gough, 1969, pp. 289). The prize for the risks they took comes in form of profits.
Throughout history, several entrepreneurs have emerged from time to time. Some notable ones include Steve Jobs, founder and CEO of Apple Corp., and Larry Hillblom, co-founder of DHL Worldwide Express Company, who took all the risks involved in developing personal computers and parcel and letter delivery businesses respectively, and achieved unrivalled success. Hillblom started several other businesses in Saipan, these include investments in the hotel industry, golf courses, and real estate (Farell, 2001, pp. 179). Entrepreneurs have specific qualities that make them excel in their fields of specialization and these characteristics are outlined below. Interestingly, entrepreneurial activities occur in the age bracket of 40-60 as shown below (The Green Room, 2009, para. 1).
To achieve success in today’s competitive business environment, it is imperative that a person have self-confidence. Self-confidence is the magical feeling of believing in oneself irrespective of the challenges. It is easy for a potential entrepreneur to become dejected, frustrated, and indignant when he/she does not possess self-confidence. Self-confidence relates with the way an entrepreneur feels about his/her ability to take on any investment opportunity, especially those opportunities that had been tried before. A successful entrepreneur takes all the risks and makes tricky and intricate decisions in order to exploit a business opportunity (Kabir, 2010, para. 4).
Despite being an entrepreneurial characteristic, self-confidence is not inherent. A person can have this trait in one activity and completely lack it in another one, it is a trait that can be adopted by practice and training. Reflecting on my skills, I have always had self-confidence in everything I do, be I it classroom assignment or non-curricular activities. This shows that I have a few entrepreneurial skills!
Entrepreneurs are ambitious
Ambition is the ability to work by oneself and having the zeal and determination to move forward even when conditions are not favorable. Ambition is a vital characteristic of entrepreneurs as it gives them the belief that anything they venture in will almost certainly end in success, it also gives him hope that he can do something better than it was done earlier. Without this characteristic, an entrepreneur cannot achieve success and will quit any entrepreneurial activity at the slightest form of discouragement.
A feeling of urgency usually accompanies the ambitious convictions of an entrepreneur, this burning desire to get a task completed can in turn be transferred to other employees and workmates (Gundry & Welsch, 2001, pp. 460). Entrepreneurs are enthusiastic, passionate and driven by their own desire to succeed, in the words of Bill Gates, Microsoft Corp. founder and CEO, “We were young, but we had good advice and good ideas and lots of enthusiasm” (Allen, 2010, para. 7).
I always have the zeal and ambition to progress even when the conditions are unfavorable due my self-confidence. The confidence has always rescued me from difficult situations. For example, during class work, I normally combine self –confidence with the ambition for my future and these push me towards achieving good grades.
Entrepreneurs are hard working
It is only through hard work that we can realize success. Entrepreneurs possess a quality known as diligence that enables to work hard to ensure the success of a business activity even though they may encounter obstacles along the way. Starting a business enterprise from scratch is never an easy task, entrepreneurs have no official time for beginning or stopping work, rather, they work round the clock, usually with limited or no staff during the initial stages of their business activities. Therefore, if a person does not possess the trait of hard work, turning a business idea into reality can be quite a hurdle, hence the importance of this trait to entrepreneurs. A story is told of how Larry Hillblom worked hard in Saipan while renovating the Dalat Palace Hotel even though he had become wealthy.
Hard work is another entrepreneurial characteristic that I possess, hard work becomes important during class work.
Entrepreneurs are committed
Entrepreneurs commit themselves to whatever they are doing until their plans and visions have been turned into reality. Commitment is the resolve of tenacity that creates focus and elicits the desire to complete a task and this flows over to the other workmates and eventually the whole organization. Therefore, entrepreneurs are just as effective in any organization as they do when working on individual entrepreneurial tasks. Problems are common in any company, particularly during the early stages, entrepreneurs can be said to be wading against a raging river as they try to turn their ideas and visions into reality, tasks are frequently creating problems in the young company.
Many entrepreneurs fall short of meeting their targets due to the problems that are cropping up and those that succeed must have the ability to withstand failure and try again. They are committed to whatever they do no matter the setbacks (Bennet, 2010, para. 3). A practical example is seen in Conrad Hilton, the founder of Hilton chain of hotels, despite being heavily hit by the Great Depression during which he sold many of his properties and divorced with his wife, he rose after the depression and became even more successful (Hallet & Hallet, 1997, pp. 263).
I have commitment to achieving my objectives at school, both curricular and co-curricular activities. This trait makes me a budding entrepreneur.
Entrepreneurs have strong ego
Entrepreneurs prefer to do things according to their standards, and do not like it when they are instructed on what to do. They have a strong ego, yet they are able to achieve success by doing things their own way, they do this by combining the other qualities such as commitment and self-confidence. Commitment allows them to approach a task from different angles in case of failure, they learn from their mistakes through their mistakes thereby increasing their self-confidence. This enables them to gain the skills needed to achieve success (Kirzner, 1973, pp. 224).
Besides doing things their way, entrepreneurs have self-awareness (Affiliate Tips, 2008, para. 3). Motivating other people demands that that one must have self-knowledge, in fact, only a few upcoming entrepreneurs confess to having weaknesses. They believe that success entails putting on a false boldness, just so to inspire workmates, employees, or juniors. In most cases, these people see through the façade. More crucial, however, is the notion that an entrepreneur is only as strong as his employees. Hence the need for him to be honest about his own weaknesses so that he can employ people who are best qualified to assist him turn the business idea into a reality. Reflecting on my characteristics, I do not possess the trait, I normally seek for assistance from my friends and parents in case I cannot find a solution in any situation.
Entrepreneurs are autonomous
Being a successful entrepreneur demands that one must act on his own principles and belief, i.e. other people’s views do not carry much weight when it comes to making decisions affecting the business. As a result of being autonomous, many entrepreneurs do not function desirably in firms with strict rules and regulations as most believe they can handle the task better than anyone else. They insist on handling tasks their own way and with the freedom to opt and act on their own ways.
Entrepreneurs are imaginative geniuses with exceptional abilities but are not always ready to discuss these ideas with other people in order to implement them, rather, they keep to themselves and can become acutely aggressive and intolerant, especially if their fellow employees cannot decipher what they want (Weishaar, 2010, para. 3). As much as I try to be autonomous, I strive to cooperate with my fellow classmates in order find solutions in difficult situations. In fact, we frequently participate in brainstorming sessions. This would ruin my entrepreneurial skills, however, information only becomes useful when it is shared with others.
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