Writing a business plan forces you into disciplined thinking, if you do an intellectually honest job. An idea may sound great, but when you put down all the details and numbers, it may fall apart.
Eugene Kleiner, Venture Capitalist
Business plan is a very important business tool. It was first used in the USA as means of acquiring funds from private investors and entrepreneur capitalists. Later they participate in the company`s activities as co-owners or partners providing the guarantee capital. Since you have made up his mind to set up a business you face a lot of various tasks. Firstly, you should make plans and create a budget for the key activities of your business. They are development, production, marketing, distribution and finance. Actually, you will need to make lots of decisions. What customers or segments will you target? What niche will your business take on the market? What price will you ask for your product or service? What is the best location for your business? What will be the pricing policy of the enterprise? Will you outsource it or handle production yourself? Secondly, it is essential to indicate the purpose of the enterprise and prospects of its development. Needless to say that, a company must be able to generate profit over the long term period of time. So, actually the list of problems is rather wide.
Writing a business plan helps you get started setting up your company as well as developing your business ideas and form a concept of your company. It details the contents, scope and structure of a business plan and the expectations venture. It also provides valuable pointers on starting up a company. A business plan is the basic document developed by the enterprise and submitted to the investor (the lender) according to the real investment project or the business rescuer of the enterprise under the threat of bankruptcy; the program of the enterprise activity, a plan of specific measures to achieve specific goals of its activities, including the estimated expenses and income [1; 2]. However, the functions of the business plan are not only used by the startups. The majority of big ventures significantly rely on project-specific business plans. They help them to make serious investment decisions. Properly conceived and executed business plan becomes a key document for evaluating and managing an operation [3; 4; 5]. Writing a business plan you need to keep your style objective and give the reader a chance to evaluate your arguments properly.
Also you need to think about your product or service from the point of view of innovation.
Usually the term «innovation» is basically used in the context of new products. They are produced with conventional production means and delivered to the customer through the distribution channels which already exist. To come to an actual startup, the business idea feasibility must be properly assessed. The assessment procedures need time and resources to carry out the project. It is important for the company to get profit over the long period of time.
Profit calculations for a new business occur as follows: a company buys material or services, thereby incurring costs and the startup phase should generate gross profits of 40 % to 50 %.
Trying to implement a business idea you should consider the following factors:
• define innovative business concept
• potential buyers
• reasons of buying your product
• distribution channels to customer
• unique concept
• comparable alternatives
• competitive advantages
• profit
Management experience and competence of your company`s team is very essential. As a matter of fact, the majority of the investors pay special attention to the employees managing the enterprise because the ability of management to implement the concept is a major factor a successful business [6; 7; 8]. Needless to say that, entrepreneurial experience is more highly valued than education background in the business field. The ability of management to work as a team is one of the main keys of a good enterprise [9; 10; 11].
For the investors it is often the first part of the plan who will manage the project. They need to be sure that the management team is capable to run a promising business. Entrepreneurs should not underestimate the significance of this question.
Firstly, it is necessary to describe the strong points of your management team. Stress out the management’s qualifications; emphasize the most important things for implementing your specific plans. Professional experience and previous achievements carry more weight than academic degrees.
Characteristics of a powerful management team are the following:
• common objective
• complementary attributes and strengths
• help individuals to develop within the team
• members trust each other
• share information effectively
• listen to different points of view
• stay together through thick and thin
• regroups and makes a second attempt
It should be noted that bringing together the right people to build up a «team of dream» requires a lot of time and care. The team-building courses help to make leading business teams by increasing personal awareness of abilities and skills in colleagues. To add to this, the company seminars involve a combination of practical, intellectual and physical challenges such as dealing with unexpected situations. Margaret Thatcher used to say: «Look at a day when you are supremely satisfied at the end. It’s not a day when you lounge around doing nothing; it’s a day you’ve had everything to do and you’ve done it».
The necessity of planning the enterprise activity is a result of the rapid change of the market economy. Organization`s activity has become more complicated due to the modern conditions of the external environment, changed managing style and serious competition on the global trade market. At the present stage the work in the economic sphere is filled with new contents. It includes studying conditions and prospects of development the commodity market and services, creating business plans, assessment of real and potential competitors in the regional market, searching the most effective options for the future development. Target approach should become one of the distinctive features of modern planning. In consumer cooperation the purpose to get profit has to be only the means to achieve the other main objective – it is the fullest extension possible satisfaction of shareholders and protection of their interests.
The main task of new quality effective planning is the search of the most favorable way to achieve the goals on the basis of multiple calculations and an agreement of all quality and quantitative indices of activity, orientation to the external environment, objective and subjective factors. Marketing approach is considered to be the main key in the principle activity of an enterprise. Modern planning of activity of the organizations is taken as a principle. Broad knowledge of the consumer, direct contact with him is the key to success of the organization. The business plan meets all the requirements listed above. It considers not only the internal purposes of the organization, but also the external purposes of those who can be useful to new business such as investors and potential partners, market factors and problems. It can be developed both for new created enterprise and for the existing organizations as well.
Foreign experience in business planning allows studying the general issues but it needs to be adapted to the existing conditions of the Russian economy and especially to the economies of consumer cooperation. Effectively and competently made business plan is a basis for making any administrative decision.
Most experts of the consumer cooperation don’t realize importance of this problem, or have no possibility of its studying and are lost in the information flow. The technique of the business plan creation and its key indicators considering specifics of the consumer cooperation activity is necessary. Today almost every company has been equipped with some modern computer equipment and various business facilities. The qualification and educational structure of the company`s staff should be changed by the means of new forms and methods of trade. Improvement of social conditions, existence in the plans the measures to improve working conditions of the employees, promotes a collective unification. And a professional «team» is a key to a success in business.
The management team should be able to create something new and make the best of the highest value for your customers and win the competition. The owner of the company should be ready to reorganize it during the first years. You’ll be up and running as you have set up the major functions: marketing, management, finance, human resources and administration. Every staff member should be able to fill in for another for a short period of time if necessary. According to Ted Levitt, the editor of Harvard Business Review: «Organizations exist to enable ordinary people to do extraordinary things».
To draw a conclusion if you your organizational line of the company is simple, staff members will know the assignments they must carry out independently. Also the employees have to work together and communicate openly. It is essential to teach them overcome the crises and cope with the stress. So, well-planned management, marketing and sales activities are the key elements of a successful business concept.