Page 127 - Business Principles and Management

Unit 2

FIGURE 5-1 Elements of a Business Plan

NATURE OF THE BUSINESS
Detailed description of products and/or services
Estimation of risk based on analysis of the industry
Size of business
Location of business
Background of entrepreneur(s)

GOALS AND OBJECTIVES
Basic results expected in the short and long run
Results expressed in terms of sales volume or profits

MARKETING PLAN
Customers and their demand for the product or service
Prices for the product or service
Comparison of product or service with competitors

FINANCIAL PLAN
Investment needed to start and maintain the business
Projected income, expenses, and profit
Cash start-up and cash flow needs

ORGANIZATIONAL PLAN
Legal form of ownership
Legal factors—licenses, leases, contracts
Organization chart
Job descriptions and employee skills needed
Physical facilities—buildings, equipment, tools

Developing a business plan will help you see more clearly the risks and respon-
sibilities involved in starting a business, and will help you decide whether you
really want to do it. Writing down your strategies for achieving your goals can
give you confidence that your business can succeed. Your plan can also inspire
the confidence of others with whom you will deal. Bankers, for instance, will
ask to see your plan if you wish to borrow start-up funds. They will have greater
assurance when they see how carefully you have considered potential problems
and solutions before launching your new enterprise. Equally important will be
your own conviction that your business will thrive. Too many people who enter
business fail for one of three reasons: (1) they did not prepare a business plan,
(2) their plan was unrealistic, or (3) they wrote the plan only because the lender,
such as a bank, required it. To be successful, you need to start with a well-designed,
realistic plan.

GOVERNMENT SUPPORT
The U.S. government has a strong support network to help entrepreneurs and
small businesses. The Small Business Administration (SBA) is a government-
supported agency that counsels, assists, and protects the interests of small busi-
nesses. It provides SBA loan guarantees to small businesses that have strong

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