Page 166 - Introduction to Business

140 PART 1 The Nature of Contemporary Business

EXHIBIT 4.7 • Overview of the company. History of when
and how the firm was started, motivations
Key Components of a Business Plan
for establishing the firm, major accomplish-
ments, anticipated products and services,
Vision or mission competitive environment, perceived
statement
strengths and weaknesses, employees, sup-
pliers, and customers.
• Goals. Briefly stated overall firm objectives,
Goals as well as marketing, operations, and
financial objectives.
• Products and services. Detailed descriptions
and pictures of the firm’s outputs in addition
Strategies
to a discussion of their innovative aspects.
• Marketing plan. Research information about
Marketing Management Operating Financial
plan plan plan plan customer demand for the firm’s outputs and
how the firm intends to attract customers
and reach sales objectives.
• Management plan. Organizational structure, backgrounds of key managers,
employee personnel needs, and leadership responsibilities.
• Operating plan. Production facilities, technology, quality control, raw materi-
als, inventory, and distribution of products and services.
• Financial plan. Expected (or pro forma) accounting statements, cash earnings
over time (or cash flows), sources of funds to produce outputs, and profit and
share value goals in the near future.
• Appendices. Supporting documents, data, and other materials needed to
supplement the previous sections of the report.
The business plan is needed not only to give managers a document from which
to work but also to attract investors and customers. Without a business plan, man-
agers would be confused about their responsibilities and duties. Also, investors
would not have critical information to evaluate potential risks and returns, and the
firm would have difficulty raising funds needed to produce its products and services.
Note that a business plan is not a static view of a firm. Most small firms are dynamic,
fast-changing enterprises in their early years. Consequently, business plans are con-
tinually amended to accommodate change. Business plans are so important that
business consultants are often hired to help develop and modify plans.

Business Ideas

Where can you find successful business ideas? Personal experiences are probably
the most common source. For example, a business idea could emerge in your work
as an employee for another firm: by accident you discover a new chemical com-
pound unrelated to your employer’s firm. Or, you might be frustrated with a product
or service that you regularly purchase and have an idea on how to make a better ver-
sion. Some people go through repeated failures and by trial-and-error eventually get
the business idea right. The active pursuit of new technology is another source of
new business ideas. Sometimes it is a unique mix of personalities that through
brainstorming and cooperation yields a good idea for a business. New ideas also
result from discussions with friends, family members, or fellow employees.
Not every good idea is feasible. You and those around you may well believe that
a business idea is a sure winner. However, the ultimate test is convincing the cus-
tomer that this is true. Without sales, no business can survive. For this reason, mar-
ket research is desirable to gauge customer demand, complaints, possible improve-
ments, and competition. Customer surveys and trials are used to collect data. Also,
Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.