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Business plan

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Startups need a business plan to help with communication, management, and planning. Get potential customers to help you pitch to investors. If investors see that there is a pent-up demand of customers asking you to build what you're working on, you have a greater chance of success.

According to Wikipedia, a business plan is a summary of how a business owner, manager, or entrepreneur intends to organize a commercial endeavor and implement activities necessary and sufficient for the venture to succeed. It is a written explanation of the company's business model.

The plan will need to detail your business, your customers, your marketing strategy, and your finances. It should include the origins and goals of the company, resumes of the staff, details of the product or service, market potential and analysis of competitors, a marketing strategy, and your financial plans.

Business plans are used internally for management and planning and are also used to convince outsiders such as banks or venture capitalists to invest money into a venture. Business plans are noted for often quickly becoming out of date. One common belief within business circles is that the actual plan may have little value, but what is more important is the process of planning, through which the manager gains a greater understanding of the business and of the options available.

Content of a business planEdit

A business plan can be seen as a collection of sub-plans including a marketing plan, financial plan, production plan, and human resource plan. The business plan has many forms. There is however a format that is typical:

  • Executive summary
    • explains the basic business model
    • gives rationale for the strategy
  • Background
    • gives short history of company (unless it is a new company)
    • provides background details such as:
      • age of company
      • number of employees
      • annual sales figures
      • location of facilities
      • form of ownership including
        • sole proprietor
        • Partnership
        • entrepreneurial startup
        • private corporate startup
        • publicly traded corporation.
        • public utility
        • Non Profit Organization
    • background of key personnel including
      • owners
      • senior managers
      • head scientists and researchers
  • Marketing
    • the macroenviroment
    • the competitive environment
    • the industry
    • the customers priorities
    • product strategy
    • pricing strategy
    • promotion strategy
    • distribution strategy
  • Production and manufacturing
    • describe all processes
    • production facility requirements - size, layout, capacity, location
    • inventory requirements - raw materials inventory, finished goods inventory, warehouse space requirements
    • equipment requirements
    • supply chain requirements
    • fixed cost allocation
  • Finance
    • source of funds
    • expected return
    • break even analysis
    • monthly pro-forma cash flow statement
    • existing loans and liabilities
  • Human resources
    • assign responsibilities
    • training required
    • skills required
    • union issues
    • compensation
    • skills availability
    • new hiring

Specialized sections such as product research and development, legal strategies, marketing research, or inter-company collaborations, are added to deal with unique features or characteristics of the business or its markets.

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