Developing a Business Plan - WEEK 7

DEVELOPING A BUSINESS PLAN

  • Definition: A business plan is a written statement that analyzes a business and provides detailed projections about its future, covering financial aspects like start-up costs and repayment.

BENEFITS OF A BUSINESS PLAN

1) Helps to Borrow Money

  • Lenders require a written business plan as proof of serious thought about critical issues impacting the business.

  • Demonstrates understanding of the business and chances of success.

2) Helps Decide to Proceed or Stop

  • Clarifies rationale of business proposals and answers lender/investor questions.

  • Analyzes money flow, strengths, weaknesses, and realistic chances for success, allowing avoidance of unfeasible ideas.

3) Improves Business Concept/Model

  • Writing a plan allows for adjustments, enhancing chances of success by strategically modifying marketing, pricing, or revenue.

4) Improves Chances of Success

  • A clear picture of risks involved, including personal and investment risks, is provided by the business plan.

5) Keeps You on Track

  • Serves as a guideline for future decisions and helps manage fluctuating business income and profits.

CHOOSING THE RIGHT BUSINESS

1) Retail

  • Retailers buy from wholesalers and sell directly to consumers; may also include services.

  • Mark-up strategies often double the cost for retail sales.

2) Wholesale

  • Wholesalers buy from manufacturers and resell to retailers, avoiding direct sales to consumers.

  • Often operate with a fixed profit margin of 3-10 percent and primarily deal in large quantities.

3) Service

  • Individuals offer their skills to consumers/businesses; end products are often advice or task completion.

  • Examples: media consultants, event planners, freelancers.

4) Project Developers

  • Create marketable commodities by assembling resources for one-time projects.

  • Typically know the market value of products before commencing work.

  • Examples include restoring antique cars or renovating properties.