Importance of a Business Plan
Question:
Discuss about the Entrepreneurship for a Case Study of Blueprints Business Planning Pty.
A business plan is an important part in starting a business. Halen et al. (2012) affirms this saying that having worked with many companies big and small, a business plan is a guide that helps companies achieve their goals. A business plan is drawn by startups as well as already established companies. A business plan gives a platform to analyze the industry in which one wants to enter, customers and competition. These analyses allow one to understand the opportunities that business has and the threats it is likely to face. A business plan also assists to evaluate the possible capabilities and resources of a business. In drawing a business plan, one puts down their financial report, forecast and budget. These three gives a view of where the business stands at that particular time and what the future holds for it.
All this analysis done through putting together a business plan will assist a business prepare for uncertainties in the future by coming up with strategies and alternatives to increase the chances of success in future. A business plan is usually broken down in several segments. These segments are the executive summary, company background information and description, product or service analysis, marketing analysis, strategy, how the company will be operated, financial projections and an implementation timetable (Bertelsen, 2011). This paper will compare two business plans. One from the company Blueprints Business Planning Pty (Schaper et al., 2014) and the other is Mid-Atlantic Recycling LLC. (Bplans.com, 2018).
Most business plans start with an executive summary. It is the executive summary that makes a reader want to read further into the business plan (Grogan, 2017). Both companies’ business plans start with an executive summary. Grogan further advices that the writer should write the executive summary last. Having written the rest of the business plan, the writer has more understanding of the business and that will make the writer write a mastery of the business in the executive summary. In the executive summary, the entrepreneur makes ‘the ask’ if they are writing this business plan to solicit for funds otherwise it will be stated how the entrepreneurs intend to fund their business. This makes the executive summary very crucial. Mid-Atlantic Recycling lacks that crucial information about funding in the executive. Instead they have given information about the importance and validity of their business idea. From their executive summary it is therefore not immediately certain why they are writing this business plan. This is unlike Blueprints which indicates in the executive summary that the directors will finance the business.
Both companies have however made an effort to give some background information about the business. This information tells who this company, what the company intends to do, the benefits of the business to the community and to the author. They are also giving the environment in which these companies will be operating. While Mid-Atlantic Recycling concentrated on giving a background of the importance of the business idea in the executive summary, Blueprints was very precise to give a very clear overview of the business and how the business will operate.
Structure of a Business Plan
A background is a brief history of the industry in which the business is centered. This is where the entrepreneur gives in-depth details of how and where the business will be operating. The company background also contains the name of the company and key employees, as well as the mission and vision of the company. Mid-Atlantic Recycling calls this section company background while Blueprints calls it background. It is noteworthy that these two companies have different content in the background section. Blueprints has its mission statement, company history and business goals in this section. While on the other hand, Mid-Atlantic recycling has its company ownership, startup summary, company location and facilities and government regulation in this section. Whereas Blueprints has a mission stated in its business plan, Mid-Atlantic Recycling doesn’t have a mission nor a vision statement. However, much as the Mid-Atlantic Recycling business plan has no mission in the company background section, it contains a precise description of the owners and the initial employees of the company, a startup summary, company location and facilities as well as government regulations the business is likely to encounter. In the company background section, blueprint included a mission statement, company history, and business goals.
This section gives an in-depth summary of the product or service the business will be dealing with. This section analyses the uniqueness and competitiveness of the product or service in the market. It is also in this section that the entrepreneur gives the advantages of his or her products and services and the differences this product has over what is currently available in the market. The Blueprints company does not have an analysis of the service it will be offering. This information is incorporated in other sections of the business plan. The Mid-Atlantic Recycling business plan has a detailed analysis of the services it will be offering.
Mid-Atlantic Recycling has an elaborate marketing analysis. In this business plan, Mid-Atlantic Recycling has concentrated on how they intend to segment the market, hoe to target that market segment, consumer requests, trends and growth. It also contains a service business analysis which contains details on distribution networks, competition and buying, patterns, significant business rivals and industry players. On the other hand, Blueprints also has an elaborate marketing analysis segment. For Blueprints this section contains the market research, analysis, marketing plan and marketing implementation. In the marketing plan, Blueprints has concentrated on service and intended consumers, placement, creating awareness and advertising, ICT marketing plan and the pricing strategy.
The marketing analysis gives a qualitative and quantitative overview of the market observing the volume and value of the market. It also gives the profitability analysis of the product in the market it is intended to join. An analysis on the market enables an entrepreneur to understand the level of competition his or her product and resultantly decide on the nature of completion the product or service will be facing (Brown, 2006). This analysis will help to make the decision of which environment is best for the business to thrive into profitability. The strengths and weaknesses of a product or service are also evaluated in this segment. Market potential is also analyzed to give the possible number of customers and the expected sales. All this market analysis assists the intended audience to understand hoe the market is and if it is going to be a worthy venture in the long run.
Executive Summary Comparison
Mid-Atlantic Recycling has a strategy and implementation section. In this section it has stated the strategies it intends to use to make sure that the ideas in the business plan are fully implemented. Blueprints does not have a strategy category in its business plan. The strategy of Blueprints may be incorporated in other parts of the business plan but it is not clearly indicated even with a subheading within the plan. For Mid-Atlantic Recycling, the approach and application summary segment contains the cost suggestion, competitive edge, advertising plan, awareness creation plan, positioning statement, valuing and sales strategy, sales prediction and the indicators.
This section in the Blueprints business plan is detailed as it contains information on authorization and certifying prerequisites, administration information, executive company arrangement, expert consultants, and protection and security issues. This section also contains company locations, necessary tools and machines, production process, ICT equipment as well as critical risks and emergency measures. The operations segment is supposed to cover the day to day running in the company in the production process the business id involved in, sales, procuring, customer requests, client information, distribution, billing, payments in and out, stock control, employees, employee data as well as fiscal books and reporting (Olokundun et al., 2012). A well-structured operations department in a company will ensure that the employees meet the objectives of the company in line with the vision and mission of that company. Mid-Atlantic Recycling does not have a distinct operations section on its business plan. However the operations activities are spread out in the other parts of the business plan.
Both companies have a financial projections section. In the Blueprints business plan, the financial projections segments consists of basic assumptions and information, analysis of financial forecasts, sales mix forecast, cash flow forecast, projected profit and loss statement, owners personal expenses, owners personal assets and liabilities. Blueprints goes ahead to provide an implementation timetable at the end of the financial projection section. For Mid-Atlantic Recycling, the financial projection section is named financial plan and it contains start-up funding, use of funds, important assumptions, break-even analysis, projected profit and loss, projected cash flow, projected balance sheet and business ratios and an appendix thereafter.
Both companies have a detailed financial projections section. This section helps to analyze how money flows in the business. This gives a good picture of a likelihood of success and it could also help a business attract investors. For the entrepreneur the financial projection helps him or her to decide whether to proceed or to stop, it will help the entrepreneur to improve on the business concept and, improve the odds for success (Collier, 2010). A financial projection also helps the entrepreneur keep on track since they had already planned ahead in case of any emergencies. A profit and loss projection is also like a foundation of the business as it discusses what the business will sell and how much profit they will make. This gives the implication whether the business will succeed or not.
The executive summary is a very important section of the business plan. It has the potential to make or break a good idea. Mid-Atlantic Recycling should therefore work on making a more appealing executive summary that will make the reader want to read more into the business plan. It is also important to either make the ask or to state how the company intends to fund itself and to also give an overview of what the company is about so that a reader will understand the purpose of the business plan right from the executive summary section. Blueprints also needs to make a distinct strategies section. In this section they should outline the strategies they intend to use to make the idea grow into a successful company. The strategies section will also give an overview of how the business intends to handle the drawbacks it might encounter in future. This section is very important in showing the preparedness of the entrepreneur in entering an already competitive market. Mid Atlantic Recycling should formulate an operations section that will outline the day to day running of the company from employees to inputs and out puts in the production process of the company.
Conclusion
A business plan is a crucial starting point for an idea whether it is a startup or it is an already developed company. The analyses of the market, the environments, the days to day running of a company, the projections or profits or loss come in handy when making decision of whether it is worth to invest in a given idea or not. It will save the entrepreneur as well as the investors from losing their money. It also prepares the business for any unfavorable eventualities as they are also considered in the business plan an possible solutions found. Comparing this two business plans further cements the need of a business plan as well as emphasizing on the components of a business plan that is going to lead to a successful investment. A good business plan will also assist the entrepreneur to get the right employees saving him or her on time and money.
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