How to Plan for a Successful Business?

A business plan is a document that explains to the reader how a business idea will be put into practice.

It helps to clarify the idea for the business and staff, but also helps to monitor progress over time. It is also used to attract investment so it needs to be persuasive.

The information in a plan needs to be well researched, realistic and as accurate as possible.

The different stages of a business plan are:

• Executive Summary
• Introduction to business idea
• Environmental audit
• Financial planning
• Marketing plan
• Operational plan

Executive Summary

This section provides a summary of the entire business. Often, potential investors will read the executive summary and decide whether it is worth reading any further. Sometimes investment decisions may even be made by reading nothing other than the executive summary. Therefore, it is important to grab the attention of the reader by including content that stands out and clearly articulates the key information such as the business concept, the target audience, potential sales and profit projections.

Introduction to business idea

Although this is not an extensive section, a clear description of the business idea is needed. The business idea is presented, differentiated and justified within this section. Other information that may also be included (but not always), are the names of key people or partner organisations involved in the business and their roles. This can sometimes help obtain funding if the key personnel are seen as people that have strong track records, experience and/or specialist knowledge.

Environmental audit

A business idea may seem like a good one, but in order to establish its potential it is important to analyse the idea in detail and assess the marketplace within which it will operate. This analysis is performed by both new and existing businesses.

The SWOT analysis is a useful tool that helps establish the strengths of an idea and the areas where the idea may be vulnerable. For example, the idea may be unique, but if it is easy to replicate by other competitors with greater access to finance; those competitors may be considered a threat to the business. The SWOT analysis will help to establish these potential issues and allow a business to plan for the challenges it has identified.

Porter’s five forces analysis examines the competitive environment within which a business is operating. It looks to assess the ease and difficulty of accessing that market, the negotiating power of suppliers and customers and the extent of competitive rivalry within the industry.

The PESTEL analysis is a more generic analysis that examines the wider environment within which a company operates. It looks to see what political, economic, social, technological, environmental and legal factors might affect a business.

Each of these three tools are used to develop the environmental audit for the business plan.

You will learn more about SWOT and PESTEL analysis in week 2.

Financial planning

A business needs to consider the expenses it will incur and how it will fund those expenses. This section of the business plan will highlight this information by presenting details of the different costs (specifically the costs of starting a business) that require funding. Any potential investor will want to see how their investment will be spent, so this is an important section that helps them understand the reasons for specific funding requests. Therefore, it is important for the information included to be realistic and well researched.

Marketing plan

A great business idea does not necessarily mean that a business will be successful. The idea needs to be priced, promoted and distributed effectively in order to attract customers. The marketing plan identifies the key customers that will be targeted and how the product will be positioned to attract their interest. The different marketing tactics to be employed will be detailed in this section. We will explore marketing further in course two.

Management strategy

A good business plan needs to have clear organisation and a strategic vision. This section helps to highlight the way in which a business will be controlled and managed, within the context of this course, a consideration of international management will be required. Therefore, it is important to discuss the approaches for dealing with customers, employees and other relevant stakeholders in different countries. This subject will be explored in more detail in course three.