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Business Planning

Planning is the first and the most crucial step for starting a business. Business Planning lays down step-by-step procedure by which would function. The various functional requirements of business-marketing, finance, human resource and production, provide information to all the concerned people like employees, venture capitalists, etc. and it also draws a read map to help the entrepreneur run the business successfully. It is known to be the most crucial step in the successful running of the business because a well planned business venture carefully scans all the possible opportunities and threats, understand the demands of the market and arranges for the best possible resources which finally lead to the success of the business.

What is Business Plan?

It is outline of the business giving details of the finance, assets, staff, products or services and markets. It guides the entrepreneur, it identifies possible problems and it is also used in funding applications. The business plans sets out how to owner of a business intends to realize its objectives.

The business plan serves several purposes:

Enables the entrepreneur to think through the business in a logical and structured way and to set out the stage in the achievement of the business objectives.

Enables the entrepreneur to plot progress against the plan.

Ensures that the resources needed to carry out the strategy and the times when they are required are both identified.

Preparing the business plan ensures that the entrepreneur has thought through the crucial aspects of the venture.

It is a means for making all employees aware of the business direction.

It is an important document for discussion with prospective investors and lenders of finance.

It links into the derailed, short-term, one-year budget.

A good business plan would document short-term and long-term goals of the business and establish specific tasks for achieving theses goals. Planning is the process that never ends for a business and is extremely important in the early stages of the business. However, business planning and is extremely important in the early stages of the business. However, business planning is an ongoing process and it should be updated regularly to assist in forward planning, the challenge for the entrepreneur while preparing a business plan is to communicate his ideas and identify gaps in management information about their business, competitors and the market. For any organization, various functional plans-marketing, financial, human resources, production-have to be laid down, even though all the functional plans serve different purposes and all theses plans provide guidance and structure to the successful running of the business.

Preparing a Business Plan:

A business plan has to be in accordance with the organization in question, its situation and time. However, a business plan is not just a document to be produced and filed. Instead, business planning is a continuous process. The business plan has to be a living document, constantly in use of monitor, control and guide the progress of a business.

Before the preparing the plan, the entrepreneur should:

Review previous business plans (if any) and their outcome. This review will help highlight which areas of the business have proved difficult to forecast historically.

Be very clear as to objectives on which their plans will be based.

Set out the key business assumptions on which their plans will be based.

“Take the critical look at their business. The classical way is by means of the strengths, weaknesses, opportunities, threats (SWOT)” (*1)

Business planning process

As discussed above, a successful entrepreneur lays down a step by step plan that he/she follows while starting a new business. This business plans acts as a guiding tool to the entrepreneur and is dynamic in nature – and needs continuous review and updating so that the plan remains viable even in the changing business situations. The various steps involved in business planning process are:

Idea Generation

Environmental scanning

Feasibility Analysis

Drawing up a Functional Plan

Project report preparation

Evaluation, control and review.

Drawing functional Plan:

After positive result form the feasibility study, functional plans are drawn up. Some scholars and writers prefer to include feasibility study with functional plan but the two have been taken separately. Whereas only after the feasibility study can one go into the derails of drawing up functional plans which would determine the strategies for all the operational areas : marketing, Finance and production.

Marketing Plan:

Marketing plan lays down the strategies of marketing which can lead to the success of business. These strategies are in terms of marketing mix (product, price, place and promotion). From the market feasibility study and marketing research, potential/ present demands of customers are determined which helps in understanding the profile of customers and hence help in laying down the strategies for segmentation of the market, identification of the target market laying down strategies for target market.

Production/ Operation plan:

The production/ Operation plan should include strategies for the following parameters:

· Location and reasons for selecting the location.

· Physical layout

· Cost and availability of machinery, equipments, raw material

· List of suppliers and, if possible, distributors

· Cost of manufacturing

· Quality management

· Production scheduling, capacity management and inventory management.

· Changes in above in the case of expansion of business.

Financial plan:Financial plan indicates the financial requirements of the proposed business enterprise such as:

Projected cash flows

Projected income statement

Projected break-even point

Projected ratios

Projected balance sheet

Project report preparation:

A successful project report must achieve the following objectives:

Be appropriately arranged, with an executive summery, a table of contents and its chapters in correct order.

Be the right length and have the right appearance.

Give a sense of what you and your company expect to accomplish.

Explain in quantitative and qualitative terms, the benefits to the user of your company products and services.

Present hard evidence of the marketability of the products and services.

Describe the manufacturing or operating process and associated costs.

Contain believable finical projections, with key data explained and documented.

Show how investors can cash out in three to seven years, with appropriate capital appreciation.
Advantages of business planning:

Potential benefits realized from the development of a business plan include:

· Improved understanding of opportunities, problems and weaknesses.

· Greater control over the organization.

· A valuable source of information about your business that may be required by third parties.

· Improved use of your company personal resulting from participation in the business planning process.

· Increased employee motivation.

· Increased profits and sustained growth.

How To Research Home Business Ideas

Starting a business from home can be a profitable and flexible way to earn a living. Most people, however, do not have a good idea what kind of business they want to start. With a little effort, these individuals can learn the proper way to research for home business ideas through various resources that are readily available. Information is the key to good business practices, and finding a good business idea through proper research is the most effective way to be successful as a new business owner.

By conducting good research through online and other resources, individuals will be able to find an idea for an at home business as well as learn how to start and maintain it. The easiest and most effective way to search for ideas for a home business is online. There are several reputable sites that are great resources. It is important for individuals looking for online resources to make sure the sites are legitimate and do not require any money. Most costly, illegitimate sites are filled with empty promises and usually do not offer any helpful insight into looking for business ideas.

Homebiztools is a helpful site that links people to various articles and blogs written by professionals who have expert knowledge on starting a home business. The site also offers business resources with access to e-books and newsletters that explain how to start a home business, as well as give advice on promoting the business and making it succeed. AHBBO is another helpful site that offers a variety of tools to help individuals research home business ideas. They categorize business ideas in alphabetically to allow users to browse with greater ease. The site offers over 130 home business ideas that do not require a lot of money to start, which adds to the appeal since many of the advertised business ideas are scams for other companies to get money. With the variety and legitimacy that this site offers, it is a clear front runner for researching good home business ideas.

Entrepreneur.com is another online resource that individuals can use to research home business ideas. They have how-to guides to teach individuals how to start a home business with greater ease. Entrepreneur also provides the basics of starting a business, which gives readers a good place to start their home businesses. One of the most interesting aspects of this site is the many success stories of individuals who have used their advice and have went on to start and maintain successful home businesses.

At-HomeWorks has good ideas for home businesses in various different industries. They suggest starting home businesses that are good for stay-at-home moms, as well as retirees. Since they focus their business ideas on a variety of different groups, it makes for a better and more informative site. People who use this site will be able to spend less time looking through ideas that will not work for them and can focus on the ideas that will.

Although starting a home business can be difficult, coming up with a good home business idea can be an even bigger obstacle. If individuals can learn to take the time to research legitimate business ideas online, they will be better prepared and more ready to start a successful business venture. By doing the proper research, individuals will learn the advantages and disadvantages of various industries and have a better chance at starting a successful home business.

Personal Qualities Required To Be An Entrepreneur And Start Your Own Business

A lack of skill, ability and experience in certain business areas need not be a barrier to success and starting your own business. The personal qualities exerted by a small business owner overcoming deficiencies over and over again are vital and present in many entrepreneurs much more so that specific technical knowledge.

Not everyone is a master of all business attributes in fact very few are. Certainly being a master of all is a fantastic position but unrealistic while certain personal qualities are essential to fight the inevitable battles to come. Business battles the successful entrepreneur wins.

Businesses that have grown and become medium sized and bigger are not reliant on the business owner entirely. Employees are engaged with specialist skills and abilities to develop and grow the business. A sole trader just starting out has to settle for a comfortable living or have the ability to grow the business to the point where more specialist abilities can be added to the business.

Most small business owners who start a new business do so in an area where that small business owner has some knowledge, experience and skill. It is a natural progression having acquired the business knowledge and experience to use those abilities to build the business under self employment rules rather than earn profits for an employer.

The personal qualities a small business owner possesses are more likely to determine the level of success. Abilities such as hard work, determination, persistence, intuition, tolerance and aggression can be the bedrock of success. But the road to success is not all slam wham bang for the entrepreneur.

Small business owners invariably work longer and harder than employees. An employee works for wages and an adequate work performance is enough. A small business owner is more likely to be on the job at first light, miss the coffee and dinner break and twelve hours later announce he has to finish off for the day because he has to go home and do the business accounting books that he started on Sunday.

Determination and persistence go hand in glove with success. Every new business runs into problems at some time or reaches a stage where the business owner needs to be completely focused and stick with a strategy to make the plans work. Things go wrong from time to time; its normal, determination and persistence are valuable qualities to see through these times.

Aggression in forcing through a business plan may sometimes be the only viable option. Not physical violence but the heightened state of anxiety to push through the plan and make it work with controlled aggression and passion. On the other side of the coin there will be times when the small business owner has to exercise tolerance and just go with the flow.

Many small start up businesses go out of business within 2 to 3 years of starting a new business. A major cause is under capitalisation which basically means they run out of money. Liquidity is a major area of concern for every small business entrepreneur and a cautious approach to a new business can be of considerable value.

There is a strong tendency for a new business start up to borrow money and buy new equipment just to get started. Such businesses are taking a major risk the plans will work. Some plans do work but rarely it is a smooth path and a better option is to build the business and reinvest profits made.

A more cautious approach would be to start a new business without borrowing substantial funds because if the small business owner has the ability to make a success of the business and make money then they can usually do so without external funding and use the profits made to build the business in the future.

The sound reason for a small business or a start up business to borrow money is to already be showing a good financial performance. Use the extra funds to speed up future success while borrowing funds with no track record is a gamble and a gamble which fails only too often.