Discussing a business plan
I have chosen a small corner shop as an example of a business. Which, I hope to relate to throughout this essay. Whilst discussing the importance of having a business plan. I will try and consider both the advantages and disadvantages of various issues about a business plan. One use of a business plan is that it states the legal description of the business. Outlining what type of business it is and if it is one of the following : sole trader, partnership, LTD or PLC. My corner shop, would be a sole trader. This is due to the fact that the business will be set up in my own name. I will be running the business and will be working for myself. Although in some cases, sole traders do hire other people to help them out but they remain responsible for the overall business and are actively involved in the running of it on a daily bases.
Another use of a business plan is that it produces a marketing plan. This will be taken from any market research was had been done, and will include the following: how the business intends to launch, what the pricing policy will be and how the business intends to advertise its products. For example, my businesses pricing policy will always remain low, being able to compete with other rivalry corner shops. Also, I intend to open with the Mayor of the village, by this I would hope to increase the community spirit within the village. Also, I will be advertising my shop on a local scale. Although it will be in the papers, I just aim to attract customers from within the village. On the other hand, attracting outsiders would increase profit but at the same time would lower any community spirit which I would have gained by just advertising locally.
Within a business plan I will also have to produce a Production plan. This will include a diagram of the inside layout of the shop as well as what machinery I will be using and the amount of people who will be working for me. Linked with my business the only pieces of machinery that I will be using will be a till, a computer and a hand gun (for pricing stock.) This is all that is necessary within the business. Although a car/van may have to be used to go and collect stock from various supermarkets etc. On the other-hand, the stock my be delivered to the shop.
Also, within a business plan, there is a Financial plan. It should include any financial commitments. I will be having to pay a mortgage, repayments on the load, rent, wages and launch costs etc. Generally fixed and variable costs. And any other financial information. This is probably the most important part to the business plan. This is due to the fact that you will be able to get an understanding of the total costs amount which will have to be paid. (usually on a monthly bases.) However, a profit still has to be made so, these cost must be controlled and recorded all the time, and updated.
External influences must be commented on in the business plan. These are factors outside of my control. E.g. Laws made in Europe or in the UK parliament. I will have to identify and explain any external influences which I think may have an influence on my business. Such as Tax. If this rises or falls, I will have to change the prices of my products which are sold accordingly. More importantly, these external influences could change the way my business runs for the worse. For example if people start to use the inter-net more to read the news, they may not wish to purchase newspapers anymore, there for I go out of business. Although these external influences will be out of my control, I will still have to find a way to survive.
In conclusion, a business plan is a useful document if you are hoping to raise money. Banks nearly always insist on seeing a business plan. If you have no idea where you want the business to go, it is unlikely you are going to succeed. Planning makes you look in some detail at the different aspects of the idea, and consider some of the potential problems. So a bank is therefore unlikely to lend to you. In comparison, someone who produces a well-thought-out and well researched plan of what they want to achieve and how they intend to achieve it, is more likely to be successful. As a result the bank is more likely to lend money.