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Components of a Business plan

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Topic updated on 02/16/2019 09:09am

Following components are generally include in a business plan:

  • Executive summary
  • Business description
  • Marketing plan
  • Operations plan
  • Human resources plan
  • Financial plan

Executive summary

  • The executive summary is the section in which the basic facts in a business plan are briefly stated.
  • Importance Of executive summary:
    • Executive summary creates a foreview about the entire business plan
    • It gives a guideline about the business plan
    • It builds up confidence about the business plan
  • The executive summary should be always brief and attractive.

Business Description

  • This should reveal what the business is, what type of a good or a service is manufactured or sold, the benefits enjoyed by customers and also its
    speciality.
  • The following details also should be there:
    • Name and address of the business
    • Goals/ objectives
    • Pioneers/ Promoters
    • Organization structure
    • The type of organization
    • Director board

Marketing Plan

  • The section which describes the facts such as the market, competition, marketing
    strategies, sales forecasting is known as the marketing plan.
  • Importance Of  Marketing plan:
    • It points out that there is an adequate and expanding market for the product
    • It points out that there is a possibility to face the market competition
  • Following elements are included in a marketing plan:
    • Analysis of industry and the market
    • Expected good or service to be sold
    • Target market
    • Analysis of competition
    • Expected sales
    • Marketing strategies of competitors
    • Proposed marketing strategies of the entrepreneur
    • Sales forecast
    • Marketing expenses

Operational Plan

  • The section consisting the details about production procedure, production machines & equipments, required quantity of products, locating the factory, national and international standards followed is known as the operation plan.
  • Importance Of Operational plan:
    • Ability to have a clear awareness about the future operations early
    • Ability to minimize the possible wastages and delays in the process of
      manufacturing
    • Ability to improve the quality of the product
    • Ability to maintain the continuity of the manufacturing process
  • Following components are included in an operational plan:
    •  Production plan
    • Machines & equipments requirements
    • Raw material requirements
    • Employee requirement
    • Manufacturing overheads
    • Total manufacturing cost and the unit cost
    •  Factory layout plan
    • Disposal of wastage and environmental influence

Human Resource Plan

  • The schedule of future human resources requirements for the achievement of goals and objectives of a particular institute is known as the human resouce plan.
  • Importance Of Human resource plan:
    • Ability to forecast the future employee requirements and the cost
    • Ability to utilize the human resource more efficiently
    • Ability to prevent breakdowns of business activities due to pre recognition and
      preparation for the future human resource requirements
    • Ability to minimize the recruitment cost that may occur due to unplanned
      requirements
    • Ability to recognize the training and development needs of the employees
    • Getting the opportunity to recruit highly competent employees
  • Details included in a human resource plan are stated as follows:
    • Organization structure and organization chart
    • Positions and responsibilities
    • Annual expenditure for the human resource

Financial Plan

  • The section in which all the estimated financial information are included is known as the financial plan.
  • Importance Of Financial plan:
    • To determine and provide the amounts of funds required for business affairs
    • To make investiment decisions on the funds available in the business
    • To identify the periods when financial shortcomings may arrise and to decide possible solutions
    • To identify the periods when there can be excess funds in the business and make effective investment decisions
  • The facts to be included in a financial plan can be categorised as follows:
    • Estimated project cost (Capital requirement)
    • Estimated profit & loss (income) statement
    • Estimated cash flow statement
    • Loan repayment chart
    • Estimated balance sheet
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Raviraj Ananth commented at 16:12 pm on 23/02/2017
Is there any free questions?

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