Business planning
A business plan is an essential part of starting any business. Entrepreneurs create business plans to help them consider all of the elements they are going to need for their new business to be a success.
The role and importance of a business plan
Jaap talks about being a self-employed carpenter and about business success, profit and independence
A business plan is a document created by a business or entrepreneur that provides details about each element of the business. Creating a business plan means an entrepreneur considers all of the different elements of their business.
A business plan is usually made up of several sections:
- the business idea – what product or service the business will provide (this is usually the first section of a business plan)
- the business’ aims and objectives – using the SMART principles
- target market – determined through market research
- revenue forecast
- projected costs and profit
- cash flow forecast
- sources of finance – long-term and short-term finance
- location – where the business will be located
- marketing mix – the four Ps (product, price, place and promotion)
By completing each section of the business plan, an entrepreneur gains a full understanding of each element of their business. This also gives the entrepreneur a better understanding of whether the business is likely to succeed or not. If there is a chance the business might not succeed, the entrepreneur can amend the business plan in order to minimise this risk.