The Importance Of A Business Plan: Purpose And Elements

Executive Summary

1. A business plan is a document which is written to describe the nature of a business, financial background, marketing and sales strategy and contains a projected statement of profit and loss (Fernández-Guerrero, Revuelto-Taboada and Simón-Moya, 2012 p.2440). In addition, a business plan provides a business with directions to plan its future and assists in the avoidance of issues along the way. The time businesses spend to prepare their business plan thoroughly and accurately is an investment that pays back dividends to the organization. The purpose of a business plan is to assist the management in running the business in a manner which is more cohesive thus acting as the organization’s roadmap.

By truly analyzing the business’ plan for website design, manufacturing, sales, marketing etc. the business greatly increases their chances for success. In addition, a business plan assists the organization to secure support from lenders and financial institutions through investment since the business plan demonstrates that the company has the roadmap to success (Jones and Penaluna, 2013 p.806). Lenders and financial institutions want to mitigate their risks of default, and private investors want a focus that is realistic on when they expect to reap returns from their capital.

2. Using a business plan gives a business direction through the definition of its objectives, mapping out strategies to achieve the goals and helps entrepreneurs in the management of possible bumps in the road. Preparing a business plan helps entrepreneurs work out the goals they want to achieve and the strategies to achieve them (Chen, Yao & Kotha, 2009 p.209).

3. While a strategic plan is primarily used for implementing and managing the strategic direction of an existing organization, a business plan is used to initially start a business, obtain funding, or direct operations (Casadesus-Masanell & Ricart, 2010 p.199).

4. 

Section	Description
Executive Summary	A concise overview of the business plan which is short and written well so as to draw readers for them to learn more about the company.
Business summary	An explanation of what the business is, how it operates and what its goals are.
Management / operational plan	A highlight of the expertise and qualifications of each member of the team in the business plan.
Market planning	An analysis of the market to define the competition and the state of the market as a whole
Future plans, vision, goals and milestones	Explains the future plans of the business, its vision, goals and milestones. A description of the relationship between the business future and company functions.
Financials and funding	A description of the finances required by the business.

1. Give three (3) examples of performance objectives that you could have for a vocational education business.
2. Develop Lifelong Learning
3. Ensure that minority groups develop professionally and create for them opportunities for employment.
4. Support student mobility

For each one, describe how you could measure its success

Performance Objective	How success will be measured
Ensure that minority groups develop professionally and create for them opportunities for employment.	Students are supporting themselves professionally and are developing in their careers.
Develop Lifelong Learning	Students are competent in their jobs and are developing skills in their daily work activities.
Support student mobility	Students are flexible in different roles and responsibilities in their careers through skills learned.

1. If you were developing a business plan for a vocational education business, which stakeholders would you need to consider? List at least five (5).
2. Industry skills council
3. The government department of education and training
4. Tertiary education quality and standards agency
5. Apprenticeships centers
6. National and State Employee and Employer Organizations
7. If you were developing a business plan for a vocational education business, from whom could you access assistance or professional advice?
8. State Commerce Departments
9. Organizations that offer consultancy services
10. Government agencies
11. Describe the steps you would follow if you were developing a business plan for a new business. Include at least six (6) steps.
12. Researching – Researching is important in the proper development and communication of a business plan.
13. Having a purpose – Understanding the reason for writing the business plan
14. Crafting a company snapshot – Important for readers to access the business’ information and its operation.
15. Completely detailing the company – Including key features such as unique strengths, copyrights, licenses and patents.
16. Writing the marketing plan beforehand – Nailing the marketing plan before planning the rest of the business.
17. Being Willing to Change the Plan for the Audience – Matching the message and plan to the addressed audience.
18. Including my motivation – Having a reason to assure people of the business’ success no matter the challenges. 

Executive Summary:

Business name, structure, location, business concept and style – to be completed after the ‘Business Section’ of the Plan 

ABC Company is incorporated in the state of Sydney in Australia. The business is equally owned and managed by three partners. Mr. Eric has extensive experience in Human resource management and was president of Human resource in Aboriginal Centre for the Performing Arts. Miss Erica brings experience in the sales and marketing area and was the former president of marketing in the National Aboriginal and Islander Skills Development Association. Mr. Enrique brings experience in Finance and administration having served as a chief financial officer with both Southern Cross and Kengan University. The partners intend to renovate and operate ABC Company as a medium vocational educational business.

Business Summary

Business name: ABC Company

Structure: partnership

Licenses and permits: State permit and license, Educational or activity license, Work health and safety (WHS) licenses,

Legal requirements: intellectual properties such as copyrights, trademarks and patents, compliance to employment acts, business structure, supplier agreements, terms of leasing premises, contracts agreement, leasing apartment agreements and work health and safety.

Business location: Sydney city in Australia, few miles from Sydney College of the Arts of the Institute of the Arts.

Buy/lease: purchase at $150,000

ABC Company offers a variety of services including providing basic education to citizens who are interested to study events and tourism programs. The differentiation of the product offers little competition to the organization as in comparison to other vocational education business. Furthermore, with lower prices on the programmes, the company attracts many citizens. Some of the students prefer joining the vocational training because of this pricing for market penetration. With many local and international residents joining the vocational training, the organization is expected to experience rapid growth in the near future. 

The dominant target market for ABC Company is a local resident who has an interest in events and tourism courses. Furthermore, the ABC organization customer demographics include gender, age, income and occupation. The key targets of the company are youths aged below 35 years who are willing to gain education and skills in events and tourism sectors. Furthermore, the company also targets female gender as the majority of them prefers tourism programs. In terms of occupation, the organization has a small size and therefore will target low and middle class of incomes. 

ABC Company has different suppliers who supply the organization with different items. ABC Company groups the supplier in accordance with the department. For example, suppliers for co-curriculum department supplying sports items and suppliers for curriculum supplying other essentials like books. The digital technology is used in the operation with all student receiving progress updates on their portal. 

The key required a staff of the ABC Company includes Tutors, technicians, managers (CEO, MD and departmental managers) and other staff necessary for running vocational education. Tutors have different leadership roles in the organization. Some have been promoted to be head of departments, senior tutors, discipline masters and dean of students. Others are normal tutors without ranks. Technicians are grouped depending on specialized fields. For example, the Electrical Technician is mandated to handle all issues related to electrical while IT Technicians handles all technology-related issues. Managers are also classified according to the group of staff they governed. For example, IT Manager is in charge of all staff under the IT department including IT Tutor. Human Resource manager or assistant and departmental manager recruits qualified staff and conduct training programs. The training programs are conducted in forms of team building, brainstorming seminars and conferences. 

Management/Operational Plan

Proposed Organisational Chart 

SWOT Analysis 

Strengths · Experienced and qualifies managers · Knowledge retention · Regular supply of skilled teaching and  non-teaching staff	Weaknesses · Insufficient budgets · Lack of qualified tutors and key staffs ·
Opportunities · The high number of students ready to join vocational training · Good reputation and examples from other vocational training schools hence attracting a huge number of foreign student · Proximity to school · A good relationship with a public organization like Voluntary Labour Corps	Threats · Competition from already established vocational educational businesses · Change in government policies · Mismatching of student skills and educations programs · Lack of well-prepared workshops for running Abc organization. · Lack of teacher’s training · The low prestige of apprenticeship education

Vision statement

The vision of the ABC Company is to enrich and improve lives by enhancing lifelong education and training; to promote personal success in a higher education and workplace and to increase cultural, entrepreneurship, economic and social development.

Mission statement

At ABC Company, our vision is a vocational training college that exceeds the stakeholder’s expectation for effective lifelong education, training and development in the workforce through the provision of excellent programmes and services.

• To provide the student with a dynamic and conducive learning environment through instructions, curricula, policies.
• To promote job creation, entrepreneurship, and economic growth through educational partnerships.
• To provide the student with skills necessary for success in the transformational economy.
• To provide citizens and student with opportunities of developing and upgrading necessary skills for the workplace and lifelong learning through customized training programmes

The financing of ABC Company will come from partner’s capital and loan from Commonwealth Bank of Australia.

Startup Requirements	cost
Premises renovation	$20,000
Legal	$3000
Expensed equipment’s	$50000
others	$13,000
Total start-up expenses	$85 000
Startup Assets	costs
Cash required	$80,000
Long term assets	$70,000
Other current assets	$70,000
Total Assets	$210,000
Total requirements	$295,000
Startup funding	cost
Startup expenses to fund	$85,000
Startup Assets  to fund	$210,000
Total funding requirements	cost
Cash required to startup	$80,000
Non –Cash assets for startups	$140,000
Additional cash balance	$0
Cash balance on starting date	$80,000
Total Assets	$210,000
Liabilities and capital
Liabilities	cost
Long-term liabilities	$200,000
Current borrowed liability	$0
Account payable( outstanding Bills)	$200
Other Current Liabilities (interest-free)	$0
Total liabilities	$220,000
capital
Planned investment
Mr. Eric	$50,000
Miss Erica	$45,000
Mr. Enrique	$35000
other	$0
Total planned investment	$130,000
Startup expenses	$85,000
Total capital	$45000
Total capital and liabilities	$265,000
Total funding	$260,000

Productivity and Performance Targets for Key Result Areas and Financial Indicators

The ABC Company Committee will develop a budget for initial funding and ongoing operations. The budget will include new funding required by each program in addition to existing funding. The budget for new operations will be part of an education infrastructure special request to the campus with strong support from the Education Systems Advisory Committee. In early January the committee will be notified if its funding request was approved.

The students and instructors will be evaluated by the technology, educational programs and operations of the center, health professions schools overseeing the necessary program evaluation and the center’s operations committee overseeing the evaluation of technology, facilities and operations.

Sample success measures will include:

1. Provision of quality services.
2. Minimum costs being incurred
3. Effective environmental protection strategies
4. The efficiency of operations in the center, including customer service, appropriate staffing and budgeting.

After twelve months, the business was expected to start making a profit. However, the performance of the business is not as expected as there are increased costs which were not planned. For example, electricity costs and the need for additional staff have increased the expenses of the business. The triple bottom line shows that the business has been socially responsible by helping the community acquire knowledge which will assist in tourism. The business has also been environmentally responsible as it has adopted strategic measures of ensuring a green environment through landscaping including the planting and watering of plants regularly. There are also strategies in place for protecting the environment.

The ABC Company has ensured that its brand is well known within the country of operation. There are different measures which have been undertaken including posters, billboards, television and radio advertisement, branded packaging, social media and marketing on Google.

ABC Company has worked towards maintaining a green environment by ensuring that the environment is protected from pollution. Since the company started, projects for planting trees and vegetation which are well taken care of have been in the process. The company has been facing challenges in minimizing environmental pollution due to waste papers.

Market Planning

ABC Company is governed by different bodies which oversee the activities being carried out by the organization. The bodies include the National and State Employee and Employer Organization, the government department of education and training, Industry skills council, Tertiary education quality and standards agency and Apprenticeships Centres.

ABC Company has been successful in their sales since they offer quality products. The company’s product and service quality have been good which is reflected in the high number of people registering with the organization. Sales have been great, with the need to increase the number of staff to cater for the increasing number of customers.

Since the company started it has been experiencing an increasing number of customers who need to be trained on events and tourism. Therefore, the need for qualified staff has also increased since the current workforce is not being able to meet the full needs of many customers. The company has been taking a lot of time to interview employees hence positions have been taking long to fill. However, the company is looking into measures of improving the hiring process to save time on employee sourcing.

Over the last six months, since the business was started, operations have been successful since customer turnover has been great resulting to great returns on business. There has been an increasing number of enrolment of new customers which has seen the improvement in the company revenue. However, the costs of running the business have been increasing and surpassing expectations. For example, the cost of electricity has been high which has led to more funds being directed to paying off the electricity bills. In addition, the company’s dream of making profits after twelve months may not be realized due to the increasing unplanned costs being incurred by the company. ABC Company has also been taking a long time to interview new staff which has been caused by the high number of new customers interested in the company’s services. The aspect has resulted in positions taking long to fill which has further resulted in a delay in the operations of the company. Although the business had an objective of being more environmentally responsible, it has been using more resources than planned and producing lots of waste papers thus frustrating its strategy for a green environment. Necessary actions should, therefore, be taken to address the issue.

The business’ key performance indicators have been met which shows that the business has been doing great. Staff are well trained to offer quality services. In addition, students learn about tourism and events quickly. Quality of services is good as clients are registering with the organization in high numbers. Although there are more costs which are being incurred, the returns of the business are good. The environmental protection objective has been slightly not been observed although new measures will be put in place to protect the environment. For example, the proper use and disposal of papers.

Future Plans, Vision, Goals, and Milestones

ABC Company’s business plan needs to have some strategies for efficient management of funds to reduce losses. In addition, the company should ensure that staff are trained regularly to improve their efficiency. All costs should also be planned for in the business plan. Strategies should be put in place for the integration of the environment protection plan. Since the current measures are not working effectively, strict measures should be imposed. The budget needs to be amended to accommodate the increased costs. In addition, the use of papers should also be minimized and used papers should be properly disposed.

Continuous review of the business performance, processes and methods will be important in monitoring the performance of the organization. That can be done though Management by Walking around (MBWA). Each department will be required to present a report to the management for review of the progress of the particular department. The department targets will be formulated and each line manager will be expected to meet the targets.

ABC Company’s business plan has several strengths. For example, there is an effective financial planning. The in-depth market analysis has effectively explained the market environment and has suggested the market size which the organization hopes to capture. The in-depth market analysis has also revealed the reasons leading to customers wanting to purchase the services of the company instead of purchasing the competition’s services. Additionally, the plan provides full details about the competitors. Furthermore, the business plan has analyzed the marketing requirements well whereby effective strategies for marketing the services of the products and proper advertising techniques have been put into place.

However, the business plan has several weaknesses. Potential risks to the business have been ignored. Measures for sourcing of employees have also not been properly analysed. The provision of an organization’s management and executive’s background information and detailed bios is important in the creation of a strong business plan. However, that has not been properly provided in the business plan of ABC Company. ABC Company’s business plan should have explained the experience and expertise of each person and present reasons on how that will translate into the business’ productive management.

Moreover, the financials of the business also have areas of weakness which have made the financial analysis of the business plan weak. Business plans that are strong require the inclusion of all required financial documents for the analysis of expenses, projection of income and calculation of the cash flow. The documents should include realistic operating budgets and financial statements.

References

Casadesus-Masanell, R. and Ricart, J.E., 2010. From strategy to business models and onto tactics. Long range planning, 43(2-3), pp.195-215.

Chen, X.P., Yao, X. and Kotha, S., 2009. Entrepreneur passion and preparedness in business plan presentations: a persuasion analysis of venture capitalists’ funding decisions. Academy of Management journal, 52(1), pp.199-214.

Fernández-Guerrero, R., Revuelto-Taboada, L. and Simón-Moya, V., 2012. The business plan as a project: an evaluation of its predictive capability for business success. The Service Industries Journal, 32(15), pp.2399-2420.

Jones, C. and Penaluna, A., 2013. Moving beyond the business plan in enterprise education. Education+ Training, 55(8/9), pp.804-814.