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One of the most important steps when setting up a business is formulating an effective business plan. A well made business plan serves as a roadmap to your business. It gives you the lay of the land, specifies each step that needs to be taken and gives you an overview of each step in the process of setting up a business, operating it and even improvements you can do in the future. Here is a simple guide, practical and straightforward like all of o5.com’s recipes for life.
There really is no universal formula by which business plans are made. Each one is tailor fit for the use of the individual that sets up the business or the kind of business that is being established. Having said that, there are some things that all business plans should contain to make them an effective tool in setting up your business.
First part of an Effective Business Plan: The Executive Summary
All business plans need an executive summary. This is, by practice, the last part of the plan that is written. This section of the business plan indicates and summarizes all of the important parts of the business plan. This needs to be a short and concise part of the plan and it should be extremely readable. By looking thoroughly at the plan and thinking about what your general plans are for the business you will be able to target which parts of the plan should be given emphasis in the executive summary.
Second Part of an Effective Business Plan: The Background information
This section of the plan will contain a description of your company. It will include the history, its mission and vision and also a brief glimpse into its target market. This is also the part where a description of the company’s products and/or services are explained. The background information is often included when the plan is given externally – to stakeholders, potential investors or lending institutions. If the plan is to be used internally, then the background information is not required.
Third part of an Effective Business Plan: The Operations Plan
The Operations plan usually fills up the majority of the business plan (along with the financial plan). In this section of the plan you should include the system of operations (the process of delivery or manufacturing), the information and communications plan, the business strategies formulated for the business and how it can be implemented, the management systems in place, and a writeup on the management team, which includes their individual responsibilities.
Fourth Part of an Effective Business Plan: The Financial Plan
This part will contain the company’s balance sheets, their cash flow, the funding plans, break even analysis and even financial forecasts for the business. If you have enough information you can even include a three year summary or a year by year financial analysis of the business, or a monthly analysis if the business is very young.
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