Business Plan Importance

Importance of Business Plan:

The most important step in launching a new venture or expanding of an existing venture is the construction of a business plan. Business plan ‘tells a story’ and explains how the business will achieve its objectives in a “coherent, consistent and cohesive manner” (GRAHAM, 2004). A business plan is a comprehensive plan that includes goals of the enterprise, both long and short term; a description of the products and services that will be offered and the different market opportunities anticipated for the same and an explanation of the resources and means that will be employed to achieve the goals in the face of likely competition. (Barrow and Brown, 2012). Planning helps an organization chart a course for the achievement

The new idea will be put to test under, the small scale (Micro) and large scale (Macro) aspects of the market and industry and also critically evaluate the team (company). The framework evaluates the opportunity starting with the customer and the market in mind. Companies would prefer to serve attractive rather than unattractive markets. Companies analyse the market to determine customer needs, barriers to entry, market structure, market size, growth rate, market capacity, attainable market share, cost structure, the core economics, time to breakeven, opportunity costs and exit strategy issues. This framework offers a better toolkit for assessing and shaping market opportunities and provides the basis for a customer driven feasibility study. It is based on seven domains viz. Market domain that addresses macro level Market attractiveness and micro level Target segment benefits and attractiveness; Industry domain that addresses macro level Industry attractiveness and micro level Sustainable advantage; Team domain comprising three sub-domains-5) Mission, aspirations, propensity for risk, Ability to execute on Critical Success Factors and connectedness up, down and across value chain. (Mullins, 2009). The seven domains model (Figure 1) brings these elements together to offer a new and clearer way to answer the crucial question that every aspiring

Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are namely supplier power, buyer power, competitive rivalry, threat of substitution, and threat from new entry. Supplier assesses how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over the firm and the cost of switching from one to another. Buyer power assesses how easy it is for buyers to drive prices down. This is driven by the number of buyers, the importance of each individual buyer to a business, the cost to them of switching from a firm’s products and services to those of someone else, and so on. Competitive rivalry analyses the number and capability of a business’s competitors. If there are many competitors offering equally attractive products and services, then the business will most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal. On the other hand, if no-one else can do what a business does, then it can have tremendous strength. Threat of Substitution is affected by the ability of customers to find a different way of doing what a firm does – for example, if one supplies a unique software product that automates an important process,