There is one step most organizations tend to skip or ignore is the development of a business plan. They either do not see the advantages or make incorrect assumptions of its cost benefits. However, business plans are an important part of the assessment of business opportunities. Let us take a look.
Assessment of Business Opportunities
The process of making a business plan is a very good way for the organization to assess its business opportunities. In its most rudimentary form, a business plan is a road map or a guideline to the future. It is the written manifestation of the company’s long term goals.
However, there is a misunderstanding about business plans. People always assume a business plan has to be a very elaborate document loaded with data and numbers, often incomprehensible. But this need not be the case in these new age business assessment methods. A business plan can be a simple, precise informal document with the basic layout. They must contain all the basic information the company wishes to communicate with the least amount of fuss.
Now while a company is in the process of assessment of business opportunities, a business plan must contain certain key areas. Let us take a look at few such key components of a business plan.
This is obviously one of the most important aspects of a business plan. And it should not only contain long term goals, but also a good business plan also includes interim goals for the company to achieve. And all goals should be accompanied by timelines to accomplish said goals.
Every department of the organization should have a strategy to accomplish the goals in the business plan. So the marketing department will have a strategy on how to achieve the necessary sales. The production department will focus on achieving the required production. And the finance department will plan on how to bring in the capital necessary for the above.
Budgets and Cash Flows
Budgets are one of the most essential parts of the business plan, but they are also the most intimidating. Most companies do not have a good idea if they will be able to finance their future plans and goals. And a budget and cash flow will help the company take a critical look at their ability to manage their finances accordingly.
The most simple form of a budget is to analyze the revenue and expenses of the firm to figure out any surplus or deficiency of funds. Also, recent payment and collection histories will help with cash and fund flow analysis.
To maintain the focus and keep on the correct path to achieve the goals of the company, regular review of the plan and achievements is a necessity. So it becomes necessary to keep a check of the interim goals the organization has set for itself. This will allow any proactive action to be taken if the company is straying from its path.
Solved Question for You
Q: Business plans are mostly meant for large companies. True or False?
Ans: False. Business plans are for both small and large companies. Even a small company can benefit greatly from a well planned and concise business plan. It will help the company achieve greater heights and that is not necessary only for large companies.