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 A calculated risk-taker who sets up a business in return for financial gain. 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’ A business aim is the overall target or goal of the business, whereas business objectives are the steps a business needs to take to meet its overall aims. – using the The acronym that stands for specific, measurable, agreed, realistic and timed, referred to when setting objectives. principles
- A group of people or area of a market that a business aims to sell its products to. – determined through Market research involves gathering data about customers, competitors and market trends.
- A revenue forecast is a prediction a business makes about the amount of revenue it will have in the future. This is either a judgement or based on past sales.
- projected costs and The amount of money made after all expenses have been paid.
- A prediction of the money flowing in and out of a business.
- sources of Any form of money used by a business. – long-term and short-term finance
- location – where the business will be located
- A description of marketing–product, price, promotion, place. – 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 An estimate of the probability of an unwanted outcome. It depends upon the chance of it happening and the consequences if it did happen..