Page 93 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Entrepreneurship and Small Business Management

Notes Preparing a business plan is not an easy task. A business plan makes the entrepreneur forcibly
plan all the critical dimensions of business and it also ensures that entrepreneur does a thorough
research about the planned business venture. The process of researching and writing the business
plan helps to identify the gaps in the existing plan. For any business venture all the functional
plans (marketing, operations/production, finance, human resources) have to be prepared.

Notes The functional plans reveal the resources required, strategies planned and the
budgeted expenditure of each functional area and also determine when the company
would break-even and when it would begin registering profits.

Here we would like to state that preparing a business plan is not just a one-time activity, but is
an ongoing process. A successful business enterprise constantly keeps improvising its business
plan based on market dynamics and learning experiences.

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Caution The challenge in preparing a business plan for an entrepreneur is to communicate
the business idea clearly and precisely to the stakeholders.
A business plan is a written document, which has to be presented to various stakeholders to get
their consent. The shareholders require it to ascertain the ownership patterns and future prospects,
the government needs it to give various certifications like pollution control, the financial
institutions like venture capitalists need it to estimate the prospects and the risks involved in
disbursing funds to the business venture.

Self Assessment

Fill in the blanks:
1. A business plan is a ……………. for starting and running a business.
2. A business plan first of all identifies an ………………….. idea.

3. The objective of a business plan is to give directions to the …………… formulated by
entrepreneur.
4. The process of researching and writing the business plan helps to identify the gaps in the
………………. plan.
5. A business plan is the ……………… of the step-by-step procedure that would be followed
to convert a business idea into a successful business venture.

7.2 Value and Importance of a Business Plan

Business plans have several major uses. These include internal planning and forecasting, obtaining
funding for ongoing operations or expansion, planned divestiture and spin-offs, and restructuring
or reorganizing. While business plans have elements common to all uses, most business plans
are tailored according to their specific use and intended audience.

When used for internal planning, business plans can provide a blueprint for the operation of an
entire company. A company’s performance and progress can be measured against planned goals
involving sales, expenditures, time frame, and strategic direction. Business plans also help an
entrepreneur or business manager identify and focus on potential problem areas, both inside

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