Importance of a Good Business Plan to an Organization
For a business to succeed in its operations, there are underlying factors that play a major role in its success. Among the factors is a good business plan that determines the objective of a company, demand and supply factors as well as good business ethics all these work closely to define a good business environment both in the short run and in the long run. Introduction
A business plan is a vital requirement for many organizations. A company without a business plan is equivalent to a ship without radar (bnet, 2010). A business plan gives the objectives of an organization. Demand and supply are the forces that determine the equilibrium in a market. Through them, a firm can know how much to produce and at what price to supply in the market. Demand and supply are the basis of a firm’s growth in the long run among other factors. In addition to demand and supply, there is the business ethics. Good business ethics adds value to the reputation of the firm which will translate to increased demand for the firm’s products. Contrary, poor business ethics will derail the firm’s reputation hence lower the firm’s output in the long run (bnet, 2010).
This is a document that offers the blue print of an organization. It states out a variety of goals that the company wants to meet. A business plan usually addresses issues like the source of capital for the firm, marketing, employee recruitment and the outline of the budget of a firm. A business plan should inform as well as specify goals and the vision of the organization. It should address things that reflect the vision and mission of the organization. This can include things like the management of the firm, action plan, the mission statement and intended business strategy. A realistic business plan is very important in meeting the expected financial projections of a firm (bnet, 2010). Depending on how it is used, a business plan is of great value regardless of the type or size of business. A business plan can be used for various purposes including the following:
Planning: drawing information from a business plan, a company management can draw a short run or the long run plan for the company. Planning is a good source of information for lenders, business partners and suppliers. A good plan should be written both for internal and external use (bnet, 2010).
Securing capital: many business financiers usually rely on the information provided in the business plan to gauge how much to invest in a business. Therefore a good business plan should specify how much capital is required. Remember, capital is needed for starting, merging or even running a business (bnet, 2010).
Marketing: a business plan highlights the practices that make up the culture of the organization. These can then be used to design the strategies that can be used to market the firm’s products (bnet, 2010).
Recruiting: information about the recruitment practice of a firm should be provided in the business plan.
Planning and budgeting: a business plan is the primary tool that is used in business budgeting. A business plan should incorporate a budget component that projects the expected revenue and the cost to be incurred (bnet, 2010). According to the bnet website (2010), it is easier for a business to merge or venture into a new market with a business plan than without. The information in the plan should be precise, concise and accurate. It is advised that a good business plan should not be more than 50 pages. A business plan is like a compass direction because through it you can project the direction of the business (bnet, 2010). Supply and Demand
Equilibrium in a market is modeled using the concepts of supply and demand. According to iscid website (2010), demand is the quantity of goods that a customer is willing and able to purchase at any given moment, while supply is the quantity...
Please join StudyMode to read the full document