A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Working capital, also known as net working capital, is a financial metric which represents operating liquidity available to a business Cash conversion cycle or CCC is the time duration in which a firm is able to convert its resources into cash Return on invested capital (ROIC is a financial measure that quantifies how well a company generates cash flow relative to the capital it has invested in its business In Corporate finance, Economic Value Added or EVA® is an estimate of true economic profit after making corrective adjustments to GAAP accounting including Just-in-time ( JIT) is an inventory strategy implemented to improve the Return on investment of a Business by reducing in-process Inventory and Economic order quantity is that level of inventory that minimizes the total of inventory holding cost and ordering cost Discounts and allowances are reductions to a basic Price of goods or services Factoring is a word often misused synonymously with accounts receivable financing. Capital budgeting (or investment appraisal is the planning process used to determine whether a firm's long term Investments such as new machinery replacement machinery new Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Managerial finance is the branch of finance that concerns itself with the managerial significance of finance techniques Financial accountancy (or financial accounting) is the field of Accountancy concerned with the preparation of Financial statements for decision makers Management accounting is concerned with the provisions and use of Accounting information to managers within organizations to provide them with the basis to make informed business In Financial accounting, a balance sheet or statement of financial position is a summary of a person's or organization's balances A corporate action is an event initiated by a Public company that affects the securities ( Equity or Debt) issued by the company The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated In Economics, a financial market is a mechanism that allows people to easily buy and sell ( Trade) financial Securities (such as stocks and bonds There are two basic financial market participant categories Investor vs Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Personal finance is the application of the principles of Finance to the monetary decisions of an individual or family unit Public finance is a field of economics concerned with paying for collective or governmental activities and with the administration and design of those activities A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money Financial regulations are a form of Regulation or supervision which subjects Financial institutions to certain requirements restrictions and guidelines aiming to It may also contain background information about the organization or team attempting to reach those goals.

The business goals being attempted may be for-profit or non-profit. For-profit business plans typically focus on financial goals. Non-profit and government agency business plans tend to focus on service goals, although non-profits may also focus on maximizing profit. Business plans may also target changes in perception and branding by the customer, client, tax-payer, or larger community. A business plan having changes in perception and branding as its primary goals is called a marketing plan. A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives

Business plans may be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. A corporate stakeholder is a party who affects or can be affected by the company's actions They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. See Investor AB for the Swedish investment company An investor is any party that makes an Investment. A customer is someone who makes use of the paid products of an individual or Organization. ^[1] External stake-holders of non-profits include donors and the clients of the non-profit's services. The definition of charitable organization, and of charity varies according to the country and in some instances the region of the country in which the charitable organization operates ^[2] For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the IMF, the World Bank, various economic agencies of the UN, and development banks. The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic The International Bank for Reconstruction and Development (IBRD is one of five institutions that comprise the World Bank Group. The United Nations ( UN) is an International organization whose stated aims are to facilitate cooperation in International law, International security A multilateral development bank ( MDB) is an institution created by a group of countries that provides Financing and professional advising for the purpose of

Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An internal business is often developed in conjunction with a balanced scorecard or a list of critical success factors. The Balanced Scorecard (BSC is a Performance management tool which began as a concept for measuring whether the smaller-scale operational activities of a company are aligned Critical Success Factor (CSF is a Business term for an element which is necessary for an organization or project to achieve its mission. This allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans. Strategic planning is an Organization 's process of defining its Strategy, or direction and making decisions on allocating its resources to pursue this strategy

Operational plans describe the goals of an internal organization, working group or department. Operational plan is a term that can be used for Military purposes see Operation plan or "OPLAN" Business purposes see Business ^[3] Project plans, sometimes known as project frameworks, describe the goals of a particular project. Project planning is part of Project management, which relates to the use of schedules such as Gantt charts to plan and subsequently report progress within They may also address the project's place within the organization's larger strategic goals. ^[4][5]

Business Plan Content

For more details on this topic, see Content of a business plan. See also Business plan This article explains what goes into a business plan and why

Business plans are decision-making tools. There is no fixed content for a business plan. Rather the content and format of the business plan is determined by the goals and audience. A business plan should contain whatever information is needed to decide whether or not to pursue a goal.

For example, a business plan for a non-profit might discuss the fit between the business plan and the organization’s mission. Banks are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organization’s ability to repay the loan. A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent Venture capitalists are primarily concerned about initial investment, feasibility, and exit valuation. Venture capital (also known as VC or Venture) is a type of Private equity capital typically provided to immature high-potential growth companies A business plan for a project requiring equity financing will need to explain why current resources, upcoming growth opportunities, and sustainable competitive advantage will lead to a high exit valuation. Competitive advantage is a position a firm occupies against its competitors

Preparing a business plan draws on a wide range of knowledge from many different business disciplines: finance, human resource management, intellectual property management, supply chain management, operations management, and marketing, among others. The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated Human resource management (HRM is the Strategic and Coherent approach to the Management of an organization's most valued assets - the people working Intellectual property ( IP) is a legal field that refers to creations of the mind such as musical literary and artistic works inventions and symbols names Supply chain management (SCM is the process of Planning, implementing and Controlling the operations of the Supply chain as efficiently as possible Operations management is an area of business that is concerned with the production of goods and services and involves the responsibility of ensuring that Business operations In popular usage "marketing" is the promotion of products especially Advertising and Branding However in professional usage the term has a wider meaning of ^[6]. It can be helpful to view the business plan as a collection of sub-plans, one for each of the main business disciplines. ^[7]

Business

Support services

• books, portals, and other sources of written information
• consulting services
• electronic planning templates (software)
• face to face help: mentoring programs, training courses
  • Australia: New Enterprise Incentive Scheme (NEIS)
  • Germany: Bundesministerium für Wirtschaft und Technologie (BMWi) [1].
  • Morocco: CRI (Centre Régional d'Investisment)
  • Pakistan: SMEDA (Small and medium enterprise development authority)
  • UK: Business Link
  • USA: SCORE, SBA centers
  • Canada: Industry Canada, [2]
  • India : Allindialive Business Planing Portal,[3]
  • Switzerland : venturelab (Förderprogramm der Bundes für innovative Start-ups mit Wachstumspotenzial)
  • Other countries: needs research

Resources for researching facts and figures

Internal corporate records

Free information

• published statistics on the web
• business libraries

Fee-based services

• marketing reports from subscription services
• archive and journal services
• books

Strategic Analysis

• Industry Assessment
  • The macroenvironment
  • Customer Strategy & Market Analysis
• Competitor Analysis
  • Porter 5 forces analysis

Forecasts: Modeling Techniques

Presentation Formats

The format of a business plan depends on its presentation context. Pakistan () officially the Islamic Republic of Pakistan, is a country located in South Asia, Southwest Asia, Middle East and Industry or market research is the acquisition of corporate intelligence on a broad range of issues including Macroenvironment Economy Definition Environmental scanning is a process of gathering analyzing and dispensing information for tactical or strategic purposes Marketing research or market research is a form of business research and is generally divided into two categories consumer market research and business-to-business (B2B market research which Competitor analysis in Marketing and Strategic management is an assessment of the strengths and weaknesses of current and potential Competitors This analysis Porter's 5 forces analysis is a framework for the industry analysis and business strategy development developed by Michael E It is not uncommon for businesses, especially start-ups to have three or four formats for the same business plan:

• an "elevator pitch" - a three minute summary of the business plan's executive summary. This is often used as a teaser to awaken the interest of potential funders, customers, or strategic partners.

• an oral presentation - a hopefully entertaining slide show and oral narrative that is meant to trigger discussion and interest potential investors in reading the written presentation. The content of the presentation is usually limited to the executive summary and a few key graphs showing financial trends and key decision making benchmarks. If a new product is being proposed and time permits, a demonstration of the product may also be included.

• a written presentation for external stakeholders - a detailed, well written, and pleasingly formatted plan targeted at external stakeholders.

• an internal operational plan - a detailed plan describing planning details that are needed by management but may not be of interest to external stakeholders. Such plans have a somewhat higher degree of candor and informality than the version targeted at external stakeholders.

Revisiting the Business Plan

Cost overruns and revenue shortfalls

Cost and revenue estimates are central to any business plan for deciding the viability of the planned venture. But costs are often underestimated and revenues overestimated resulting in later cost overruns, revenue shortfalls, and possibly non-viability. Cost overrun is defined as excess of actual Cost over Budget. A benefit shortfall results from the actual benefits of a venture being lower than the projected or estimated benefits of that venture During the dot-com bubble 1997-2001 this was a problem for many technology start-ups. The " dot-com bubble " (or sometimes the " IT bubble " was a speculative bubble covering roughly 1995–2001 (with a climax on March 10 However, the problem is not limited to technology or the private sector; public works projects also routinely suffer from cost overruns and/or revenue shortfalls. The main causes of cost overruns and revenue shortfalls are optimism bias and strategic misrepresentation. Optimism bias is the demonstrated systematic tendency for people to be over-optimistic about the outcome of planned actions Strategic misrepresentation is the planned systematic distortion or misstatement of fact—lying—in response to incentives in the Budget process ^[8][9] Reference class forecasting has been developed to reduce the risks of cost overruns and revenue shortfalls. Reference class Forecasting predicts the outcome of a planned action based on actual outcomes in a reference class of similar actions to that being forecast

Legal and Liability Issues

Disclosure requirements

An externally targeted business plan should list all legal concerns and financial liabilities that might negatively affect investors. Depending on the amount of funds being raised and the audience to whom the plan is presented, failure to do this may have severe legal consequences.

Limitations on content and audience

Non disclosure agreements (NDAs) with third parties, non-compete agreements, conflicts of interest, privacy concerns, and the protection of one's trade secrets may severely limit the audience to which one might show the business plan. A non-disclosure agreement (NDA also known as a confidentiality agreement, confidential disclosure agreement (CDA proprietary information agreement A non-compete clause or covenant not to compete ( CNC) is a term used in Contract law under which one party (usually an employee agrees to not pursue A conflict of interest is a situation in which someone in a position of trust such as a Lawyer, Insurance adjuster, a Politician, executive or director Privacy is the ability of an individual or group to seclude themselves or information about themselves and thereby reveal themselves selectively A trade secret is a Formula, practice, Process, Design, instrument, Pattern, or compilation of Information which Alternatively, they may require each party receiving the business plan to sign a contract accepting special clauses and conditions.

This situation is complicated by the fact that many venture capitalists will refuse to sign an NDA before looking at a business plan, lest it put them in the untenable position of looking at two independently developed look-alike business plans, both claiming originality. Venture capital (also known as VC or Venture) is a type of Private equity capital typically provided to immature high-potential growth companies In such situations one may need to develop two versions of the business plan: a stripped down plan that can be used to develop a relationship and a detail plan that is only shown when investors have sufficient interest and trust to sign an NDA.

Open Business Plans

Traditionally business plans have been highly confidential and quite limited in audience. The business plan itself is generally regarded as secret. However the emergence of free software and open source has opened the model and made the notion of an open business plan possible. Free software or software libre is Software that can be used studied and modified without restriction and which can be copied and redistributed in modified or unmodified Open source is a development methodology which offers practical accessibility to a product's source (goods and knowledge

An Open Business Plan is a business plan with unlimited audience. The business plan is typically web published and made available to all.

In the free software and open source business model, trade secrets, copyright and patents can no longer be used as effective locking mechanisms to provide sustainable advantages to a particular business and therefore a secret business plan is less relevant in those models. A trade secret is a Formula, practice, Process, Design, instrument, Pattern, or compilation of Information which Copyright is a legal concept enacted by Governments, giving the creator of an original work of authorship Exclusive rights to control its distribution usually for A patent is a set of Exclusive rights granted by a State to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an

While the origin of the Open Business Plan model is in the free software and Libre services arena, the concept is likely applicable to other domains. Libre

How Business Plans are Used

Venture Capital

• business plan contests - provides a way for venture capitals to find promising projects
• venture capital assessment of business plans - focus on qualitative factors such as team.

Public Offerings

• in a public offering, potential investors can evaluate perspectives of issuing company ^[10]

Within Corporations

Fundraising

Fundraising is the primary purpose for many business plans, since they are related to the inherent probable success/failure of the company risk. Risk is a Concept that denotes the precise probability of specific eventualities

Total Quality Management

For more information see Total Quality Management

Management by Objective

For more information see Management by objectives

Strategic Planning

For more information see Strategic Planning

Education

K-12

Business plans are used in some primary and secondary programs to teach economic principles. Total Quality Management ( TQM) is a business Management strategy aimed at embedding Awareness of Quality in all organizational processes Management by Objectives (MBO is a process of agreeing upon objectives within an organization so that Management and Employees agree to the objectives Strategic planning is an Organization 's process of defining its Strategy, or direction and making decisions on allocating its resources to pursue this strategy ^[11] Wikiversity has a Lunar Boom Town project where students of all ages can collaborate with designing and revising business models and practice evaluating them to learn practical business planning techniques and methodology. Wikiversity is a Wikimedia Foundation project which supports learning communities their learning materials and resulting activities

Higher Education

• BA, MBA programs
  • integrative team projects
  • projects for specific course work
  • Business plan contests

GetSet for Business [4] provides UK educational establishments with the facility for students to learn about starting a business and produce a professional and bespoke business plan online.

Satires of Business Plans

The business plan is the subject of many satires. Satires are used both to express cynicism about business plans and as an educational tool to improve the quality of business plans. For example,

• Five Criteria for a successful business plan in biotech uses Dilbert comic strips to remind people of what not to do when researching and writing a business plan for a biotech start-up. Dilbert (first published April 16, 1989) is an American Comic strip written and drawn by Scott Adams. Scott Adams, the author of Dilbert, is an MBA graduate (U.C. Berkeley) who sees humor as a critical tool that can improve the behavior of businesses and their managers. The Master of Business Administration ( MBA) is a Master's degree in Business administration, which attracts people from a wide range of academic disciplines The University of California Berkeley (also referred to as Cal, Berkeley and UC Berkeley) is a major research university located in Berkeley ^[12] He has written numerous critiques of business practices, including business planning. The website Dilbert.com - Games has a mission statement generator that satirizes the wording often found in mission statements. His book The Dilbert Principle – A Cubicle’s Eye View of Bosses, Meetings, Management Fads & Other Workplace Afflictions discusses the foibles of management and their plans as depicted in the Dilbert comic strips by Scott Adams. The Dilbert Principle refers to a 1990s satirical observation by Dilbert cartoonist Scott Adams stating that companies tend to systematically Dilbert (first published April 16, 1989) is an American Comic strip written and drawn by Scott Adams. Scott Raymond Adams (born June 8, 1957) is the creator of the Dilbert Comic strip and the Author of several Business

• In the article "South Park's" Investing Lesson, the The Motley Fool columnist "Fool on the Hill" uses the Underpants Gnomes to illustrate the fallacy of focusing on goals without a clear implementation strategy. The Motley Fool is a commercial Website about Stocks investing, and Personal finance. " Gnomes " (often referred to as " Underpants Gnomes " is the 30th episode of Comedy Central 's animated series South Park The Underpants Gnomes episode satirizes the business plans of the Dot.com era. The " dot-com bubble " (or sometimes the " IT bubble " was a speculative bubble covering roughly 1995–2001 (with a climax on March 10 Surrounding the issue of the opening of a huge corporate coffee shop in competition with the existing small-town cafe owned by Tweak's parents, it features a three-part business plan for the gnomes to profit from stealing underpants from unsuspecting humans:

1. Collect underpants
2.  ???
3. Profit!

References

See also

• Revenue shortfall
• Corporate Finance
• Cost overrun
• Cost-benefit analysis
• Optimism bias
• Reference class forecasting
• Marketing plan
• Strategic plan
• Color of the bikeshed