The Utility of a Business Plan in Entrepreneurial Ventures Analysis

This report provides a comprehensive overview of the importance of a business plan for entrepreneurs. It details the essential components of a business plan, including the nature of the business, mission statements, and critical strategic analyses such as SWOT and PESTEL analyses. The report emphasizes the significance of financial projections, covering cash flow statements, profit and loss accounts, and balance sheets. It also addresses operational aspects like marketing, sales, distribution, and risk management, culminating in a discussion on exit policies and the critical need for a well-structured business plan. The report references several academic journals to support its arguments, highlighting how a business plan aids in identifying potential challenges, determining financial feasibility, and ensuring long-term sustainability for entrepreneurial ventures. Overall, the report underscores the value of a business plan for both new and existing businesses in achieving organizational goals and attracting investment.

ENTREPRENEURSHIP-A
Utility of Business Plan for entrepreneurship
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Table of Contents
Introduction.................................................................................................................................................3
Basic ingredients of a business plan............................................................................................................3
Features...................................................................................................................................................4
Nature of business...............................................................................................................................4
Mission Statement...............................................................................................................................4
Critical analysis to fix strategies...............................................................................................................4
SWOT Analysis.....................................................................................................................................4
PESTEL Analysis....................................................................................................................................5
Finance....................................................................................................................................................5
Projected cash flow statement............................................................................................................5
Projected Profit or loss account...........................................................................................................5
Projected Balance Sheet......................................................................................................................6
Operation................................................................................................................................................6
Marketing............................................................................................................................................6
Sales and distribution..........................................................................................................................6
Risk management....................................................................................................................................6
Exit policy................................................................................................................................................7
Critical analysis of need for business plan...................................................................................................7
Conclusion...................................................................................................................................................7
References:..................................................................................................................................................8
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Introduction
This article will emphasize on the importance of business plan with financial projection for any
entrepreneurship to set up any new business. Business plan will highlight different aspects of
new entrepreneurship including its projected financials to understand the demand of the business
along with monetary requirement for the business. In this article different aspects of business
plan will be discussed to provide guidance to the entrepreneur for foreseeing the business for
different aspects of said business. (Sanchis-Palacio et al., 2013) A good plan of business makes
the entrepreneur able to follow certain directions related to new business, already framed by the
plan, to fix future strategies in different fields of business to prove its long-term sustainability.
(Haag, 2013) We will discuss this issue in respect of different well-acclaimed journals
highlighting the issues of importance related to business plan with its contributions for smooth
running of future business. (Honig & Karlsson, 2004)
Basic ingredients of a business plan
We will discuss the above aspects of new business as projected in business plan with their
respective roles for decision making process for the entrepreneur. (smallbusiness, n.d)
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FeaturesFinanceOperationMarketingExitPolicy

Features
Nature of business
For initiating any new business, the entrepreneur should select the nature of business with the
products or services selected for the business. Legal status of the said business is to be selected,
too for statutory compliance. Different products or services have their own distinctive features. It
is the prerequisite of the entrepreneur to select the nature of business to succeed with
sustainability.
Mission Statement
Mission statement is consisting of vision, mission, objectives and values to run any business.
Vision features the destination of the business, which the entrepreneur wants to see as its future
target to reach. (Government, 2019) (PEAVLER, 2019)
Mission features the service or product, the business plans to cater, with its level of probable
satisfaction to be provided to the target audience. (Editors, n.d)
Objective features the way the business would run with its long and short term goals projected to
ensure sustainability. (Fernandes, 2019)
Values feature the ethical approaches of the business considering the stakeholders’ and
entrepreneurs’ interest. (Berry, n.d)
Critical analysis to fix strategies
To run any business, strong strategies are required for accomplishment of short-term and long-
term goals of the business. There are different tools considered for this purpose.
S W O T Analysis
S W O T analysis is known as Strengths, Weaknesses, Opportunities and Threat related to any
business. While strength and weakness are internal features, which can be controlled by the firm;
opportunities and threats are considered as external features in nature, on which the entrepreneur
has got no control. By proper analysis of these factors, the success of any business can be
determined with future strategies in future. (Parsons, 2018)
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PESTEL Analysis
PESTEL analysis is critical analysis of different socio-economic factors, which can determine
the future success of any business. The different factors covered under this analysis are –
Political, Economical, Social, Technological, Environmental and Legal. Critical analysis of these
factors can guide the entrepreneur its future strategies with the positive and negative impact of
these factors. (B2U, 2016) (KBmanage, n.d)
Finance
Finance is the prime part of any strong business plan. Proper projecting source of fund and its
deployment is necessary to find the viability of any business. There are different reports
generated to project the financial position of the company like projected cash flow statement,
profit or loss account and balance sheet. This exercise is to be done for minimum projected
period of five years to understand the financial feasibility of this business for that projected
period.
Projected cash flow statement
This statement projects the incoming of funds with its respective deployment to ensure
anticipated cash balance at the end of any accounting year. Incoming of funds are mainly
generated from the insertion of projected capital with its source, and other projected business
income generated from revenue occurred through sales operation. The outflow of funds consists
of different projected expenses, like cost of goods sold, different administrative and operational
expenses to arrive at the projected resultant balance of cash for any period. This statement can
give probable ideas about the source and deployment of projected funds with its projected
increase or decrease in subsequent projected period through proper analysis as per business
demand.
Projected Profit or loss account
The forecasted profit or loss account of any upcoming business would feature the anticipated
revenue expected to be generated from the business for the projected period. From this revenue,
different expenses under administrative, marketing, and operating heads would be deducted to
arrive at the projected profit or loss of the business. This report can ensure the possibility of
generating profit or loss of the firm with detection of break-even point for the business and
would ensure the viability of the said business for the entrepreneur in long-term with
sustainability.
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Projected Balance Sheet
The projected balance sheet of any upcoming business for certain period would feature the
anticipated assets and liabilities with clear distinction of current and non-current nature including
capital of the business. This statement would feature the net asset value of the upcoming business
as per projection and can also project working capital of the business by deducting current
liabilities from current assets. Projection of balance sheet can ensure the strength of the business
as per anticipation of the entrepreneur to sustain in long-term.
Operation
Operation management is the basic important part of any business plan. This projection would
emphasize on three domains of operation- marketing, sales and distribution and supply chain
management.
Marketing
Marketing of any business is reckoned as backbone of its sustainability. Marketing strategies are
to be fixed as per the demand of the market and respective target audience. For effective
planning of business, a good and ground-level exercise of market survey is required to find basic
criteria of that business, e.g. identification of target audience, potential of local market, easiest
way to reach the target audience, competitor’s analysis etc. All these basic information can make
the entrepreneur able to fix his marketing strategies as per the nature of the business. A strong
business plan must possess effective marketing strategies based on the information gathered from
market through efficient market survey.
Sales and distribution
Sale of product or service is the key factor of any business. The sales procedure should be
planned based on the marketing strategies of the business along with pricing strategy. The
identification of target audience is main factor of sales strategy for any business. Distribution
strategy is to be fixed to reach the target audience in convenient way. As these strategies are
main determinants for success of any business, proper planning of these strategies are to be done
well in advance to avoid ambiguity in sales and distribution operation of any upcoming business.
Risk management
Risk management is one of the essential parts of any business plan. Through this part, relevant
risks to any business are to be identified with proper homework to mitigate them. (Kenton, 2019)
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Exit policy
Exit policy of any business plan is mandatory with the settlement of residual liabilities to the
creditors through most viable option available. (Elle, 2011)
Critical analysis of need for business plan
A business plan can give ideas about different aspects of any business with the probable hurdles,
which may be faced during operation. Without any proper business plan, an entrepreneur can be
in dark to find the way-out from any business problem faced during operation. Business plan
cannot be able to provide solution for any typical business problem. But any strong business plan
can give ideas to explore different alternatives on the basis of pillars considered for the said
business. As per the journal: The Value of Business Plans for New Ventures: Company and
Entrepreneur Outcomes; written by R.C. Becherer and M.M. Helmes and published in May 2009
in The Journal of Small Business Strategy, the writers reiterated the importance of preparing
business plan for any start-up business to ensure viability or for any existing business for future
expansion. This journal is based on the research about the role of business plan for any old or
new business by adopting qualitative method and the observations endorsed the role of business
plan of any old or new business process for determination of the success and sustainability with
its value for the respective entrepreneur. Different success aspects in the domains of finance or
sustainability for achievement of organizational goals including financial return ensured through
this plan for any business. (Becherer & Helms, 2009)
In the journal; Business plans for new or small businesses: paving the path of success by
Hormozi et al (2002), the researchers inferred from findings that irrespective of the stage or size
of the development of business, corporate uses business plans for improvement of operations
internally to depict the business with its marketability to external investors. Business plan should
follow a standard format to make it understandable for the users. (Hormozi et al., 2002)
Conclusion
Above discussion can well conclude that for entrepreneurship, business plan creation by keeping
all justified features including financial projection for a new business is necessary for the
entrepreneur and the investors. A good business plan can give ideas of the viability of any
business from its risk management view point and financial feasibilities.
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References:
B2U, 2016. Scanning the Environment: PESTEL Analysis. [Online] Available at: https://www.business-to-
you.com/scanning-the-environment-pestel-analysis/ [Accessed 4 October 2019].
Becherer, R.C. & Helms, M.M., 2009. The Value of Business Plans for New Ventures: Company and
Entrepreneur Outcomes. Journal of Small Business Strategy, 20(2), pp.80-96.
Berry, T., n.d. Mission, Mantra, Vision, Goals, Etc. [Online] Available at:
https://articles.bplans.com/writing-a-business-plan/ [Accessed 4 October 2019].
Editors, A., n.d. Business Plan Basics: Vision Statements, Mission Statements, and Objectives. [Online]
Available at: https://www.allbusiness.com/business-plan-basics-vision-statements-mission-statements-
and-objectives-3514-1.html [Accessed 4 Octobeer 2019].
Elle, A., 2011. Economics - Exit Policy. [Online] Available at:
https://www.scribd.com/doc/51908496/Economics-Exit-Policy [Accessed 4 October 2019].
Fernandes, P., 2019. What Is a Vision Statement? [Online] Available at:
https://www.businessnewsdaily.com/3882-vision-statement.html [Accessed 4 October 2019].
Government, Q., 2019. Create a business vision. [Online] Available at:
https://www.business.qld.gov.au/starting-business/planning/business-planning/vision [Accessed 4
October 2019].
Haag, A.B., 2013. Writing a Successful Business Plan- An Overview. Workplace Health and Safety, 61(1),
pp.19-29. https://doi.org/10.1177/216507991306100104.
Honig, B. & Karlsson, T., 2004. Institutional forces and the written business plan. Journal of
Management, 30(1), pp.29-48.
Hormozi, A., Sutton, G., Mcminn, R. & Lucio, W., 2002. Business plans for new or small businesses:
paving the path to success. Management Decision, 40(8), pp.755-63.
https://doi.org/10.1108/00251740210437725.
KBmanage, n.d. PESTEL ANALYSIS. [Online] Available at: https://www.kbmanage.com/concept/pestel-
analysis [Accessed 4 October 2019].
Kenton, W., 2019. Risk Management in Finance. [Online] Available at:
https://www.investopedia.com/terms/r/riskmanagement.asp [Accessed 4 October 2019].
Parsons, N., 2018. What Is a SWOT Analysis, and How to Do It Right (With Examples). [Online] Available
at: https://www.liveplan.com/blog/what-is-a-swot-analysis-and-how-to-do-it-right-with-examples/
[Accessed 4 October 2019].
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PEAVLER, R., 2019. Company Vision Statement and Business Planning. [Online] Available at:
https://www.thebalancesmb.com/company-vision-statement-and-business-planning-393552 [Accessed
4 October 2019].
Sanchis-Palacio, J.R., Campos-Climent, V. & Mohedano-Suanes, A., 2013. Management in social
enterprises: the influence of the use of strategic tools in business performance. International
Entrepreneurship and Management Journal, 9(4), pp.541-55. https://doi.org/10.1007/s11365-013-0262-
7.
smallbusiness, n.d. Business planning. [Online] Available at:
https://www.smallbusiness.wa.gov.au/business-advice/starting-your-business/business-planning
[Accessed 4 October 2019].
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