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Entrepreneurial Finance: Fundamentals of Financial Planning and Management for Small Business by M. J. Alhabeeb

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CHAPTER 5 THE BUSINESS PLAN

5.1 What is a Business Plan?

Research has shown that entrepreneurs who put some effort into preparing a sensible business plan are most likely to succeed in the subsequent business stages such as acquiring patents, securing capital, assembling the right team, launching their business, and actually achieving a measure of success. The comparison is made to those entrepreneurs who do not care much about preparing and writing a detailed business plan. A recent study by the Small Business Administration (SBA) confirmed the conclusion that the early planners tend to be doers. A business plan is a written document that presents a proposed business idea and details the process of turning the idea into a real business project. The details include description of the product and market; production process; management; marketing and sales; projected expenses and earnings; funding; and the way to pay for loans.

Types of Business Plan

The main purpose of any business plan would determine the nature of its audience. In other words, business plan type would lead to knowing to whom it should be submitted and by whom it should better be judged. Table 5.1 shows the common types of plans as listed against those who would be the best to judge their merits.

Table 5.1 Types of Business Plans and Where They Should be Submitted to

Order Type Submitted to
1 Equity finance plan Private investment firms, venture capitalists, and angel investors
2 Debt finance plan ...

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