Business Planning Framework
A good framework for business planning has several essential components, including an industry analysis, market description, company overview and financial plan. With this information it's much easier to identify the strengths and weaknesses of a business idea and create a viable business plan. A business planning framework varies by type of business, but the crucial elements are generally the same.
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Industry Analysis
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A business plan should contain a thorough description of the industry in which the business operates. A typical industry analysis uses a "5 Forces" model, which describes rivalry, substitutes, buyer power, supplier power and threat of entry. These factors help business planners understand how to position the company in its industry and how to mitigate the risks and threats that the industry presents.
Market Research and Planning
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It's essential to assess the market when planning a business. This involves identifying who the people are that will buy your product or service --- also known as your target market --- and then devising a plan to raise awareness about your business within this market. A market analysis should also involve assessing your competition to determine how you the products or services they currently buy.
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Company Overview
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The company overview or summary is an important component of a business plan because it describes exactly what the business is, what it offers to consumers and why the business is needed. If applicable, it also includes a history of the business or a description of its origins. A company mission statement, vision and value, and goals and objectives are also common parts of a company overview.
Financial Plan
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No business plan is complete without financial projections. The financial plan should contain a detailed description of startup expenses. It also includes revenue and sales projections for anywhere from one to five years. Expenses must also be itemized and may include personnel, manufacturing costs, freight, marketing, rent, utilities and many other categories, depending on the type of business. All of this information is used to inform the balance sheets, income statements and cash flow statements for each year of projections.
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