What is a business Plan?
The business plan is a professional genre of significant importance to business practice. It presents the strategic approaches to conduct a certain business in a period of time. It also means to convince the reader of the feasibility of the business idea and the benefit of their participation in it. Business plan comprises of qualitative and quantitative sections. The qualitative section includes business description, marketing planning, operation strategy, human resources management, information technology strategy, and corporate social responsibility. An executive summary describes the business plan in one or two pages, helping the reader to understand the concept of the business. The quantitative section is the financial planning of the business or project.
Kirsch et al. (2009) tried to determine how the presentation and content of a business plan influence funding decisions. They established a list of content clues that could lead to an endorsement (Kirsch, Goldfarb, & Gera, 2009). Besides being a funding instrument, a business plan is utilized in the management of the business as there is a correlation between planning and business success (Delmar & Share, 2003). SMEs that have substantial operations and maintain a growth pattern can utilize their progressive business plan to prove to lenders, investors, and partners that/how their business concept would work. Therefore, it is essential for the SMEs to develop and update their business plans from funding and management perspectives.
The business plan plays a primarily “symbolic” role is business formation. It is used chiefly to gain legitimacy in the eye of external parties and, secondarily only, as a learning tool, which could also eventually increase entrepreneurial efficiency (Doganova & Giraudeau, 2014). Early planning for new ventures has notable effects on the confidence of entrepreneurs, their perseverance, and consequently on the likelihood for their ventures to actually emerge (Dimov, 2009).
Although the content of business plans vary, Canada Business Ontario outlines successful business plan should include an executive summary (business description), identifying the business opportunity, marketing and sales strategies, team, operations, financial forecast of a business plan, and other supporting documents (FedDev Ontario Small Business Services, 2019). The proposed content relates to different managerial functions and topics. Strategic management seems to be the most prevalent theory in the development of a business plan as it should demonstrate a response to rivalry in the market, competitive advantage and how to create differentiation.
Delmar, F., & Share, S. (2003). Does Business Planning Facilitate the Developed of New Ventures? Stratregic Management Journal, 1165 – 1185.
Dimov, D. (2009). Nascent Entrepreneurs and Venture Emergence: Opportunity Confidence, Human Capital, and Early Planning . Journal of Management Studies, 1123-1153.
Doganova, L., & Giraudeau, M. (2014). Entrepreneurial Formulas Business Plans and the Formation of New Ventures. Sociologie.
FedDev Ontario Small Business Services. (2019, 03 14). Retrieved from Government of Canada: http://www.cbo-eco.ca/en/index.cfm/planning/writing-a-business-plan/business-plan-guide/
Kirsch, D., Goldfarb, B., & Gera, A. (2009). Form or Substance: The Role of Business Plans in Venture Capital Decision Marketing. Strategic Management Journal, 487-515.