A business plan is a plan setting out business objectives while detailing how they are to be reached in practice and the assumptions used to build it. The resources required as inputs for these goals to be attained, as well as the expected outputs and the financial returns are also laid out. Business plans, usually undertaken for new business ventures, are typically undertaken for timespans of 1, 3 or 5 years, but may vary depending on the nature of the business or the project being planned for, its capital intensity and the time required to gear up for operations in the target market.
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Business plans may need to be addressed to different audiences, including investors, financiers, bank staff, entities interested in acquiring your business, regulators and public authorities, management and shareholders. They can therefore be either externally or internally oriented, and need to be pitched for the right audience(s) to succeed.
Business plans require an in-depth appraisal of a proposed venture’s external environment as well as the objectives and the strategy that have been set for the venture or project being planned. Once both the external environment and the strategic direction have been well understood, the business plan looks into each area of business to see how the organisational setup required for the successful attainment of the business objectives as set out in the business plan can best be structured. This entails looking at the human resources and management structures necessary, the technical infrastructure to support the organisation, the physical capital requirements, addressable markets, product/service portfolio, demand potential, sales targets, pricing structures, marketing and promotion needs and roadmap, and the financial outlay required to get the operation going as well as the expected returns (both from a cashflow perspective and also from an accruals perspective). Business plans usually also include a set of common accounting ratios like the Return On Investment (ROI), the Internal Rate of Return (IRR), the Gearing Ratio, the Net Present Value (NPV) of the investment taking into account anticipated inflows and outflows of cash and the payback period.
No business plan can be considered to be complete unless all the assumptions made are explicitly listed together with a cost-volume-profit analysis to see how resilient the projections are to outlined risks and the point at which a venture or project turns to unviability.
In an endeavour to save money, some businesses refrain from undertaking proper business plans until that time when it becomes necessary to submit the business plan to the bank. Experience has shown us that this is a very risky way of going about business planning as the business plan will still have to be undertaken at some point in time and also since before that time when the business plan is actually commissioned significant effort and sometimes even money would have been diverted to an incipient venture or project with the result that this will all be lost if the business plan shows that the venture or project is not viable and would ideally, therefore, be discarded.
Equinox has a long-standing experience in the crafting of business plans for regulatory licensing applications, EU Funding and the acquisition of bank finance. Apart from being able to advise you in relation to business planning and to produce your business plans, Equinox can also advise you on specific matters that affect your business plan, like optimal tax structures, tariffing and pricing and optimal debt finance structuring. We also undertake to earnestly let you know if your business plan is exceedingly risky or if we believe that the proposed project or venture will not be able to take off.