Writing a business plan is an important step in the process of starting your own business. By writing a business plan, you can develop a clearer idea of how you intend to make your business successful. In addition, with the help of a well-written business plan, you can secure financing to help get your business started.
There are four sections that you must include in a business plan:
- a description of the business;
- how you intend to market your business;
- how you'll finance your business;
- how your business will be managed.
When describing the business that you intend to establish, you should provide detailed information regarding what your business will offer and what sets it apart from the competition. In order to accomplish this task, you'll also need to research businesses that you consider to be competitors. Your business plan should include detailed information about your competitors, as well as how your business compares.
Your business plan report should also describe your marketing plans, such as whether or not you'll use direct mail campaigns, radio advertisement, Internet marketing, etc. Within this section of the business plan, you should discuss your target audience and why you believe that your marketing plan will effectively help you to reach this audience.
A thorough business plan must also include a description of the business's operating procedures. This will include the management layout and who will be responsible for which aspects of the business. This section may also describe the personnel that you'll need to effectively run the business, including how many employees are required and the various roles that will need to be fulfilled.
If you must still acquire financing to get your business off the ground, your business plan writing should include information regarding exactly how you intend to obtain the financing. This portion of the business plan should also detail the type of business insurance that you'll cover, including the categories of coverage that your business will carry.
Your financial information should also provide a detailed forecast of your projected profits and losses over the next few years. You should include a three-year summary, month-by-month expectations, and what you anticipate from your business after the first year.
Along with the written portion of the business plan, you should include a variety of different supporting documents. For example, you should include any tax returns for principles over the last three years, as well as any letters of intent that you have received from suppliers or other important business contacts. You should also include any legal documents, including copies of your licenses and lease agreements. Finally, if you're getting involved with a franchised business, you'll need to include a copy of the franchise contract and any documents that you have received from the franchiser.
Business Plan Writing
It is likely that a student majoring in business will have to complete at least one business plan during the course of his/her degree. Many students will encounter a business plan for the first time in upper-level business classes, and despite the fact that they possess many of the skills needed to design such a plan, will be unsure of how to write a business plan. However, there are many existing models for how to write business plans that will help students successfully compose their own. These models vary depending on the business plan objective, so it's likely that a student's business professor will issue a particular model that he/she deems appropriate for the course.
A business plan is significantly different from other types of college work. Some students who are unsure of how to write a business plan tend to approach the project in the same way as they would a research or report. This should be avoided. Business plans are detailed documents that present a strategic approach to a business operation. They are therefore not papers such as a student may be used to writing, but rather practical guides that outline the operation of a business and reveal the business plan writer's knowledge of a variety of business skills and applications.
One of the most important things to consider when learning how to write business plans is the purpose of such plans. Business plans are composed by business owners to assist in the development of their business and by prospective business owners to attract investors to fund a start-up business. Therefore, a student's business plan should direct the plan to its intended (though fictional) audience: business partners and/or possible investors. The business plan should aim to inform and persuade this imagined audience.
As mentioned, most students need not worry about the organizational aspect of how to write business plans, as it's likely that a student's instructor will recommend a particular model. This model will likely be some variation of the following structure: (1) an executive summary, (2) an overview of the company, (3) a description of the company's services and/or products, (4) a market analysis, (5) details of the management structure of the business, and (6) a description of the business' projected finances.
An executive summary is in essence an outline of the business plan written out in sentences rather than in outline structure. This should be the first page of the document, and serves the same purpose as an abstract—it gives the reader a complete overview of the contents of the plan. The details of the plan will be presented in the remainder of the text.
After the executive summary, the business plan will likely present a description of the company. This includes explaining what type of business the company is, where it's or will be located, where the business fits in among other similar businesses, and why the business plan writer believes it will be profitable.
The plan will then provide a detailed description of the company's services and/or products and why those services and products are marketable. This shouldn't merely include the business plan writer's opinions, but should point to market research that indicates why the product or service will be successful. This section should also indicate the price and profit margin of the product or service.
The market analysis section of a business plan identifies who will buy the product or service and why they're likely to buy it. To do this effectively requires the business plan to point to case studies of similar businesses or business models. It may also require the inclusion of detailed information about the target consumers' purchasing habits and the business' competition.
Every business plan should include a description of how the business will operate. This should offer details of the management positions the company will have and the specific roles of each of those positions. The business plan should close by projecting the costs of implementing the plan and the profitability of the company once the plan has been implemented.
If students aren't confident in how to write a business plan, they should read professional business plans in order to become familiar with the conventions of the form. It is likely that a business library will be able to provide these to interested students.
Business Plan Example
A business plan example is a complete or partial business plan that's distributed as a model for individuals unfamiliar with business plan writing. Business plan examples are provided by writing reference sources, business how-to Web sites, business schools, business libraries, and business professors. Business plan examples can be an excellent reference point for individuals who are new to writing business plans; however, as business plan examples are, like most examples, very general, they're intended to display the basic model of business plan writing. Actual business plans will likely be far more detailed and specific as they will be directed toward a particular audience and designed for a particular business idea.
A business plan example is most useful for its indication of the structure and general content of a business plan. Though business plans will vary, they follow a general format comprised of several sections related to the operation of a business. This format will likely be some variation of the following structure: (1) an executive summary, (2) an overview of the company, (3) a description of the company's services and/or products, (4) a market analysis, (5) details of the management structure of the business, and (6) a description of the business' projected finances. The order of this structure will differ from example to example, with the exception that the executive summary will likely always come first, as it's an overview of the information included in the plan. Business plan writers can select a structure based on the example they find best suited to their particular aim. However, business students who are composing a business plan for a class should always use the example provided by their instructor, as it's likely that the instructor considers the particular example he/she provided to be the best model.
Two of the most important considerations when completing a business plan are audience and purpose—who is going to read the plan, and what the business plan writer hopes the outcome of the plan to be. Therefore, the best business plan examples are those that are geared toward the same audience or industry as those for which the business plan writer intends to write. An individual preparing a business plan for an independent cosmetics boutique looking for investors has a different audience and purpose than an individual preparing a business plan for a toy store franchise. These individuals would benefit more from a business plan example that has a similar audience or purpose to their own. This way, the business plan example will provide the writer with more and specific details and guidance.
Business Plan Content
A business plan is a detailed outline explaining an approach to a business' operation. Business plans are composed by existing business owners to assist in the development of their business and by prospective business owners to attract investors to fund a start-up business. Because they're an important document in the business world, it's likely that undergraduate and graduate students majoring in business will have to complete at least one business plan in the course of their studies.
It is important for business students to realize that a business plan is radically different from other types of college and graduate-level work. It isn't an assignment, in the standard sense of the term. It requires extensive research, planning, and revision in the same way that a paper would, but its purpose and appearance are very different. A business plan isn't completed to argue a position or demonstrate the writer's grasp of a specific business concept. It is, rather, a practical guide that outlines the operation of a business and reveals the business plan writer's knowledge of a variety of business skills and trends.
Business plans completed for a college or graduate course should follow the explicit format requirements issued by the instructor. This format will likely include some variation of the following structure: (1) an executive summary, (2) an overview of the company, (3) a description of the company's services and/or products, (4) a market analysis, (5) details of the management structure of the business, and (6) a description of the business' projected finances.
An executive summary is simply a summary of the business plan. It is essentially an outline of the entirety of the plan written out in sentences rather than in outline structure.
Following the executive summary, business plans frequently begin the detailed portion of the plan by presenting a description of the company. This includes explaining what type of business it's (retail, service-based, etc.), where it will be, where this business fits in among other similar businesses, and why the business plan writer believes it will be profitable.
Next, the plan will describe the company's services and/or products and why those services and products are marketable. This shouldn't merely include the business plan writer's opinions, but should point to research that suggests why the product or service will be successful. It should also outline a pricing structure.
The market analysis section of the business plan should also rely on research. This section identifies who will buy the product or service and why they're likely to buy it. To do this effectively requires the business plan to point to case studies of similar businesses or business models. It may also require detailed information about the target consumer's purchasing habits and the business' competition.
Every business plan should include a description of how the business will operate. This should offer details of the management positions the company will have and the specific roles of each of those positions.
Finally, the business plan should close by projecting the costs of implementing the plan and the profitability of the company once the plan has been implemented.
Business Plan Outline
Whenever an individual or a partnership wants to open a business, it will have to complete a business plan. The business plan isn't only an essential document for ensuring the success of the business, but it's also the document that will be used in order to solicit support for the business from investors, partners, clients, and other entities. In order to complete an effective business plan, it's important to start with a business plan outline.
Many students will have to learn how to write business plan outlines during their academic careers—especially students in undergraduate and graduate business programs. A business plan is similar to many other types of academic documents that a student should know how to write. However, business plans must include plenty of research, projections, and background information.
There are many different business plan formats. Because there are so many formats, many people begin by finding a business plan outline that has the appropriate sections for their needs. When people start with a business plan outline, they simply need to fill in the sections of the outline, rather than starting the business plan writing from scratch.
Each different type of business may have unique business plan outline fields. For example, a business plan for a restaurant may require sections devoted to the menu, cost of food, cost to build out the kitchen area, depreciating food asset projections, and more. The business plan for a services company may not require as much financial information, especially financial information about depreciating assets.
In order to find the right business plan outline for a particular business, many individuals search online through business plan outline databases. Many databases provide separate outlines based on the category of business. Some outlines are more comprehensive than others. Additionally, some business plan outlines are focused on helping individuals raise capital for the business, and, therefore, have more fields for financial information and projections.
Whenever students have to work on their own business plan outlines, they need to keep in mind that a business plan outline not only requires an explanation of the business industry, experience of founders, financial situation and current situation, but it should also contain information about industry trends, financial projections, economic and environmental projections, and more. Therefore, unlike many other academic documents that students will need to write objectively and based solely on proven fact, learners will need to use some creative thought when writing business plan outlines so that they can predict probable (or possible) outcomes.
Free Sample Business Plans
A business plan is a practical guide that outlines the details of a proposed business or business operation. A free sample business plan is a business plan provided free of charge by an institution, organization, or individual. Free sample business plans are distributed to serve as models or guidelines for individuals unfamiliar with how to write such plans; free sample business plans are therefore not templates to be copied, but rather general guides to be used and modified as the business plan writer sees fit.
Free sample business plans are often distributed by business schools, online resources for developing business models, and instructors of business classes. A free sample business plan will often point out important structural, stylistic, and informational aspects of business plans so that students can learn how to incorporate these aspects into their own plans. For instance, the sample may point out the various sections of the plan and their organization. A business plan will typically be organized into some variation of the following structure: (1) an executive summary, (2) an overview of the company, (3) a description of the company's services and/or products, (4) a market analysis, (5) details of the management structure of the business, and (6) a description of the business' projected finances. The sample plan will likely go through the specific elements necessary for each of these sections and explain the importance of each section and the information the reader of the plan expects to gain from it. Free sample business plans may also make note of the way in which the writer of the plan incorporates research to bolster the validity of the plan, as well as the type of language and syntax the writer uses.
When using a free sample business plan as a model, learners should use the guidance of several different samples. All business plans will be different depending on the needs of each writer's business idea; it's therefore wise to determine how several different business plan writers executed their plans so that the student can see how those various plans modify the basic business plan structure to accommodate the needs of their specific intentions. Furthermore, it may be helpful for students and other new business plan writers to draw primarily from sample business plans that are for businesses similar to their own proposed ideas. This will help the student determine how to tailor the business plan to his/her particular audience and industry.
Small Business Plan
It is a business "best practice" to have a business plan in place prior to opening a business. A business plan is a basic road map for the direction of a business. It not only describes how a business will operate and receive revenue, but it also provides information about the metrics that will be used to determine how successful a business is. Even small businesses require small business plans in order to run effectively.
A small business plan is easy to write. Each business owner gets to determine just how extensive his/her small business plan should be. For example, some business owners pay great attention to the details of their plans, especially if they're seeking funding for their businesses. In such a case, they may need to include marketing data, market data, profiles of the operators of the business, and more. Lenders want to know that small business owners have done their due diligence to determine that a business has a good chance of being successful.
Some business owners may have shorter and less thorough business plans, especially if their businesses are self-funded. These business plans may only include a few paragraphs about what the business is and how it's operated. Even these short small business plans will provide guidance for a business owner as he/she pursues the business development.
While all small business plans are different, one of the major components that should be included is a description of the business. If a business owner wants to open a clothing store, the business plan should include information about the clothing store, such as whether or not it's a franchise or a boutique.
All small business plans should also include information about how the business will get revenue. For example, will be primary revenue stream be clothing sales through the store or online? Will the store have annual sales or events to boost sales? Business owners need to take some time to think about these variables.
A small business plan isn't the same thing as a business proposal, though they're similar. A business proposal is a physical/visual document that proposes a certain business to partners or funders. A proposal, essentially, asks for help or partnership. However, a small business plan is a statement about what a business is and how it will operate. It isn't as conceptual as a business proposal.
Business Proposal Paper
Here is a simple approach to help you cover all the bases when learning how to write a business proposal paper. For each section/requirement that you must address, make sure that you answer: who, what, where, how, when, and why. Repeat it until it rolls off your tongue and you have it memorized.
- Who: who will do the work, who will manage the work, who does the customer call if there's a problem, who is responsible for what
- What: what needs to be done/delivered, what will be required to do it, what can the customer expect, what it will cost
- Where: where will the work be done, where will it be delivered
- How: how will be work be done, how will it be deployed, how will it be managed, how will you achieve quality assurance and customer satisfaction, how will risks be mitigated, how long will it take, how will the work benefit the customer
- When: when will you start, when will key milestones be scheduled, when will the project be complete, when is payment due
- Why: why have you chosen the approaches and alternatives you have selected, why the customer should select you
This simple phrase (who, what, where, how, when, and why) can help you ensure that your business proposal research paper communicates everything needed to "answer the call." For each of the customer's requirements, go through the list and you'll probably have everything covered. You can use it for inspiration when writing, and you can use it like a checklist for reviewing a draft proposal.
Step-by-Step Tutorial on How to Communicate . . . Proficiently
Love it? Hate it? Post a review!
Playlist: Learn English with James -- ALL my engVid videos (JamesESL)
Business Plan for the Farmery…
Business Plan Product Description Market Analysis Demographics Regulatory Environment Competition Marketing Plan Market Penetration Strategy Advertising Media Management Plan Company Organization Company Philosophy Personnel Policies Training Record Keeping Manufacturing Plan Financial Pro-Formas Risk Analysis The Farmery is a startup venture…
15 pages (4,066 words) | Business Plan | Business / Corporations / E-commerce | Style: n/a | 15 Sources
Business Plan for a Company…
Business Plan IDC Interiors aims to open a small business venture with the aim to attract clients as much as this venture can of both types of customers (residential or commercial) by offering unique, comprehensive, environment-friendly and comfortable, interior design…
12 pages (3,240 words) | Business Plan | Business / Corporations / E-commerce | Style: n/a | 5 Sources
Business Plan for an Imaginary Software Company,…
¶ … business plan for an imaginary software company, Techno soft which aims to enter South Asian market as a part of its international business expansion strategy. The paper is divided into different sections. The first section presents an ample…
16 pages (5,030 words) | Business Plan | Business / Corporations / E-commerce | Style: n/a | 16 Sources
Business Plan for a Financial…
Therefore, CleanDivision will have to set new international strategies while setting up its business in new geographical locations. B4: Management Structure: The ownership of the CleanDivision business is in the hands of both the partners. Michael Kothakota is the majority…
25 pages (6,850 words) | Business Plan | Business / Corporations / E-commerce | Style: n/a | 10 Sources
View 1,000+ other related papers >>
Any company whether starting a new business or expanding an existing firm within an established organization- all requires a business plan so that it can meet the expected and unexpected opportunities, the obstacles which the future holds and also the most important to raise funds so that it can navigate successfully through its own unique competitive environment.(Brown et al, 2001)
This assignment focusses on the role of the business plan in acquiring capital from the investors for its start-ups or expansion and also the limitations when securing those funds.
Business plan is a blueprint of any business giving a detailed outline of business concept, business opportunity, competitive landscape, key to success and people who are or will be involved. Therefore it acts as an important sales tool which can be used to borrow money or gather support to launch a new product or service. Kuratko and Hodgetts (2001: 289) suggest that 'the business plan is the minimum document required by any financial source.'
ROLE OF BUSINESS PLAN:
An entrepreneur, when having any idea of a business ,are afraid of writing the business plan fearing for the future. But a well documented plan provides unlimited benefits.(Arkebauer,1995) It helps to define the in-depth analysis of the business and the strategies of how to venture with that business in the current market. A plan written on paper not only helps in identifying the potential problem areas but also helps in working out the solutions without interfacing the real world consequences.( O'Connor,1998). It also helps in communicating goals throughout the organization. If proper strategies are implemented then owners or the managers can use it as benchmark to assess the goals they have achieved and also to improve the areas of weakness. Hence it should not be limited to a start up tool but should be used continually to re-evaluate the progress of the business. Business plan does not guarantee success but helps in reducing probability of failure.(Crawford-Lucas,1992)
Apart from the above benefits, the most important role of business plan is to accomplish the vision of an entrepreneur by persuading the investors to fund them. The financiers could be either the lenders or investors. All require a business plan to evaluate the potential of business. Lenders looks at the riskiness of the loan by seeing the payback periods and cash flow data whereas the investors are interested on the longer term potential of the business and hence they want to know what the break even points are and what will be the return of investment. Thus the decision of the prospective funder to consider the proposal would depend on the quality of the plan supported with the funding proposal. As stated by Brown et all(2001:11) "the business plan is the ticket of admission giving the entrepreneur his first and often the only chance to impress prospective sources of finance with the quality of the proposal.''
To accomplish this an entrepreneur needs to formulate the plan in such a manner that it satisfies all the aspects which the investors look into. The important aspects are listed below:
- Executive Summary:This section plays a critical role as its the first document which an investor looks and makes a quick decision on the proposals. It should be as concise as possible detailing all the important aspects of the business fulfilling the investors expectation.
- Product, history and competitors:The investor also looks into the following factors such as what is the product or service ,what pain is being eased through this product or service, history of the product, uniqueness of the product so that the customers are induced to purchase and who are the direct and potential competitors.
- Marketing analysis and plan: This is the critical part of the business plan as this not only helps the investors but also an entrepreneur to understand the market. The market analysis helps them to analyze what the market size is and what the future it holds for them and how they are going to target the market, what is the value proposition they are having and what strategies they are going to pursue to target those market.
- Management: Management summary is an important summary which an investors wants to look into it as they are the ones to whom investors invest their money. The investor knows that without the right people no unique opportunity can be turned into reality. Hence they give more emphasis on the quality of the management team.
- Financial plan:The financial aspects plays a critical role in the plan as it converts the other parts of the business such as the operations, marketing, management etc. into the expected financial aspect. Hence when providing financial projections one must highlight and explain the importance of the significant figures from the pro forma income statements such as revenue, operating profit, operating margin, net income and net margin over the period of 3 to 5 years. In addition to these statements it also shows the break even analysis, NPV and the cash flow statements.
- Risks: Risk is the uncertainty of the future and the investors wants to know the assessment of the level of risk. They want to know that if there is any risk such as operation risk, market risk, financial risk then how one plans to avoid it and also how to mitigate those risks.. Hence when formulating the plan one needs to take care of adding all the risks which are associated
LIMITATIONS OF THE BUSINESS PLAN:
No matter how innovative is the product but if proper business plan is not formulated with proper research then there might be some flaws which an investor will feel and would hinder him in investing in your business. The limitations could be :
- the management team having no experience in the field in which they are venturing nor having any good reputation of successfully completing their projects and also the team having no proper blend of people, range of skills and depth of knowledge will lead to rejection of the plan. Hence the team should contain blend of people with proven track record and their requisite resumes should also be attached.
- if the market analysis is not done properly i.e. the size of the market in which the company is penetrating its product,buying behaviour of the customer, how they are going to target their market and at what price they are going to target etc. then an investor might feel unsecured in investing the funds as they will feel that entrepreneur is not having proper analysis of their target market.
- if one defines the market size too broadly for a product then it provides no value to the investor as investor would feel that proper market analysis is not done.
- Certain business plan shows that there is either no or very few competition which implies that there is not enough customer to support the product or service. Hence proper marketing analysis needs to be done showing that there is a wide market for the product and it also gives an assurance to an investor that if management executes well then the firm can earn substantial profit.
- They also require to know what's the the strength and weakness of the competitors,what's their market share and what are the threats of entry to that particular industry.
- if its a manufacturing industry and is not located at favourable geographic location with no assess to skilled employees or inexpensive labour might also hinder an investor to invest.
- if unrealistic sales are forecast i.e. expecting an unimaginable sale when there is not much demand in the market.
- if proper profit projections and cash flow statements are not shown in the plan. Since profit projections is considered to be the heart and the cash flow is considered to be the blood of the plan, hence the investors are keen to see whether the peak need and the peak availability of cash are shown and what is the expected financial returns i.e. return on investment(ROI).
- If proper balancing of an asset and liabilities are not done.
- If proper break even analysis is not done as the investor are interested to know at what level of sales will a break even occur.
- If neither any investment nor any security i.e. collateral is provided then an investor might feel unsecured in investing.
- If proper fund planning, usage of the funds and the repayment of funds are not shown properly then an investor might not invest.
- If no sensitivity analysis is done then investor might not approve the plan as this is the critical part of the financial plan. Since the financial data are made on assumptions and it may change in due course of time. Hence,its necessary to calculate the changes in the profitability by changing the critical parameters of the financial plan and also to evaluate that whether the firm is able to repay all its debts and obligations.
- Most investors do not calculate the risk associated with the business and this might also hinder the investor to invest. They want to evaluate what the risks are associated and what are the ways to mitigate those risks.
- When expanding an existing business, credit rating should be attached as the investors would like to see that how the company is performing for the last few years.
- an investor always look into the sustainability of the business i.e. who will run the business in absence of an entrepreneur. This is the critical aspect as they want to know that will the business die if an entrepreneur leave the business and pursue some other work.
- The business plan does not accommodate multiple individual investors
- the business plan does not contain any document which sets the terms and conditions i.e. Subscription Agreement(SA) for the investment as no investor would invest without these documents. It also becomes difficult for the entrepreneur to raise funds without these documents.
- Business plan does not provide any loan agreement i.e. Promissory note agreement and neither it provides Private Placement Memorandum(PPM) i.e. the document which contains all the information related to the company stating the operations, transaction structure, terms of investment, risk of the business etc. Both the PPM and SA should be included in the business plan when raising capital from the investors.
Business plan is basically the backbone of an entrepreneurial finance. Since some entrepreneur have difficulties in conveying their ideas to the investor, hence business plan becomes an important communication media to convey their ideas. The business plan cannot guarantee the success of the business, if the entrepreneur does not have the necessary skill, knowledge and zeal to translate the plan into reality. While formulating a business plan, the entrepreneur must bear in mind about the government policies of the country. A business plan which might be quite alluring and promising in an open economy may not be fruitful in the closed door economy. An entrepreneur when starting a new venture should not entail himself in a highly capital intensive plan as the risk factor is high. He should venture in an average size plan which can be personally monitored. The most important learning outcome of mine after going through the researches is that it has broadened my vision by giving an idea that when starting a new venture one should write the plan by his own instead of making professionals to do as this not only helps to understand the whole scenario of the business plan but also helps in understanding the critical aspect which the investor looks into and how to overcome those limitations by proper planning. The learning outcome through this assignment has been quite fruitful to me.
a) an import/export business which requires funds to support its expansion:
- For an import/ export business it is considered to be medium risk since there is certain fluctuation in the currency.
- Since its in the expansion phase hence the track record of the company is good and also the return on investment would be quick as its a trading business. It will not take much time to reach break even point of its sales. Hence bank would be able to invest.
- It is requiring funds for its expansion, hence the firm must be having increasing revenue with positive cash flow.
- Since exporting to the foreign country, hence a guarantee is required for the payment. This guarantee can be provided either through the banks in terms of Letter of Credit or through the well known venture capitalist. The banks give them credit on the basis of the collateral which could be foreign account receivable.
- The creditors or the lenders could also finance the company because of the goodwill created in the market as its operating for a long time. This debts are repaid back by the company at the predetermined date.
- The banks also introduce lending investors such as pension funds to finance the firms having high potential as the bankers are not able to extend their limit for a longer period of time.
- The firm can also use factoring for financing but this type of financing has a negativity that its too expensive due to high factoring discount and major of the profit shares are also absorbed.
- Since the firm can get funds through the line of credit or banks and hence they would not require to take the funds from the investors as investors require equity ownership for the funds which in due course of time could be a threat of loss of control of business.
b) a high tech business in its development phase:
- For a high technology business, it is considered to be highly risky. Risky because it may happen that the companies operate for a long period without any profit nor sales.
- A very high cost is spent on Research and Development and also the time frame cannot be stated for the launch of its product.
- Since it is in development phase hence the track record of the company would not be available and also the return on investment would be slow. In the initial period the return may be negative i.e. it may take a longer time to have a break even point but in long term it may have good return.
- The bankers would not invest since its a risky business having no track record and also the rate of return would not be good in the initial few period, hence the company may not be able to service the interest and repayment on timely basis in the initial period.
- The venture capital are basically investing the third party money in any business hence they require high return on investment and that too within a short frame of time. But since the return on investment is not known, neither the track record of the company is known and also the company may not be able to service the debts and obligations in that time frame, hence venture capital may not fund them.
- Finally the probable source for the investment would be angel investors since they help the company in the development phase. They like to invest in the risky business and they neither require the track record of the company. Since they take high risk and hence they require high return on investment. Hence they take the equity investment in the company.
1. Barrow, C., Barrow, P. and Brown, R. (2001), 'The Business Plan Workbook', edn. London: Kogan Page. Available at: http://isb.sagepub.com/cgi/content/abstract/22/3/227 .( Assessed on:
2. Kuratko, D. F. and Hodgetts, R. M. (2001), 'Entrepreneurship: A Contemporary Approach', 5th edn. Orlando, FL: Harcourt. Available at: http://isb.sagepub.com/cgi/content/abstract/22/3/227 (Assessed on:
3 Arkebauer, J.B.(1995), Guide to writing a high business plan,Mc Graw hill, new york, NY 4 Mason,C.,Stark,M., 'What do Investors look for in a business plan', Available: http://isb.sagepub.com/cgi/content/abstract/22/3/227. (Assessed on:
5 . O' Connor, T.(1998) ,'Take the initiative to write a viable business plan', Denver Business Journal, February, pp 21A. Available at:
6 .Crawford- Lucas, P.A.(1992),' Providing business plan assistance to small manufacturing companies',Economic Development Review, Winter,pp.54-8. (Available at:
Source: Essay UK - http://www.essay.uk.com/free-essays/business/business-plan.php
Not what you're looking for?
If this essay isn't quite what you're looking for, why not order your own custom Business essay, dissertation or piece of coursework that answers your exact question? There are UK writers just like me on hand, waiting to help you. Each of us is qualified to a high level in our area of expertise, and we can write you a fully researched, fully referenced complete original answer to your essay question. Just complete our simple order form and you could have your customised Business work in your email box, in as little as 3 hours.