Answer:
Entrepreneur does the business planning in many forms, but it requires creativity, independent thought and strategic planning skills. Many times, if required, learning from a professional entrepreneur is the best option for an entrepreneur, when it is available. Starting with a feasibility plan, a business plan and a proposal will be useful in the preliminary process. These will provide a blueprint, and the ability to convey themessage of the business. The planning process should follow the sections of a feasibility study, which investigates whether the idea is capable of becoming successful. The business plan shows the details of why, and the proposal is the pitching portion of the planning process. All materials can help get investors or funding. Oncethe business is in operation, the planning does not end. Entrepreneurship requires constant innovation and change. Subscribe to Entrepreneur Magazine, and others to get more strategic insight. If required, stay informed by local, national, and global media outlets to plan ahead for the next year or quarter.
A plan which looks feasible at the first instance might actually not be when its details are referred. Before preparing the plan entrepreneur should make an effort to do preliminary review starting should be from making review of the available plans; followed by drawing key assumptions about competition, growth of market economic variables; SWOT analysis by scanning internal and external environment; and if required get the professional advice from a person engaged in a similar business activity. Therefore, documenting business plan is important activity and preparation of business plan needs to follow process which is given below.
- Identifying and Generating the Idea
- Assessment of Environment
- Analysis of Idea’s Feasibility
- Preparation of Project Report
- Evaluation and Monitoring
- Identifying and Generating the Idea: The basic function of an entrepreneur is not only to do innovation in the form of creating a new product, service but they need to offer concept, product and service to customers, employees and shareholders with major or key value addition in its offerings. Hence, an entrepreneur keep in mind the key word of value addition right from the first activityhe initiate for his venture.An entrepreneur as a creative person work on entirely new innovative idea, add the value to the idea and come out with a product as a solution to the needs of people. Even if idea is not new only value addition to existing product is also considered as creation of innovative product or service. So idea generation is the first stage of planning process involves creation of new ideas, or service to satisfy existing demand, latent demand or future demand of the market. If entrepreneur does not have idea he can use various sources of idea generation which includes consumers; employees; intermediaries such as dealers and retailers; existing companies offerings; laboratories; research and development activity etc.
In order to get ideas from such sources entrepreneur use various methods of generating new ideas such as Brainstorming, Reverse Brainstorming, Brain writing; Group discussion; Collection of information through questionnaires from existing customers, dealers, retailers; Ideas are invited through Advertisements, Mails and use of Internet; Market research; addition of value to the current product/service etc. Many times entrepreneur organize contest to identifyideas through TV channels and other Medias to invite participation to get best business ideas. Entrepreneur should do screening of these new ideas to eliminate impractical ideas.
2) Assessment of Environment: After generating ideas the next step is to assess the environment for analyzing prospective strengths, weakness, opportunities and threats of the business enterprises. In order to know whether opportunity exists for the idea generated it is advisable to scan both external and internal environment which help in collecting information about the possible opportunities, threats from the external environment and strength and weaknesses from the internal environment. Various variables to be scanned includes economic, socio-cultural, technological, Governmental and demographic changes taking place in external environment and variables of internal environment includes availability of finance, machinery, raw material manpower etc. Entrepreneur fulfill the objective of collecting maximum information from informal sources such as friends, family, colleagues etc. and formal sources such as newspapers, magazines, Government records, seminars and conferences, dealers, competitors, suppliers etc.
The appraisal of socio-cultural environment includes variables such as norms, beliefs, values, fashions of a particular society which help in understanding the level of flexibility and rigidity of a given society towards a new product or service or concept. Technological assessment includes appraisal of available technological know-how and future technologies to convert an idea in to a product. Appraisal of economic environment includes assessing the economic status in terms of per capita income, inflation, consumption pattern, and balance of payments, fiscal and monetary policies which help in identifying whether opportunities for growth and development exists in economy. Such knowledge provides confidence to entrepreneur for success of their business venture. The appraisal of various policies, incentives, legislation, grants, and procedures formulated by Government help an entrepreneur to decide whether to run or establish the business or wait for favourable approach form the Government. The demographic environment assessment includes apprising overallpopulation pattern in a particular geographic region considering variables like age profile, population distribution, income distribution etc. which help in identifying size of market available for product or service of an entrepreneur.
Assessment of internal environment includes assessment of availability of required raw material; production machinery, equipments, techniques, tools; availability of required finance in terms if start-up expenses, fixed and running expenses etc. It also includes assessing the present, potential and latent demands of the market as well as assessing kind of human recourse required and its availability in the labour market. The basic objective of environmentalscanning is to collect as much information as possible to from as many sources as possible to meet the information requirement for enhancing the probability of success in this business.
3) Analysis of Idea’s Feasibility: Considering the scanning of the environment entrepreneur is interested in knowing whether the entire project of new venture is feasible or not. For this reason entrepreneur would conduct feasibility study considering various variables or dimensions or areas such as analysis of market; analysis of technical and operational aspect; financial feasibility and drawing various functional plans such as marketing plan, production plan, ownership plan and financial plan.
The market analysis includes estimating demand and market share of the proposed product or service in future based on factors like availability ofsubstitute goods, consumption pattern, competition etc. For estimating demand preliminary discussions were made with intermediaries, consumers, suppliers, competitors etc. and consumer preferences and potential demands estimation is made.
Analysis of technical and operational aspect includes assessment of operational ability of proposed business considering the cost and availability of technology which is critical for business. For technical /operational analysis information is collected considering parameters such as availability of material; planning of required material; feasible/economic location of business; production capacity of proposed business; machinery and equipment and plant layout etc. Analysis of financial feasibility includes carrying out cost estimates of land and building; plant and machinery; preliminary estimates of marketing and administrative expenses; provision for contingencies; working capital estimates; cost of production and projection of profits. Thus, financial analysis includes projection of Break-Even Point, Cash Flow Statement, and Balance Sheet Statement.
After positive indication form feasibility study the functional plans are drawn. The marketing plan includes formulating potential strategies in terms of marketing mix based on target market identified by market feasibility study. Production plan is drawn by entrepreneur involved in a manufacturing sector and entrepreneur involved in service sector prepare operational plans. These production and operational plan includes strategies related with suitable location of business; physical layout of plant; availability and cost of raw material, machinery, and equipment; cost of manufacturing and operations, production capacity; production planning and scheduling; inventory management; quality management and control and expansion of business.
The organizational plan includes choosing ownership pattern form various forms of business organization such as sole proprietorship; partnership; company of franchising. It will determine the organization structure in which the relationship between human resources and other resources are developed. Financial plan indicates the financial requirements of the proposed business considering costs related with marketing, operations, human resources and smooth functioning of business. In covers preparation of projected cash flows, income statement, break-even point, ratios and balance sheet.
4) Preparation of Project Report: After assessing environment and feasibility of idea entrepreneur now start preparing report which is a written document describes the strategies involved in starting and running the business. Report helps entrepreneur to monitor whether the business is growing as projected in business plan. Project report can be an evaluation tool for investors and financial institutions to provide required finance to proposed business. Project report ensures utilization of resources and put the organization on a path of sustainable growth. The project report should be arranged in a sequence; cover all the details about the proposed venture; should not be very lengthy; should be logical and subjective; should justify financial needs, market prospects and should be professionally made to demonstrate that promoters of business possess entrepreneurial insight and sound experience.
5) Evaluation and Monitoring: It is important to continuously review and evaluate the business because technology is changing continuously and business is facing intense competition in globalized world. The dynamic environment compels an entrepreneur to evaluate, control and review the business at regular interval to introduced changes and match with dynamic environment.
