Abstract vital activities that go into the


Most small business owners start and operate their businesses without paying any attention to the importance or necessity of a business plan. They, however, realise the need for it at a later stage in the business especially when they require financial assistance such as a loan from a bank and other financial institutions. A business plan is a detailed outline of the structure of the business and vital activities that go into the operation of the business for its success.

It answers questions such as what are the products of the business. What is the target market of the business? What is the competitive advantage of the business? What costs are incurred to start up the business? What are the strategies of the business in order to remain competitive? What is the structure of management? Who owns the business? (Small Business Administration, 2011). This paper seeks answers for the above questions with special regard to the business of Chad and Kyle.

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The Benefits of a Business Plan

It is critical for any business that wishes to survive to have a detailed and updated business plan. This is because a business plan is used to analyze and measure the potential of the business, for instance, by potential investors before investing their money into the business. Since it outlines all the areas of the business, one can use it to analyse the viability of the business by checking the target market. Hence, this helps in determining the likely market share for the business. The strategies of the business could also imply the direction towards which the business heads (Small Business Administration, 2011). Secondly, a business plan is a tool for internal business analysis in that it allows the management of the business to set objectives; acts as a reminder of both the objectives and the position of the business.

In short, the plan lists the business strategies and ways to achieve them effectively. Therefore, it acts as a map for the management to follow in their quest for success (Harvard Business School, 2011). Thirdly, a business plan acts as tool for communication. The entrepreneur may have a vision of the business in future.

However, the employees and other external stakeholders may not necessarily be in tune with the entrepreneur. Therefore, the business plan is a means for the entrepreneur to communicate the vision or the idea to the employees and the external stakeholders such as the investors (Harvard Business School, 2011). Fourthly, a business plan is the fundamental tool in forming future or present relationships in the world of business. For instance, the business may want to merge with other businesses and the business plan is vital in explaining the position of the business and its structures, strategies, competitive advantage and its ownership. This factors influence the nature of the relationship the entrepreneur seeks.

For example, in a merger the owners of both businesses must agree on who owns what stake/ percentage of the business. The business plans of the two businesses will enable the definition of such key decisions in the process (Zimmerer, 2010). Lastly, the business plan enables the business in getting large contracts.

This is important as it enables the business to keep growing in aspects such as market share, increased popularity, and increased faith in the business by the relevant customers and obviously increase in revenue and profits (Zimmerer, 2010).

The Structure of the Business Plan

The business plan should consist of the following aspects: Business Description: This involves a summary of the company/business in terms of its products/services, the target market, the executive summary, the ownership of the business the start-up costs and the management summary. It serves to provide an overview of the business for introductory purposes. Market Analysis: It involves an in-depth analysis of the market in which the business will operate. The analysis identifies the target market, the various factors that influence entry into the market, the benefits of targeting the market, the other competitors in the market, their effect on the business, the challenges the business is facing and how to overcome such challenges (Zimmerer, 2010). It also establishes the market share of the business and the prospective future market share of the business in the market.

Market analysis enables management to come up with feasible strategies of capturing the desired market share (Sexton & Upton, 1991). Marketing Plan: This involves a detailed plan of action of how the business intends its products and services to get the customers’ attention. It also details efforts of the marketing department in both the present and future. Design and Development Plan: This consists of details about the designing and development of the services offered by the business to meet the expectations of the consumers. It should explain the competitive advantages of the product/services, how the product is used, the risks involved and plans to improve and develop new products (Sexton & Upton, 1991). Manufacturing and Operations Plan: This involves the production aspects of the business in terms of how such factors as the location of the facility enables the business to compete effectively. It should clearly explain the decisions involved in the production process and their effects on the survival and profitability of the business (Timmons, 2004).

Management Team: It involves a detailed structure of the management team including the ownership of the business (Timmons, 2004). Financial Analysis: This section gives the economic feasibility of the business. That is, whether the business is economically justified to do what it is doing.

It includes break-even analysis and the expected profits in the future. Financial Plan: This provides projected financial section to justify the economic feasibility of the business over time (Timmons, 2004). Proposed Company Financing: This is a detailed account of means through which management has funded the business or expects to fund the business (Zimmerer, 2010). Appendices: It provides all the supporting documents to support the claims made in the business plan for example, supplier agreements, copies of contracts, licenses and references. The business plan must have a design that suits the expectations of the people or group of people it targets.

For instance, in the case of Kyle and Chad, the business plan must be tailored to meet the expectations of the lenders or investors or the bankers. In this case, therefore the business plan must demonstrate the economic viability of the business. It must show the investors that the business has the capability to grow and to capture more market share (Timmons, 2004). It must also bring to the forefront that the business possesses enough assets such that the bankers know that there exists enough collateral in case of failure to repay a loan. The business plan should also provide evidence that the business generates adequate or more than adequate cash flows to guarantee payment of borrowed funds (Harvard Business School, 2011).

Sources of Finances

For small businesses, the financing options are a bit narrow. This is because the small businesses lack collateral and evidence of sustainability in terms of promising cash flows. However, there are still options such as a bank loan or a loan from other lenders. One could also offer some of the company’s equity for money therefore sharing ownership with the investor (Small Business Administration, 2011).

Tips in Presenting the Business Plan

The business plan should be short, precise and straight to the point.

That is, there is no need of giving so many details except where necessary. In addition, it should be neatly typed and bound. The presenter should also be smartly dressed and fluent in his communication skills. He should also clearly make a justification of the financial data for instance, by use of carefully illustrated visual aids. The business plan should also demonstrate the viability and importance of the product or service providing reasons why the investors should invest in the products. Moreover, the presenter should have prior knowledge of what the audience expects from the presentation. In addition, he should study the reactions of the audience as he makes the presentation and react appropriately (Small Business Administration, 2011).


A business plan is the most fundamental tool that any small and medium business owner can have if he wishes to be successful both in the short-run and in the end (Timmons, 2004).

This is because of its application in analysis and planning. Moreover, it is paramount for communication and as a day-to-day reminder of the actions required to achieve success in the operations of the business (Zimmerer, 2010). Consequently, it is important that Chad and Kyle pay more attention to the development of a solid business plan to ensure they succeed in securing the funds they require for the expansion their business.


Harvard Business School. (2011). Entrepreneurship: Business Plans.

Retrieved on 24 February 2012, from http://www.hbs.edu/entrepreneurship/resources/businessplan.html Sexton, D. and Upton, B. (1991). Entrepreneurship: Creativity and Growth. New York: McMillan.

Small Business Administration. (2011). Writing a Business Plan. Retrieved on 24 February 2012, from http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/writing-business-plan Timmons, J.

A. (2004). New Venture Creation: Entrepreneurship for the 21st Century. Boston: Irwin/McGraw Hill. Zimmerer, W. (2010).

Effective Small Business Management. Scarborough: Pearson-Prentice Hall.


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