What are Business plans:

When a growth in the business is required, it is done by various ways. The first and the most common way is to increase the installed capacity of the business so that the volume of the business is increased. The profits of the firm automatically goes up because in doing so, it is only the variable costs that are increased and the fixed costs remain the same.

The other way is to put up a new business unit so that it generates the profit when it crosses the break even point. The last way of expansion of the business is when a tie up is made between the various business organization or when a business house take over the other business house. All the above ways seems to be very simple. But it is not like that. Before proceeding to any of the methods above, a complete plan regarding the expansion plan, expenditure that has to be made, manpower that has to be employed, machines that have to be procured and the returns that would flow in the business, has to be made. Such a plan is known as a Business Plan. Thus a business plan relates to the complete planning of the business procedures and knowing the final profits that the organization would make.

How the Business Plans are Made:

If the business house that is going for the expansion, acquisition etc is a small one, it is generally observed that the business plans are made by the proprietor or partners etc. Such business plans are generally in the raw form and the data pushed in such plans are just an estimate. These are not made on the basis of any business models. The result, as observed many a times, is the business plan going in rough weather. In an accurately made business plan, there are the cross sectionalists of the various sector pertaining to the business and finance that are involved in the making of it. The analysts see the outcome not as estimation, but through the simulation of various business models that are used. The data are taken on a conservative basis and the profits thus calculated are very near to the actual profits generated. There is complete assessment of the costs that are put through in the business plans and the various bottlenecks that may occur during the run of business. There are various project reports that are obtained by the experts who put the actual costs of the raw materials, the wages are calculated as per the standards set by the government and the profits are calculated on a conservative basis. By following such a business plan, the probability of data going wrong is very less and the results obtained are as per the estimates made in the business plans. The other factors that are taken into consideration while making the business plans are the availability of the raw material, its procurement, the availability of the labor and the various laws that governs the movement and employment of the labor, and the appointment of an appropriate authority for resolving the cases of labor unrest etc.

The important aspect that is taken care while the preparation of the business plans is the active involvement of the proprietor or partners or the directors of the business. It helps the analysts and experts to know about the actual circumstances under which the business plan would be implemented and thus they make the corrections accordingly. It is also important to note here that when these plans are implemented, these are implemented under the supervision of the experts who confirms that there is no deviation from the business plan report actually made so that the desired results are obtained. If there is any deviation that is inevitable, the correction are made on the spot itself and thus the results obtained are as per the expectation made while making the business plans.

The other important aspect of the business plan is that sometimes it is required by the various funding agencies like banks. On the basis of the calculations made in the plan and on the basis of the fund flow charts made, the finance is made available to the business organization. Thus, in such cases, it becomes a mandatory requirement that the business plans in the form of project report etc have to be made.

UTILITY OF BUSINESS PLANS

As discussed above also, the utility of the business plans is immense. Whether the business proposal would succeed or not depends upon how practical the business plan is made. The data provided in the business plan must correlate to the actual observations made. If the business plan that is made is accurate and is based on practical date, there is no fear that the business would fail, provided there is no natural calamity that has affected the business. The results thus obtained would be on the expected lines and the business would definitely prosper and the very purpose of expansion or installation would be fulfilled. The returns would encourage all the persons attached with the business and a healthy environment would prevail in the business organization, which is a quality of a successful business organization.

When any organization submits any new business plan etc to the government or other bodies, it is seen if it would generate new sources of employment and government would be benefited by way of taxes it would impose. If by observing the data provided in the business plan report, the agency is confidant that the above purposes are fulfilled, they immediately pass the plan and thus there are no obstacles left in its implementation. It is possible only if the data in the plan given are accurate and contemporary.

The other utility of the business plans is that the proprietor or the partner or the directors etc can easily find out the shortcomings in their existing business entity. Thus they can remove those also and it would a two-way benefit to them.

THUS, BUSINESS PLANS ARE ESSENTIAL

After going through the above discussion, it can be easily said that the business plan is very much essential and every care should be taken that it is made with as much care possible. So always make a business plan before starting any business.