How and Where to Write About Technology in Your Business Plan

Male entrepreneur writing on a whiteboard listing out the technology features and uses for his business.

6 min. read

Updated October 27, 2023

Often, a business plan introduces a new technology that requires some explaining.

On one hand, as a reader of business plans for investors, I see way too many business plans that ask a reader to wade neck-deep through technology to get to the business. That’s a great way make your reader run in the other direction! It’s a business plan, not a term paper or thesis. Establish technology as a differentiator, when it is. Tell me about it in relation to its importance to the business. Don’t force me to understand it when I don’t need to.

On the other hand, as a writer, manager, and user of business plans as tools for steering a business, I believe you should discuss your technology in the plan for any business. Even if technology isn’t the driving force of your business or your main differentiator, these days, almost all businesses have to manage technology as part of branding, marketing, and communications.

To the extent that technology matters, I want to see it in the priorities and in specific milestones. Are we developing what we should? Are we using what we should? Are we competitive with tools and process?

  • Let your business purpose be your guide

The point of my opening paragraphs is that the right way to handle technology in a plan depends on the context of the plan. As always, in business, form follows function.

As you develop technology descriptions, priorities, milestones and such in your own business plan, consider first the business plan’s purpose.

Business plans aren’t all the same. They are used for different things, such as:

  • Some business plans are intended for outsiders, as summary and description of the business, to serve the purpose of raising money with investors, backing up a commercial loan document, and so forth. In these cases the purpose of describing your technology is validation, proof of value; you’re making your technology part of the reasons that your business is a good investment or a good risk for a loan.
  • Most business plans are intended to optimize management and allow business owners and management teams to better steer the business. For these plans, technology is not describing, but rather planning, setting milestones, dates, priorities, directions, and so forth.
  • Technology in a plan for outsiders

Investors, bankers, and other outsiders look at technology as part of the secret sauce, the things that make your business better than competitors, defensible, or differentiated. They want to know about the technology for its business impact. But they rarely want to wade through the ins and outs of how that technology works and evaluate it for themselves. They want to know about the technology, not know the technology. The only exception is the technology they know and work with themselves.

To explain the difference, let’s take me as an example:

I’m a software entrepreneur, and, in recent years, a member of an angel investment group. I looked to scientists in the group to evaluate technology when we invested in molecular chemistry that can ease the pain of chemotherapy. I get involved in detail when the group is looking at startups in software, web, mobile apps, or financial forecasting.

When a business plan involves expertise in software, the web, apps, and technologies related to financial forecasting, I’m curious, and I’ll look for an appendix with interesting details. I’ll join in the due diligence for my angel group, test for myself, and develop my informed opinion. In fact, during my consulting years in the 1980s and 1990s, I had multiple consulting engagements with venture capital firms that contracted me to evaluate software as an expert.

When a business plan involves pharmaceuticals, medical electronics, biotechnology, clean energy, and so many other technologies that aren’t within my areas of expertise, I validate as I suggested above, with background checks, patents, and so on. I don’t, however, wade through scientific documentation.

I’m comfortable with what I don’t know. When it involves my specific investment group, I trust other members who do know.

The detailed look at the technology comes during due diligence, not in the plan or during the pitch. For plans and pitches, we look for the patents, customer testimonials, and backgrounds and achievements of the team as validators. We want to see those for sure, and we expect good summaries as part of the business plan discussion of product-market mix, or company background (in either section, whichever seems better to the founders). Technical background and technical details go into appendices, or extra docs used for due diligence, not the main body of the plan.

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  • Technology in business planning for owners and managers

For business owners, I recommend a lean business plan as a dashboard and GPS. It’s just big enough to steer the business. It skips the text summaries and descriptions you won’t need because it’s for your own use only. It’s reviewed and revised frequently. It includes strategy and tactics as summary bullet points to serve as reminders. It includes milestones and schedules too.

Since the lean plan is just for you and the team, not for outsiders, it doesn’t necessarily include or cover your technology. Does your technology differentiate your business from all others? Is it vital to staying competitive? Does it create barriers to entry? Does it create competitive advantage? If you answer yes to any of those questions, then you are probably already managing technology as part of your strategy and tactics. So you include bullet points related to technology in your lean plan, in strategy, tactics, milestones, and schedules.

For example, tech businesses managing product development road maps, research and development teams, extending software features or tech features in hardware would be likely to build strategy and tactics around technology. More traditional businesses, on the other hand, such as real estate, restaurants, or personal training, would be less likely, on average.

But, even within traditional businesses, some innovative leaders set themselves apart for the use of new technology. Maybe the real estate brokerage is working on its app to show houses, or the restaurant is developing new techniques for cold pressed processes. Maybe the personal trainer is offering subscriptions to remote workouts.

The key to where technology goes into your lean plan is the execution and management. You don’t describe for description only. Instead, you list tasks and deadlines and action points. If there are none of those related to technology in your business, then leave it out of the lean plan.

  • Stick with the business purpose

Remember, a business plan is about business. It’s not a forum for showing off. Even in the case of a show-off business plan for angel investors, keep to the business side of it. The business plan is about what you’re going to do, not what you know.

Give the investors what they need to know, and spare them from the rest. They’ll thank you. For you business owners and managers, how you develop and manage technology is a critical factor for steering the business. Make sure you plan for it, with reinforcement in strategy, tactics, and milestones to develop accountability and keep you on track.

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Content Author: Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

what is technical aspect in business plan

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How To Write the Operations Plan Section of the Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

what is technical aspect in business plan

Stage of Development Section

Production process section, the bottom line, frequently asked questions (faqs).

The operations plan is the section of your business plan that gives an overview of your workflow, supply chains, and similar aspects of your business. Any key details of how your business physically produces goods or services will be included in this section.

You need an operations plan to help others understand how you'll deliver on your promise to turn a profit. Keep reading to learn what to include in your operations plan.

Key Takeaways

  • The operations plan section should include general operational details that help investors understand the physical details of your vision.
  • Details in the operations plan include information about any physical plants, equipment, assets, and more.
  • The operations plan can also serve as a checklist for startups; it includes a list of everything that must be done to start turning a profit.

In your business plan , the operations plan section describes the physical necessities of your business's operation, such as your physical location, facilities, and equipment. Depending on what kind of business you'll be operating, it may also include information about inventory requirements, suppliers, and a description of the manufacturing process.

Keeping focused on the bottom line will help you organize this part of the business plan.

Think of the operating plan as an outline of the capital and expense requirements your business will need to operate from day to day.

You need to do two things for the reader of your business plan in the operations section: show what you've done so far to get your business off the ground and demonstrate that you understand the manufacturing or delivery process of producing your product or service.

When you're writing this section of the operations plan, start by explaining what you've done to date to get the business operational, then follow up with an explanation of what still needs to be done. The following should be included:

Production Workflow

A high-level, step-by-step description of how your product or service will be made, identifying the problems that may occur in the production process. Follow this with a subsection titled "Risks," which outlines the potential problems that may interfere with the production process and what you're going to do to negate these risks. If any part of the production process can expose employees to hazards, describe how employees will be trained in dealing with safety issues. If hazardous materials will be used, describe how these will be safely stored, handled, and disposed.

Industry Association Memberships

Show your awareness of your industry's local, regional, or national standards and regulations by telling which industry organizations you are already a member of and which ones you plan to join. This is also an opportunity to outline what steps you've taken to comply with the laws and regulations that apply to your industry. 

Supply Chains

An explanation of who your suppliers are and their prices, terms, and conditions. Describe what alternative arrangements you have made or will make if these suppliers let you down.

Quality Control

An explanation of the quality control measures that you've set up or are going to establish. For example, if you intend to pursue some form of quality control certification such as ISO 9000, describe how you will accomplish this.

While you can think of the stage of the development part of the operations plan as an overview, the production process section lays out the details of your business's day-to-day operations. Remember, your goal for writing this business plan section is to demonstrate your understanding of your product or service's manufacturing or delivery process.

When writing this section, you can use the headings below as subheadings and then provide the details in paragraph format. Leave out any topic that does not apply to your particular business.

Do an outline of your business's day-to-day operations, including your hours of operation and the days the business will be open. If the business is seasonal, be sure to say so.

The Physical Plant

Describe the type, site, and location of premises for your business. If applicable, include drawings of the building, copies of lease agreements, and recent real estate appraisals. You need to show how much the land or buildings required for your business operations are worth and tell why they're important to your proposed business.

The same goes for equipment. Besides describing the equipment necessary and how much of it you need, you also need to include its worth and cost and explain any financing arrangements.

Make a list of your assets , such as land, buildings, inventory, furniture, equipment, and vehicles. Include legal descriptions and the worth of each asset.

Special Requirements

If your business has any special requirements, such as water or power needs, ventilation, drainage, etc., provide the details in your operating plan, as well as what you've done to secure the necessary permissions.

State where you're going to get the materials you need to produce your product or service and explain what terms you've negotiated with suppliers.

Explain how long it takes to produce a unit and when you'll be able to start producing your product or service. Include factors that may affect the time frame of production and describe how you'll deal with potential challenges such as rush orders.

Explain how you'll keep  track of inventory .


Describe any product testing, price testing, or prototype testing that you've done on your product or service.

Give details of product cost estimates.

Once you've worked through this business plan section, you'll not only have a detailed operations plan to show your readers, but you'll also have a convenient list of what needs to be done next to make your business a reality. Writing this document gives you a chance to crystalize your business ideas into a clear checklist that you can reference. As you check items off the list, use it to explain your vision to investors, partners, and others within your organization.

What is an operations plan?

An operations plan is one section of a company's business plan. This section conveys the physical requirements for your business's operations, including supply chains, workflow , and quality control processes.

What is the main difference between the operations plan and the financial plan?

The operations plan and financial plan tackle similar issues, in that they seek to explain how the business will turn a profit. The operations plan approaches this issue from a physical perspective, such as property, routes, and locations. The financial plan explains how revenue and expenses will ultimately lead to the business's success.

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How to write a technical specification [with examples]

what is technical aspect in business plan

Before writing a single scrap of code, a wise software engineer will always write a technical specification, also known as a tech spec. This document prevents the development team from wasting time and effort on unnecessary steps or misunderstandings internally and among stakeholders.

This article takes a look at the value of a technical specification and the importance of using a professional template. has worked closely with engineers to craft a technical specification template that saves time and ensures that all bases are covered.

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What is a technical specification?

A technical specification is a detailed and comprehensive document that describes all technical procedures related to product development. It covers all the vital, nitty-gritty information about the process of product development.

Download Excel template

The development team lead usually writes a technical specification. After reading a technical specification, the development team and stakeholders should know:

  • How the proposed product is going to behave
  • What it can and can’t do
  • How it’s going to be developed
  • All systems that are going to be used/changed/created to assist development, security measures for data privacy
  • The plan for rollout and rollback if necessary
  • Business-related metrics
  • Support and maintenance plans
  • The project timeline

Technical specification vs. functional specification

A technical specification is sometimes confused with a functional specification. While both documents lay the groundwork for a successful project, there are key differences.

A functional specification is based on business requirements. It focuses on user experience by looking at product functionality. In contrast, a technical specification focuses on internal programming. It includes plans for implementation, testing, and the benefits of specific features.

Why use a technical specification?

A technical specification, especially written using a good template, is like your product development bible. Here’s why a well-written technical specification is so important while developing a digital product .

A table showing some different examples of technical specifications

( Image Source )

Keeps everyone on the same page

It’s easier than you might think for a development team to agree on specific requirements and goals but end up building different things or failing to deliver on promises made to stakeholders. A well-written technical specification keeps your engineers on task and your stakeholders well-informed by making sure that everyone sees it from the same point of view.

Lead engineers should ensure that technical specifications communicate everything known about the product requirements. It should also communicate its goals, features, limitations, and the timeline necessary to build it.

Provides clarity

Because of the precise nature of software engineering, even the smallest misunderstanding can cause catastrophic setbacks. It’s also vital for stakeholders and investors to understand exactly what is possible. People with less expertise tend to underestimate the technical requirements of ambitious projects, and any unrealistic expectations should be nipped in the bud. Using a technical specification template lets you rest assured that what you are planning to build is possible and that all your bases are covered, down to the last detail.

Prompts important questions

A technical specification also gives the author a good idea of open questions that still need answering. Some elements of the project may only become clear after trial and error. The estimates of time and resources needed may shift and change during the project. If there are any uncertainties on your roadmap, a technical specification helps identify them and their potential impact.

A technical specification also acts as a rationale for your approach to a project. There should always be justification for the methods you choose to use in your project. When writing your specifications documents, you may find that there is a better solution. A technical specification helps clarify things for the development team and stakeholders.

What are the steps to complete a technical specification?

Let’s look at a practical example of a technical specification at work. In this example, you are designing a new food delivery app. A comprehensive technical specification template will help clarify your goals and nail down the details.

Preliminary questions

First, you’d need to establish the way your app behaves. You want to answer questions like:

  • What do you want your app to do?
  • What problem does it solve for the user?
  • How will your product improve on existing food delivery apps out there?

Here’s your chance to be specific about what your system can and cannot handle. This is the section that paints a detailed picture of what you want to build.

Set limitations

Now you need to establish what is not possible for the development of your app. This is called the “out of scope” section of the technical specification. Any grand, unrealistic ideas from stakeholders need to be confronted with experience-based evidence from the project manager. For example, the app cannot accept payments in cryptocurrency.

Determine your approach

In this section of your technical specification, you can outline how you plan to tackle each element of your project. You should also include your reasoning. For example, if you want to use biometric security for user login, here is where you explain why it is the best approach and how you plan to execute it.

Another important functional specification is security and privacy. Your document should outline how you plan to protect user privacy and prevent breaches.

Testing and support

Finally, you outline your testing, deployment, and support strategies. For example, if you have arranged for a 100-person alpha test, detail that here. You can specify what platforms you’ll release on, how you’ll monitor feedback , and how you’ll offer support.

Because of the nature of technical specifications, these documents can get pretty detailed. The set of requirements you include will depend on the product you are building. Case in point is this technical specification by NetBit for a 650 Watt DC-DC Power Module.

technical specification documents for NetBit power module’s technical specification template

At, we understand the many moving parts involved in software engineering. That’s why we’ve developed a technical specification template that does the tedious work for you while adding dynamic functionality. Here are some of the key features of our technical specification template.

what is technical aspect in business plan

Seamless integrations

Data migration is no tough feat with our template — you can easily import data from Excel into the template and you can export data from your board into an Excel sheet. You can also integrate our template with your other development tools for a seamless transition. From Jira and Pingdom to Github , our template is ready to go.

Effortless collaboration

With’s Work OS, you can share files and communicate instantly with everyone and anyone. With everyone in the loop at all times, your team can work towards a common goal, knowing that all project specifications are accessible and customizable 24/7.

Boost your team’s alignment by assigning actions to developers, adding notes, and making changes in real-time. Our cloud-based templates make real-time collaboration easier than ever.

what is technical aspect in business plan

Fully customizable

Every software development project is unique, each with its own software requirements. Our technical specification template is fully customizable, so you can add and remove steps and sections as you see fit for your project. This fully editable and integrative template allows you to make changes without worrying over ease of use and readability.

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Related templates

If you like our technical specification template, you’ll want to take a look at these too.

Product development planning

You can also try using a product development planning template, which we call a product roadmap template on This template serves as a centralized repository for planning, building, and managing your sprints. It allows you to track progress, deadlines, owners, and more. Thanks to our product development planning template, organizing and tracking sprints has never been easier.

Features and releases roadmap template

Organize your product and feature release goals in one place with our features and releases roadmap . Assign priorities to major releases, get automatic deadline reminders, and view team feedback while keeping your roadmap tidy. With our roadmap template, you have a clearly laid out plan to manage and execute releases for each quarter.

Scrum software development template

This Scrum software development template keeps your team on track by allowing you to prioritize your backlog, track bugs, and reflect on previous sprints. Your projects have never been this organized.

Kanban software development template

Use the Kanban software development template to manage your Kanban workflow while improving efficiency. This is done by monitoring progress, assigning action priorities, and keeping your plan firmly in view with our premade Kanban stages.

FAQs about a technical specification

What is the meaning of technical specification.

As the name suggests, this document provides detail and specifics around the practical elements of a project. Any technical aspect of your product development plan is outlined and motivated in a technical specification.

What are technical specifications used for?

Technical specifications are used to provide clarity on specific details of a software development project . They keep your team working on the same goals with a firm idea of how to go about it. They are also used to keep external stakeholders in the loop.

How do you write a technical specification?

Writing a technical specification from scratch can be difficult, but makes it easier with a state-of-the-art template. Our Work OS takes the stress out of mapping out your technical requirements and approaches.

What makes a good technical specification?

A good technical specification requires attention to detail coupled with smooth presentation.’s technical specification template allows you to expand on critical areas without losing accessibility. Technical specifications are wordy documents by nature, and our template will help you trim the fat without losing any vital details to set you up for a successful project.

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Types of Technical Documents

Business plans.

what is technical aspect in business plan

A business plan is very much like a proposal, since they are both intended to persuade a reader to do something. However, they differ in scope. You write a business plan when you’re trying to start a new business or significantly expand an existing business. Business plans usually try to persuade readers for a significant investment or offer of time, goods, or services. A proposal, on the other hand, seeks approval to do a specific project for an existing business. For example, a business plan might seek funding to start a software company to create computer games, yet a proposal might bid to do the development work for some specific computer game. Business plans therefore have some different content and sections.

Business Plan Content and Structure

what is technical aspect in business plan

Business plans are usually formal documents, so all conventions related to formal reports apply, e.g., letter of transmittal, headings, subheadings, graphics, etc.

The following sections are common in business plans; know that you can add, subtract, combine, and/or sequence them in any way that best addresses your audience.

Executive Summary

Provide a condensed version of the business plan’s content in an executive summary, which acts as an introduction to a business plan. Make your case immediately for your product, service, or company and why it’s unique in the market. Offer brief information about your qualifications/your team’s qualifications, and include information on funding and investment.

Product or Service to be Offered

what is technical aspect in business plan

Technical Background for the Product or Service

Explain any technologies or technical processes, if the technology involved in your product or service is potentially unfamiliar to your reader. Remember that business plans often go to non-specialists who, despite their lack of technical expertise, have the investment funds or the legal understanding to get your business going.

Market for the Product or Service

Information about potential markets is another key section of any business plan. What has your exploration of the existing marketplace revealed? Are there other companies that offer the same or similar thing? If so, what differentiates your goods or services? How much business do other companies in the same field do? Or, is your item or service new? If so, on what are you basing the projection that people will need it?

This section focuses on the likelihood of the success of your business. Make the content as specific as possible for the marketing section, and carefully research and cite your sources. Support your own belief in the business with facts and research in order to convince your readers. The sections on Product or Service to be Offered and Market for the Product or Service form the heart of a business plan.

Business Overview and Operation

what is technical aspect in business plan

Qualifications and Background of Personnel

Introduce this section by describing your group’s qualifications as a whole. Then present your individual qualifications to start and operate the business you are proposing, along with qualifications of others who will be a key part of the business.

Funding Needs, Projected Revenues, and Investment Potential

Detail the funding you’ll need to get the business started as well as the funding needed for operating costs to run the business on a daily basis. Discuss the revenues you project for your business. If you know the estimate of total revenues for the market area in which you plan to operate, what percentage do you expect to win? If you operate at a loss in the first few years, which often happens, at what point in time do you expect to break even? Your discussion of funding and projected revenues should illustrate the feasibility of contributing to the business. It’s like a mini logical argument within the overall logical argument of the business plan. Finally, as appropriate, end by explaining what kinds of investments you are seeking and offering.

Additional Resources

There are many resources for writing business plans. They vary a bit in naming and ordering the sections, but all include the same basic information. Here are just a few additional resources you may find useful:

  • How to Write a Business Plan
  • Write Your Business Plan
  • A Standard Business Plan Outline
  • Business Plan Outline: A Practical Example
  • Business Plans, adapted from Open Technical Communication; attribution below. Authored by : Susan Oaks. Provided by : Empire State College, SUNY. Project : Technical Writing. License : CC BY-NC: Attribution-NonCommercial
  • Business Plans (pages 1-2 of 2). Authored by : David McMurrey. Provided by : Kennesaw State University. Located at : . Project : Open Technical Communication. License : CC BY: Attribution
  • image of person at laptop with business plan notes on bulletin board. Authored by : Gerd Altmann. Provided by : Pixabay. Located at : . License : CC0: No Rights Reserved
  • image of person pointing at chalkboard with names of business plan sections. Authored by : Gerd Altmann. Provided by : Pixabay. Located at : . License : CC0: No Rights Reserved
  • image of bulletin board with notes naming sections of a business plan. Authored by : Gerd Altmann. Provided by : Pixabay. Located at : . License : CC0: No Rights Reserved
  • image of a person's hand drawing a diagram with the word business plan. Authored by : Gerd Altmann. Provided by : Pixabay. Located at : . License : CC0: No Rights Reserved

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

what is technical aspect in business plan

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

  • A business plan is a document describing a company's business activities and how it plans to achieve its goals.
  • Startup companies use business plans to get off the ground and attract outside investors.
  • For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
  • There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

  • Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
  • Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
  • Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
  • Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
  • Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

  • Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
  • Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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Production Plan in Business Plan: A Comprehensive Guide to Success

February 26, 2024

Production Plan in Business Plan: A Comprehensive Guide to Succes

In any business venture, a solid production plan is crucial for success. A production plan serves as a roadmap that outlines the steps, resources, and strategies required to manufacture products or deliver services efficiently. By carefully crafting a production plan within a business plan, entrepreneurs can ensure optimal utilisation of resources, timely delivery, cost efficiency, and customer satisfaction. In this article, we will delve into the intricacies of creating an effective production plan in a business plan , exploring its key components, strategies, and the importance of aligning it with overall business objectives .

Key Takeaways on Production Plans in Business Planning

  • A production plan : a detailed outline that guides efficient product manufacturing or service delivery.
  • Importance of a production plan : provides a roadmap for operations, optimises resource utilisation, and aligns with customer demand.
  • Key components : demand forecasting, capacity planning, inventory management, resource allocation, and quality assurance.
  • Strategies : lean manufacturing, JIT inventory, automation and technology integration, supplier relationship management, and continuous improvement.
  • Benefits of a well-executed production plan : improved efficiency, reduced costs, enhanced product quality, and increased profitability.

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What is a Production Plan?

A production Seamless Searches plan is a detailed outline that specifies the processes, resources, timelines, and strategies required to convert raw materials into finished goods or deliver services. It serves as a blueprint for the entire production cycle, guiding decision-making and resource allocation. The production plan considers factors such as demand forecasting, capacity planning, inventory management, and quality assurance to ensure efficient operations and optimal customer satisfaction.

Why is a Production Plan Important in a Business Plan?

The inclusion of a production plan in a business plan is vital for several reasons. First and foremost, it provides a clear roadmap for business operations, helping entrepreneurs and managers make informed decisions related to production processes. A well-developed production plan ensures that resources are utilised efficiently, minimising wastage and optimising productivity.

Additionally, a production plan allows businesses to align their production capabilities with customer demand. By forecasting market trends and analysing customer needs, businesses can develop a production plan that caters to current and future demands, thus avoiding overstocking or understocking situations.

Furthermore, a production plan helps businesses enhance their competitive advantage. By implementing strategies such as lean manufacturing and automation, companies can streamline their production processes, reduce costs, improve product quality, and ultimately outperform competitors.

Key Components of a Production Plan

To create an effective production plan, it is crucial to consider several key components. These components work together to ensure efficient operations and successful fulfilment of customer demands. Let's explore each component in detail.

Demand Forecasting

Demand forecasting is a critical aspect of production planning. By analysing historical data, market trends, and customer behaviour, businesses can predict future demand for their products or services. Accurate demand forecasting allows companies to optimise inventory levels, plan production capacity, and ensure timely delivery to customers.

One approach to demand forecasting is quantitative analysis, which involves analysing historical sales data to identify patterns and make predictions. Another approach is qualitative analysis, which incorporates market research, customer surveys, and expert opinions to gauge demand fluctuations. By combining both methods, businesses can develop a robust demand forecast, minimising the risk of underproduction or overproduction. Utilising a free notion template for demand forecasting can further streamline this process, allowing businesses to organise and analyse both quantitative and qualitative data efficiently in one centralised location.

Capacity Planning

Capacity planning involves determining the optimal production capacity required to meet projected demand. This includes assessing the production capabilities of existing resources, such as machinery, equipment, and labour, and identifying any gaps that need to be addressed. By conducting a thorough capacity analysis, businesses can ensure that their production capacity aligns with customer demand, avoiding bottlenecks or excess capacity.

An effective capacity plan takes into account factors such as production cycle times, labour availability, equipment maintenance, and production lead times. It helps businesses allocate resources efficiently, minimise production delays, and maintain a consistent level of output to meet customer expectations.

Inventory Management

Efficient inventory management is crucial for a successful production plan. It involves balancing the cost of holding inventory with the risk of stockouts. By maintaining optimal inventory levels, businesses can reduce carrying costs while ensuring that sufficient stock is available to fulfil customer orders.

Inventory management techniques, such as the Economic Order Quantity (EOQ) model and Just-in-Time (JIT) inventory system, help businesses strike the right balance between inventory investment and customer demand. These methods consider factors such as order frequency, lead time, and carrying costs to optimise inventory levels and minimise the risk of excess or insufficient stock.

Resource Allocation

Resource allocation plays a pivotal role in a production plan. It involves assigning available resources, such as labour, materials, and equipment, to specific production tasks or projects. Effective resource allocation ensures that resources are utilised optimally, avoiding underutilisation or overutilisation.

To allocate resources efficiently, businesses must consider factors such as skill requirements, resource availability, project timelines, and cost constraints. By conducting a thorough resource analysis and implementing resource allocation strategies, businesses can streamline production processes, minimise bottlenecks, and maximise productivity.

Quality Assurance

Maintaining high-quality standards is essential for any production plan. Quality assurance involves implementing measures to monitor and control the quality of products or services throughout the production process. By adhering to quality standards and conducting regular inspections, businesses can minimise defects, ensure customer satisfaction, and build a positive brand reputation.

Quality assurance techniques, such as Total Quality Management (TQM) and Six Sigma , help businesses identify and rectify any quality-related issues. These methodologies involve continuous monitoring, process improvement, and employee training to enhance product quality and overall operational efficiency.

In addition to the core components of a production plan, it's also important for businesses to consider the broader aspects of their business strategy, including marketing and advertising. Understanding the costs and returns of different marketing approaches is crucial for comprehensive business planning. For instance, direct response advertising costs can vary significantly, but they offer the advantage of measurable responses from potential customers. This type of advertising can be a valuable strategy for businesses looking to directly engage with their target audience and track the effectiveness of their marketing efforts.

Strategies for Developing an Effective Production Plan

Developing an effective production plan requires implementing various strategies and best practices. By incorporating these strategies into the production planning process, businesses can optimise operations and drive success. Let's explore some key strategies in detail.

Lean Manufacturing

Lean manufacturing is a systematic Seamless Searches approach aimed at eliminating waste and improving efficiency in production processes. It emphasises the concept of continuous improvement and focuses on creating value for the customer while minimising non-value-added activities.

By adopting lean manufacturing principles, such as just-in-time production, standardised work processes, and visual management, businesses can streamline operations, reduce lead times, and eliminate unnecessary costs. Lean manufacturing not only improves productivity but also enhances product quality and customer satisfaction.

Just-in-Time (JIT) Inventory

Just-in-Time (JIT) inventory is a strategy that aims to minimise inventory levels by receiving goods or materials just when they are needed for production. This strategy eliminates the need for excess inventory storage, reducing carrying costs and the risk of obsolete inventory.

By implementing a JIT inventory system, businesses can optimise cash flow, reduce storage space requirements, and improve overall supply chain efficiency. However, it requires robust coordination with suppliers, accurate demand forecasting, and efficient logistics management to ensure timely delivery of materials.

Automation and Technology Integration

Automation and technology integration play a crucial role in modern production planning. By leveraging technology, businesses can streamline processes, enhance productivity, and reduce human error. Automation can be implemented in various aspects of production, including material handling, assembly, testing, and quality control.

Continuous Improvement

Continuous improvement is a fundamental principle of effective production planning. It involves regularly evaluating production processes, identifying areas for improvement, and implementing changes to enhance efficiency and quality.

By fostering a culture of continuous improvement, businesses can drive innovation, optimise resource utilisation, and stay ahead of competitors. Techniques such as Kaizen, Six Sigma, and value stream mapping can help businesses identify inefficiencies, eliminate waste, and streamline production workflows.

Frequently Asked Questions (FAQs)

What is the role of a production plan in business planning.

A1: A production plan plays a crucial role in business planning by providing a roadmap for efficient production processes. It helps align production capabilities with customer demand, optimise resource utilisation, and ensure timely delivery of products or services.

How does a production plan affect overall business profitability?

A2: A well-developed production plan can significantly impact business profitability. By optimising production processes, reducing costs, and enhancing product quality, businesses can improve their profit margins and gain a competitive edge in the market.

What are the common challenges faced in production planning?

A3: Production planning can present various challenges, such as inaccurate demand forecasting, capacity constraints, supply chain disruptions, and quality control issues. Overcoming these challenges requires robust planning, effective communication, and the implementation of appropriate strategies and technologies.

What is the difference between short-term and long-term production planning?

A4: Short-term production planning focuses on immediate production requirements, such as daily or weekly schedules. Long-term production planning, on the other hand, involves strategic decisions related to capacity expansion, technology investments, and market expansion, spanning months or even years.

How can a production plan be adjusted to accommodate changes in demand?

A5: To accommodate changes in demand, businesses can adopt flexible production strategies such as agile manufacturing or dynamic scheduling. These approaches allow for quick adjustments to production levels, resource allocation, and inventory management based on fluctuating customer demand.

In conclusion, a well-crafted production plan is essential for business success. By incorporating a production plan into a comprehensive business plan, entrepreneurs can optimise resource utilisation, meet customer demands, enhance product quality, and drive profitability. Through effective demand forecasting, capacity planning, inventory management, resource allocation, and quality assurance, businesses can streamline production processes and gain a competitive edge in the market.

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4 Reasons Your Business Needs Technical Writing

When people think of technical writing, they often think of a scientist or engineer who needs to communicate what they do. However, technical writing is much broader than one field or discipline. In fact, most businesses use some form of technical writing. In the broadest sense of the term, technical writing just explains. Technical writers can write manuals for salespeople, directions or help instructions, or tutorials.

At Applied Development, our technical writers provide services like strategic research and analysis in the creation of written documents. Here are four reasons your business may need technical writing. 

Your business is complex, but you need to make sure everyone understands it

As the fourth industrial revolution  moves forward, the presence of technology grows in our lives. This means that more and more companies rely on some sort of technology to do businesses. These companies have to explain how they do businesses not just to shareholders, but to consumers as well. Technical writing can mean writing a manual for employees or customers. It can also mean explaining how a technology works for investors, who may not be experts. A technical writer provides clear writing without losing the important technical aspects. 

Technical experts don’t have time to write. 

Often times, technical and subject-matter experts don’t actually have the time to write about what they are doing. In an office, you can image that they need to spend time implementing and planning programs. Although they might have time to outline or explain how they do their work, creating a cohesive written document that’s easy to read is a much larger task. Employing a technical writing expert allows the subject matter experts to do their important work, while the writing still gets done. 

Technical writing can make work easier in the future. 

Often, technical writing involves outlining steps and processes. This writing is clear and organized, so that the reader knows how to complete a task or procedure. When this writing is clear, concise, and organized, it will save you and your company time in the future. Imagine a self-directed training manual for an employee.

A good technical writer provides clear instruction, so the reader immediately understands the tasks and procedures. Furthermore, the reader will be able to quickly follow the guide. This means that the employee can be fully self-directed with the manual and complete the training quickly, for example. 

You don’t need a full-time technical writer. 

One reason businesses may need a technical writer is because they don’t actually need a full-time technical writer. A special or short-term project in your office may require an expert writer. However, you won’t need that person after the project is over.

While some business owners are tempted to find someone in the office who can complete the project, hiring a contract technical writer often provides a better solution. Because your employees are not technical writers and may not have the time to write the document, you will want to hire a part-time or contract writer. 

The ability to communicate clearly and effectively is central to Applied Development’s mission , and why we continue to provide technical writing services. Learn more about our strategic communications services. 

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Small business startup ideas and money making guide

Components of a Business Plan

A business plan is basically composed of the following:

business plan photo

Introduction or executive summary

Just like the preface or foreword of a book, the introduction or executive summary gives a general idea about the contents of the business plan. It also states the name of the person who is planning to set up the business, form of ownership, the business address, type of project, objective(s) of the business, and total project cost.

Marketing aspect

This generally refers to the product or service that the business will offer. It gives details of the product or service, how it will benefit the buyer, how it will look like; who are expected to buy the product or use the service, where they can buy, and how much it will cost. This component also includes data on how much sales the business can expect – in a year, in two years, or longer – in units and in peso values. This portion also looks at the general situation outside the proposed business. The information will consist, among others of the following: how many buyers or users there are in the market as against the number of makers of similar products or services, how the latter are doing in the market; details as to how they make the buyers and users know about their products or services and convince them to buy; and many more information.

One of the first steps to take in preparing a business plan is to study the present situation of the market – the buyers and sellers. You have to know thy enemy. Like a soldier in a war you should have some idea of the products or services similar to yours that are already available in the market, who are making or offering them, how these other makers or providers sell their products or services, how they make their products or services known to the buying public, how go-betweens handle their products, and how they price their products or services.

The next step is to study supply and demand. Determine the volume produced by the different makers or providers (supply) against the volume needed by the buyers (demand). If the supply is greater than the demand, then it might be better for you to abort the business idea.

Once you are convinced that there is a good market opportunity for your product or service, it is time to stretch those finger muscles and work out the marketing plan. Begin by describing your target market or the specific group of customers you would expect to buy from you. After knowing their needs and wants, proceed to describing the product or service you have in mind. Then plan how your product or service will get into the hands of your expected buyers or users.

If, for instance, you intend make bath soap, you may consider supplying the bath soap needs of people living within the vicinity where you live. Let us say you live in Quezon City and your target market is just 0.001% of the total household population of the city. If the total household population of the city is 480,000, your target share then is 480 homes. Let us further assume that an average family of four consumes two bars of soap a month. That will mean you have to produce 960 bars of soap a month. With this target market in mind, you may have the marketing strategy shown below:

Product: Bath soap with green papaya extract for whitening skin packed in an attractive box at 150 grams. Promotional activities: Eye-catching signboard inside the supermarket and the storefront of sari-sari stores. Place or channel of distribution: Supermarkets and variety stores. Price (from the factory): 20 pesos per 150-gram pack.

After estimating the number of packs of soap you expect to sell, where to sell them and how much to charge per pack, you can now calculate your projected sales:

960 bars of soap a month * P25 = P24,000 a month or P288,000 a year.

Let us take the case of a service business, say, a laundry shop.

Service : Laundry services consisting of the following combinations: dry clean, wash-dry-fold, wash-dry-iron, steam-dry-iron. Promotional activity : Signboard at the shop, movable signboard on the pavement. Place or channel of distribution : Front of the main gate of the public market Price : Dry clean – from P150 to 700 per piece, depending on size, wash-dry-fold at P25 per kilo, wash-dry-iron at 30 per kilo, steam-dry-iron at 40 per kilo.

Production or technical aspect

This component deals with how the product is made or the service completed; when it is made or completed; type and number of materials and equipment and number of people needed to make the product or complete the service; type and amount of electricity, power and water to use; arrangement and location of machines, work stations, storage and other areas; physical space and facilities; quality control system; waste disposal system; and many more. In our example on the soap-making business, technical information may consist of the following:

Product specification : This refers to the characteristics and components of the bath soap. In other words, it will describe how the soap will look like and what it is made of. In this case, it would be: 150-gram soap with green papaya extract that comes in three different scents. In the case of the laundry shop, the specifications will describe the nature of the different combinations of laundry services being offered.

Production process : This is a step-by-step description of how the product is made or the service completed.

In the soap-making example, you will show the different steps for making soap in a manner similar to the recipes you see in cookbooks. This is best illustrated by using a chart similar to the one below:

In the case of the laundry shop, use a similar chart to trace the steps and the amount of time required to complete each step from the time the shop receives the clothes for washing until the time they are done and temporarily stored, waiting to be claimed.

There are two methods for making soap, the cold process and the hot process. The process flow chart above illustrates the cold process. It does not need heating but requires additional four to six weeks of curing. If you intend to follow the hot process, just change the process flow chart.

Production machinery and equipment : This refers to the machines and equipment necessary to make the product or complete the service.

For the soap-making example, list the equipment, tools, and machinery you will need to make 960 bars of bath soap. While a startup business of making bath soap per se will not need much equipment, you may still need at least a computer and a printer to make attractive packaging for the soap. A table like this one will help you describe the equipment you will need:

For the laundry shop, list down the type, specifications, and number of washing machines, dryers, steam irons, ironing tables, laundry baskets that will be used to complete the service.

Production materials : This refers to the major materials that you will use to make a product or complete a service. There are two types of production materials, direct materials and indirect materials. Direct materials refer to the materials that become part of, or are directly related to the product you make or service you offer. Indirect materials refer to some materials that are usually used in small amounts to make a product or complete a service.

Following the same format of the machinery and equipment, make another table for the materials and supplies and the quantity or amount necessary to produce the 960 soap bars. For the soap, the direct materials would be base oil, caustic solution, and papaya extract. The solution that will provide the scent is considered as indirect material.

For the laundry business, major materials would consist of laundry detergent and water. Indirect materials would be the solution that will give the pleasant smell on the clothes.

Utilities, plant location and layout : This relates to the sources of water and electric power, the site of the business, and arrangement of facilities and workstations.

Indicate whether you will use tap water, deep well, or any other source. Do the same for the electric power. Mention the availability or unavailability of your water and power source and whether you need to do some installations.

Production schedule : This gives in detail how the work is going to be spread out in the next 12 months. This has to be made in order to ensure that the number of units to be sold or services to be completed, based on the projected sales, are produced in time. Among others, the schedule will show the status of production at any point during the production period; the specific periods when production or service will start and when the product or service will be completed.

For the soap-making example, make a production schedule based on the data given in the process flow chart. Find out how long each step takes in minutes or hours. In the soap example, you may have noticed that the curing period is long. You may have to prepare the mixture for all the 960 bars of soap in advance. Once you have computed the length of period required for one production cycle (960 bars), you will be able to determine the number of cycles you can do in a week, a month, and a year. This information will help you to decide whether to concentrate on the business or consider it as a part-time project.

In the case of the laundry shop, the production schedule should indicate how many washing jobs can be done in one day, week, month, and a year given the estimated amount of time that were identified to complete one washing job, number of washing machines, dryers, flat irons, and ironing tables, as well as the number of workers in the shop.

Labor requirement : This comes in the form of direct labor and indirect labor. Direct labor refers to the people who are actually involved in making the product or completing the service. In the soap business, this will be the mixer. Indirect labor refers to the people who perform tasks that do not have anything to do directly with making the product or completing the service. They are the production helpers, quality control inspector, supervisor, etc.

The decision to hire people will depend on your choice on whether to operate the soap-making business full time or part time. Let us assume that you want to go full time. The type of people you will need to help you and their number will be dictated by your production schedule. You could have some use for a table like this:

Inventory schedule : Inventory refers to the stock of materials, supplies, and spares required for making the product or completing the service. The inventory record will keep you informed of the date of purchase, quantity purchased, cost, date released for production, quantity issued, and remaining balances. Keeping track of these items will ensure that you do not only have the materials you need to make the product or complete the service on short notice but also to prevent you from keeping obsolete or expired materials in your stock.

You can devise something similar to the chart below for this purpose.

Total production cost schedule : This is a summary of the costs involved to produce your product or complete the service. It is composed of the direct materials cost, direct labor cost, and the supplies, utilities, depreciation of machines and equipment, and indirect labor costs, collectively known as manufacturing overhead cost.

Use the charts below to help you compute your total production cost.

Organizational aspect

This refers to the details of putting the business together. It involves getting the people, setting up systems and procedures, acquiring the machines and equipment, and registering the enterprise. It includes coming up with a timetable of activities to do until the enterprise formally opens for business.

You start by defining your vision for the enterprise and setting up your goals and objectives. Then decide on the form of ownership, whether it will be a sole proprietorship, a partnership, or a corporation. If you have a group, you may also choose to form a cooperative.

Show the organizational structure by means of an organizational chart arranged according to the four functional areas: marketing, production, finance and administration. Below is an example of an organizational chart.

The organizational chart is useful for indicating the hierarchy or the levels of authority and communication in a company. It identifies who is responsible for whom and who reports to whom. It also visually presents how the various job assignments are classified among the staff.

This chart shows that the owner is a hands-on manager. He may have some staff to assist him but he is on top of the business and makes all decisions.

Besides the organizational chart, you have to describe the duties and responsibilities that go with the positions, the number of people you will need, the qualifications of those who will carry out each task, and the corresponding salaries and benefits, in the organizational plan.

An important part of the organizational plan is the Gantt Chart. This is a list of all the activities you are to do prior to launching the business and the timeframe for accomplishing them. Preparing the Gantt Chart is a useful exercise that allows you to have a view of the pre-operating activities and their cost implications. These activities include writing of the business plan, negotiation for financing, construction or improvement of the building, acquisition of machinery and equipment, recruitment (and training, as applicable) of personnel, registration of the business etc. Your Gantt Chart could look like the one below.

Financial aspect

Just as money is very important to any business, this section is critical to any business plan. This component will let you know how much you will need to put up the business, where you will get the money to finance it, and keep it going. Vital to this component is an estimate of how much you will need to operate the business for at least a year up to, probably five years, especially if you will borrow from a bank, how you are going to use the loan, how much profit the business will earn, how you are going to repay the bank loan, and some other information. While you usually go to a doctor only if you are ill, it is nonetheless advisable that you see your doctor regularly for a checkup. In the same manner, you should know the financial status of your business regularly (preferably once a month) and not just whenever you experience cash flow problems. The financial plan can be both a tool for prognosis for a healthy business and diagnosis for one that is experiencing difficulties.

The financial plan translates into monetary terms what you have learned after completing the first three major components of your business plan. In doing the marketing plan, you learned things related to sales generation, whereas in the production and organizational plans, you learned about things related to expenses. The financial plan translates all of this information into monetary figures, and from these data you will be able to assess whether the profit that you expect the business to earn is greater than the cost of setting it up and operating it.

In the soap business for example, you expect to realize a monthly sales of P24,000 or P288,000 within a year. After computing your expenses, deduct this amount from your total sales. If you get a positive number, it could mean that the business is profitable. This is a very simplistic way of measuring the profitability of a business. There are a lot of other factors to consider and methods to use for evaluating a business plan. Chapter 10 will discuss this in more detail.

One of the financial schedules you are to prepare for the financial plan is the total project cost schedule, which is composed of items relating to the total fixed assets, the working capital, and the pre-operating expenses. Examples of fixed assets are land, building, vehicle and equipment. Working capital, on the other hand, refers to funds you need to pay for expenses related to production, marketing, and organization within a short period or until the revenues start coming and the business will be able to finance its own operation. Pre-operating expenses, meanwhile, consist of the fees you incur when you register with the government and consultancy fees you pay to a consultant or researcher who prepared the feasibility study. You include your sources of funds. The money may come from your own pocket and from fellow owners of the business or equity contributions, if any. It may also come from relatives, friends, banks or financial institutions. External sources of funds are referred to as creditors.

In the soap-making business, the blender, weighing scale, computer and printer are considered your fixed assets. If you put up a stall or improve a part of your house for the business, the costs for putting up the stall and house improvement are also considered your fixed assets. Your working capital will consist of the money you will need to buy the direct and indirect materials, pay your direct labor, take care of overhead costs, and sell the soap. If you loaned from the bank or from an informal source, the interest will also form part of your working capital. If you will train your workers, hire a consultant, or do some research these expenses, and the fees you will pay for business registration will be part of your pre-operating capital.

A financial plan includes the preparation of the following financial statements: income statement, which presents the net result of a company’s revenues, minus expenses, over a given period; balance sheet, which is a “financial snapshot” of your business at a given time that tells you how much your assets and liabilities are, as well as the net worth of your business; and cash flow statement, which shows the sources and uses of cash for your business over a certain period.

You are not expected to acquire the skill of preparing financial statements after reading this. You can ask somebody to prepare these statements for you. A well-experienced bookkeeper or an accountant can easily do the task. The more important thing is for you to understand how to use the financial plan, particularly the financial statements, to come up with good business decisions.

Source: Your Guide to Starting a Small Enterprise

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The Basic Legal Aspects of an Effective Business Plan

what is technical aspect in business plan

As we enter the final month of the year and excitement grows for the holiday season many people may not realize December also holds a special designation for business owners and aspiring entrepreneurs. It is National Write a Business Plan Month . And while the holidays often serve as a time for reflection on the year that was, developing a business plan forces business owners to look forward and put constructive thought into the years ahead.

No matter what stage a business is at, it is always beneficial to develop and strengthen a strategic plan. A well-drafted business plan serves as a strong foundation for a successful business. The plan acts as a road map directing what the business will do, how it will grow, the markets its will serve, the manner in which it will operate, the struggles it may encounter and the goals it hopes to achieve. Similar to a road map, your business may encounter roadblocks and detours requiring you to rethink the plan’s path, but ultimately an effective business plan will force the owner to think critically and objectively about the future of the business and should continuously serve as a compass for the company going forward.

Along with addressing overarching business matters, the development of the business plan presents a great opportunity to address certain legal matters that may seem minor today but can prevent major stress down the road.

One of the biggest decisions a business faces at the outset is determining how it will be structured. The chosen structure will have lasting implications related to business operations, liability protections, and tax strategies. The most common business structures are limited liability companies, corporations, and partnerships. The entity you chose will likely require state filing and may necessitate obtaining a tax identification number from the IRS and State Department of Revenue.

In addition to determining business entity type, an effective business plan must consider all applicable federal, state and local laws that may be applicable to its operations for each location it intends to conduct business. These considerations keep the business ahead of the curve when it comes to obtaining necessary licenses or permits to operate. The business must also consider local zoning ordinances for each physical location from which it will operate in order to ensure the location is suitable for the operation. Effective planning in these areas helps avoid future hurdles that could delay expansion into a new market and hinder growth.

Finally, the business should consider contracts and legal agreements that may be necessary in its operations. While many of these documents will develop over time and need not be specifically addressed in the business plan, they should be given some forethought as the business considers its operations. Specific contracts that may require particular attention in the business plan are Confidentiality and Non-Disclosure Agreements. These documents are not absolutely necessary in every business venture, but in the right circumstances they can be crucial to the development or growth of the business. By entering into Confidentiality and Non-Disclosure Agreements the business owner will be able to talk freely about the innovative ideas and creative potential of the business without concern that the information will be stolen or publicly disclosed. The more sensitive the information the higher the likelihood the business will require strong Confidentiality and Non-Disclosure agreements.

Ultimately, these are just a few of the issues a business owner must address and there are many other matters that should be taken into consideration when developing a strategic plan. A business owner need not develop the plan alone. They may consult with experts in tax, law, and business as well as trusted individuals invested emotionally or financially in their success. While the business plan will not address every detail that may impact the company, it should plot the road the business will follow. Establishing an effective plan for the business will pave a way that leads to success down the road.

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