Question

• State how the essentials components of a business plan and financial statements aid in a company’s success.
• Explain why you believe a company will be more successful if they complete a business plan.

Answer 1

The various components of a business plan aid in a company’s success in the following manner:

1. Executive Summary: It is the summarized version of the entire business plan. It focuses on the objectives of the business and the needs that are to be fulfilled. It even covers important aspects of the other components of the business plan.
2. Description of the Company: This describes the mission statement of the organization, its activities , the business model used by the organization, area where the organization is situated, the promoters and owners of the business , the type of legal entity and the date when the organization was constituted .
3. Market Analysis: This focuses on the understanding of the organization as to which segment of the market it fits into and how the organization is superior to its competitors. The market analysis should include information on the markets where the organization decides to sell its products or services and also a list of its potential or target customer based on market trends.
4. Organisation and Management: The focus is on displaying the highly qualified and competent management team that will be able to face the challenges and achieve its objectives.
5. Sales Strategies: The focus is on what are the prices to be charged i.e the strategy related to the price and the various other sales strategies to be undertaken in order to promote sales and the brand of the organization.
6. Funding Requirements: It focuses on the requirements of funds and how to raise the funds and the time limit within which it would be raised.
7. Financial Projections: Based on the market trends and the growth in the organization’s revenue, the organization needs to make financial projections

Understanding the components of the business plan helps in understanding the probable problems that might be potentially faced by the organization and that helps in formulating the future plans of the organization and that will make the organization more equipped to handle any problems and thereby ensure their success.

The financial statements provide financial information about the financial conditions of the organization and that helps in projecting the performance of the organization and projects information about its achievements to its investors etc and thereby that helps in the success of the organization.

A company would be more successful if they complete its business plan as it provides a better understanding of the business and the market and it motivates and gives a direction for the achievement of its objectives and that helps in the business growth. Having a business plan and following it makes everything well organized and that helps in securing funds and inv estments required for furthering the business. When the business plan is properly formulated then it actually aids in the conversion of the vision into actual reality. When a business plan is created and followed it provides a direction to the management, investors etc and that gives the organization a competitive advantage over others operating in the same market.