Introduction to business planning

With constantly changing conditions in a market economy, economic agents very difficult to plan long-range ixi the course of events. But, refusal of planning is tantamount to rejection of the development of the enterprise, which will first lead to stagnation and ultimately to the destruction of the business.

On the other hand, the business development entails a continuous process of innovation, which requires additional investment. The investment can be obtained in two ways: at the expense of own means of the enterprise, which is a fairly costly and lengthy process, or at the expense of borrowed funds, which may be drawn in persuading financial institutions in the prospects and profitability of the project. In the latter case, to overestimate the role of the business project is quite difficult, as it zainteresowania least three main businesses: owners, creditors and managers.

In this paper, the author sought to present a generalized methodology for the development of the business project as a whole and its individual sections in particular. In the work on the Handbook used the actual and theoretical material, numerous domestic and foreign sources, as well as data of practical activities in the field of business planning.

The manual is intended for a wide circle of readers studying the issues of business planning in General and development of separate sections of the business project in particular. It will be useful to undergraduate students of colleges, technical schools and Universities, and entrepreneurs.

1. Introduction to business planning.

A business plan is a new document for the majority of Russian entrepreneurs. Even now widespread position that denies the appropriateness of the detailed design of the expanded business plan and offering as an alternative a brief feasibility study. It is believed that the lack of a business plan may be offset by knowledge of the “depths” of domestic and foreign businesses as well as the familiarity with the right people occupying prominent positions.

In modern conditions this position may not be sufficient to obtain or selection of investments for specific projects. Of emerging market conditions dictate the need to use commonly accepted in other countries the practice of promoting entrepreneurial projects to invest in. With planning and the creation and functioning of commercial organizations.

Years of experience of foreign firms and Russian companies shows that the underestimation of business planning in the market conditions, its reduction to a minimum or incompetent implementation often leads to a large, unwarranted losses, and ultimately to the liquidation of the business. Successful leaders know well that all great battles are won primarily on paper after a carefully designed plan and then in reality.

The market does not suppress or deny the planning at all. Even at the country level, the planning function does not replace the invisible regulating hand of the market. Both Western and Eastern economies are developing strategic directions for its economic development, major social and scientific-technical programs, the budget of the country. At the enterprise level it is necessary to implement not only strategic, but also operational planning.

In market conditions, the company must use the advantage of planning the competition. Therefore, any entrepreneur must have a well thought out and fully justified plan – a document that defines the strategy and tactics of the business, target selection, technology, production and sales. The presence of a well-researched plan allows you to actively develop entrepreneurship; to attract investors, creditors and partners; maximum use of competitive advantages and prevent potential mistakes; monitor the new trends and use them in its activities; to mitigate the impact and enhance the impact strengths of the enterprise; to take timely measures against various types of risk; assess the performance of the company.

The plan is a guide containing data on magnitudes and nature of changes in the external and internal factors at that specific moment in time and forecasts of their changes over a certain time interval in the future. As implementation and change of circumstances the plan may be adjusted by adjustments of the respective indicators.

The plan required not only large and medium-sized enterprises, but also small, since the latter is most sensitive to fluctuations in the environment. In all cases the planning of activity of enterprise is carried out by senior management, based on annual, monthly and ten-day plans of its subsidiaries.

Unfortunately, country-specific investment climate complicates the procedure for development plans and the inclusion of unpredictable factors: high levels of inflation, floating the banking and tax rates, unstable exchange rates, payment problems of supply due to non-payment, insufficient and sometimes complete lack of information and statistical data.

But in spite of that to start any business without a plan is too risky. Market and plan in common, they are not mutually exclusive, and expertly complement, resulting in winning the case and therefore everyone involved in the entrepreneur. Therefore, every entrepreneur needs to learn the basics of business planning in the new conditions.

2. BUSINESS IDEA, BUSINESS PLAN AND BUSINESS PROJECT.

Currently in Russia there are many the new in the field of Economics, Finance and entrepreneurship. If in General innovations has already more or less well to understand the new terminology is not infrequently remains a dark spot in the General knowledge of the entrepreneur. They did not pass by and business planning.

Often in business you hear the concept: “business idea”, “business plan” and “business project”, which are used as synonyms although they are quite different from each other.

Business idea – this is a document that is developed by the author or authors of the idea of any business undertakings with the aim to interest and to convince staff of the need for further development of the business idea and its deeper study. In General, the more information you provide, the better. Moreover, sometimes the information that you think is not significant, it may be primary not only for foreign but also for local business partner.

The business idea can be developed on any topic, the deadline, the amount of investment.

Business idea – most important part of any business undertaking, irrespective of whether it will be implemented in practice in the original version or not. The main drawback of the business idea is that it is not as protected from unfair competition: it can steal, modify and implement any entrepreneur.

Under favorable circumstances, as not every business idea (or rather a very small part of the proposed business ideas) receives approval among the collective, the group is embarking on the revision of the business ideas. Final stage of development of the business idea is developed a business plan to evaluate the feasibility of entrepreneurial initiatives.

A business plan is a comprehensive document, fully reflecting crucial aspects and economic characteristics of entrepreneurial endeavors. The business plan can be developed by the project initiators and experts from outside, the client prepares and provides the data they needed. Preferable to the first scenario, there are at least three explanations. First, when developing the business plan the project proponents better understand all the subtleties of a practical implementation of the idea, secondly, the initiators have the best appreciation of the essence of the idea, and except for them nobody will be able to cover some special sections and various details of the business plan. Thirdly, it decreases the risk of leaving a business idea to third parties, which is not rarely observed on the market of intellectual services not only in Russia but throughout the world.

In General, a business plan is a list of standard questions and answers to the questions given in the Appendix of this training manuals.

The purpose of the business plan is to interest a potential investor in the allocation of funds for further development or (rarely) the practical implementation of entrepreneurial initiatives. The result of further development of the business plan is a business project.

A business project is a comprehensive document, most fully reflecting all the aspects of business undertakings and representing a décor proposal for practical implementation.

Development of the business project is a serious, highly skilled and expensive work, occupying the period of time measured in weeks, months or even years. The choice of methodology for the development of the business project, the depth and the time horizon of its elaboration, variation lay in it solutions depend on the specifics of the project itself, but primarily from the business of the project.

3. GENERAL CLASSIFICATION AND LIFE CYCLE.

In the world there is a wide variety of business projects, which at first glance may clearly differ, and be similar to each other, although they are inherently different instruments. Therefore, the diversity of business projects klassificeret on various grounds. We present the most common classification of business projects.

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