Business Plan – Background of Manage Strategy

Professor Temur Khomeriki, TSU Management and Administration Department Head

Managering practice confirms that success business running is impossible without adequate business strategy having.

According to H. Mintcberg managing strategy is 5 aspects based: plan, tactic actions, perspective, pattern, market position. Business plan mentions a map providing relatively facilitated “business –ship” launching to the harbor of the success. How to stat it?
Business plan is a written document, including business capacity of the organization and perspectives of their development while effective management condition. As a rule it reports business ideas, goals, tasks, manufacture environment analyze, needy resources and their localization, risks, financing attraction plan, business-plan realization arrangements and ect;
Business plan needs following organization arranges providing:
. Environment analyze and organization interior parameters based organization mission formulating.
. Goals fixing while market demands and organization opportunities determination.
. Alternate strategy preparation while organization goals and environment condition determining.
. Organization strategy concerning politics and procedures determination.
. Operative plan preparation.
. Maintain resource providing for organization and its unites` plans realization.
Working on the business plan mentions exact goals and tasks determination, dealing and environment analyzing, plan-project preparation and the plan realization providing. Business projecting circle following way characterized:

It responses following questions:
. Where (what stage of development) is the organization for the moment? –for the dates receiving, management exact functions analyze of finances, marketing, staffers managing, production regulating is providing.
. Where do we eager move? Estimating influence of organization opportunities and environment factors (suppliers, competitors, clients, consumers, legislative base, technology, social –cultural tendencies, political factors, economic conditions and ect;) organization leaders forming goals and determining hinder points of their accomplishment.
. How do we schedule projected tasks realization? –Managers, as in general so in exact form should project acting plans for the organization members, for organization goals coming into being. Projecting, the authority makes definition of the organization staffers enforce direction, for maintaining accomplishment of the resolutions.
Modern environment faces constant changes of strategy approach: number first task for the organizations created adequate react on the environment transformation; time and space factors of changes appear very necessary while globalization condition; production vital risk reduces and role of innovations increases; informed society foundations process in under the way. Despite of strategy planning conception assimilation by the organizations, several sort of shortcoming is typical issue for it: it is not able detailed and exact description of future giving; it has no procedures and schemes; description methodologies and apparatus, because of what it ` s considered as the determined philosophy (ideology) of management; its realization for organizations needs huge time and resource maintain; in the case of incorrect strategy view and less of their correcting looses factor for the organization increases; strategy realization process often comes across inter-systematic resistance, caused by undeveloped organization culture.
No matter as best way the strategy plan realization will be presented, organization will suffer being unsuccessful in the case of projecting stage low level providing. Therefore, every organization attempts project highlights multi-side substation. Well prepared project needs especial importance for business relation providing, so business plan mentioned as program document. Comparing with this and other mass economic projects business plan faces difference with basic accentuate on finance- economy highlights and scientific-technical, manufactory –technology, social points, presenting them as given. When business object present innovations, technical-technology issues create main component of the business –plan.
Business plan fulfils three basic functions: entrepreneur estimates factual results of its dealing in determined term interval; it can be used as a further perspective of business development and appears as a tool of resource source. So, business plan gives (entrepreneur) manager possibility of business developing grounded conception and business strategy creating. Business plan presents acting tool for organization dealing effectiveness estimating while determined period; The most important function of business plan includes resources attraction under useful conditions.
Business plan is equally needy in entrepreneur business as for managers, so for making sure in interested economy subjects plan substantiality, for giving the possibility the last ones` investing in. Entrepreneurs and managers declaim every interest about their project sharing to the competitors. So, business plan of the firm considered as commercial clandestine. Its structure and content is not regalement and no one claims its unification. But ruling practice includes recommendations definition while any sort of business plan creating, according them most of the project includes:
. Annotation (resume)
. Firm and business description
. Production and service description
. Marketing strategy
. Production plan
. Production organization and management
. Financial plan
. Rick estimation and insurance
Annotation includes aim of the entrepreneur concerning business. It is creating for the very last moment and presents defined resume (result of already written business –plan). Annotation should make clear imagination for business plan essence and its realization opportunities for the officials. It should include every basic moment of the project realization, economy statements and commercial capacity description. Annotation should face laconism, business sort and exact. Little conclusions concerning business may be competent (complex tight up from parts of every chapter) or description (literarily reported), for making the reader interest in the chapters given below. The second and third pages should include brief report concerning main points of the business: What we schedule? Have do we schedule? What is the difference between future product and competitors? How to gain clients` interest? What will the project cost? What financial sources do you expect? What is projected sales total volume, what are earnings, profits, rentability and ect points Are any sort of innovations (new commodity, new market, new techs and generally innovation) expected? Summary annotation created while standard environment basically meets requirements of businessmen, because detail information much more interesting for essayed investors, then optimistic scenario.
Description of firm and business –plan is as unit, closely concerned to projecting of one of business operations. It reports basic paraments of the organization, not presenting commercial clandestine. It should report sort of dealing, organization goals, technology-producing and financial potential, business developing potential and the prestige of the organization. It should exactly include: firm` s entitle, post address, registration country, account banking number, telephone number, fax, e- mail address, firms ` s capacity and share volume –asserts, turnover, sales volume and ect; The property of the capital and controlling form is the description of its owners, also description of sort of dealing and sphere; firm` foundation date and developing way (important organizations, unites, business-partnership, juridical status and entitles ` changes); description of production and service, definition of specialists` s direction, nomenclature of firm` s export- import, it` s share and location, as in domestic, so in abroad markets; assistance banks for the operations providing, firms` s owners, representatives and offices description, management staffers ` description, administration system and instances staffers description, general managers ` dates, unites entitles and ect; firm` s material –technical and production base, strength location description, staffers ` description, financial condition of the organization and basic statement of its development, its analyze and trend, relationship with market operations main partners and ect;
Several projects include separate juridical aspects of the organization functioneering: founders and participators, juridical registration rule and organizations ` order; administrative branches and its staffers, main dealing, sort of property, capital` s structure (long term credits, credit lines, package and bonds, privileged shares, common shares and ect;) Form of credits ensure (treasury bonds, material vulnerabilities bailing, guarantees, warrants and ect); juridical resolutions making with partners. Description of procedure and service is very important –commodity and service basic sort description on the very early stage (quality, design, security and ect) Product treatment, preparing and firm service methods. Description form is basically depended of manufactory sort (production operations require tested patterns description; while commercial work –instance copy, while financial work –treasury bonds existence, while go –between –just service description is quite enough. Production and service use sphere detail description considered as preferable issue, as with its direct so other directions. The project should include priorities of the production and services, unique and competitive abilities. Within the issue, important is relating the business plan to the clients ` requirements, payment ability, markets description, new trade markets searching, price policy. While market economy system selling operation is one the main, because businessmen just able conditionally prognoses making and realization capacity in terms hugely depended on commodity sale perfection and chosen market analyze for the service providing. In the given research main reference is made on market sector correct choice making, activation, price and non –price methods way effective market strategy preparation of competition. Possible competitors naming, their economy potential definition and production description. Analyze becomes possible following real market practice studding, research of preliminary agreement with consumers and using of modern methods of scholar prognoses.
Projecting the product needs the responding to the following questions:
. What demands meets production and service?
. What is the difference between existent analogies?
. Why the production market attractive?
. What is the vital cycle of the commodity?
. How is your technologies secure and product with authorize rights and patent?
. What are the especial signs of the commodity design?
While production description pattern picture facing is obligatory. If it is high –tech product its realization service most important for the client, the client is frequently charmed with service, package, advertising, free consultations, loans, supply conditions and ect; just within the production itself. Production unit` s average price determination takes place, production expanses and expected gain. It should be considered, that product is produces at entrepreneur, but sold clients hope is shops. Marketing plan of the firm should include: marketing environment analyze, complex study of clients demand on the production, markets volume and market requirements, market conjuncture research, price fundraising system analyze, selling methods and forms, organization maintain with resource supply, entrepreneur and selling opportunities estimation, competitive research on every segment of the market. For the goals achievement exact marketing strategy scheduling is the issue of main importance, determining action of the firm while market demand and supply exact condition.
Background of marketing program includes marketing researches of: commodity quality and service study as well as clients demands, competitive estimation of the production and market conjuncture analyze, market` s segmentation, consumers stimulation research for commodity circulation activation. These needs primary and secondary information, what can be received via inquiry, survey, experiment providing war or special researches. All these will provide background for price, commodity and sales policies determination of the organization. Market analyze mainly include: market ` s survey, consumer behave analyze, goal market description, demand- supply analyze, marketing –mix (product, place, pro- pattern, price), marketing budget, expected dales and ect;
Forming of price policy is influenced by: price establishment general rules, competitive level of the market, state regulation system of the prices and other different sort of factors. But while every condition, price establishment maintain obligatory needs following works providing: price establishment goals and tasks forming, demand definition, entrepreneur expanses evaluation, analyze of commodity quality and price analyze of competitors, research of commodity and service related to the firm product of the market, price establishment methods choose and starting price determination, complementary market factors determination. Finalize process determination is provided at the conclusive moment.
Production policy condition includes firm` s production quality highlight improvement and its competitive possibility increasing, new sort of commodity and service launching, commodity vital cycle duration and ect; Positions strengthening on the market and optimatization of assortment is necessary requirement of the commodity: production assortment fixing following the commodity typical signs, via commodity differentiation, narrow commodity specialization commodity diversification or vertical integration.
Sale policy includes realization network maintain providing, stores founding for middle keeping, after realization service organization, exhibitions providing, commodity circulation directions definition , supply and convoy schemes preparation, distribution and dealer network forming. Sales methods appear being separate: direct channels, go-between, compound and ect; If the recent suppliers and producers were identity mediators fast way development of the institute is faced all over the world for today, what is the resound of centre point of suppliers and sellers on the market. Suppliers are basically realization essayed mediators. Sale projecting defines: commodity circulation channels according to business segments, sale system levels, organization –justice aspects of sale, commodity circulation intense and ect; Organization come to the mediator choose following the components foresee, they do participate while trade- commercial centers organization, which’s` location, equipment and business arranging level frequently turning point while sales operations providing. Communication element bears huge importance while marketing strategy planning, including advertising, sales stimulation, service policy, modern information techs of communication and ect; Online (networking) marketing role, based on internet connections is very important while economy globalization condition. It is important possibility for potential supplier potential research and successfully results every sort of problem related to sales capacity reduction, increase slowing, sharp competitive and marketing strategy providing expanses increasing. Aiming attraction of the consumer attention, exhibitions providing and participation on the markets planning is as important as the advertisements, straggling for trade marks prestige, positive image forming among the population. Modern marketing communication systems and technologies give possibility close contact providing with the client, guarantee service and service active forms using providing, what is background for long term collaboration.
Entrepreneur plan creation mentions maintain resource system providing of the organization and entrepreneur possibilities description. It includes analyze of as foreign conditions (expert opportunities and justice base), so domestic condition (financial-economy potential of the firm, producing competitive, entrepreneur strength, scientific technical and technology potential, information infrastructure, prognoses` effectiveness and planning work condition. Production plan should face: general approach towards entrepreneur, raw- materials and other sort of materials sources possible variants, technology supply of producing, working resources demands, relationship forms with suppliers and clients while producing process. Production plan creation concerned to the production preparing and producing assimilation, technology and organization support of producing, after realization service, justify defense arrangements planning against outwards influence.
Organizing and managing the entrepreneur as a part of a business plan mentioned as hugely important, it mostly important while entrepreneur producing providing, but has no less importance in service sphere. It ` s basic directions: organization` s management, organized structure of the market, staffers policy and strategy, managements ` technical opportunities, technology and methods, motivation and communication systems. This direction of business plan mentions scheme of organization managing, relationship forms between organization unites, centralization level of managing, administrative resolutions making methods, leadership style, corporative culture typical points and ect; Organization projecting requires: staffers choose analyze, organization structure analyze, organization culture analyze, organization behave analyze, management acting system analyze, entrepreneur administrating functioneering realization analyze, managers description and administrating collegiums branches. Financial plan highlights together with marketing strategy presents background of organization business plan. Financial plan includes investition demands of the organization and economy expediency of the project –creation of requires income statements creation, organization balance statement creation while project writing and ect; other sort of documents also need to be studied. Loans flow move and general financial highlights analyze are also actually among the important issues. Basic points of the financial plan are following: initial investition and expanses calculation, expected sales, determination of every dealing expanse, finance source attraction arrangements maintain. So, financial plan is finance calculation, registration and analyze based, investition program (project) is also among the issues.
Financial –economy condition of the firms` determination means: organization asserts, basic opportunities and entrepreneur strength, capacity and market price of the production and the service, preferable geographical condition, entrepreneur infrastructure developing level and ect; Total expanses and incomes structural analyze of the organization bears huge importance. Financial part treatment of business plan covers following stages: needy initial capital for business running is calculated for the firs time, the sources of supply searching takes place after, sales volume and market price prognoses statement based revenue average level and structure is determined, the following steps are scheduled business operation expanses calculation, incomes and expanses comparing faces under money means of circulating and balance prognoses parameters. Every sort of calculated statement includes realization prognoses, money expanse and income balance revenue and expanses table, asserts and passives collective balance documentations, incomes potential managing, investition and dividends policies realization substation.
Risk estimation and administration is basic component of business plan. Under modern condition entrepreneur environment indetermination causes risk factors and prognoses importance increase. Risk factor concerned as well as to project content, so to its realization environment. Entrepreneur risk estimation appears most difficult while planning stage and entrepreneurs’ appeal to the experts, use their consulting services. Every sort of risks determination is an obligatory issue, its reduction arrangements providing and such way loosing avoid in up –coming future. Investor` s confidence level deeply dependent on risk insurance level. Insurance is not the only way of risks reduction: organizations and interested in individual approach this by necessary information timely purchasing, diversification providing and ect; But insurance remains basic direction of risk reduction. Firs of all obligatory state insurance obliges entrepreneurs (for instance at social ensuring united found) obligatory accounts making. From the other hand, commercial risk insurance makes easy organization business relationship with partners, clients and investors. Producing risk insurance needs two sides existence: insurance company (special organization, providing amounts accumulation is special sort of founds and giving them out in the case of necessary) and insurance individual (physical or juridical person accounting into the found established amount of money), insurance agreement is making between that both.
Property and personal insurance responsibility keeps being the equalize. Each can be separate by the agreement conditions and risk factors. Producing risk may be related to commercial operations, agreement fulfilling, partners payment, stock operations, banking crediting, inflation events, fors- major situations and ect; So, project insurance agreement (risks administration plan) ought obligatory be attached to the business plan, meaning as well as risk factors so the ways of its reduction and gears of resolution in the case of necessary.
Business plan conclusive part includes primary chapters given prognoses generalization and conclusions are made concerning determined arrangements expediency of the business plan: income analyzing according to business operations, estimating its social economy effectiveness for current and long term periods. Production realization hinder condition may be also faced and points of creaking down on them. Despite of any business plan being provider of one entrepreneur structure exact goal, estimation of its results influence on the organization bears huge importance.
Entrepreneur practice faces typical mistakes while business plan creation. Frequently, plan appears very long, overloaded with technical terminology or sharply detailed. Present is strategy faced and not the future, less reference is made on consumer, recognize of competitor is failed and straggle methods are undetermined, business season and its influence on currency is not estimated, non effective monitoring, unrelated (non- professional) staffers receiving for organization planning works providing and management separate risk factors rejecting and ect;
Businessmen should check following for success business plan creating:
. Do not create post soviet based plan –one issue is planed future by others, and other issue is planed future for you by yourself.
. Involve in every acting and future (potential) manager of your organization while business plan creation.
. Maintain your business plan to be logical, distinguished, readable and compact.
. Try your best for successful business plan creation, but keep in mind: 1 gram done is much more precious then 1 kilogram planed.
. Primary find clients and consumers being immediately ready transfer money on your account.
. Determine exactly, what are your goal investors (entrepreneur, bank, company, micro finance organization and ect;) whishes and on this background keep continue working on the business plan.
. Make real estimation of production selling capacity and rely on it while financial plan creating (do not sell eligible real)
. While production process and procedure description go pass special terminology just known for the specialists (no one will finance misunderstandable)
. Never believe bid coming into being if potential partner pries you and surrounds friendly –it proves just after concerning money transfer.