• An important tool that helps people willing to start a new business is the business plan (BP). A BP is a document carefully explaining every aspect of a new business venture. Although some entrepreneurs simply “wing it” and start a business without the benefits of formal planning, experts recommend preparing a BP. For most new ventures, the BP is a dual-purpose document used both inside and outside the firm. Inside the firm, the plan helps the company to develop a “road map” to follow in executing its strategies and plans. Outside the firm, the BP introduces potential investors and other stakeholders to the business opportunity pursued by the firm.

• A properly conducted feasibility analysis lays the foundation for a well-reasoned and well-researched BP. The most compelling facts included in a BP are the results of a feasibility analysis of the business, including feedback from industry experts and prospective customers.

• A target market is the limited portion of a sector market that a firm goes after or tries to appeal to at a certain point in time. Most firms do not try to serve their whole markets. Instead, they focus on serving a specific market segment. Separating the analysis of a firm’s industry from its target market is important, because understanding the industry helps the entrepreneur to gain a better idea of the target market.

• The market analysis focuses on three aspects: describing a firm’s target market, customers, and competitors; explaining how the firm will compete in the marketplace; and forecasting potential sales and market share. The market analysis is an extremely important section of a BP for two reasons. First, it helps defining the nature of the business and the remainder of the plan. Second, it shows that the entrepreneur has a well-thought-out target market, understands its customers, and can generate sales in the face of competition.

• A company’s marketing plan start by articulating a marketing strategy, positioning, and points of differentiation. Then it explains how the mentioned aspects be supported by price, promotional mix, sales process, and distribution strategy.

• The operations plan section of a BP outlines how the business will be run and how the product or service will be delivered. The operations plan generally delals with the operating model and procedures, the business location, facilities and equipment, and the operating strategy. Further topics may be included depending on the nature of the business.

• The final section of a business plan translates the described strategy into financial projections. It includes the source and use of funds statement, the necessary assumptions, and pro-forma statements for income, balance, and cash flow — key for assessing profitability, liquidity, and the overall financial position of the business.