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Abstract
Management Decision
40/8 [2002] 755763
# MCB UP Limited
[ISSN 0025-1747]
[DOI 10.1108/00251740210437725]
Introduction
``If you don't know where you are going, any
path will get you there''. This quotation
illustrates the important role planning plays
in determining the degree of success realized
by a business. Essential elements to business
success are identification of goals, followed
by development of strategies to meet those
goals. A business plan is an effective tool
used by businesses to organize these goals
and objectives into a coherent format
especially for new or small businesses. It can
be defined as operating a company on paper.
No matter the size or stage of development,
companies use business plans to improve
internal operations and to describe and
market the business to potential outside
financiers. This paper seeks to address that
utilizing business planning as a tool will
allow new or small businesses to achieve and
even surpass their goals.
[ 755 ]
Amir M. Hormozi,
Gail S. Sutton,
Robert D. McMinn and
Wendy Lucio
Business plans for new or
small businesses: paving the
path to success
Management Decision
40/8 [2002] 755763
Cover page
[ 756 ]
Table of contents
Executive summary
Industry
Amir M. Hormozi,
Gail S. Sutton,
Robert D. McMinn and
Wendy Lucio
Business plans for new or
small businesses: paving the
path to success
Management Decision
40/8 [2002] 755763
The company
Pricing
The market
Marketing plan
[ 757 ]
Amir M. Hormozi,
Gail S. Sutton,
Robert D. McMinn and
Wendy Lucio
Business plans for new or
small businesses: paving the
path to success
Management Decision
40/8 [2002] 755763
Management team
Financial statements
[ 758 ]
Income statement
Balance sheet
Amir M. Hormozi,
Gail S. Sutton,
Robert D. McMinn and
Wendy Lucio
Business plans for new or
small businesses: paving the
path to success
Management Decision
40/8 [2002] 755763
Sources of capital
One of the biggest challenges of starting and
operating a business is financing. Financing
options vary, depending on the current stage
of the business and the entrepreneur's
[ 759 ]
Amir M. Hormozi,
Gail S. Sutton,
Robert D. McMinn and
Wendy Lucio
Business plans for new or
small businesses: paving the
path to success
Management Decision
40/8 [2002] 755763
[ 760 ]
Amir M. Hormozi,
Gail S. Sutton,
Robert D. McMinn and
Wendy Lucio
Business plans for new or
small businesses: paving the
path to success
Management Decision
40/8 [2002] 755763
Online businesses
Conclusion
As research by Crawford-Lucas (1992) and
Orser et al. (2000) indicate, businesses that
utilize business plans are typically more
successful than others. Crawford-Lucas
(1992) mention that while a good business
plan will not guarantee success, it can go a
long way toward reducing the odds of failure,
and Orser et al. (2000) comment that the
presence of a business plan is highly
correlated with the performance of the
business and contributes to the growth of the
firm. Therefore, for future research, we
challenge practitioners and academicians to
get together and create practical documents
that can be used as guidelines for
entrepreneurs, managers, as well as
executive MBA students, to improve the
understanding of how a business should
operate.
The purpose of a business plan is to define
the business and explain in as much detail as
possible how the venture will operate in the
current market. A business plan is used for
both internal and external purposes. For
external purposes, a business plan is a
requirement if a new or small business hopes
to obtain external financing. It is the primary
tool used by financiers to evaluate the
potential of a business. For internal
operations, a business plan will help the
entrepreneur to clarify short and long-term
objectives and the means by which to achieve
those objectives.
A business plan should reflect the
individuality of the new business but follow a
standard format. Business plans are
comprised of four major sections:
1 introductory elements;
2 business section;
3 financial statements; and
4 the appendix.
First, the introductory elements provide the
reader with important preliminary
information about the business and where to
locate relevant data within the plan. Second,
[ 761 ]
Amir M. Hormozi,
Gail S. Sutton,
Robert D. McMinn and
Wendy Lucio
Business plans for new or
small businesses: paving the
path to success
Management Decision
40/8 [2002] 755763
References
[ 762 ]
Amir M. Hormozi,
Gail S. Sutton,
Robert D. McMinn and
Wendy Lucio
Business plans for new or
small businesses: paving the
path to success
Management Decision
40/8 [2002] 755763
3. Financial statements
4. Appendix
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