A business plan defines a business’s objectives and outlines how the business plans to achieve its goals. It lays out a well-written roadmap for a business from marketing to financial plan to operational standpoints. An effective business plan is well-written and sufficiently addresses all the required components. Notably, a business plan should incorporate both short and long-term forecasting. While developing a business plan, some components may prove challenging to complete. However, leveraging technology can help address the challenges. Besides having a well-written business plan, an organization should also emphasize networking (both formal and informal) and knowledge management. This paper explores the importance of short and long-term forecasting, the rationale for formal and informal networks, knowledge management in the digital age, and the components of a business plan.
Necessity Of Short-Term And Long-Term Forecasting For Developing The Key Elements Of The Business Plan
Business plans serve several purposes. The primary purposes of a business plan include creating an effective growth strategy, determining future financial needs, or attracting investors. Notably, all three functions require short- and long-term forecasting (Barrow, Barrow, & Brown, 2018). Thus, short and long-term forecasting is essential to developing the critical elements of a business plan. Both short and long-term forecasting provides the business plan’s target audience sufficient information to make informed decisions. Additionally, it helps in setting goals and planning for the short and long-run future. Moreover, it helps in budgeting by making the future visible in the approximation lens. For business plans aimed to attract investors, the short and long-term projections help potential investors determine if the venture is viable and whether it is worth investing in. short-term projections help investors understand when the business is expected to break even while the long-term forecasting demonstrates expected growth pattern (Ekanem, 2017). Thus, short and long-term forecasting is significantly crucial while developing the key elements of a business plan.
Importance of Developing Formal and Informal Networks When Building New Business Opportunities and Expanding Into New Markets
Formal and informal networks are crucial when building new business opportunities or expanding into new markets. An entrepreneur’s entrepreneurial networks start with his/her established web of relationships with friends and family (Benatti et al., 2021). According to Benatti et al., an entrepreneur develops social, avocational, and religious linkages from the outset. People in these groups can prove significantly useful by providing unexpected information or contacts that can help in some aspect of a business establishment or expanding to new markets. It is worth noting that informal networks are most valuable when building new business opportunities (Benatti et al., 2021). Nonetheless, if well-utilized, informal networks can prove considerably resourceful to an entrepreneur, whether in the process of developing new business opportunities or expanding to new markets.
Unlike informal networks, which a person develops from the outset due to passive social interactions with family and friends, formal networks are developed through active and purposeful efforts. According to Benatti et al. (2021), such networks are business associations or functions within a business/industry. They are relationships organized around business or industry groupings. These types of associations are valuable sources of information about new business opportunities and new markets. Benatti et al. elucidate that formal networks’ primary purpose is sharing of information and knowledge about various aspects of a particular business or industry and are characterized by asynchronous reciprocity. Hence, formal networks are valuable sources of insight about new business opportunities or expanding into new markets.
Importance Of Knowledge Management In The Digital Age And Identify Two Risks Organizations Must Address To Mitigate Competitive Pressures
Digital transformations characterizing today’s world are rapidly broadening the array of technologies that a business can use to manage knowledge. Notably, knowledge management in the digital age is crucial as it hones an organization’s decision-making ability. Knowledge management entails three components: accumulation, storage, and sharing (North & Kumta, 2018). According to North and Kumta, the goal of knowledge management in the digital age is to facilitate organizational learning and create an ongoing improvement culture based on evidence. The wide range of technologies characterizing the digital age has made it relatively easier and effective for an organization to gather, define, structure, store, and share knowledge. Additionally, digital knowledge management makes it easier for organization members to easily access knowledge and share as needed (Abubakar, Elrehail, Alatailat, & Elçi, 2019). Thus, knowledge management in the digital is crucial to promoting evidence-based practices and facilitating ongoing improvements.
There are various risks associated with knowledge management in the digital age. The risks fall into three broad categories: human knowledge risks, technological risks, and operational risks. This paper will address human knowledge risks and technological risks. Human knowledge risks include knowledge hiding, unlearning, knowledge hoarding, and inadequate competence of employees. Technological risks include risks related to social media, such as the spread of fake information, risks associated with old technologies such as outdated software, risks related to cybercrime such as hacker attacks, and digitalization risks such as flawed algorithms (Abubakar, Elrehail, Alatailat, & Elçi, 2019). Organizations must mitigate these risks to mitigate competitive pressures.
Two Most Challenging Business Plan Components for an Aspiring Entrepreneur
A business plan comprises an executive summary, business description, market analysis and strategy, marketing and sales plan, competitive analysis, management and organization description, products and service description, operating plan, financial projection and needs, and exhibits and appendices. The executive summary section provides an overview of the entire business plan by highlighting what the plan will cover. The business description part provides a comprehensive description of the venture and its goals, services, products, and target market. The market analysis and strategy component identifies the business’s primary target audience and establishes a strategy to reach the market (Ekanem, 2017).
The marketing and sales plan section addresses the specifics regarding how the business plans to market and sell its products/services. The completive analysis entails a detailed competitive analysis and compares the business with its competitors. The management and organization description component elucidates the details of the venture’s management and organization strategy. The products and services description part expounds on the products/services the business offers. The operating plan section describes how the company will run. It also incorporates information regarding where the firm will operate, the number of employees, and other pertinent information related to the business’s operations. The financial projection and needs section details how the business anticipates bringing revenue and the funding required to hit the ground running. Lastly, the exhibits and appendices part contains extra information to further the goal business plan (Ekanem, 2017).
From the above-described components of a business plan, the two that would be most challenging for me as an aspiring entrepreneur are the operating plan and the financial forecast sections. As an aspiring entrepreneur, developing an operating plan that adequately addresses all the needed aspects can prove considerably challenging. Additionally, since the financial forecast section requires knowledge in accounting, it can prove challenging due to the dynamics of the variables involved.
How Technology Could Help Overcome Identified Business Plan Challenges
Technology can help address the above-identified business plan challenges. To start with, the internet is a rich source of information that can help me better understand how to complete the two sections. Besides providing access to journal articles and insightful databases, the internet has business plan samples that can serve as guidelines for completing my business plan. Additionally, there exist many technological tools that render financial analysis and projection relatively more straightforward, even for those who are not accounting savvy. These include technologies such as Xero, Float, DryRun Financial Forecast, and Pulse Financial Forecast. Using these technologies can help me address the challenges associated with developing the financial forecast section of the business plan.
To sum up, a business plan serves a crucial role in describing an organization’s core business activities, goals, and how it plans to achieve its objectives. Both short and long-term forecasting is essential to a business plan as they allow the target audience of the plan to make well-informed decisions. Knowledge management in the digital age is also vital as it facilitates organizational learning and creates an ongoing improvement culture based on evidence. Notably, a business plan incorporates many components which can prove challenging to develop. However, leveraging technology can help address the challenges. Besides developing a business plan, informal and formal networks are crucial to building new business ideas and expanding to new markets.