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Parts of a Business Plan; Risk and External Funding


1. Explain the parts of the business plan.
2. Define each part of a financial plan and discuss the importance of these components in managerial decision making
3. Explain the importance of interest rates, and how risk is considered to businesses and economic activity.
4. Explain the process to calculate external funding needs and the importance to a business .

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1. Explain the parts of the business plan.

A business plan is used to help potential stakeholders understand a business. It outlines what a company plans to do, and how they plan to do it. There is a formal template that can be used to ensure that each component of the business is covered. A business plan is helpful to tell others about the business, as well as helpful for the writer to understand their business better. The business plan starts with an executive summary. This segment gives a summary about the company, its owners, and the industry in which it operates. It also outlines the target markets and identifies competition. The executive summary outlines the financing that is requested as well as the repayment plan, in the event the plan is being used as a funding request.

The business description is next. It includes the full name of the business, as well as its complete mailing address, contacting information (website, e-mail, etc), and owner's contact information. There should also be information regarding the type of business it is (for instance, an S corporation), its goals and professional relationships and contact information, such as key suppliers. Key staff members and their backgrounds should be outlined. The business environment and operation should be discussed, in which the location, hours of operation, equipment needs and products that will be produced are discussed. This would also include information about zoning compliance, building and property payments. A marketing section would include a list of the company's products (or services) and retails. The target market will be outlined, as well as a plan for reaching these consumers. The competition will be identified and strategies to be competitive will be discussed. In the financial section, a "personal financial statement, balance sheet, income statement and cash flow statement " (Smith, 2013) would be included. The plan would have an appendix, which would contain information to validate the information supplied in the plan, such as copies of lease agreements or ...

Solution Summary

This detailed solution explains parts of a business plan, define the financial plan parts and why it is important in managerial decision making, also it explains the importance of interest rates, how risk is considered. It describes how to calculate external funding needs as well.Includes APA formatted references.