Critical Appraisal of Business Plan Process Towards the creation of a Essay

Critical Appraisal of Business Plan Process Towards the creation of a successful entrepreneurial venture - Essay Example Because it is contained in a tangible document, it is open to critical examination by important third parties such as possible co-investors, creditors, venture capitalists, or banks which may be considering extending a loan towards the business (BC Ministry of Small Business, 2011, p.2). Elements The business plan is comprised of several elements, which may be described as follows: Idea generation, while not a tangible part of the business plan proper, is a vital phase of the planning process. It is the germination of the business intention, the idea that combines a perceived need in the environment with a recognized capability in the business proponent. Idea generation is the most difficult stage of developing a new product or service, whether it be for a new or existing business (Crane, 2010, p. 104). This is because it involves the creative process and is not defined according to any established procedure, but often occurs as a flash of inspiration or unique insight as to how a pa rticular need may be fulfilled. When an idea is first generated, there is usually no indication as to whether it will be successful or even feasible, thus embarking on a course of action on the bases of new ideas always involves a great deal of conviction and a leap of faith. Strategic objectives are set subsequent to the generation of the idea. Strategic objectives provide the overall mission or purpose of the business (i.e., a â€Å"philosophical† purpose, according to Piotrowski, 2011, p. 174), as against the operational objectives. Strategic objectives relate to the definition of four elements of the business profile, namely products, customer groups, market segments, and geographic markets (Robert, 1998, p. 234). As with all statements of intention, however, the statement of strategic objectives is always couched in general terms that may admit of many varied interpretations. As a guide, therefore, the strategic objectives are at best advisory, but cannot be held as defi nitive as promises or commitments for which the business may be held answerable. Therefore, the effectiveness of strategic objectives will only be as meaningful as the best intentions of the business proponents may hold them to be. Market analysis and research is the process of gathering information about the prospective market of the business and drawing important insights and observations about future prospects. Information about the market’s size, its location, its history, the competitive profile, and likely profitability, as well as its general strength and health, are described and assessed. The information gathered during this stage provides the foundation for forecasting sales volumes and revenues, for determining the capacity of the business, and consequently the amount of financing required (Ehmke & Akridge, 2005, p.3). Market research analysis has its limitations. Ideally, accurate knowledge of markets is very important, but such knowledge does not serve to reduce knowledge of the business into a single solution that solves all possible problems. It is a myth that a business cannot fail if it completely knows its market; this is because the market is just one aspect of the business, the others being the financial, technical operations, accounting control, and human resources aspects (Brown, 2008, p. 464). Furthermore, the market has too many factors that could not be forecast with certainty, that any feeling of possessing complete knowledge of the market is a certain