A business plan is a statement that outlines the way that the business will achieve its objectives. An established business may produce a business plan to show how it will obtain the funds to pay back a loan for a new piece of machinery. On the other hand, for a business starting up, a business plan can be used to give a clear idea of its direction and operation, show a bank or other institution its likely to position and its ability to pay back a loan, identify problems that may occur to allow the business to deal with them before the situation gets out of control, and highlights its major strengths and weaknesses. The key elements of a business plan include all the salient qualitative and quantitative features of the business, the product, the market, personnel, purchasing policies, production methods, premises, and equipment, profit, cash flow, and finance.
Every business sets plan but do the managers set these plans blindly? Does a manager set these plans just for the sake of setting business aims or does he take an initiative to do some work before setting plans and strategies? It is always said that the managers should first analyze the micro and macro environment to set the right strategies and carry out proper implementation. The external environment of a business should be analyzed carefully in order to ensure that a business strategy is realistic and objective oriented. The pest analysis is a study of political, economic, social and technological factors that have an impact on the performance of a business. The political environment refers to the extent to which a country is enjoying political stability. The economic environment is divided into two parts. Firstly it represents the living standards and purchasing power of the customer. Secondly, the role of banks is also extremely important in molding the economic set up of a country. Social and ethical issues are sensitive and it can prove to be disastrous for a business if it tries to challenge the social or religious beliefs of people. It is important to run ethically. It is important to set aims that are accepted by the society and serve the ultimate motive of profit.