Complete business plan
A business plan is guide that is prepared prior by the management of the business firms to guide them on how the firm is going to operate. It shows the future projection on how the firm should perform. The management work hard to follow the guidelines so that they can convert the projection into reality. This paper discuses the comparison of the two business plans templates; Mike’s trucking service Company and the American management Technology (AMT). The paper starts with identifying strong components of the two business plans, their weak components, how these plans can be improved, the challenges that were encountered by the planners of these two templates when preparing them, the lessons learned and the competencies demonstrated by the planers.
Table of content
Strong components of business plan………………………………
Weak components of business plan…………………………………
How business plan can be improved…………………………………
Challenges faced and their solutions………………………………….
This report will discuss business plans of Mike’s Trucking Service and American Management Technology. It will show the strategies that would be used by firms, how these strategies would help the two companies and how they will be developed in future to keep the organizations growing in such a competitive market. It will focus on the different analysis and business level strategy of Mike’s Trucking Service and American Management Technology. The paper would identify strong components and weak components of the two business plans. It would show the challenges encountered when preparing them and how the plans can be improved.
Mike’s Trucking Service has positioned itself excellently in commercial truck industry because of innovation, efficient marketing and use of advance technologies (Palo Alto Software, 2014). Increased financial threats have threatened the future of the company. In addition, stiff competition is experienced within the industry. Strikes may interfere with employee productivity. Mike’s Trucking Service employs product and service differentiation to stay ahead of its competitors (Palo Alto Software, 2014).
With the global presence and competition, American Management Technology has had to devise new strategies to adapt to new markets. The company developed strategies to make its devices affordable and accessible to the mass market. The new proliferation of new software and hardware technology has drastically transformed the landscape of the computer software and hardware industry (Palo Alto Software, 2014).
Integration of software and hardware products and services has enabled American Management Technology to promote versatility, reliability and superior performance of their products (Palo Alto Software, 2014). Among the strategies, that American Management Technology has had to initiate to adapt to the changing software and hardware market is mainly through innovation (Wassinger & David, 2011).American Management Technology has the reputation and credit in design, multimedia and graphic-design industries. The company must therefore establish its stores and branches in most profitable places. This would make it easier for the clients to see, access the stores and buy the required products. The competition in the targeted market must not be very heavy to ensure that American Management Technology meet its market and marketing strategies and goals of the company.
b) Strong components of the business plans
Mike’s trucking service company
One of the strongest points in Mike’s trucking company plan is that the company is not planning to have heavy management personnel (Palo Alto Software, 2014). It is noted that Mike Smith is the chief executive officer ( CEO) and the president of the company. He is the only man to make executive decisions; this means that the decision-making process would be faster. On the other hand, Joan Rose is the secretary to the company and she is the one who answers all the enquiry calls and carryout all the administrative functions. Moreover, the company would only hire part-time sales persons when need arises. It implies that the company’s business plan aims to have less management staff to minimize overhead costs. This is one best strategy that any company can use to increase the profits margins.
Another strong component of Mike’s trucking company plan is that it has not limited itself to one industry; rather, it has diversified its operations to operate in more than three industries (Palo Alto Software, 2014). It majorly targets food industry that is the main, computer industry, retail industry and other industries that require haulage services. One interesting point about all these industries is that they all have potential for growth. This implies that the company has a bright future.
The final strong component about Mike’s company business plan is that it has already taken care of the future trends that may affect the company’s operations (Palo Alto Software, 2014). The plan states that the company would be adjusting its strategies according to the prevailing marketing conditions to capitalize on growth opportunities. This means that the company already knows that there would be challenges in the future operation of the business; thus, it has already put into consideration the details on how it will deal with such challenges.
American management technology (AMT)
One strong component with the business plan of American management technology is that it has projected that the company would sell a variety of products and services. When a business firm engages in selling different products, it tends to serve various ranges of customers having different needs (Harper, 2014). Some of the products the plan has shown that the company would offer include; super home, power user, business special, software, periphery, training, service and support. Therefore, many customers would prefer this company since it offers most of the products and services they would need. This would be an advantage to the company because the sales volume would be high hence, more revenue.
The second strong component of this plan is that it has based its future projections on the past performance records. The financial statistics of the past years are the ones that have been used in this plan to plan for the future. This is healthy because the data is accurate hence, it can predict the future performance with certainty. The management would use these past data to take precautions to avoid the mistakes that were made in the past.
Finally, this plan has detailed personnel plan, which reflects the expected performance for each individual according to their capabilities to match their positions in the organization (Harper, 2014). This means that high-level managers need to perform better than middle level managers do because their positions imply that they have better skills and knowledge. This component would compel every individual in this company to work hard to defend their positions.
C) Weak components of the business plans
Mike’s trucking service company
One of the weaknesses in Mike’s trucking company plan is that it has based its future performance on just mere guesswork. This is because the company has been in business for only one year and yet the plan projects only positive performance (Palo Alto Software, 2014). The plan does not have enough historical records on which the future performance can be bench marked. This would be a bit dangerous and deceiving when the reality starts dawning.
The second weakness in that the plan has not put in place the strategies it would use to counter the competition in the sector. It is clear that trucking service industry is a perfect competition industry; this means that there are so many firms operating in it competitively. Therefore, there would be stiff competition from the competitors yet the plan does not show any counter-strategy it would employ to quell it.
Finally, the funding capital base for Mike’s trucking is actually low. The plan shows that there is plan of funding $125,000 for equipment purchase (Palo Alto Software, 2014). In real sense, a trucking company ought to have high capital base since most equipments in this sector are too expensive. Established firms are going for sophisticated and expensive equipments to increase efficiency and overcome competition. Therefore, the planned funding amount for purchase of equipments is just too little for any company in this trucking service sector.
American management technology (AMT)
One weak component in AMT business plan is that it does not clearly defines the responsibility for implementation. A good business plan should be able to identify specific persons who would be responsible for accomplishing specific tasks. A task that does not have an individual to perform it would likely not be implemented.
Secondly, the plan does not show the innovation strategies. AMT operates in a technology industry, which is quite dynamic. New technologies are being innovated to suit customers’ preferences in this industry (Harper, 2014). However, AMT’s plan is not showing credible strategies the company is going to use to sustain its innovations to improve its products and services to remain in market.
Lastly, the plan does not show the market share AMT Company. This industry has many competitors as stated but in the plan, we have not been told the percentage share of the market that the company holds(Palo Alto Software, 2014). It is important for a business plan to gauge the size of the market, which the organization commands to assist in strategizing on how to expand into new markets.
d) How these business plans can be improved
A number of things ought to be done to make these two business plans to be more effective and appealing. First, there should be clear identification of the assumptions; this is very important since business plans are often wrong. Individuals who draw business plans are just human beings. They look into the future and guess the future performance basing on the present conditions (Kren, 2014).
It is likely that they may make wrong guessing that can mess the entire organization. In American management technology (AMT)’s plan, the only assumption mentioned is the turnover rate of the inventory which is projected to move from 5, 6, 7 and 8 turns. However, in Mike’s trucking company plan, there are no assumptions mentioned.
Another improvement that should be done on these business plans is to make them more specific so that one can be able to track results against plan (Wassinger & David, 2011). It is important that any business plan must include tasks, deadlines, forecasts, dates, budgets, metrics, graphs and other measurable components. Good planning should answer questions such as what, when, who and how much (Wassinger & David, 2011). This leaves the readers with no doubt because they can read and comprehend everything.
In both business plans, there is no thorough analysis of the competitive forces. A good business plan should heavily focus on the strength and weaknesses of the competitors (Wassinger & David, 2011). In fact, both AMT and Mike’s trucking companies operate in a competitive industry. Therefore, the biggest threats to their survival are their competitors. However, their plans did not analyze the competitive forces effectively. These plans should examine the competitive advantages of their competitors to come up with counter strategies to overcome the competition. The plan should try to deduce how their competitors would evolve both in the medium and long-term duration. This would enable the organization to develop its own competitive strategies and survival tactics.
Another thing that should be considered in these plans is good understanding of the clients. Any business organization should be in a position to understand the exact needs and preferences of the clients it serves (Kren, 2014). The two plans should show the current and anticipated clients needs and behavior. This would help the companies to concentrate on products and services that satisfy their clients fully. Moreover, the plans should show how the needs and behavior of the clients might change in future. Knowing the future trends is very important because it aids in prior planning on what kind of the products that should be manufactured and the costs involved serving the customers well.
Finally, these plans can be nourished by drawing reviews that would enable frequent reviews to check progress. This implies that planning and review should be locked together for a successful and effective implementation (Harper, 2014). There should be review plan on every component of the business plan implementation. During the process of reviewing, the management would be able to identify areas of weaknesses and correct them in time to steer progress.
e) Challenges faced and their solutions
One of the challenges faced in preparing the business plan for Mike’s trucking service is predicting the future performance of this company. This is because this company had only operated for only one year and had no vast past records which the future projections could be based on (Palo Alto Software, 2014). In other words, this plan is unrealistic because there is more of guesswork that accurate prediction. One best solution to this challenge is to have a review plan that can be used to monitor the performance progress (Harper, 2014). When the reviewing process is done regularly, it would be easy to adjust and direct the implementation process towards the goals.
The second challenge is that both these firms operate in technology industry an industry that is known for rapid changes. Technology is changing very fast, therefore any firm that is technology oriented is supposed to respond quickly to the changes in the market, products or services (Palo Alto Software, 2014). When drawing these two plans, it was actually a challenge to devise a mechanism that would enable the two firms to adjust faster with the changing environment. Every year, there are new hardware or software devices developed in the computer industry, thus firms like AMT should be able develop other sophisticated products to satisfy the consumers to remain competitive. The solution to this challenge is that both Mike’s trucking company and AMT should set an innovating team to concentrate on researching, innovation and nurturing creativity (Kren, 2014).
The third challenge that was faced in drawing these two business plans was how to carryout the pricing process. Pricing is the act of giving the products or services their prices that would be charged to customers (Kren, 2014). The two companies would offer differentiated products and these products tend to have different manufacturing costs. The costs of the materials tend to vary with time; this poses uncertainty when it comes a time of pricing. Therefore, projecting future prices of the goods and services was a bit hard and challenging. This was coupled with the strategies that the competitors used to capture the market (Palo Alto Software, 2014). Some competitors in the trucking industries are well established hence, they take advantage of economies of scale and price their commodities at cheaper prices. This forces young company such as Mike’s trucking company to reduce their profits margins to remain in market. One solution to the pricing challenge is to outsource the raw materials from suppliers who are near to avoid many transport costs (Harper, 2014). Moreover, the company should try as much as possible to be efficient in its operation by using modern equipments to reduce wastes. This would lead to minimization of the costs and maximization of the profits; they would price their commodities at competitive prices with their competitors.
f). Lessons learnt
A number of lessons arose during the preparation of the two business plans. First, before the process of making a business plan, one should carry out a thorough research of the industry in which the firm intends to operate (Harper, 2014). This would enable the planner to know the competitors in that industry, size of the market, the capital required to operate comfortably, the personnel needed and the trends of that industry.
Secondly, when one intends to prepare a business plan of a particular organization, the planner should navigate in the historical records and mine important data that would aid in making measurable variables that would lead to accurate future projections (Kren, 2014).
It is hard to make future prediction like in Mike’s trucking company because there were little historical records. However, those organizations that have been in operation for many years, their past records can help greatly in determining the future of the company.
The third lesson is that for a firm to perform well, it must concentrate on addressing the preferences of customers. The products manufactured or the services offered must be customer oriented (Harper, 2014). Firms should design and adjust products and services that aim to quench their customers’ curiosity. The customers must find them satisfying and easy to find. Thus, when preparing a business plan, the planner must try to include techniques the firm would use to create the products that are more appealing to customers to make them come for more.
Another lesson in creating a business plan is that one should be able to identify the risk factors that affected the business in the past, present and things that would likely affect the firm in future. Accurate prediction of the likely risks would enable the planner to devise measures to cushion the firm in case they occur (Kren, 2014).
The planner should look in both the internal and external environment of the firm in order to exhaust all the risks that might affect the organization.
g.) Competencies demonstrated
In preparing these business plans, the planners demonstrated analytic competencies. This is shown when they prepared various measureable variables in both tabular and graphical form. They used the given data to insert in the mathematical formulae to calculate the ratios to tell the future performance of the companies. This reveals that they demonstrated analytic competencies. Another competency that was demonstrated is management competency. They tried to explain how the firms ought to be managed to achieve the projected results. For example, the act of proposing the use of part-time personnel rather than full time in Mike’s trucking company was meant to reduce the costs and maximize the income. This is a management skill and the planners of these business plans used it. Other competencies include accounting, computing and communication.
Any operating business firm should have a business plan which act as a guide on how it should operate. Business plans enable firms to remain focused on their goals and finally they end up achieving them or reaching close to the targets. Therefore, it acts as a compass direction to the management of any organization. Most famous business firms around the world have their own business plans and it is most likely that they adhered to them to rise to the level where they are now. However, those firms that do not have good plans end-up finding themselves in trouble because of poor management. Mike’s trucking company and American Management technology firms decided to draw-up business plans like any other firms to operate basing on these plans. These plans would be their road maps as they carry out their operations; therefore, business planning is an important element in the management function and should be done regularly to adjust some variables according to the changes in the environment.
Harper, S. C. (2014). Rising above the turbulence. Industrial Engineer: IE, 46(4), 34-38.
Kren, L. (2014). Tracking Value Created by Efficiency Improvements in a Traditional Overhead Cost Management System. Engineering Management Journal, 26(1), 3-7.
Palo Alto Software (2014).General Freight Trucking Business Plan. Retrieved from http://www.bplans.com/general_freight_trucking_business_plan/executive_summary_fc.php