ASPiRiN Methodics of Business-Planning

Abstract

Business plan development is the basic method to describe decisions made before starting up a certain business. The estimating of the planned business is realized, and the decision about investment or crediting of a certain business is made based on a business plan. Business plan is also applied to perform the planned development of an already existing enterprise.

There are many different methods and standards of business plan creation. However, they are directed mainly to the specialists in the field of economics and business with a certain experience, specific knowledge, and improved abilities to work with information. Small business representatives usually do not have these knowledge and abilities. Consequently, we have the majority of small enterprise functioning without a business plan.

The result of it is that the small business acts “up to the situation” and does not apply the existing economical science achievements in the field of decision-making. It often happens that small and micro-business owners consider scientific methods too complicated and difficult to understand and apply to develop their business.

The researches in this field use the principles of a rational approach and do not take into account the peculiarities of making decisions by those who would work with such business plans.

The purpose of our research is to create a methodic of the business planning, which would, from the one hand, be efficient and based on the latest scientific achievements, and, from the other hand, would have to be so easy and clear that it might be used by an ordinary small business representative; at the same time it might be applicable for the current estimation and planning, and it must also have the algorithm of business plan making based on all of the current international standards.

We can confidently affirm that both creating and applying of a business plan have a general feature—they are developed and used by people. Whereby it is the small business that is characterized by a low acquirement level of people and the impact of their acquirement level onto the business planning result.

Having used the achievements of the modern science such as economics (The Bounded Rationality Theory by H. Simon) and psychology (The Magical Number Seven Plus or Minus Two by G. Miller) and also the term of cognitive load (J. Julien), we can answer the questions of differences and formulate the criteria following to which would allow to develop a general approach to the creation and implementation of business plans making it possible for the small business to work with this instrument efficiently.

The Bounded Rationality Theory tells us that though a person makes rational decisions, he does it within certain limits of intellect, attention, willpower, and self-interest. At that, the supposition that the smaller the organized business is, the more limits a person has seems to be quite fair.

H. Simon describes the limits, but tells nothing about how they work. G. Miller though defines the quantitative parameters and the functioning principles of human attention. J. Julien, in his turn, represents us the qualitative estimation difficulties of the human comprehension.

The next work algorithm is proposed:

1. Presentation of the business “nucleus”—the obligatory elements with the mnemonic abbreviation ASPiRiN

2. Express estimation of each element working-out level: (1) is not reasoned out, (2) is reasoned out, (3) is written down, and (4) is described according to the methodic.

3. Based on the express estimation, the further plan is created, depending on the entrepreneur’s purposes: (a) level 2 is sufficient for the micro-business; level 3 is sufficient for the small business; and level 4 is sufficient to apply the documents to the investor or crediting organization.

In our research the basic existing methods are chosen, which composes the notional base for small and micro-business development at the level of the increase of the made decisions efficiency. The algorithm presented hereby might be applied both for individual work of the small business representatives and for the work of business consultants who use the scientific approach.