Business Plan and Business

¶ … Federal Reserve Bank and the Importance of a Business Plan This paper provides a discussion concerning the role of the Federal Reserve Bank and why it is important for the American economy, followed by a description of the essential components of a business plan and financial statement and how these contribute to corporate success. Finally, a summary of the research and salient findings concerning the Federal Reserve Bank and the importance of a business plan and financial statements to corporate success are presented in the conclusion.

The Role of the Federal Reserve Bank and why it is necessary for the American economy The central bank of the U.S. is the Federal Reserve System which is tasked with providing five basic functions that are necessary for the American economy as follows: Conducts the nation's monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy; Promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S.

and abroad; 3. Promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole; 4. Fosters payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments; and, 5. Promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and the administration of consumer laws and regulations (Overview of the Federal Reserve System, 2016, pp. 1-2).

The foregoing activities have assumed new importance and relevance in recent years for the American economy, especially with respect to the private sector. For instance, Taylor (2008) reports that, "[Because] the central bank's interest rate settings are following regular rule-like responses to inflation and real GDP, the private sector has taken these responses into account in projecting future variables and in developing their own rules of thumb for making decisions" (p. 406).

While the "Fed's" activities are important to the private sector, so too is the need for a business plan and financial statements as discussed below. How the essentials components of a business plan and financial statements aid in a company's success Although business plans differ in content and structure, eight essential components of a business plan are: (1) an executive summary, (2) description of the business; (3) description of the products or services; (4) sales and marketing; (5) operations; (6) management team; (7) development; and (8) financial summary (Ciccarelli, 2015).

Companies will be more successful if they complete a business plan because it "provides a roadmap to run a business, allowing the business operator to make detours, change directions or alter the pace which was set in starting or running the business" (Fallek, 1998, p. 13). In sum, a business plan provides business owners with a flexible framework in which to address the wide range of factors that contribute to organizational success.

Likewise, according to Shim and Siegel (2007), financial statement analyses can aid in a company's success by identifying areas requiring audit attention such as dramatic changes in expenditures in various accounting categories. For instance, "If promotion and entertainment expenses to sales last year was 2% and this year shot up to 16%, the auditor would want.