Definition

• A Business Plan (BP) can be defined as a document that describes an organization's current status and forecasts / plans for the growth in the times ahead.

• This can be from a quarter of an year to several years in the future.

Introduction

• The business plan is written document prepared by the entrepreneur that describes all the relevant external and internal involved in starting a venture. Entrepreneur should consult with many other sources in its preparation like lawyers, accountants, marketing consultants and engineers.

• Business plan could take more than 200 hrs to prepare but varies from person to person according to their knowledge and experience, with purpose about a new venture to a potential investor.

A“Business Plan” is nothing but a :->“Selling Document” that conveys the excitement and promise of your business to any potential backers and stakeholders .

Why ????

• The reason for compiling a business plan will be different for each situation:

• • If you are starting a new business you will require a plan to clearly assess every aspect of the business and show how it will succeed. Also helps to obtain capital for the venture.

• • If you are buying an already established business you will need to identify the strengths and weaknesses of the business to decide if you will be able to make it a success.

Reasons for Writing a Business Plan

To sell yourself on the business To obtain bank financing To obtain investment funds To establish strategic alliances To obtain initial contracts To attract key employees To assist in the completion of mergers and

acquisitions To motivate and focus your management team

CONTENTS OF A BUSINESS PLAN

INTRODUCTORY PAGE Name and address of business.  

Name(s) and address (es) of principals.

Nature of business. Statement of financing method. Statement of confidentiality of

report.

EXECUTIVE SUMMARY  Three to four pages summarizing the complete business Plan.

INDUSTRY ANALYSIS Future outlook and trends.  

Analysis of competitors.  

Market Segmentation. Industry forecasts.

DESCRIPTION OF VENTURE Product(s)  Service(s) Size of business. Office equipment and personnel. Background of entrepreneurs.

PRODUCTION PLAN Manufacturing process (amount subcontracted) Physical Plant. Machinery and Equipment. Names of Suppliers of raw materials.

MARKETING PLAN Pricing. Distribution. Promotion. Product forecasts. Controls.

ORGANIZATIONAL PLAN Form of ownership. Identification of partners or principal shareholders. Authority of principals. Management- team background. Roles and responsibilities of members of organization.

ASSESSMENT OF RISK Evaluate weakness of business. New technologies. Contingency Plans.

FINANCIAL PLAN Proforma income statement.  Cash Flow Projections.

Proforma balance sheet Break-Even analysis. Sources and application of funds.

APPENDIX (contains backup material)

•  

• Letters.

• Market Research Data.

• Leases or contracts.

• Price lists from suppliers.

How do you WRITE ???

• The business plan can take more than 200 hours to prepare, depending on the experience and knowledge of the entrepreneur as well as the purpose it is intended to serve.

• It should be comprehensive enough to give any potential investor a complete picture and understanding of the new venture and will help the entrepreneur clarify his or her thinking about the business.

• Many entrepreneurs incorrectly estimate the length of time that an effective plan will take to prepare. Once the process has begun, however, the entrepreneur will realize that it is invaluable in sorting out the business functions of a new venture. Each of the items in the contents of the business plan is explained in detail as follows.

INTRODUCTORY PAGE:

• This is the title page or cover that provides a brief summary of the venture and should include the following things:

• Name and address of the company.

• Name of the entrepreneur(s) and telephone number.

• Description about the company and also stating nature of business.

• Stating their financial requirements.

• A statement of the confidentiality of the report.

EXECUTIVE SUMMARY:

• This is prepared after total plan is written. This about 3 to 4pages in length, this summary should stimulate the interest of the potential investor.

• This highlight concise and convincing manner the key point in the business plan stating the nature of the venture, financing needed, market potential, and supports to why it will succeed.

INDUSTRIAL ANALYSIS:

• This reviews industry trends and competitive strategies. The industry outlook, including future trends and historical achievements, insight of new product developments in this industry.

• Competitor should be identified, with appropriate strengths and weakness described and how will it affect the new ventures potential success in the market.

DESCRIPTION OF VENTURE:

• It states the product produced by venture which includes patent, copyright, or trademark status. It also gives a brief idea where the business will be located including the construction of building, leased or owned.

• In description of venture the type of office equipment will be required whether it will be purchased or leased. He (entrepreneur) should also look at the management experience, stating their education, age, special abilities and interest.

PRODUCTION PLAN:

• This includes details of manufacturing process a product, which is very necessary.

• If the manufacturing is to be carried out in whole or in part by the entrepreneur, he or she will need to describe to physical plan layout: the machinery and equipment needed to perform the manufacturing operations: raw material and suppliers names, addresses, and the terms; costs of manufacturing and any future capital equipment needs. It should also include state subcontractors name and addresses; costs of subcontracted manufacturing; raw material required for manufacturing.

MARKETING PLAN: 

• The marketing plan represents a significant element in the business plan for a new venture.

• Marketing planning should be an annual activity that focuses on implementing decisions related to the marketing mix variables (product, price, distribution, and promotion).

• Like the annual budgeting cycle, market planning has also become an annual activity and should be incorporated by all the entrepreneurs, regardless of the size or type of the business. These marketing plans must be monitored frequently, especially in the early stages of start up.

ORGANIZATIONAL PLAN:

• The organizational plan describes the venture form of ownership i.e. whether it is proprietorship, partnership or a corporation.

• If the venture is a partnership, the term of partnership should be included, name of partners, term of agreement, specimen signatures of the partners etc. If it is a corporation venture than it is important to detail the shares of the stock authorized, share options, names and address, resumes of the directors and officers of the corporation.

• If it is an incorporation venture than it should state the principal shareholders and shares owned by them; type and number of shares stating voting or non-voting stocks have been issued, members of board of directors, check signing authority or control.

• The plan also states how many members are there in management team and their background, their roles and responsibilities stating their salaries, bonuses or other forms of payment for each members of the management team. This is also helpful to provide an organization chart indicating the line of authority and responsibilities of the members of the organization. This information provides the potential investor with a clear understanding of who controls the organization and how other members will interact in performing their management functions.

ASSESSMENT OF RISK:

• All ventures face some potential hazards, given the particular industry and competitive environment. An entrepreneur should make assessment of risk and prepare an effective strategy to deal with them.

• Even if these factors present no risks to the new venture, the business plan should discuss why that is the case. Contingency plans and strategies illustrate to the potential investor that the entrepreneur is sensitive to important risks and is prepared should any occur.

FINANCIAL PLAN:

• The financial plan should include proforma income statements, break -even analysis, proforma cash flow, proforma balance sheet, and proforma sources and uses of funds.

APPENDIX:

• It generally contains business plan generally back up material that is not necessary in the text of the document. Reference to any of the documents in the appendix should be made in the plan itself.

• Letters from customers, distributors or sub- contractors are examples of information that should be included in the appendix. Any documentation of information that is secondary data or primary research data used to support plan decisions should also be included. Leases, contracts or any others types of agreement that have been initiated may also are included in the appendix. It should also include price lists from suppliers and competitors may be added.

CONCLUSION

• A business plan is a crucial component for an entrepreneur. A business plan is presented to a bank to obtain funds in the initial stage of a project.

• It is a monetary rule that a business plan has to be presented to a bank before the release of funds by the financial institutions. Hence, business plan is a stepping- stone for an entrepreneur in the commencement of a project.

Conclusion……..The Last Words

Have a business plan that is simple to grab user / reader attention.

The simple rules and information can make a killer BP to turn heads and maximize business.