Business Plan

Format and Contents

Contents of Business Plan
 Executive summary
 Industry and Company and ts products /Services
 Market Research and Analysis
 Economics of the Business
 Marketing Plan
 Design and Development Plans
 Manufacturing and operations plan
 Management Team
 Overall Schedule
 Critical risk problems and assumptions
 Financial Plan
 Proposed Company offering
 Appendices
Executive Summary
 Description of the Business Concept and the
Business
 Opportunity and strategy
 Target market and projections
 Competitive advantage
 Costs
 Sustainability
 The Team
 The Offering - Finance needed (Debt equity and
your contribution)
Industry ,Company and
Product/Service
 The industry current state,
 size,
 growth
 competitors,
 new product/devp,
 environmental profile –energy
intensity, supply chain, waste, green
technology –carbon credits CER)
Company and the Concept
 Company and the Concept –
 present biz, products service
offered /will offer,
 background of growth and promoters
involvement,
 prior sales and profit performance or
discuss losses and why
 and improvements done or envisaged
Product or Service
 Product and or service – describe of new product
service ,
 application of its use ,
 delivery system
 unique features how they add value, differentiation from
those current available,
 possible drawbacks,
 present state of development,
 first mover of head start advantage
 any features which give you unfair advantage over
others like patents, trade secrets or proprietary
features,
 opportunities of expansion of product lines or related
products.
Entry and Growth Strategy
 Entry and growth strategy – Key success
variables in mktg plan
 innovative product,
 timing advantage,
 marketing approach,
 pricing ,
 channels of distribution
 advertising and promotion
Market Research and Analysis
 Customers
 Market size and trends
 Competition and competitive edges
 Estimated market share and sales
 Ongoing market evaluation
Customers
 Who are they? Classified by groups segments-
common identifiable characteristics
 Where are they? Segment and region
 How they buy (retail /wholesale), reached and
receptiveness?
 Where buying decisions are made and length of
decision cycle, customers purchase process,
basis of decisions (price, quality timing, delivery
training, service personnel, contacts, political
pressures) and can they change current buying
decisions?
Customers(2)
 What orders contracts or letters of
commitment or potential customers
you have in hand?
 What you are doing to overcome
negative customer reaction?
 If in existing business , current
customers and sales trends
Market Size
 Five year projections of size and your share,
by segment, region or country for product or
service
 Potential annual growth for at least 3 years
 Major factors for market growth ( industry
trends, socio economic trends, govt. policy,
envrt. impact, population shifts)
 review previous trends
Competition and Competitive
Edge
 Realistic SWOT of Competitors, assess
substitute and alternatives ,list of suppliers
of these
 Compare competing and substitute products
or services on market share, price ,quality,
performance , delivery, timing service,
warranties, other features
 Current advantages and disadvantages of
these products
Competition and Competitor’s
Edge
 Knowledge of competitors actions that could lead to
improved products (R&D)
 Are they awake or asleep?
 SWOT of competing companies their market share sales
and distribution
 Financial position ,costs and profitability of competitors
 Who are service providers
 pricing, performance ,cost and quality leaders-why co
exiting or entered the business
 Discuss 3-4 key competitors and why customers buy from
them
 What you know of competitor’s operations
Economics of the business
 Gross and operating margins
 Profit potential and durability
 Fixed variable and semi variable costs
 Cost to breakeven
 Time to reach positive cash flow
Marketing plan
 Overall marketing Strategy
 Pricing
 Sales and tactics
 Service and warranty policies
 Advertising and promotion
 Distribution
Design and development plan
 Development status and tasks
 Difficulties and risks
 Product improvement and new product
 Costs
 Proprietary Issues
Manufacturing and Operation plan

 Operating cycle
 Geographical allocation
 Facilities and improvements
 Strategy and Plans
 Regulatory and Legal teams
Management team
 Organisation
 Key management personnel
 Management Compensation and Ownership
 Other investors
 Employment and other agreements and stock
options and Bonus Plan
 Board of Directors
 Other shareholder’s rights and restrictions
 Supporting professional advisers and services
Overall Schedule
 A schedule that shows the timing and
interrelationship of the major necessary to
launch the venture and realise its objectives.
 Cash conversion cycle will underline key
inputs
 Deadlines indicated
 Indicates to investors your depth of planning
and resource use
 Indicate methods of calculations
Critical Risks Problems and
Assumptions

 Demonstrate that you have thought out

and can handle them
 Description of risks implicit in plan
 Assumptons- use objectivity to deal with it
– sales projections, orders
 Consequences of adverse outcomes –
industry, company, personnel, product,
market appeal
 Unstated negative factors of investors
Contingencies – Indicate critical
ones
 Running out of cash before orders come in
 Price cutting by competitors
 Potentially unfavorable industry trends
 Costs excess of estimates
 Sales projections not achieved’
 Unmet product development schedule
 Difficulty in procuring long lead items
 Difficulties in obtaining bank credit
 Increase in R&D costs
 Running out of cash after orders come in
Financial Plan -Best Estimate of
Reqt.
 Indicate venture’s potential and timetable for
financial viability
 Operating plan for fin mgt using fin benchmarks
 Prepare exhibits
 Use three year income statements and
balance sheets and break even analysis. For
cash flow statement use cash system instead of
accrual system
 Give assumptions behind -sales levels, growth,
inventory requirements, cash balances,
operating and cash conversion cycles
Fin Plan (2)
 Proforma income statement – plan for profit
indicates potential fin. feasibility of the venture.
 Initially, level of profits cannot finance operating
assets and cannot match the actual cash flow
on a short term basis, hence a forecast of cash
needs should take care of such conditions is
recommended.
Fin Plan (3)
 Proforma balance sheets are used to
detail the assets required for the
projected level of operations and how
they will be financed (liablilities)
 Indicate projected debt equity ratios,
working capital, current ratios, inventory
turnover within the limits required to
justify future financing
Financial Plan (2)
 acceptable limits to justify future financing
 Break even chart showing level of sales that
will cover all costs including those that vary
with production and those that do not
 Income statements -In Proforma
statements fully discuss bad debts,
discounts, assumptions for sales expenses,
general and administrative costs
Fin Plan(2)
 ,show effect of sales reduction say 20%,
learning curve and level of productivity
snesitivity of profits to risks
 Prepare Balance sheets, cash flow analysis,
Break even charts ,cost control measures
and budget overrun
 Highlight important conclusions, including
maximunm amount and timing of cash
required , amount of debt and equity
needed, how fast debts will be repaid
Financial Plan
 Actual Income Statements and balance
Sheet
 Proforma Income statements
 Proforma Balance Sheets
 Proforma Cash Flow Analysis
 Breakeven Chart and Calculations
 Cost control
 Highlights
Proposed Company offering

 Amount of money being sought

 Nature of security offered to investors
 Summary of how the investor can expect to
achieve his targeted rate of return
 Terms for financing your company spelt out here

 Description of Uses of Capital

 Desired Financing –how much
Proposed Company Offering
 Offering – common stock, convertible,debentures,
debts with warrants, debt plus stock,unit price, total
amount of securities (if not common , interest
rate,type,maturity and conversions conditions,
percentage others can hold before and after
conversion, private placement –restrictred securities
for a period of time
 Capitalisation – current and proposed (post offfering
number of outstanding shares and how the holding
will change after on completion of fnancing),
authorised and issued capital, stock options
Offering (3)
 Use of funds – how capital raised will
be used- R&D,capital eqpt, marketing ,
working capital
 Investors Return- Indicate how your
valuation and proposed ownership
pattern will result in in desired rate of
return for investors whom you have
targeted
Appendices
 Information too extensive in the body but necessary
Product specification
Photos
List of references
Suppliers of critical components
Special location factors
Facilities
Technical analysis
Consultant reports
Critical regulatory approval or licences