MODULE 3C: BUSINESS PLAN

LEARNING OBJECTIVES:

• The Business Plan

• Perspectives that should be considered in Preparing Business Plan
• Information Needs
• Outline of the Business Plan
• Critical Issues for Environmental and
Industry Analysis
• Production Plan
• Why Some Business Plans Fail

THE BUSINESS PLAN

The Business Plan is a written document prepared by the

entrepreneur that describes all the relevant external and internal
elements involved in starting a new venture.
It is often an integration of functional plans such as marketing,
finance, manufacturing, and human resources.

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• It addresses the integration and coordination of effective
business objectives and strategies when the venture
contains a variety of products and services.
• It also addresses both short-term and long- term decision
making for the first three years of operation.
• Thus, the business plan—or, as it is sometimes referred to, the
game plan or road map.

THREE PERSPECTIVES THAT SHOULD BE

CONSIDERED IN PREPARING THE PLAN
• The Perspective of the Entrepreneur
• Marketing perspective
• The entrepreneur should try to view his or her business
through the eyes of the investor.

HOW DO POTENTIAL LENDERS AND INVESTORS

EVALUATE THE PLAN

• It is conceivable that the entrepreneur will prepare a first draft

of the business plan from his or her own personal viewpoint
without consideration of the constituencies that will ultimately
read and evaluate the plan's feasibility
• Customers may also want to review the plan before buying a
product that may require significant long-term commitment,
such as a high-technology telecommunications system

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• Another group that may evaluate the plan is the potential
suppliers of capital. These lenders or investors will likely
vary in terms of their needs and requirements in the business
plan
• Investors, particularly venture capitalists, have different
needs since they are providing large sums of capital for
ownership (equity) and the expected cashing out within five to
seven years

INFORMATION NEEDS

• Upside-Down Pyramid Approach in Gathering Market

Information

THE ENTREPRENEUR MAY NEED OPERATIONS

INFORMATION ON THE FOLLOWING:

• Location
• Manufacturing operations
• Raw materials
• Equipment
• Labor Skills
• Space
• Overhead

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Before preparing the financial plan section of the business plan,
the entrepreneur will need to prepare a budget that includes a
list of all possible expenditures in the first year and a list of all
revenue sources including sales and any external available funds.

• Capital Expenditures
• Direct Operating Expenses
• Cash expenditures for items

OUTLINE OF A BUSINESS PLAN

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SAMPLE INTRODUCTORY PAGE

CRITICAL ISSUES FOR ENVIRONMENTAL AND

INDUSTRY ANALYSIS

DESCRIBING THE VENTURE

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PRODUCTION PLAN

MEASURING PLAN PROGRESS

• Inventory Control
• Production Control
• Quality Control
• Sales Control
• Disbursements

WHY SOME BUSINESS PLANS FAIL

• Goals set by the entrepreneur are unreasonable

• Goals are not measurable
• The entrepreneur has not made a total commitment to the
business or to the family
• The entrepreneur has no experience in the planned business

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• The entrepreneur has no sense of potential threats or
weaknesses to the business
• No customer need was established for the proposed product or
service