Business Plan Unit 9

What Is a Business Plan?

Business Plan
A written document that describes in detail how a new business is
going to achieve its goals…A business plan layout a written plan
from a marketing, financial and operational viewpoint..
A business plan is a written description, typically 25 to 35 pages
long, that describes what a new business idea/plan to accomplish.
Dual-Use Document
For most new ventures, the business plan is a dual-purpose
document used both inside and outside the firm.
Why Reads the Business Plan—And What Are They
Looking For?
There are two primary audience for a firm’s business plan
Audience What They are Looking For
A Firm’s Employees
A clearly written business plan helps the employees of a firm to operate and move forward
in a consistent and purposeful manner.

Investors and other external stakeholders

A firm’s business plan must make the case that the firm is a good use of an investor’s funds
or the attention of others.

Benefits/Reasons for Writing a Business Plan

Initial planning document for a new business.
Serves as a tool to communicate the idea of the new venture to
potential investors, bankers, key employees.
Serves as a record to monitor and compare results.
To obtain bank financing.
To obtain investment funds.
To establish strategic alliances.
To obtain initial contracts.
To attract key employees.
To motivate and focus your management team
Questions a start-up business plan should answer
The plan is meant to be read by potential finance providers (banks etc) or business
owners /shareholders. So it ought to provide convincing and realistic answers to
questions such as:
•What is the business idea or opportunity?
•What is the product and how is it different or unique?
•What is the target market segment and who are the potential competitors?
•How large is the target market and is it growing?
•Who are the customers; how much will they buy and at what price?
•What will it cost to produce and sell the product?
•Can the product be made and/or sold profitably?
•At what stage will the business break-even and what are the likely profits?
•What investment is required to launch and establish the business?
•Where will the money come from?
•What are the main risks facing the business and how to handle them?

Types/ level of Business Plans

What Should a Business Plan Contain?

1.Title Page
2.Table of Contents
3.Executive Summary and Fact Sheet
4.Body of the Plan
The Company description
The Product/Service Offering
Industry Analysis
Market Analysis
The Marketing Plan
The Production/Operations Plan
The Management Team
Implementation Schedule and Risks Associated with the Venture
The Financial Plan
Exit Plan
5.Appendices

Section 1: Executive Summary

Executive Summary
The executive summary is a short overview of the entire business plan
It provides a busy reader with everything that needs to be known about the new venture’s
distinctive nature.
An executive summary shouldn’t exceed two single-space pages.
Section 2: Company Description
Company Description
The main body of the business plan beings with a general description of the company.
Items to include in this section:
Company description.
Company history.
 Mission statement.
Products and services.
Current status.
Legal status and ownership.
Key partnerships (if any).
Section 3: Industry Analysis
Industry Analysis
This section should being by describing the industry the business will enter in terms of its
size, growth rate, and sales projections.
Items to include in this section:
Industry size, growth rate, and sales projections.
Industry structure.
Key success factors.
Long-term prospects.
Section 4: Market Analysis
Market Analysis
The market analysis breaks the industry into segments and zeros in on the specific segment
(or target market) to which the firm will try to appeal.
Items to include in this section:
Market segmentation and target market selection.
Buyer behavior.
Competitor analysis.
Section 5: Marketing Plan
Marketing Plan
The marketing plan focuses on how the business will market and sell its product or service.
Items to include in this section:
Overall marketing strategy.
Product, price, promotions, and distribution.

Section 6: Management Team and Company Structure

Management Team and Company Structure
The management team of a new venture typically consists of the founder or founders and a
handful of key management personnel.
Items to include in this section:
Management team.
Board of directors.
Board of advisers.
Company structure.
Section 7: Operations Plan
Operations Plan
Outlines how your business will be run and how your product or service will be produced.
Items to include in this section:
Business location.
Facilities and equipment etc.

Section 8: Product (or Service) Design and Development Plan

Product (or Service) Design and Development Plan
 If you’re developing a completely new product or service, you need to include a section that
focuses on the status of your development efforts.
Items to include in this section:
Development status and tasks.
Challenges and risks.
Intellectual property.

Section 9: Financial Projections

Financial Projections
The final section of a business plan presents a firm’s pro forma (or projected) financial
projections.
Items to include in this section:
Sources and uses of funds statement.
Assumptions sheet.
Pro forma income statements.
Pro forma balance sheets.
Pro forma cash flows.
Presenting the Business Plan to Investors
The Oral Presentation
The first rule in making an oral presentation is to follow directions. If you’re told you have
15 minutes, don’t talk for more than the allotted time.
The presentation should be smooth and well-rehearsed.
The slides should be sharp and not cluttered.
Questions and Feedback to Expect from Investors
The smart entrepreneur has a good idea of the questions that will be asked, and will be
prepared for those queries.

Presenting the Business Plan to Investors

Twelve PowerPoint Slides to Include in an Investor Presentation
1. Title Slide
2. Problem
3. Solution
4. Opportunity and target market
5. Technology
6. Competition
7. Marketing and sales
8. Management team
9. Financial projections
10. Current status
11. Financing sought
12. Summary

Unit 9. Reviewing Business Plan ( Project Appraisal)

It is very essential to review a business plan. It si to ensure that all the relevant sections and aspects
are covered .Plans can be broadly reviewed from three aspects.

1.Business Model Review- Business model is basically the design of a business. Business plan must
be reviewed from various aspects of business model which include

a. Customer-Has the business plan been written for the company’s target customers.

-Have their characteristics ( buying habits, lifestyle, spending patterns, geographical locations etc.)
been considered while developing the plan.

-b. Value proposition

-Does it incorporates the values being created and delivered to the customers.

-Has the plan been developed from the customer’s perception of value or the company’s perspective
of value.?

c. Communication channels- does the plan incorporate all possible communication channels to
reach out to its customers?

Does the plan enable effective use of those proposed communication channels.

d. Distribution Channels- has the plan considered the possible channels of delivering the company’s
products services?

e. Resources.-Does the company have adequate resources to meet its goals and objectives?

Does it need any additional resources to cater to its customer needs?

f. Activity-Does the paln include long term and short term activities required to meet customer
expectations.

g. Management- Has the business plan considered the interest of the people in key roles in the
management.?

Are the roles and responsibilities clear among various levels of management.?

2.Financial Review-
From financial viability of the enterprise following aspects need review
a. Fixed Capital- the requirements of fixed capital in land building etc will vary in different
enterprises depending on types of operation, scale of operation, nature of business etc. All
items and aspects relating to such assets have to be considered in a plan.
b. Working Capital – is needed for the day to day operations. This involves a cycle as cash is
converted in inventories, then to receivables and receivables to cash. Lack of this would
adversely affect the organization.
C Capacity Utilization- It indicates activity level of firm. Plan should consider the capacity
utilization of the firm at the required level of depth.
d.Breakeven Analysis- A point where a company neither makes profit nor loss. Business
plan should enable the firm to determine the point at which breakeven will happen.
3.Technical Feasibility Review---Plan should be reviewed from feasibility point of view. This
will help enterprise to determine whether it is adequately equipped to deliver the goals and
objectives..Few aspects which are considered in this section are.
-Know –how.. Is the know how present within the firm or should it be procured fom
outside.
-Collaboration..if it requires collaboration,have the terms and conditions been considered
for the same.
Location- Does the business depend on the geographical location of the firm.
-Inputs to the firm..Have inputs like water, power ,electricity etc. ben considered.
Work force- Is the firm equipped with adequate workforce to handle the proposed
volumes.?
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