CHAPTER TWO

Business Plan (BP)

A Plan is a Bridge Which Takes us from
the Present to the Future
 In this chapter

 Three Basic Topics

 Creativity and idea generation
 Feasibility Study
 Business Plan

2
 Introduction
 For Engineers, you have many businesses to
choose. You can be a Consultant, a Contractor,
electromechanical installation company, a
Manufacturer, a Specialist etc…

 Without a Business Plan it’s like driving a car

at night without a head lamp/light!

3
 Introduction
 Business idea is like saying "Let’s GO“
But go where, why, how, when, who, what if.
 With a Plan, at least we know in the beginning:
 How to do what we want to do,
 How much money required,
 The risks faced us in journey ,
 The benefits and challenges,
 Who to do what, and try to provide answers to problems not yet
faced.
Source of business ideas : business ideas has its own source
depend on the existed situation of social life and styles.
That sources are may be obtain from magazine, newspaper, radio,
TV, computation in life, favorable and unfavorable condition, 4
YouTube, etc
Business

Creativity

Feasibility Business
Analysis Plan

5
 Creative Thinkers are
 Always ask, “Is there a better way?”
 Challenge custom, and tradition
 Play mental games
 Realize there may be more than one “right” answer
 See problems as springboards for new ideas
 Relate seemingly unrelated ideas to a problem
Barriers to Creativity
 Focusing on “being logical”
 Blindly following the rules
 Constantly being practical
 Becoming overly specialized
 Fearing mistakes and failure 6

 Believing that “I’m not creative”

 To Enhance Individual Creativity
 Allow yourself to be creative
 Give your mind fresh input every day
 Observe the products/services of other companies, especially
those in completely different markets
 Listen to customers
 Read books on stimulating creativity
Three sources of new business opportunity.
1. Changing environmental trends
 Economic trends
 Social trends
 Technological advances
 Political and Regulatory changes
2. Unsolved problems
3. Gaps in the marketplace
7
 Feasibility Analysis

 Entrepreneurs do not lack creative ideas.

 Is a particular idea a viable foundation for
creating a successful business?
 Feasibility study addresses the question:
“Should we proceed with this business idea?” or
not?

8
 Feasibility Study
 Not the same as a business plan.
 An investigative tool /assessment methods/ of the selected
ideas.
 Serves as a filter, screening out ideas that lack the potential
for building a successful business before an entrepreneur
commits the necessary resources to building a business
plan.
Element of feasibility analysis
Product /Service
Feasibility
Financial
Feasibility 9
 Industry and Market Feasibility Analysis.
Industry
Two areas of focus:
1. Determining how attractive an industry is overall as a “home”
for a new business.

2. Identifying possible niches a small business can occupy

profitably.

10
 Product or Service Feasibility Analysis
 Determines the degree to which a product or service idea appeals to
potential of customers and identifies the resources necessary to
produce it.
Two questions:
 Are customers willing to purchase our good or service?
Can we provide the product or service to customers at a profit?
 Product desirability
Primary research –
Secondary research.  Is the product desirable
and serve a need in the
 Prototypes marketplace?
 Is it reasonable?

.11
Financial Feasibility
Analysis
 Capital requirements – must have an
estimate of how much start-up capital is
required to launch the business.
 Estimated earnings – forecasted income
statements.
 Return on investment – combining the
previous two estimates to determine how
much investors can expect their
investments to return.

12
 Concept Test
A concept test is a preliminary description of a product
or service idea to industry experts to get their feedback
Business Prototyping

 Entrepreneurs test their business models

on a small scale before committing
serious resources to launch a business
that might not work.

13
 The Business Plan
Introduction.
For you no one can do it better than you!
 In working out your own project, you have the opportunity to prepare
a sound business plan based on data which you yourself have
collected and in which you have the utmost confidence.

 A written summary of:

 An entrepreneur’s proposed business venture

 Its operational and financial details
 Its marketing opportunities and strategy of business.
 Its managers’ skills and abilities and more…
 A written document that carefully explains every aspect of a new
business venture
so
Inside the firm, the business plan is used to develop a road map
Outside the firm, the business plan introduces potential investors and
14

other stakeholders to the business opportunities

 Why do a Business Plan?
Your own thinking process is solidified through the planning process.
 The planning outline provided in this guide leads you through a
series of questions and issues that you should consider when
thinking about your business.
 Remember that you are an investor in your own business.

 The business plan is a communications tool to inform and influence

the reader towards some action – providing a loan, extending credit
or investing in your business.

15
 Reasons for Writing a Business Plan
Two main reasons to write a business plan:
Internal— Forces the founders of the firm to think through every
aspect of their new venture. It is a road map for taking the business in
a particular direction. It is also a litmus test for the business
External— Communicates the merits of a new venture to outsiders,
such as investors and bankers.
Who reads the business plan and what are they looking for ?
Two primary audiences
 Investors and other stakeholders
 Investors, potential business partners, potential

customers, grant awarding agencies who are being

recruited.
 Firm’s employees .16

 Looking for the vision and future of the firm

 Always consider …
 Structure and style of the business plan
 Content of the business plan
 Measuring the business plan against your personal goals
and aspirations
 Recognizing that elements of the plan may change
Why Take the Time to Build a Business Plan?
Although building a plan does not guarantee success, it does
increase your chances of succeeding in business.
 A plan is like a road map that serves as a guide on a
journey through unfamiliar, harsh, and dangerous territory.
Don’t attempt the trip without a map!
17
 The Business Plan:
Essential Functions
1. Guiding the company by charting its future course and defining
its strategy to follow.
2. Attracting lenders and investors who will provide needed capital.
3. Demonstrating that the entrepreneur understands the business
venture and what will make it succeed.
4. Increase chance of succeed in business by moderating risk.
5. Make easy the work when it is according to the manner.
6. It is also serve as litmus test for the business to GOAL.
…etc.

18
 A Plan Must Pass Three Tests
 Reality Test - proving that :
A market really does exist for your product or
service.
 You can actually build or provide it for the cost
estimates in the plan.
 Competitive Test - evaluates:
 A company’s position relative to its customers.

 Management’s ability to create a company that

will gain an edge over its rivals.
 Value Test – proving that:
 A venture offers investors or lenders an
attractive rate of return or a high probability of
repayment 19
 Features versus Benefits
 Feature – a descriptive fact about a product or service
 Benefit – what a customer/producer gains from the product or service
feature.
Key Elements of a Business Plan
 Title Page and Table of Contents
 Executive Summary
 Mission/vision Statements
 Business and Industry Profile
 Business Strategy
 Description of Products/Services
 Marketing Strategy
 Opportunity Analysis
 Description of Management Team
 Plan of Operation
 A Budget Plan 20