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The Business Plan for a Start-Up Title

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The Business Plan for a Start-Up A good understanding of the market is the basis for an effective business plan Before you start to plan for the business, you must clearly define business idea and have a good understanding of what you are getting into (in terms of the opportunities and threats in the intended market) and your capabilities (in terms of your strengths and weaknesses vis--vis potential competitors). Your knowledge of the market and appreciation of your own capabilities are extremely important in devising an effective business plan to penetrate and succeed in the market. Contecbiz BizPlan software is designed to help you plan for your business start-up with the aim to successfully compete for and penetrate the market, and to grow your business. The software helps you by guiding you in the process of formulating business strategies that are compatible with your capabilities and capitalizes on the market opportunities, while overcoming the market threats. Content The Executive Summary Business Plan Summary Profitability The Business Idea Analysis of the Market and Internal Capabilities Business Strategy Target Market Positioning Strategy Competitive Strategy Growth Strategy Marketing Mix Strategies Product/Service Pricing Distribution Promotions Projection of Resource Requirements Human Resources General Services Capital Assets Intangible Assets Profit & Loss Projection Cash Flow Projection Accounts Receivable Accounts Payable Net Cash Flow & Capital Business Start-Up Action Plan

The Executive Summary Keep your executive summary to maximum 2 pages Your executive summary summarizes the important features of your whole business proposal. The aim of the executive summary is to sufficiently interest parties who read it (e.g., potential partners and investors) so that they are willing to devote more time and effort to find out the details of your proposal and hence, read the rest of your business plan proposal. BUSINESS PLAN SUMMARY Business Idea & Uniqueness ATTRACTIVENESS Sizeable & Growing Market Gap Competitive Advantages & Internal Capabilities

Favorable Environment CHALLENGES Threats & Weaknesses

BUSINESS STRATEGY Competitive Strategy Growth Strategy

PROFITABILITY 1 Revenue (RevT) Gross Profit (GPT) $ % Operating Expenses (OEX) Asset Depreciation (DCA + DIA) Operating Profit (OP) Breakeven Revenue (BER) Breakeven Units (BEU) Operating Cash Flow (OCF) Capital Assets & Intangible Assets (CAT) + (IAT) Service Deposits (GSDT) Capital Investment (Cap) Return on Investment (ROIB) Payback Period (PP)

Year 2

The Business Idea A promising business idea is one that is unique in some important aspects For a start, describe what is your core business idea? More importantly, explain why your business idea is special or unique. A business idea that is unique in some important aspects is generally more promising. THE BUSINESS IDEA Core Idea

Uniqueness

Analysis of the Market and Internal Capabilities Knowing the market and your capabilities is critical for planning business strategies This section guides you in performing the analysis of the potential market segments for your products/services to identify the opportunities for your business idea and also the threats that you may face, and to assess your capabilities to capitalize on the market opportunities or overcome the threats, in order to succeed in the business. If you have identified more/less than 3 potential market segments, simply add/delete another column accordingly. MARKET & CAPABILITIES Size & Growth Market Gap Competitive Advantages Human Capital, Specific Assets, & Resources Opportunities: Environmental, Supply, and Industry Factors CHALLENGES OF SEGMENT Competitive Reactions Weaknesses Threats: Environmental, Supply, and Industry Factors Potential Market Segments 1 2 ATTRACTIVENESS OF SEGMENT

Business Strategy Target Market Choose your target market(s) to focus your resources and efforts From the potential market segments identified and evaluated above, you can now proceed to choose the target market segment(s) that you want to sell to. TARGET & RATIONALE Target Market Target Markets 2

Rationale

Business Strategy - Positioning Strategy Formulate positioning strategy in terms of product/service and price positions After selecting your target market(s), you should now decide on the positioning strategy in terms of the product/service position and the price level in each of these markets. The question here is how do you want your customers to perceive your products/services and hence, how do you create the desired customer perceptions of your products/services through the marketing mix strategies in products/services, pricing, promotions, and distribution strategies. Effective positioning leads to a higher perceived value of your product offerings. POSITIONING STRATEGY 1 Positioning Attributes Benefits to Customer Price Positioning Superior Value Delivery Target Market(s) 2 3

Competitive Advantages

Sustainable Competitive Advantages Unique Sales Proposition (USP)

Business Strategy Competitive Strategy Formulate your competitive strategy to penetrate and hold the target market This section helps you design strategies to enter and penetrate your target market and outsmart your competitors. The key questions you should think of while answering this section are: - How to compete successfully for the market that you target? - How to protect and hold on to your position against competition? STRATEGIC OBJECTIVES COMPETITIVE STRATEGY Target Market (1) Target Market (2) Target Market (3)

Market Entry and Penetration

Preemptive and Deterrence

Business Strategy Growth Strategy Plan to grow your business Your growth strategy guides you in increasing and expanding your business over the next 3 to 5 years. This section helps you identify potential strategies to grow your business. You can explore increasing market share in your targeted markets, developing new products for your targeted markets, introducing your products to new markets, or diversifying your business to venture into new markets with new products. GROWTH STRATEGY Market Penetration Year 1 Year 2 Year 3-5

Product Development

Market Development

Diversification

Marketing Mix Strategies Product/Service Formulate marketing strategy to be consistent with your business strategy You can now design your marketing mix strategy in terms of the product/service, price, distribution, and promotions strategies. It is extremely important that your marketing mix strategies are inline with your business strategy that you have formulated earlier in terms of target market(s), positioning, competitive and long term growth strategies. Design product/service offerings to meet the demand of each of the target markets This section guides you in designing your product/service offerings. For each of your target markets, you should identify and describe explicitly your core products/services, consider different product/service variations that maybe offered, and explore bundling different products together to sell as a package. If you have identified more/less than 5 product/service offerings or bundles for each target market, add/delete rows accordingly. PRODUCT/ SERVICE Core Products/Services Product/Service Presentation Product/Service Line Product/Service 1 Product/Service 2 Product/Service 3 Product/Service 4 Product/Service 5 Product/Service Bundle Bundle 1 Bundle 2 Bundle 3 Bundle 4 Bundle 5 Target Markets 2

Marketing Mix Strategies Pricing The pricing for your products/services must be consistent with your business strategy This section guides you in setting the prices for your product/service offerings that you have decided earlier. It is important that your pricing is consistency with your business strategy (i.e., product and price positioning, competitive, and growth, strategies), and acceptable by your target market(s). If you have more/less than 5 product/service offerings or bundles, add/delete rows accordingly. PRICING Unit List Price (P/ut) Unit Cost (COGS/ut) Var. (VC/ut) Product/Service Offerings 1 2 3 4 5 Product/Service Bundle 1 2 3 4 5 End-User Discounts (UD%) End-User Payment Terms Fix (FC/ut) Unit Profit Margin (GP/ut) (a) % (b) %

Marketing Mix Strategies Distribution Formulate channel strategy taking into account appropriation risks and/or agency costs Your distribution strategy should look at the best ways to reach your customers effectively and efficiently. This section guides you in deciding on the different distribution channels that you may use. DISTRIBUTION 1 Channel Strategy Target Markets 2

Rationale

Trade Discounts (TD %) & Payment Terms

Marketing Mix Strategies Promotions Plan for a cost effective and affordable promotions strategy This section guides you in planning how best to promote your products/services to your target market. Different communications objectives and target markets require different ways to promote. The challenge for a start-up, usually with limited resources, is to design the most cost effective and affordable way to promote to achieve the desired communication objectives, given the target market. Hence, always be mindful if you can afford the resources for any of the promotions activity considered. Specify the promotions mode for each communication objective and target market For each of the communication objectives and target market, describe which one or a combination of the following promotions mode you will use to achieve the stated communication objective. o Advertising: State explicitly the type of advertising media that you will use. o Publicity: Describe how you can create newsworthiness to generate publicity. o Personal Selling: Consider whether this is cost effective and feasible for your business. o Sales promotions: Describe what forms of sales promotions that you will use. o Others e.g., new media, internet, etc. COMMUNICATIONS OBJECTIVES Create Awareness Inform & Educate Persuade Remind Generate Leads Assist Personal Sales Effort Build Brand Image and Loyalty Promotions Mode for Target Market 2

Projection of Resource Requirements Human Resources Identify the human resources that you require to run the business This section guides you in determining the human resources required for running the business and the projected wages. If you have more/less than 3 positions for each type of personnel, add/delete rows accordingly. Human Resource & Wage Projection (HRW) Year XXX
1 2 3 4 5

Months
6 7 8 9 10 11 12

Management Personnel Positions No. 1


$

Number and Amount $

2 3 Total

No. $ No. $ No. $

Technical Personnel Positions No. 1


$

Number and Amount $

2 3 Total

No. $ No. $ No. $

Sales and Marketing Personnel Positions No. 1


$

Number and Amount $

2 3 Total

No. $ No. $ No. $

Accounting and Finance Personnel Positions No. 1


$

Number and Amount $

2 3 Total

No. $ No. $ No. $

Production Personnel Positions No. 1


$

Number and Amount $

2 3 Total Other Personnel Positions 1 2 3 Total Total HR & Wages (HRWT)

No. $ No. $ No. $

Amount $
No. $ No. $ No. $ No. $

Projection of Resource Requirements General Services Identify the general services that you require to run the business This section guides you on determining the general services required for running the business and the projected expenses on such services. If you have more/less items, add/delete rows accordingly.

General Service Projection Months Year XXX 1 2 3 4 5 6 7 8 9 General Service Expenses (GSE) Items Number and Amount $ Ut. 1
$

10

11

12

2 3 4 5 6 Total GSE (GSET)

Ut. $ Ut. $ Ut. $ Ut. $ Ut. $ $

General Service Deposits (GSD) Items Ut. 1


$

Amount $

2 3 4 Total GSD (GSDT)

Ut. $ Ut. $ Ut. $ $

Projection of Resource Requirements Capital Assets Identify the capital assets that you require to run the business This section guides you on determining the capital assets required for running the business and the projected expenditures on such assets. If you have more/less than 3 items for each type of capital assets, add/delete rows accordingly. Capital Asset Projection (CA) Year XXX
1 2 3 4 5

Months
6 7 8 9 10 11 12

Office Assets Items 1 2 3

Number and Amount $


Ut. $ Ut. $ Ut. $

$ Total Service Center Assets Items Ut. 1 $

Number and Amount $

2 3 Total Factory Assets Items 1 2 3

Ut. $ Ut. $ $

Number and Amount $


Ut. $ Ut. $ Ut. $

$ Total Retail Outlet Assets Items Ut. 1

Number and Amount $

2 3

Ut. $ Ut. $

$ Total Warehouse Assets Items Ut. 1 $

Number and Amount $

2 3 Total

Ut. $ Ut. $ Ut. $

Other Capital Assets Items Ut. 1


$

Amount $

2 3 Total Total Capital Assets (CAT)

Ut. $ Ut. $ $ $

Projection of Resource Requirements Intangible Assets Identify the intangible assets that you require to run the business This section guides you on determining the intangible assets required for running the business and the projected expenditures on such assets. If you have more/less items, add/delete rows accordingly. Intangible Asset Projection (IA) Months
1 2 3 4 5 6 7 8 9 10 11 12

Year XXX Intangible Asset Items


1 Ut. $ 2 Ut. $ 3 Ut. $ 4 Ut. $ 5 Ut. $ 6 Ut. $ 7 Ut. $ 8 Ut. $ 9 Ut. $ Ut. $ Ut. $

Number and Amount $

Total Intangible Assets (IAT)

Profit & Loss Projection The profit and loss statement is a forecast of the financial returns and viability of your business. It can also identify areas that you can improve and/or refine in your business. Your projections should be based on the analyses and strategy decisions that you have detailed in all the previous sections, and not determined independently and/or arbitrarily. This means that, if there are questions raised about the validity of your profit and loss projections, you must be able to substantiate them with the analyses and strategy decisions that you have made earlier. If you have more/less items for your profit and loss projection, add/delete rows accordingly. Year XXX
1 2 3 4 5

Months
6 7 8 9 10 11 12

Revenue (Rev) Sources 1 2 3 4 5 Total Rev (RevT) Gross Profits (GP) Sources % 1 2 3 4 5 Total GP$ (GPT) Marketing Expenses (ME) Items 1 Selling 2 Advertising 3 Promotions 4 Publicity 5 Sponsorship 6 7 Total ME (MET) Wages (HRWT) and General Services (GSET) Amount $ Amount $

Amount $

Items 1 Wages (HRWT) 2 General Services (GSET ) Usage Fees for Intangible Assets (FIA) Items 1 Franchising 2 Licensing 3 4 5 Total FIA (FIAT) Other Expenses (EX) Items 1 2 3 4 5 Total EX (EXT) Total Operating Expenses (OEX) Asset Depreciation Capital Assets (DCA) Intangible Assets (DIA) Earnings Operating Profit (OP) Non-Operating Income (NOI) Non-Operating Charges (NOC) Earnings before Tax (EBIT)

Amount $

Amount $

Amount $

Cash Flow Projection Accounts Receivable The cash flow projection details your expected cash transactions over a period of time and hence, helps you plan your cash requirements over the period and your working capital requirements at different stages of your business. This is important so as to avoid any disruptions to your business due to inadequate cash availability. The accounts receivable refers to the income that you expect to receive from your main business activities. The faster you get paid by your clients, the better cash is king! When you sell and/or license your products/services, what is important is when you will receive payment always remember, a sale is not a sale until payment is collected! Your cash flow will be critically affected by the payment terms that you extend to your clients, whether it is on the basis of "cash on delivery", "X-Days credit term", and/or "consignment". If you have more/less items for the accounts receivables projection, simply add/delete rows accordingly. Accounts Receivable (AR) Months
1 2 3 4 5 6 7 8 9 10 11 12

Year XXX Sales (RS) 1 Cash Sale 2 Credit Sale X Days 3 Consign Sale X Days Total Sales Receivable (RST) Others (RO) 1 Royalties 2 Licensing Fees 3 4 5 Total Other Receivables (ROT) Total Accounts Receivable (ART)

Amount $

Amount $

Cash Flow Projection Accounts Payable The longer the credit terms that you get from suppliers, the better! Your cash flow will also be critically affected by the payment terms that your suppliers extend to you, whether it is on the basis of "cash on delivery", "Y-Days credit term", and/or "consignment". However, in contrast to accounts receivables, for accounts payable, the longer the credit terms that your suppliers extend you, the better. If you have more/less items for the accounts payable projection, simply add/delete rows accordingly. Accounts Payable (AP) Months
1 2 3 4 5 6 7 8 9 10 11 12

Year XXX Supplies (PS) 1 Cash 2 Credit X Days 3 Consign X Days Total Supplies Payable (PST ) Operating Expenses (OEX) Others (PO) 1 2 3 4 5 Total Other Payables (POT) Total Accounts Payable (APT)

Amount $

Amount $

Cash Flow Projection Net Cash Flow & Capital Based on your financial projections computed earlier, the net cash flow and capital requirement can now be readily derived. Net Cash Flow Year XXX 1 2 Operating Cash Flow (OCF) Total Accounts Receivable (ART) Total Accounts Payable (APT) Operating Cash Flow (OCF) Investment on Assets Capital Assets (CAT) Intangible Assets (IAT) Service Deposits (GSDT) Total Assets (TA) Business Funding Sources 1 Equity 2 Loans 3 Grants 4 5 Total Capital (Cap) Net Cash Flow (NCF) Amount $ 3 4 5 Months 6 7 8 9 10 11 12

Business Start-Up Action Plan Set the schedule to achieve key milestones and the activities to be undertaken The business action plan is a schedule of the activities to be undertaken to implement your business idea. Based on your business plan, identify the key milestones for your business, and set a deadline for the achievement of these milestones. For each key milestone, determine the activities to be undertaken to achieve the milestone, the time by which you should complete each activity, and the person responsible for achieving the milestone and completing the activity. If you have more/less items for action, add/delete rows accordingly. Year XXX
1 2 3 4 5

Months
6 7 8 9 1 0 11 12

Person

Complete Business Registration

Complete R&D

Complete Product/Service Development and Trials

Secure Suppliers of Products/Services

Complete Production Set-Up

Begin Product/Service Launch and Marketing

Other Milestones and Activities