THE BUSINESS PLAN: A PRACTICAL GUIDE

Cristina Pérez Pérez - Thais González Torres – Juan José Nájera Sánchez

Contents
Introduction .................................................................................................................................. 2
Formal aspects when writing a business plan ............................................................................... 3
Generic business plan model ........................................................................................................ 3
A. Executive summary ........................................................................................................... 4
B. Business plan ..................................................................................................................... 5
1. Introduction .................................................................................................................. 5
2. Business model.............................................................................................................. 6
3. Analysis of the sector .................................................................................................... 8
4. Implementation strategy and business model.............................................................. 9
5. Economic-financial analysis......................................................................................... 12
6. Risk and mitigation. Conclusions................................................................................. 14
 The business plan: A practical guide

Introduction

A Business Plan is a document that identifies describes and analyses a business

opportunity, examines its technical, economic, and financial viability and develops all the
procedures and strategies necessary to convert the business opportunity into a definite
business project. As a second use, what in this document we are going to call “corporate
use”, the Business Plan is a fundamental instrument in the corporate analysis of a new
business opportunity, a diversification plan, an internationalisation project, the
acquisition of a business or a unit of an external business or even in the launching of a
new product or service. In short, both in the development and launching of a start-up and
for the analysis of new corporate investments, the Business Plan has become an
indispensable tool.
The development of a business plan covers several specific objectives:
• On the one hand, it allows the promoter of a business opportunity to carry out
an exhaustive market study in which to analyze the information to carry out the
correct positioning of its project and to determine its viability with reasonable
certainty. In addition, it details the strategic measures necessary in each
functional area to achieve the objectives that the document itself will have
foreseen, depending on the chosen business model and the resources available
to the company.
• This plan also serves as an internal tool for evaluating the achievement of the
objectives set and possible deviations from what was planned. This allows making
adaptations on the initial model and obtaining updated information for the daily
management of the company.
• In addition, generally in a reduced version or executive summary, it covers the
objective of being the business card of entrepreneurs and their project before
third parties when requesting any type of collaboration, help or financial support.
• Finally, carrying out the feasibility analysis may lead to definitively discarding the
project or to a remodeling of the proposed business model. This analysis, correctly
carried out, allows us to avoid compromising with dubious or doomed
opportunities, thus improving the profitability of the entrepreneur or investor
portfolio.
By definition, a good business plan is dynamic in nature and is never finished. Business
models change and adapt, market and industry circumstances continually change, the
wants and needs of the governance team never remain unchanged, and the resources
available to the business increase and decrease. This document must always be
developed in truthful assumptions, avoiding “making up” the financial and operational
hypotheses to try to attract more financial resources.

2
 The business plan: A practical guide

In the specific case of our subject, the business plan helps us, after knowing the
simulation and its mechanics, to evaluate the different alternatives that the game offers
to the participants, both to the combination of production and commercial activities, as
well as their location and geographic distribution. In this way, we will ensure that we have
a solid plan for the rest of the course, which allows the company not only to be viable,
but also to produce solid results that are competitive for the final classification of the
companies, which has a very relevant weight in the final grade of the subject.

Formal aspects when writing a business plan

The development of a business plan carries a series of rules and standards that affect its
formal aspects, from the language used, the internal structure of the document, the
content of each section or the presentation of the document, all depending on the
objectives that are intended to be achieved with its elaboration.
• Based on the language used, a business plan is usually addressed to more than
one reader, so it is important to use a language that is intelligible for more than
one group: investors, bankers, suppliers, technologists, etc.
• Regarding the structure of the plan, as there are no predetermined rules on it,
it is difficult to speak of a standardized format, but any plan must include the
specifications derived from the business or corporate project it contemplates, the
sector and the type of activity envisaged, and also the place where the main
activity that is planned will take place. Next, we propose a summary or outline of
the content of a business plan.
It must be borne in mind that, although this document will not be read by agents external
to the subject, it is important to take care of the format and spelling, as well as the
structure and content included. The model that we propose covers all the aspects that
should be included in a business plan, but it is true that due to the characteristics of our
simulation there are sections that will not have too much relevance while others will
involve a more exhaustive work. To facilitate this, at the end of each section we have
included an annotation on how to apply that specific point to the simulation, as well as
an example of how that part could be done. Keep in mind that each business plan will be
unique due to the individual decisions that each company makes and the unique
characteristics of each simulation, so the examples provided are just that, examples so
that you have an idea of how to do it, but they should not be taken as a template to fill in
with the data of your companies.

Generic business plan model

A business plan needs a coherent script that allows the reader to understand. This implies
starting from an explanation of the specific opportunity that is the reason for analysis,
3
 The business plan: A practical guide

where that opportunity lies and what its potential is. Then it continues the explanation of
the business model that captures that opportunity and allows it to be brought to market.
This market must be thoroughly analyzed, including its sector, its size, potential,
evolution, clients, competitors and other agents involved, as well as the surrounding
circumstances that configure the opportunity. After this, the strategic actions
contemplated by the company can be introduced to achieve the objectives set, and the
flow of concepts and decisions that will allow the assessment of the required resources
and the expected profitability. The proposed model based on this is the following:
A. Executive summary (about 3 pages summarizing the main document).
B. Business plan
1. Introduction.
2. Business model.
3. Analysis of the sector.
4. Implementation strategy and business model
• Commercial strategy and marketing plan.
• Operations and supply plan.
5. Economic-financial analysis.
6. Risks and mitigation. Conclusions.
All the information included in this document must be current and truthful. Likewise, the
formal and presentation aspects must be taken care of, always keeping in mind that this
document is the presentation card of the project in front of the different groups. In the
same way, it is important to include an index that includes the different sections and
pages in which they appear to facilitate the specific location of each section.

A. Executive summary
This document should be the last to be prepared and should be a summary of all the
information included in the business plan. It should not extend beyond three pages, and
is a business requirement when looking for potential investors. The executive summary
should emphasize the strengths of our business and the most appropriate strategic
developments. At a minimum, this document should include:
• A description of the business model, highlighting the value chain and the
revenue model.
• A summary of the most significant data of the reference market (size, entry
barriers, customers, competitors, etc.).
• An analysis of the most critical areas of the company for the success of the
process.

4
 The business plan: A practical guide

• A summary table of financial aspects.

• A final summary of the main risks and their corresponding contingency plans.
Although this document is highly relevant in a "real" business plan, since as explained it
is the document that is provided to potential investors and other agents involved, in our
case it will not be necessary to carry it out in assignment 1.

B. Business plan
1. Introduction
This section should include the name and address of the business planned or already
established, a summary of the business activity, the date of its constitution, activities or
sectors in which it operates, the number of employees, products or services marketed,
etc. In the case of a new project, this section should focus on the attractiveness of the
business, the market potential, previous experiences or references to previous successes
similar to the project presented. This section is the cover letter of the project, so it should
capture the interest of the reader from the first moment.
As a reinforcement for this point, a brief summary of the nature of the business, the
characteristics of the project, the sector where it is located and the competitive
advantages can be included. This section serves to offer a framework for action to further
detail the content of the business plan and to place the reader in front of the project.
For our project, as it is a newly created business, this section should give a few first
touches of what activities have been decided to finally carry out, supporting this decision
with information extracted from the subject guide, from the data provided on
information from previous years or other evidence that will be made available to you. All
these points will be developed in depth in their corresponding sections, so you do not
need to elaborate much. Aspects referring to the number of employees, business
address, date of incorporation, etc. have no relevance in the simulation, so you can omit
them.
Example
“Techygo is a company with its headquarters located in Liechtenstein (Switzerland) which
is going to dedicate itself to the production of chips, a basic element when it comes to
producing computers. To do this, we will locate factories in the territories of the European
Union and in the US and then we will market them to different companies that are
dedicated to the production of computers. In addition, these chips will also be marketed
to end customers who have a computer and want to fix any imperfections in their chips
or simply enhance it by adding chips of a higher grade. Our purpose is to generate growth,
wealth and employment in society, seeking customer satisfaction since they are a key
element of our business process.
In addition, we are a company focused on technological innovation, with a strong
commitment to research and development of our products, bearing in mind

5
 The business plan: A practical guide

competitiveness in order to provide a better service to our customers and meet their
needs in a more adequate way.
In this way, among our objectives is to become a benchmark company in the production
and commercialization of chips, providing a personalized service of high quality. In
addition, these objectives will be sought to achieve without neglecting corporate social
responsibility with our customers, suppliers, society and the environment. "

2. Business model
A reference should be made to the product or service proposed in the business plan, the
needs it covers, its difference from the competition's products, descriptions of its current
use, testimony of current customers of the product, means of protection and rights over
the product or service to be commercialized (patents, trademarks, anagrams,
authorization formulas, etc.) and in the case of a new product, the steps taken to obtain
patents or other protection formula whose bases have been initiated or completed.
The business model proposed here should answer the following questions:
• What do we do? The answer to this will position the business model in a given
industry and sector.
• How do we do it? This answer is found in a strategic review through tools such
as the value chain. What activities are developed, which are outsourced, which
are the ones that generate the most value ...
• How do we generate income? This is a fundamental part and answers the
question of why my customers will buy my products.
In addition, a unique value proposition must be included that explains the positioning of
the company vis-à-vis the market or customers. Key cost and revenue drivers should also
be identified. It must be borne in mind that this model should not be static, but must be
continuously adapted to the internal and external requirements facing the company.
Regarding this point, you will have to detail what the scope of your company will be, what
products / services you are going to dedicate to, in which market(s) you are going to
locate, both for production and for sale, if you you are going to integrate vertically or on
the contrary you are going to depend on agreements with other companies. You will also
have to detail here your policy regarding R&D, both investment and possible
commercialization of patents. You can ignore the aspects related to the use of the
product, testimonials from current clients and all those that due to the dynamics of the
game have no place.
Example:
"The SwissTech company will specialize in the manufacture of a single product, the PC's,
with which it is intended to focus on the strategy of development and improvement of
the quality of the devices, creating systems of increasingly better quality, and with a

6
 The business plan: A practical guide

higher level development, through investments both in the improvement of production

methods and in product innovation.
Regarding the decision to establish the manufacturing plants, at first, it was proposed to
establish a factory in Europe and commercialize in the European and American markets
at the same time. Subsequently, we proceeded to analyze alternatives related to
marketing in the United States, since the decision to manufacture only in the European
market and marketing in the United States would entail additional costs derived from the
process of transporting the PCs from one market to the other. other. The alternatives
that were analyzed and compared were the first option mentioned, to manufacture only
in Europe and transported to the United States to carry out the sales process, and the
other option was to establish a factory in each market, to that each of the factories focus
its production for the market in which it is located and, in turn, avoid transport costs.
On the other hand, the reasons that have led the Swiss Tech company to opt for the sole
production and commercialization of computers as its main activity is that by focusing on
a single product, it will be possible to offer it with the best conditions and characteristics
in the market, being able to place in a relatively attractive and differentiated position, in
terms of technological development. Likewise, PCs are more valued by end users in
Europe, since it is the tangible product they receive, which is an important fact for Swiss
Tech as it is one of the main markets in which it will operate. That is why it is possible to
have a greater impact on consumers, by putting an innovative and quality product on the
market.
As for the Chips, they have been discarded from the activity of the company since it is a
product that is sold in a high volume and with a very small margin, it is this, so that any
variation or small error in the price, can arrive to become exponential losses. In addition,
the sale of chips represents a lower share than the sale of computers, for that reason,
the volume that the sale of computers can reach is valued to a greater extent. Also,
another reason that has meant that this product is discarded for its manufacture is that,
according to the information obtained by the means of contact established for
communication with other companies, many of these will be dedicated to the
manufacture of chips, which implies that the offer of this product meets a very high level
of competition and is not very attractive for its manufacture. But, on the contrary, this
condition makes the acquisition of the product from other supplier companies very
attractive, facilitating the acquisition of the product at relatively lower costs compared to
those that would be involved in its manufacture. Although it is true that, according to the
data provided by analysts, there are certain rumors that the consumption of PCs is
decreasing, this is a cycle that, if it occurs, would later recover.
Regarding the production process, this will be carried out by establishing two plants for
the manufacture of the product in the two selected markets, and at the same time, their
corresponding sales networks will be established for the commercialization of this in both
markets, that is, both in the USA. as in Europe.

7
 The business plan: A practical guide

On the other hand, for the manufacture of the main product of the company, PCs, one of
the essential resources are the chips. These will be acquired from other supplier
companies that are in the same areas of the PC manufacturing plants for the
aforementioned reasons.
And finally, in terms of the types of computers to be manufactured, in both areas the aim
is to achieve the maximum possible degree of innovation, which is why we will constantly
work and invest in R&D, in order to achieve this objective. For this, each plant will
specialize in the manufacture of computers with a certain degree of innovation, avoiding
mixing the manufacture of computers with different degrees of innovation. "

3. Analysis of the sector

Carrying out a complete market study is a fundamental part of a good business plan. The
information obtained through this study allows us to make a judgment on the technical,
economic and financial viability of our business project. By analyzing the industry and
existing competitors, and applying the business model, a positioning and differentiation
strategy can be designed.
The first phase of the market study should be the setting of objectives and how to achieve
them. Carrying out a complete study allows us to know the following points:
• The definition of the sector, its evaluation and potential growth. In which sector
do we compete?
• The current size, percentage of growth or decline of the market and buying
behavior of potential customers. Market segments have to be determined. In
addition, the prospects of our company in the market should be reviewed. What
trends are expected in the market? What reaction do we expect after entering
this one? How are we going to react to this?
• Going deeper into the potential clientele, the market study should determine
who the customers are. These must be identified and classified in relatively
homogeneous groups with respect to common and identifiable characteristics.
You have to take into account the factors on which customers base their
purchasing decisions, such as quality or price.
• Analysis of the competition and their products: the location of our competitors,
the characteristics of their products or services, their prices, their quality, the
efficiency of their distribution, the service offered, the time of the product, their
market share or estimated , sales volume, its commercial policy, its profitability,
and in general all the information that helps our product or service to position
itself as best as possible in the reference market or segment.
• The market study must also analyze the current and future entry barriers to the
market in order to determine the viability of entry and the strength of the
company's position in it. The globalization process has to be taken into account as

8
 The business plan: A practical guide

well, since in most markets there is global competition thanks to advances in

logistics and telecommunications.
• The market study must show all the possible formulas through which the
government can influence our product. In addition, the existence of regulations
that may affect our business model must be verified.
To cover the points mentioned above, we need to collect a huge amount of information
that is not always available. For this reason, it is essential to intelligently plan the field
work that must be carried out to collect the necessary information.
The information that we are going to collect by conducting the market study will have a
great influence on the preparation of the different parts of the business plan and in many
cases, since it is the determining element when analyzing the viability of a business
project, it can lead to a change in strategy or even abandonment of the business idea.
Finally, a good market study will end up with some conclusions that, related to the
business concept and resources, support the potential of the idea and validate the
proposed business.
Regarding the analysis of the sector in the game, you will have to carry out an assignment
focused entirely on it, once there is more information related to other companies and
their competitive model, so, for now, leave it aside. Yes, you can comment on aspects
related to the sector you have chosen, taking into account the information that you will
have regarding each market and its demand. You can also comment if there is any entry
barrier, such as taxes or minimum production levels. For greater efficiency, all this
information can be included in the previous point, when you describe the scope of the
company.

4. Implementation strategy and business model

i. Business strategy and marketing plan
Positioning and segmentation should be the key responses of the business model and
their development is essential for a good plan. This positioning is related to the
perception that the market has of our product. Segmentation answers the question
"What is my target market?"
This marketing plan must establish the commercial strategies that allow reaching the
desired turnover figure. Therefore, you must detail the global marketing strategy that
allows you to exploit the business idea and the competitive advantages obtained.
At this point, the sales objectives must be included and quantified precisely, in units and
monetary units. The pricing strategy must be detailed, calculating the margin that you
want to obtain and that can support the activity of the company, investments and
derivative expenses. It is interesting to know, if possible, the commercial margins of the
competition. Likewise, the sales policy must be identified, and the marketing plans
contemplated must be detailed. Finally, the distribution policy must be considered, taking

9
 The business plan: A practical guide

into account the distribution channels, the transport of the units, and the discounts and
conditions of sale to other companies.
At this point, the sales objectives must be included and quantified precisely, in units and
monetary units. The pricing strategy must be detailed, calculating the margin that you
want to obtain and that can support the activity of the company, investments and
derivative expenses. It is interesting to know, if possible, the commercial margins of the
competition. Likewise, the sales policy must be identified, and the marketing plans
contemplated must be detailed. Finally, the distribution policy must be considered, taking
into account the distribution channels, the transport of the units, and the discounts and
conditions of sale to other companies.
In the simulation, a complete definition of the marketing policy must be included.
Although in a simplified way, if you decide to sell to the final market, you will have to
define your pricing policy, your investment in advertising, the type of distribution you will
carry out (representatives or your own sales network and, in this second case, the
dimension of the network) and the product mix (range). At this point, you will have
already decided your scope of action, as well as your main strategy, so you will more or
less know if you tend more to cost leadership or differentiation. This will condition the
different decisions to be made in this area. Regarding the price of the products, it is
convenient to analyze both the costs that are generated when producing them, as well
as the typical prices set by the different markets. Likewise, the costs of the offices, the
possible influence of advertising and the range of products offered must be taken into
account.

ii. Operations and supply plan

The technical description section must include, in the event that our activity being based
on the development, production and commercialization of a product, the first two phases
already mentioned: development and production. If it is a service, as there is no
production process as such, we will speak of a technical description and we will limit
ourselves to giving a detailed description of the procedures and technical needs that we
will encounter when providing the service.
In the case of a product, we must start by considering the duration of the research and
development work that leads us to form the product as a whole and the investment
needs in the human team and the laboratory, samples, prototypes, etc. that take to
develop our final product, as well as examine if we are trained in terms of technology and
know-how for such development or if we should opt for outsourcing.
Then, we have to describe the production process, for which we must pay attention to
the following aspects:
• The operating cycle, including the number of units to be produced, the number
of shifts in hours and days necessary to cover production projections and the need
for personnel, their qualification and cost.

10
 The business plan: A practical guide

• The geographical location of the facilities, the advantages and disadvantages of

the selected option in terms of the existence of qualified labor, the cost of labor,
labor unrest in the area, the incentives for the placement of facilities of
manufacturing, environmental regulations, proximity to raw material sources,
accessibility of facilities, etc.
• Buildings and land needed in square meters, financial formulas to acquire them,
expansion possibilities, acquisition regime, maintenance costs, structure and
design and construction of the plant and estimated cost of the facilities.
• Equipment necessary for the manufacture of the product (or sale of the service),
characteristics, models, acquisition formulas, production capacity, estimated cost
and time of acquisitions and finally the duration of the production equipment and
annual depreciation.
• The strategy of the production process, decisions and reasons for
subcontracting components, definition of subcontractors, who they are,
qualification and cost, description of the production plan in terms of volume, cost,
labor, raw material, subcontracted components, management of stock, etc.
Description of the quality control processes, inventory control and inspection
procedures, which guarantee minimum costs and avoid dissatisfaction problems
among our clients.
• Finally, we will be able to evaluate, from a strategic point of view, the option of
outsourcing production if our added value is not found here. Likewise, we will
describe the aspects associated with the logistics of entry and exit of the products,
taking into account the costs, times and necessary resources.
Likewise, an operations plan must include a purchasing plan, which deals with the
provisioning aspects necessary to carry out the activity. The purchasing plan must cover
the list of raw materials and materials necessary to produce and market our product or
service. It is necessary to make an estimate of costs, of the needs of the existing stocks in
storage and their rotation, and a list of suppliers and other sources of supply and their
location.
To conclude this section we must refer to our need for space to store raw materials and
finished products and the cost of this storage and, assuming it is relevant, mention the
seasonal nature of the storage of raw materials as a result of production.
This point will also depend on the activity you have chosen for each company, and
practically all the aspects contemplated must be taken into account. You will have to take
into account the times necessary between the order of construction of the factories until
the first sales to other companies or to the final market. Here you can also include the
periods that will require obtaining the patents, or failing that, the purchase of these, and
the manufacture of the most developed products. Likewise, you will have to detail the
number of units to be produced, the number of plants available, and their corresponding
costs, and their geographical location. Keep in mind that plants located in different

11
 The business plan: A practical guide

countries have different production capacities. In the event that you have suppliers, you
will have to detail your supply plan and the agreements that you have reached or are in
the process of reaching. As in previous points, you can ignore all aspects related to labor,
production processes beyond the number of units and degree of development, quality
controls, etc. Yes, you should take into account and develop the purchasing plan in the
event that you have agreements with suppliers or are vertically integrated, basically
taking into account how many chips you need to manufacture the computers.
Example:
“As we have commented in previous points, the production of chips of our company will
be destined to its commercialization, both to final consumers and to other companies
that are dedicated to the production of computers. To do this, we have contacted
companies dedicated to this activity (such as Swiss Tech and Calitech), offering them our
service to become their suppliers, and in the absence of closing the agreement, the
negotiations are in a very state of progress. advanced.
Regarding the price of our chips, because at the beginning of our commercial activity we
do not have any patents, our production will be destined to zero grade chips, so the initial
sale value of our product will be that established by the market, this being 45 dollars in
the US and 40 euros in the European Union.
In any case, the moment we invest in R&D and our chips are of a higher grade, our price
will increase in proportion to our quality of the product offered, reserving some privileges
in the form of discounts to those customers who show loyalty to our product. This
decision will be taken when we have enough information to analyze the demand for the
chips and their different grades and thus obtaining advantages when establishing a price
according to possible sales and meeting objectives.
Our marketing channel will be done through independent representatives of the
company, since we consider the flexibility and reduction of risk that this channel provides
us as key aspects compared to the rest of the alternatives, thanks to the absence of fixed
costs and only to face variable costs in relation to our sales, that is, commission per sale.
To finish with the commercialization, we will talk about the advertising that we will invest
to publicize our product, taking into account that in certain countries customers have a
greater sensitivity. To do this, we will establish advertising campaigns that will be studied
and developed in subsequent quarters. "

5. Economic-financial analysis
The financial plan is another of the basic elements included in the business plan. Its
purpose is to evaluate the economic potential of a business project and present viable
alternatives to finance it. Obviously, before reaching this point and after carrying out the
market study in our business plan, some calculations will have had to be made previously
that indicate the possible economic and financial viability of the business. When

12
 The business plan: A practical guide

preparing our business plan, it is necessary to think creatively about our business project
and consider alternative ways of financing or launching the project.
When starting to prepare the financial plan, we have to refer to the hypotheses that will
support our plan, hypotheses that are generally contained in the different sections of
what we have been covering when carrying out our business plan. Now we have to
describe the capital structure and the promoters' contributions to it.
As a central part of our financial plan we have to provide a series of financial status
forecasts that are listed below:
• Treasury quota for the first year broken down into months to reflect the effects
of a possible seasonal variation.
• Analysis of the working capital.
• Calculation of the breakeven point and explanation of its possible reduction if
the projected sales volume is not reached.
• Financing needs and plans, including information on the options considered and
the one chosen as the most profitable for the project.
• Projections of balances for five years. For a business that is already in business,
this should include the current year and the previous two years.
• 5-year forecasted income statements.
• Origin and application of funds.
Once the financial statements described have been made, it is interesting to comment
on the main conclusions they reflect, data such as the maximum amount of capital
required and when it will be required, amount of debt required, when it must be repaid,
etc.
Regarding profitability, the expected internal rate of return on the investment, the
investment recovery periods, as well as the most appropriate financial ratios of the
specific financial plan must be determined and explained in detail.
Before completing the section on the financial plan, it is advisable to refer again to the
double function that this plan covers, as a global development of the business project
strategy and as a marketing tool when obtaining financing for the project. If we prioritize
this second function, we run the risk of “inflating” the assumptions in our financial
statements so that we would be making a double mistake. Apart from "falling in love",
we would be misleading potential financiers and they have enough knowledge to detect
these anomalies and bury our credibility.
In the simulation, companies will have to decide how much they want to have as their
own capital, the maximum available being 20 million Swiss Francs at the parent company.
It should be taken into account that companies will be evaluated among other metrics

13
 The business plan: A practical guide

for their financial profitability. This implies that having a higher initial investment will
reduce this profitability if this capital is not being used for profitable purposes.
Companies will have to distribute the funds wherever they need them, taking into
account aspects such as currency exchange (which is dynamic) and the commissions that
must be paid when buying a new currency. At this point in the game, the calculations that
you will have to prepare for the first decisions will be aimed at covering the expenses of
opening the production plants, investment in R&D (if any) and investment in local
investment bonds (decision 1) , and expenses derived from production (fixed expenses,
variable expenses, depreciation) and investments from the second decision. You will also
have to calculate your working capital needs. Keep in mind that until the third decision
you will not enter money (except for that from financial investments or extraordinary
operations derived from patent licenses), so you will have to manage your funds in a
rational way. These costs must be calculated precisely, leaving a certain margin of safety
when there are elements that imply uncertainty, since the game penalizes the lack of
funds with "supplier credits", which in addition to having a high interest to pay, influence
negatively in the final ranking of companies.
When calculating the costs of establishing and operating factories, taking into account
aspects such as:
- The cost of setting up the plants, both in local currency and in Swiss francs, to
facilitate the accounts later.
- Fixed and variable costs of the plants, as well as amortization or investment in
improving methods.
- The acquisition costs of the chips, if they are necessary.
- The costs of opening the own sales network (if it is to be used). Remember that
a central office will open automatically, and that it supports up to 9 regional
offices.
- The investment to be made in R&D, if it is to be done.
After calculating the costs that will be incurred in each area, you will have to make sure
to send the necessary amounts of money to their respective areas, taking into account
both the commission for the currency exchange and the minimum of 20,000 FS required
in the parent company box.

6. Risk and mitigation. Conclusions

The start-up of a business project or the launch of a new product is an activity that
undoubtedly carries multiple risks, and the business plan must contain explicit references
to them. Thus, the business plan must include a description of the risks and possible
consequences of adverse circumstances that affect the industry, our company, our
human team, the acceptance of our product or service by the market, or delays in the
launch of the product or service, obtaining the necessary financial resources.
14
 The business plan: A practical guide

Similarly, the risk assessment should refer to external factors such as recession, new
technologies, reaction from the competition, changes in demand, premature
obsolescence, etc. The influence of these risks should be considered in the development
of our project and in the possible corrective measures that we can apply. The
identification and discussion of the risk factor in our business project and the proposed
contingency plans show the writer's management capacity and increase the credibility of
the project in the eyes of investors.
The final conclusions must summarize the main strengths, weaknesses, advantages,
opportunities, threats and risks of the project. This point can help make the case for
investors who are not yet convinced.
In this last point, and by way of conclusion, you can include some of the scenarios that
you may find and that can condition the game, such as that there are several companies
competing in the same region and under more or less the same strategy, the introduction
of more technologically advanced products by other companies that reduce our demand
and how these circumstances can be counteracted.

15