Contents of a Business Plan
1. Title Page
2. Executive Summary
3. Industry Overview
4. Market Analysis and Competition
5. Sales and Marketing Plan
6. Management Plan
7. Operating Plan: This plan provides an
overview of the company’s physical
requirements, such as office space, machinery,
labour, supplies, and inventory.
8. Financial Plan: This plan is an important
section that often determines whether the business
will obtain required financing from financial
institutions, investors, or venture capitalists.
9. Appendices and Exhibits: The appendices and
exhibits part is the last section of a business plan.
It includes any additional information that banks
and investors may be interested in or that adds
credibility to the business.
Formulation of Business Plan
1) Preliminary Investigation: For effective
business plan entrepreneur must – a) Review
available business plan reference. b) Draw key
business assumptions on which plan is based c)
Seek advice from professionals, d) Conduct
functional audit.
2) Idea Generation: It involves generation of
new concept or product or service or value
addition to existing product or service.
3) Environmental Scanning: The internal and
external environment must be analysed to study
the prospective strengths, weakness,
opportunities and threats of the business.
4) Feasibility Analysis: It is done to identify
whether proposed business plan is realistic and
achievable or not.
5) Drawing functional: It involves preparation of
following functional plan as below. a)
Organizational Plan b) Financial Plan c)
Marketing Plan d) Production Plan e) Human
Resource Plan
6) Project Report Preparation: When above
parameters related to environmental scanning and
feasibility test is satisfactory then it’s time to draft
a written document that involves step by step
procedure from start to end while operating a
business.
Project Risks
1. Completion Risk
2. Permitting Risks: These risks are associated
with official licences and consents required for
the project that have too many bye-laws.
3. Price Risk: These risks are born due to volatile
markets or government price controls. They were
wide ranging risks stretching from inputs to
outputs of a project.
4. Resource Risks: These risks arise due to scarce
resources and their reserves such as gas, minerals,
manpower, etc.
5. Operating Risk: These cover manpower costs,
maintenance costs, technology, operating supply
costs.
6. Casualty Risks: They are also labelled as
damage risks and are usually met as far as
possible by insurance in which the deductibles
and exclusions are important.
7. Technology Risks: These risks refer to
involvement of a sophisticated unproven
technology with a likelihood of latent defects.
8. Political Risks: These risks are related to
reformulations brought under ever-changing
political interventions in the form of regulation of
taxes and employment control.
9. Environmental Risk: This contemplates such
matters as pollution and clean-up costs on
abandonment. The risk can be mitigated to some
extent by initial environmental audit and by
insurance.
10. Exchange Rate Risk: These risks represent
fluctuations in the local currency due to change in
the foreign market.
11. Interest Rate Risks: These risks constitute
unanticipated or unexpected changes in interest
rates. These may be met by caping of interest rates
or by interest swap agreements.
12. Insolvency Risks: The risk arises due to
insolvency of contractors, project sponsors,
suppliers, purchasers, even insurers or syndicate
bank.
New product development process:
1. Generation of new product ideas 2. Screening
of Ideas 3. Product Concept Development 4.
Commercial Feasibility 5. Product Development
6. Test Marketing 7. Commercialization
 Feasibility Analysis
Feasibility study is the process of investigating a
problem and developing a solution in depth to
determine its economic viability and worth of
development.
1. Technical feasibility: Technical feasibility or
analysis encompasses the technical areas of
project, namely material inputs and utilities.
2. Financial Feasibility: Demand and prices
estimates are derived from market feasibility
study. Project cost and operating costs are derived
from technical feasibility study.
3. Organizational Analysis: Institutional
analysis has become one of the important parts of
project work. The outcome of development
projects depends upon the quality of institutions
responsible for them.
4. Marketing Analysis: Market and demand
analysis is the management demand, its
estimation and determining the extent to which it
can be met with satisfaction to consumers and
profit to the producers.
Network analysis represents the inter-related
flows of work that must be accomplished to
complete a project. They visually portray the
events and activities that are planned for the
project and show their sequential relationships
and interdependencies.
Hypothesis
A definite statement about the population
parameter is known as hypothesis. A hypothesis is
a claim to be tested. It is usually denoted by the
capital letters like H, K, L etc.
Null Hypothesis
A hypothesis of no difference is called null
hypothesis. According to Prof. R.A. Fisher, null
hypothesis is the hypothesis, which is to be tested
for possible rejection under the assumption that it
is true. It is usually denoted as Ho.
Alternative Hypothesis
An alternative hypothesis (H1) is a statement that
directly contradicts a null hypothesis (H0) by
stating that that the actual value of a population
parameter is less than, greater than, or not equal
to the value stated in the null hypothesis.
Small sample test
A hypothesis test that is appropriate when the
sample size is small (usually n<30) or when the
population standard deviation is unknown, and is
based on the t-distribution.
Parametric Tests
t- test and Z-test: Parametric tests assume a
specific distribution of the population and use the
population parameters to make inferences. The
most of the parametric tests are focused on
analysing and comparing population parameters
like mean, proportions. We will discuss about t
and Z tests in this section.
Non-parametric Tests
A) Sign Test: One of the simplest non-parametric
tests is the sign test. It is especially helpful in
studies where it is hard or impractical to quantify
quantitatively but it is still possible to establish
whether an observation is larger or smaller than
the median value.
B) Run Test: In order to determine if a group of
observations represents a random sample from an
infinite population, the run test is used.
C) Chi-square Test for Independence of
Attributes: When a predetermined number of
observations are predicted to fall into two
categories, we may want to look into whether the
two categories are independent or if there is
evidence of a relationship between them.
Classification of Projects
a) Quantifiable and Non-quantifiable b) Sectorial
Project: i) Agriculture ii) Irrigation & Power iii)
Transport & Communication iv) Social Services
c) Techno-Economic Project c.1) Factor intensity-
oriented classification c.2) Cause-oriented
classification c.3) Magnitude oriented
classification
Stages of Project Formulation
1) Feasibility Analysis 2) Techno-Economic
Analysis 3) Network Analysis 4) Input Analysis
5) Financial Analysis 6) Cost-Benefit Analysis 7)
Pre-Investment Analysis
 Characteristics of Project
1. Achieving the Goal 2. Separate entity
3. Unique Activities 4. Sequence of Activities
5. Specified Time 6. Interrelated activities
7. Funds Requirements 8. Life Cycle
9. Team Work 10. Risk and Uncertainty
11. Sub-contracting
Internal Rate of Return - Internal rate of return
for an investment proposal is the discount rate that
equates the present value of the expected cash
flows with the initial cash outflows.
Project Life Cycle
The control needs of the project organization
determines the number of the project phases. The
project life cycle characterizes the linear
progression of a project from the conception
phase, definition phase, planning and organizing
phase, implementation phase and lastly project
clean-up phase.
Project Design is a rough layout of the project
which helps to give an idea about how it is going
to be executed. It is a blue print of the project.
Project design is the key to make the project
successful.  The identification of hierarchy of
project goals and objectives linked by causal
relationships.  The planning of solutions, in
terms of inputs, activities / task, outputs, effects
and impacts.  The assessment of project
outcomes.
Techniques of Financial Analysis
Financial Analysis - It is process of ascertaining
proposed project financially viable or not.
a) Comparative Financial Statement b) Common
Size Financial Statements c) Trend Percentages d)
Fund Flow Analysis e) Cost-Volume Profit
Analysis f) Ratio Analysis.
Project Report
Content of Project:
The contents of the project report are similar to
the formats.
Format of Project Report: This format one is
quite exhaustive contains fifteen sections as:
1) Introduction 2) General Considerations 3)
Capital Expenditure 4) Working Capital 5) Cost
of Project 6) Means of Finance 7) Total Cost of
Project per Year 8) Excise and Sales Tax 9) Sales
10) Profit and Loss Account for Year 11) Balance
Sheet End of Year 12) Forecast for Five Years 13)
Balance Sheet for Five Years 14) Cash Flow
Statement for Five Years 15) Ratios
Steps involved in Testing of Hypothesis:
Finding out how likely it is that a population
parameter, such the mean, is true is the aim of
hypothesis testing. Following are the steps of
hypothesis testing.
Step 1: State the H0 and H1 hypotheses.
Step 2: Set the criteria for a decision (set LOS at
α). Step 3: Based on the given data, compute the
test statistic. Step 4: Make a decision based on P-
value or by comparing calculated value of the test
statistic with critical value of the test statistic.
Step 5: Statement of conclusion: The conclusion
should be without of statistical terminology.
However, the significance level should be clearly
stated.
Project Life Cycle
The control needs of the project organization
determines the number of the project phases. The
project life cycle characterizes the linear
progression of a project from the conception
phase, definition phase, planning and organizing
phase, implementation phase and lastly project
clean-up phase.