BUSINESS PLAN

LEARNING OBJECTIVES
• To define what the business plan is, who
prepares it, who reads it, and how it is
evaluated.
 WHAT IS THE BUSINESS PLAN
• A business plan is
a written document prepared by the
entrepreneur that describes all the relevant
external and internal elements involved in
starting a new venture.
• The business plan is like a
road map for the business' development.
• In developing the business plan the
entrepreneur can determine how
much money will be needed for the business.
 WHO SHOULD WRITE THE PLAN
• The business plan should be prepared by the
entrepreneur; however, he
or she may consult many sources.
Lawyers, accountants, marketing consultants, and
engineers are useful supplemental sources.
• To help determine whether to hire a consultant,
the entrepreneur needs to make an
objective assessment of his or her own skills.
 SCOPE AND VALUE OF THE BUSINESS
PLAN AND WHO READS THE PLAN
• The business plan must be comprehensive enough
to address the concerns of employees, investors,
bankers, venture capitalists, suppliers, and customers.
• Three perspectives need to be considered:
1. The entrepreneur understands the new venture
better than anyone.
2. The marketing perspective considers the
venture through the eyes of the customer.
3. The investor looks for sound financial projections.
• The depth of the business plan depends on
the size and scope of the proposed venture.
IMPORTANCE OF THE BUSINESS PLAN

1. It helps determine the viability of the venture

in a designated market.
2. It gives guidance in
organizing planning activities.
3. It serves as
an important tool in obtaining financing.
 HOW DO POTENTIAL LENDERS AND
INVESTORS EVALUATE THE PLAN
• Suppliers may want to see a business plan
before signing a contract to supply products or services.
• Customers may also want to review the plan
before buying the product for storing or supplying.
• Lenders are primarily interested in the ability of the
new venture to pay back the debt and focus on
the four C's of credit:
1. The entrepreneur's credit history or character
2. Their ability to meet debt and interest payments (cash f
low.)
3. Equity contribution or the amount
of personal equity that has been invested by the
entrepreneur.
 PRESENTING THE PLAN
• It is often necessary for an entrepreneur
to orally present the business plan
to investors.
• Typically the entrepreneur provides a
short (20-30 minutes) presentation of
the business plan.
• The entrepreneur must sell their
business concept in a short time period.
 FOR BUSINESS PLAN DEVELOPMENT
INFORMATION NEEDS – any possible barriers
• Market Information
• Operations Information Needs
1. The entrepreneur may need information on:
2. Location
3. Manufacturing operations
4. Raw materials
5. Equipment
6. Labour skills
7. Space
8. Overhead
• Each item may require some research but is needed by those
who will assess the business plan.
 WRITING THE BUSINESS PLAN
1. Introductory Page
2. Executive Summary
3. Environmental and Industry Analysis
4. Business Description
5. Marketing Plan
6. Financial Plan
 1) Introductory Page
• The title page provides a brief summary of
the business plan's contents, and should include:
 The name and address of the company
 The name of the entrepreneur and a telephone
number
 A paragraph describing the company and the nature of
the business
 The amount of financing needed
 A statement of the confidentiality of the report
 It also sets out the basic concept that the entrepreneur
is attempting to develop.
 2. Executive Summary
• This is prepared after the total plan is written. It
should be three to four pages in length and should:
• The summary should highlight in a concise manner
the key points in the business plan.
• Issues that should be addressed include:
 Brief description of the business concept
 Any data that support the opportunity for the
venture.
 Highlight some key financial results that can be
achieved
3. Environmental and Industry Analysis
• ENVIRONMENTAL ANALYSIS
 Economy
 Culture
 Technology
 Legal concerns
• INDUSTRY ANALYSIS
 Industry demand
 Industry trend
 Competition
 4. Business/Venture description
• The description of the venture should
be detailed in this section.
1. This should begin with the mission
statement or company mission, which describes
the nature of the business and what the
entrepreneur hopes to accomplish.
2. Management and Operations
 5. Marketing Plan
• Market Research
• Marketing Mix
6. Financial Plan