The

The Business
Business Plan
Plan ::
Creating
Creating and
and Starting
Starting The
The
Venture
Venture
Devilal
Devilal Sharma
Sharma
Lecturer
Lecturer
Prithivi
Prithivi Narayan
Narayan Campus,
Campus, TU
TU
Unit 4: Writing a Business Plan LH 8
• Concept,
• Reasons for writing for a business
plan,
• Guidelines for writing a business
plan,
• Section of the plan,
• Presentation of business plan.

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 Planning as Part of The
Business Operation

• Planning is a process than never ends

for a business.
• As the venture grow up to mature
business, planning will continue …

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What is a Business Plan?
• A business plan is a written document
prepared by the entrepreneur that
describes all the relevant internal and
external elements and strategies for
starting a new venture.
• It is a integration of functional plans such
as marketing, finance, manufacturing, sales
and human resources.

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 Executive Summary
• A Business Plan identifies key areas of your business so you
can maximize the time you spend on generating income.
• Key investors will want to look at your Business Plan before
providing capital.
• A Business Plan helps you start and keep your business on a
successful path.
• You should prepare a Business Plan, although, in reality,
many small business owners do not.

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Lecturer, PNC, TU
 What is a Business Plan?

• A Business Plan is a written document that defines the goals

of your business and describes how you will attain those
goals.
• A Business Plan is worth your considerable investment of
time, effort, and energy.
• A Business Plan sets objectives, defines budgets, engages
partners, and anticipates problems before they occur.

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Lecturer, PNC, TU
 10 Reasons Why You Need a
Strong Business Plan
1. To attract investors.
2. To see if your business ideas will work.
3. To outline each area of the business.
4. To set up milestones.
5. To learn about the market.
6. To secure additional funding or loans.
7. To determine your financial needs.
8. To attract top-level people.
9. To monitor your business.
10. To devise contingency plans.

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Lecturer, PNC, TU
 How Detailed Should
Your Plan Be?
• Business plans differ widely in their length, appearance,
content, and the emphasis placed on different aspects of the
business.
• Depending on your business and your intended use, you may need
a very different type of Business Plan:
– Mini-plan: Less emphasis on critical details. Used to test your
assumptions, concept, and measure the interest of potential
investors.
– Working Plan: Almost total emphasis on details. Used continuously
to review business operations and progress.
– Presentation Plan: Emphasis on marketability of the business
concept. Used to give information about the business to bankers,
venture capitalists, and other external resources.

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Lecturer, PNC, TU
 Assembling a Business Plan
Every Business Plan should include some essential components:
– Overview of the Business: Describes the business, including
its products and services.
– The Marketing Plan: Describes the target market for your
product and explains how you will reach that market.
– The Financial Management Plan: Details the costs associated
with operating your business and explains how you will pay for
those costs, including the amount of financing you may need.
– The Operations and Management Plan: Describes how you will
manage the core processes of your business, including use of
human resources.

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Lecturer, PNC, TU
 Seven Common Parts of a
Good Business Plan
• Business plans must help investors understand and gain
confidence on how you will meet your customers’ needs.
• Seven common parts of a good Business Plan are:
1. Executive Summary
2. Business Concept
3. Market Analysis
4. Management Team
5. Marketing Plan
6. Financial Plan
7. Operations and Management Plan

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Lecturer, PNC, TU
 Part 1: Executive Summary
• The Executive Summary of a Business Plan is a 3-5 page introduction to
your Business Plan.
• The Executive Summary is critical, because many individuals (including
venture capitalists) only read the summary.
• The Executive Summary section includes:
– A first paragraph that introduces your business.
• Your business name and location.
• A brief explanation of customer needs and your products or services.
• The ways that the product or service meets or exceeds the customer needs.
• An introduction of the team that will execute the Business Plan.
– Subsequent paragraphs that provide key details about your business, including
projected sales and profits, unit sales, profitability, and keys to success.
– Visuals that help the reader see important information, including highlight
charts, market share projections, and customer demand charts.

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Lecturer, PNC, TU
 Part 2: Business Concept
• The business concept shows evidence that a product or
service is viable and capable of fulfilling an organization's
particular needs.
• The Business Concept section:
– Articulates the vision of the company, how you plan to meet the
unique needs of your customer, and how you plan to make money
doing that.
– Discusses feasibility studies that you have conducted for your
products.
– Discusses diagnostics sessions you had with prospective
customers for your services.
– Captures and highlights the value proposition in your product or
service offerings.

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Lecturer, PNC, TU
 Part 3: Market Analysis
• A Market Analysis defines the target market so that you
can position your business to get its share of sales.
• A Market Analysis section:
– Defines your market.
– Segments your customers.
– Projects your market share.
– Positions your products and services.
– Discusses pricing and promotions.
– Identifies communication, sales, and distribution
channels.

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Lecturer, PNC, TU
 Part 4: Management Team
The Management Team section outlines:
– Organizational Structure: Highlights the hierarchy and outlines responsibilities
and decision-making powers.
– Management Team: Highlights the track record of the company’s managers. You
may also offer details about key employees including qualifications, experiences, or
outstanding skills, which could add a competitive edge to the image of the business.
– Working Structure: Highlights how your management team will operate within your
defined organizational structure.
– Expertise: Highlights the business expertise of your management and senior team.
You may also include special knowledge of budget control, personnel management,
public relations, and strategic planning.
– Skills Gap: Highlights plans to improve your company’s overall skills or expertise. In
this section, you should discuss opportunities and plans to acquire new information
and knowledge that will add value.
– Personnel Plan: Highlights current and future staffing requirements and related
costs.

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Lecturer, PNC, TU
 Part 5: Marketing Plan
 The Marketing Plan section details what you propose to
accomplish, and is critical in obtaining funding to pursue new
initiatives.
 The Marketing Plan section:
– Explains (from an internal perspective) the impacts and results of
past marketing decisions.
– Explains the external market in which the business is competing.
– Sets goals to direct future marketing efforts.
– Sets clear, realistic, and measurable targets.
– Includes deadlines for meeting those targets.
– Provides a budget for all marketing activities.
– Specifies accountability and measures for all activities.

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Lecturer, PNC, TU
 Part 6: Financial Plan
• The Financial Plan translates your company's goals into specific
financial targets.
• The Financial Plan section:
– Clearly defines what a successful outcome entails. The plan isn't merely
a prediction; it implies a commitment to making the targeted results
happen and establishes milestones for gauging progress.
– Provides you with a vital feedback-and-control tool. Variances from
projections provide early warnings of problems. When variances occur, the
plan can provide a framework for determining the financial impact and the
effects of various corrective actions.
– Anticipate problems. If rapid growth creates a cash shortage due to
investment in receivables and inventory, the forecast should show this. If
next year's projections depend on certain milestones this year, the
assumptions should spell this out.

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Lecturer, PNC, TU
 Part 6: Financial Plan
• The Financial Plan is the most essential part of your Business
Plan. It shows investors the timeframes you have scheduled to
make profits.
• Some elements of the Financial Plan include:
– Important Assumptions
– Key Financial Indicators
– Break-even Analysis
– Projected Profit and Loss
– Projected Cash Flow
– Projected Balance Sheet
– Business Ratios
– Long-term Plan

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Lecturer, PNC, TU
 Different Financial Planning
Options
 Short-term Forecast: Projects either the current year or a
rolling 12-month period by month. This type of forecast should
be updated at least monthly and become the main planning and
monitoring vehicle.
 Budget: Translates goals into detailed actions and interim
targets. A budget should provide details, such as specific
staffing plans and line-item expenditures.
– The size of a company may determine whether the same model used
to prepare the 12-month forecast can be appropriate for budgeting.
– In any case, unlike the 12-month forecast, a budget should generally
be frozen at the time they are approved.

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Lecturer, PNC, TU
 Different Financial Planning
Options
 Strategic Forecast: Incorporates the strategic goals of the
company into the projections. For startup companies, the initial
Business Plan should include a month-by-month projection for
the first year, followed by annual projections for a minimum of
three years.
 Cash Forecast: Breaks down the budget and 12-month forecast
into more detail. The focus of these forecasts is on cash flow,
rather than accounting profit, and periods may be as short as a
week in order to capture fluctuations.

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Lecturer, PNC, TU
 Part 7: Operations and
Management
• The Operations and Management section outlines how your
company will operate.
• The Operations and Management section includes:
– Organizational structure of the company. Provides a basis for
projected operating expenses and financial statements. Because
these statements are heavily scrutinized by investors, the
organizational structure has to be well-defined and realistic
within the parameters of the business.
– Expense and capital requirements to support the organizational
structure. Provides a basis to identify personnel expenses,
overhead expenses, and costs of products/services sold. These
expenses/costs can then be matched with capital requirements.

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Lecturer, PNC, TU
 Key Takeaways From This
Module
• Business Plans are critical for the success of a company.
• Different businesses will require different types of Business Plans.
• All Business Plans have some essential sections that explain the core aspects
of the company.
• In order to help your company have a better chance of gaining interest and
investors, a Business Plan should include seven essential sections:
1. Executive Summary
2. Business Concept
3. Market Analysis
4. Management Team
5. Marketing Plan
6. Financial Plan
7. Operations and Management Plan

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Lecturer, PNC, TU
Who should write the plan?
• The business plan should be prepared
by the entrepreneur.
• The entrepreneur may consult with
many other sources in its
preparation, such as lawyers,
accountants, marketing consultants,
and engineers.

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 Who Reads The Plans?
• The business plan may be read by
employees, investors, bankers, venture
capitalists, suppliers, customers, advisors,
and consultants.
• There are three perspectives should be
considered in preparing the plan :
– Perspective of the entrepreneur
– Marketing perspective
– Investor’s perspective

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Why Have a Business Plan?
• The business plan is valuable to the entrepreneur,
potential investors, or even new personnel, who
are trying to familiarize themselves with the
venture, it goals, and objectives.
– It helps determine the viability of the venture in a
designated market
– It provides guidance to the entrepreneur in organizing
his or her planning activities
– It serves as an important tool in helping to obtain
financing.

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 Presenting The Plan
• It is often necessary for an entrepreneur
to orally present the business plan before
an audience of potential investors.
• In this typical forum the entrepreneur
would be expected to provide a short
(perhaps 20-minutes or half-hour)
presentation of the business plan.

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 Information Needs
• Before committing time and energy to
preparing a business plan, the
entrepreneur should do a quick
feasibility study of the business
concept to see whether there a any
possible barriers to success.
• Internet can be a valuable resource.

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 Outline of a Business
Plan
• Introductory Page
– Name and address of business
– Name(s) and address(es) of principal(s)
– Nature of business
– Statement of financing needed
– Statement of confidentially of report

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 Outline …
• Executive Summary – Three to four pages
summarizing the complete business plan
– What is the business concept or model?
– How is this business concept or model unique?
– Who are the individuals starting this business?
– How will they make money and how much?

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 Outline …
• Environmental and Industry Analysis
– Future outlook and trends
– Analysis of competitors
– Market segmentation
– Industry and market forecasts
• Description of Venture
– Product(s)
– Service(s)
– Size of business
– Office equipment and personnel
– Background of entrepreneurs

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 Outline …
• Production Plan
– Manufacturing process (amount subcontracted)
– Physical plant
– Machinery and equipment
– Names of suppliers of raw materials
• Operational Plan
– Description of company’s operations
– Flow of orders for goods and/or services
– Technology utilization

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 Outline …
• Marketing Plan
– Pricing
– Distribution
– Promotion
– Product forecasts
– Controls
• Organizational Plan
– Form of ownership
– Identification of partners or principal shareholders
– Authority of principals
– Management-team background
– Roles and responsibilities of members of organization

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 Outline …
• Assessment of Risk
– Evaluate weakness of business
– New technologies
– Contingency Plans
• Financial Plan
– Pro forma income statement
– Cash flow projections
– Pro forma balance sheet
– Break-even analysis
– Sources and applications of funds

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 Outline …
• Appendix (contains backup material)
– Letters
– Market research data
– Leases or contracts
– Price lists from suppliers.

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 Using and Implementing
The Business Plan
• The business plan is designed to guide the
entrepreneur through the first year of
operations.
• Implementation of the strategy contain
control point to ascertain progress and to
initiate contingency plan if necessary.
• Business plan not end up in a drawer
somewhere once the financing has been
attained and the business launched.

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 Measuring Plan Progress
• Entrepreneur should check the profit and loss
statement, cash flow projections, and information
on inventory, production, quality, sales, collection
of accounts receivable, and disbursements for the
previous month.
– Inventory control
– Production control
– Quality control
– Sales control
– Disbursements

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 Updating the Plan
• The most effective business plan can
become out-of-date if condition change.
• If the change are likely to affect the
business plan, the entrepreneur should
determine what revisions are needed.
• In this manner, the entrepreneur can
maintain reasonable targets and goals and
keep the new venture on a course that will
increase probability of success.

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 Why Some
Business Plans Fail
• Goals set by the entrepreneur are unreasonable.
• Goals are not measurable
• The entrepreneur has not made a total commitment to
the business or to the family.
• The entrepreneur has no experience in the planned
business.
• The entrepreneur has no sense of potential threats or
weaknesses to the business.
• No customer need was established for the proposed
product or service.

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