Preparing Business

Plan

Mohit Gupta
Assistant Professor
Department of Business Management
PAU, Ludhiana
Cover Page
 Company Name, Address, Telephone and FAX
No.and e-mail address.
 No.& Position of the contact person, who should
be one of the firm’s top executives - Prepared to
answer questions.
 Date of Establishment & Operation
 The Name of the Funding Organization
 Numbering copies of Plan.
 The Company’s Logo.
Table of Contents
 Each major section should be numbered and
divided into subsection
 Do not number the Executive summary and the
appendixes
 The appendixes number are in Arabic preceded by
“A” (A.1,A.2,and so on).
 If the plan has a significant number of tables,
figures, drawings, and exhibits, a separate table
can be prepared with their titles and page numbers.
Executive Summary
 If the summary is not convincing, the reader
goes on to the next plan. It is estimated that
only 10 % of the all business plans are read
thoroughly, meaning that 90% are rejected
after the summary.
 It should be written in the last.
 It should be one to three pages in length.
Executive Summary…
 Type of Business About 10 words
 Describe the firm’s industry of sector.
 Company summary Be brief -Half a page(150
words).
 State primary product or service.
 Stress the uniqueness of product or service.
 Management
 List the top two or three people and
emphasize their industry experience
Executive Summary…
 Mention the competition to-illustrate the
niche that your firm occupies. Half a
page (150 words)
 Funds Requested
 Briefly state exactly how to raise money.
 Debt, equity.
Executive Summary…
 Availability & Form of Collateral If borrowing
needed. If there is none, you should say so
 Specify how the money will be used
 Financial History
 For existing firm Show only major categories:
revenues, net income, assets, liabilities, and
net worth for last 2 or 3 years .
 Financial projections for next 2 - 3 years
Major Sections
 Contains the strategic and operating details.
 Background and purpose - For understanding
the business and its opportunity
 History of venture and its product or service
 Current Situation What your product is, to
whom it will be marketed and the technology
necessary to make and deliver the product
 Key resources that contribute to the firm’s
success
Major Sections…
 Market Analysis - To convince that the
entrepreneur understands the competitive
environment and the microenvironment.
 Demonstrate that
– the market for the product or service is
substantial and growing
– the entrepreneur can achieve a defendable
competitive position.
Major Sections…
 Specific Market - Narrow the focus to the
specific target market, segment or niche in
which your firm will operate
 Competitive Factors - Analyze power of
buyers, suppliers, substitute products and
services, the height of entry barriers, and
the nature of the current rivalry
Major Sections…
 Macroenvironmental Influences - Analyze the
political, economic, technological, socio-
demographic, and ecological factors that affect firm.
Development and Production
Outline stages in development and production of
product or service, with time and money allocated
at each stage
- Discuss the difficulties and risks encountered in
each stage.
- Create a flowchart to illustrate how the core
function is accomplished.
- Evaluate each stage for its subcontracting
potential.
- Where you face make-or-buy decisions, explain
your choice.
Development and Production
 What resource-based competencies provide
the firm with advantages during the
production process?
 Resource Requirements - Analyze each type
of resource employed in the production
process
– Financial, physical human, technological
reputation, and organizational resources.
 Quality Assurance - Discuss the quality
dimensions
Marketing

- Describes the actual marketing strategy

- What’ benefits and positive outcomes
will the customer will derive from firm.
 How does your marketing strategy support
your product’s strengths? How will it exploit
your competitors’ weaknesses?
 Next identify your target market and show
evidence of market research
Marketing
 Describe the packaging, branding, and
labeling plans for the product
 Advertising, promotional activities and
campaigns
 Discuss your pricing strategy.
 Your credit policy
 Warranty policy
 After sales service
 Distribution effort
Marketing

 Sales forecasts
 Present your sales forecasts in an
exhibit or chart.
 Prepare the forecast in terms of units of
products as well as in value
Finance
 The purpose of the financial analysis
 To see whether enough profits will be
generated to make the venture an
attractive in investment.
 This section is number oriented. Given
the audience what it needs: rows and
columns of figures carefully labeled and
footnoted
Financial Statements
– If the firm has an operating history, summarize its
past and current performance
– By calculating ratios that highlight its profitability,
liquidity, leverage and activity compare these
ratios with the averages for industry
– If the firm is a new venture – Present projected
profit and loss statements (income statement) for
5years. projected cash flow statements ’ and
analysis. projected balance sheets for 3 to 5
years
– provide a break-even analysis
Financial Resources

 State how much money the business

will need
 If debt is sought what is for collateral?
 How will you repay the loan?
 How will you use the money
 Provide the details of Receivables &
Existing debt
Financial Strategy

 State your preferences for sources of

new capital - Is it from continuing
operations, new debt, or new equity?
 What combination is appropriate, and
what debt/equity ratio and degree of
financial leverage is the firm targeting?
Financial Strategy
 What are the firm’s priorities for using
the excess case generated by operation
and by additional financing ?
 Is expansion and growth the priority or
are dividends?
 What safeguards are being proposed to
ensure the security of the funds
generated by operations
Organization and Management
 Provide an organization chart with the names
and titles of the key executives.
 Provide brief synopses of these individuals’
previous experience, education and related
qualifications.
 The complete resumes of top managers and
key executives may be placed in and
appendix.
 State whether these people have worked
together before and in what capacity
Organization and Management
 What are these individuals’
contributions to the company?
 Specify who will do what and why they
were chosen for that role. Describe the
initial salaries incentives, bonus
pensions and fringe benefits of the top
people
 Unique skills, abilities and experience.
Human Resource Management
Strategy
 Employee compensation profit sharing, and
employee ownership.
 How will the firm manage and control health-care and
insurance costs?
 What are its strategies for employee and
management development and training, for
continuing education, and for hiring and promoting
from within ?
 What factors dictate criteria for promotion?
 How will performance be assessed ?
Human Resource Management
Strategy
 How may employees does the firm currently
have or how many will be required to start the
new venture?
 What are these employees responsibilities,
positions, and job descriptions?
 What percentages are skilled and unskilled?
Ownership
Form of business - sole proprietorship, partnership,
Private Ltd, Public Ltd, etc.
Equity positions
prepare an exhibit to show the amount that you and
the other founders and executives of the company
have invested in the business or will be investing in
the near future.
Critical Risks and Contingencies
 Failure to produce the products and services
promised
 Failure to meet production deadlines or sales
forecasts
 Problems with suppliers and distributors
 Unforeseen industry trends
 Unforeseen event in the political, economic social,
technological and ecological environments.
Critical Risks and Contingencies
 Failure to survive retaliation by competitors with
significant more resources
 The problems of unproven and undeveloped
technology.
 Difficulties in raising additional financing.
 Other issues specific to the firm in question.
Summary and Conclusions
 Briefly summarize the highlights and key features of your
report
 Firm’s overall strategic directions
 The reasons for believing the firm will be a success
 A brief description of how the firm will be able to exploit
its unique resources to advantage, the firm’s sales and
profit projections, its capital requirement, and the
percentage ownership for the founders and for investors,
 No new information should be reported here.
 You may even use the exact words you used in the
earlier sections.
Scheduling and Milestone
 To consolidate the timing of event
 Prepare a schedule, in chart form of all of the
important milestones that the firm expects to reach in
the near and intermediate term. Like
1. Seeking legal counsel and accounting services
2. Filling the documents necessary to set up the desired
legal form of business, and completing licensing
requirements.
3. Completion of research and development efforts
4. Completion of a working prototype
5. Purchase or lease of production facilities, office and
retail space
Scheduling and Milestone
6. Selection of personnel: management,
skilled semiskilled.
7. Ordering supplies, production materials,
inventory.
8. Beginning production
9. First order, sales, and payment
10. Other critical dates, and events
Appendixes
 The business plan will usually have a number of
appendixes. Like:
1. A photograph or a drawing of your product (if
appropriate) including title and labels if
necessary. If the product or process is highly
technical, and it is believed that investors will
have the technical section reviewed by a
consulting engineer, the entire technical section
should be under separate cover.
Appendixes
2. A photograph or drawing of your intended
location and physical layout (if appropriate )
3. Sales and profitability forecasts in chart form
4. Market surveys and documentation of size and
nature of market.
5. Sample advertisements, brochures, and
telemarketing protocols
Appendixes
6. Sample press releases
7. Price lists, catalogues, and mailing lists (just titles )
8. All detailed and footnoted financial statement , including
income statements, cash flow statements, balance sheet,
break-even calculations and table of start- up cost
9. Fixed-asset acquisition schedule.
10. Individual and corporate tax returns.
11. Resumes of founders, board members, and key individuals
12. Letters of recommendation or character references from
notable people.
Any additional information deemed appropriate
What is Expected from You?

 Form group of 4-5 persons, identify

roles
 Prepare business plan according to the
instructions given to you
 Present business plan
 Plan should have atleast, hand written
(both text and tables) 40-50 pages
What is Expected from You?
 All charts and exhibits should be labeled
 Make proper indexes
 Submit the Written plan before the start
of final examinations
 Present the plan as Schedule
 Take Actual data wherever possible
( like depreciation rates, interest rates,
wages etc)
What is expected from You?

 Make projections of income statement

and balance sheet for next 3 years
 Calculate BEP

This exercise carries 15 marks (out

of 30 marks practical exams)
Thank You