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The Business Plan

The document discusses the importance of creating a comprehensive business plan that outlines the business concept, industry analysis, production and operations details, marketing strategy, financial projections, and goals for monitoring progress. An effective plan considers the perspectives of entrepreneurs, investors, and other stakeholders and convinces readers that the business is viable and profitable. The document provides guidance on the critical components to include in a business plan and strategies for developing an effective plan.

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13K views26 pages

The Business Plan

The document discusses the importance of creating a comprehensive business plan that outlines the business concept, industry analysis, production and operations details, marketing strategy, financial projections, and goals for monitoring progress. An effective plan considers the perspectives of entrepreneurs, investors, and other stakeholders and convinces readers that the business is viable and profitable. The document provides guidance on the critical components to include in a business plan and strategies for developing an effective plan.

Uploaded by

willtodo
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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The Business Plan :

Creating and Starting


The Venture
MASTERS OF MANAGEMENT
ADMINISTRATION(BIRLA
SCHOOL OF MANAGEMENT)
Entrepreneurship
Learning Objectives
 To define what the business plan is, who prepares it,
who reads it, and how it is evaluated.
 To understand the scope and value of the business
plan to investors, lenders, employees, suppliers, and
customers
 To identify information needs and sources for each
critical section of the business plan.
 To enhance awareness of the ability of the internet
as an information resource and marketing tool.
 To present examples and a step by step explanation
of the business plan.
 To present helpful questions for the entrepreneur at
each stage of the planning process.
 To understand how to monitor the business plan.
Planning as Part of The
Business Operation
 Planning is a process than never ends for a
business.
 It is extremely important in the early
stages of any new venture when the
entrepreneur will need to prepare a
preliminary business plan.
 As the venture grow up to mature
business, planning will continue …
 Plan may be short term or long term,
strategic or operational.
What is Business Plan?
 The 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.
Definition-Business Plan
 Document that can convince the
reader that the business can produce
enough revenue to make a
satisfactory profit and therefore
attractive as an investment
opportunity
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.
Who is it for?
 Self
 Investor/Venture capitalists
Debt
Equity

 Key employees
 Significant others ( suppliers,
bankers…)
Scope and Value of the Business Plan –
Who Reads The Plans?
 The business plan may be read by
 employees,
 investors,venture capitalists
 bankers, suppliers
 customers, advisors, and consultants
 & by the entrepreneur himself
 Thereare three perspectives should be
considered in preparing the plan :
 Perspective of the entrepreneur
 Marketing perspective
 Investor’s perspective
Scope and Value …
 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.
How do Potential Lenders and
Investors Evaluate The Plan?
 Four Cs of Credit:  Another …
Characters
Marketable
Cash flow
Collateral Payback
 Contribution of period
Equity Risk
Feasibility, etc
Presenting The Plan
 Itis often necessary for an entrepreneur to
orally present the business plan before an
audience of potential investors.

 Inthis typical forum the entrepreneur


would be expected to provide a short
(perhaps 20-minutes or half-hour)
presentation of the business plan.
Information Needs
 Before committing time and energy to
preparing a business plan,
 the entrepreneur should do a quick feasibility
study of the business concept
 The information, obtainable from many
sources should focus on
marketing (segmenting, targeting, and
positioning),
 finance (list of all possible
expenditures, demand forecast,
revenue),
 and production (location,
manufacturing operations, raw
materials, equipment, labor skills, space,
overhead) .
 Internet can be a valuable resource.
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
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?
Outline …
 Environmental and Industry Analysis
 Future outlook and trends
 Analysis of competitors
 Industry and market forecasts

 Description of Venture
 Product(s)
 Service(s)
 Size of business
 Office equipment and personnel
 Background of entrepreneurs
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
Outline …
 Marketing Plan  Organizational Plan
 Pricing  Form of ownership
 Distribution  Identification of
 Promotion partners or principal
 Product forecasts shareholders
 Authority of
 Controls
principals
 Management-team
background
 Roles and
responsibilities of
members of
organization
Outline …
 Assessmentof Risk
Evaluate weakness of business
New technologies
Contingency Plans
Outline …
 Financial
Plan
Pro forma income statement
Cash flow projections
Pro forma balance sheet
Break-even analysis
Sources and applications of funds
 IRR and NPV projections
Budget
Outline …
 Appendix (contains backup material)
Letters
Market research data
Leases or contracts
Price lists from suppliers.
Using and Implementing The
Business Plan
 Thebusiness 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.
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
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.
Why Some Business Plans
Fails?
 Goals set by the entrepreneur are unreasonable.
 Goals are not measurable
 The entrepreneur has not made a total
commitment to the business
 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.
Packaging the Plan
 Itis a ”living” document
 No right/wrong way: the need of
reader is essential
 What are the challenges/ questions
that can be raised by reader: answer
these.
Packaging the Plan
 Include supporting materials
 Don’t make unsupported statements
 Designate an outside reviewer/
reader that can critique plan

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