Chapter Two New
Chapter Two New
Chapter Objectives
After completing this chapter, students will be able
to:
Identify opportunity in the environment,
Evaluate the opportunities in the environment,
Generate business idea,
Explain the concept of business planning,
Identify components of business plan,
Develop business plan,
2.1 Opportunity Identification and Evaluation
Managers
Owners
Lenders
Investors
The three basic questions
• The financial plan is usually drawn for two to five years for an
existing company.
• For a new organization the following projections are drawn:
a) Projected Sales
b) Projected Income and Expenditure Statement
c) Projected Break Even Point
d) Projected Profit and Loss Statement
e) Projected Balance Sheet
f) Projected Cash Flows
g) Projected Funds Flow
h) h) Projected Ratios
VII) Critical Risks:
• The investors are interested in knowing the tentative
risks to evaluate the viability of the business and to
measure the risks involved in the business.
• This can further give confidence to the investors as
they can calculate the risks involved in the business
from their perspectives as well.
VIII) Exit Strategy:
• The exit strategies would provide details about how
the organization would be dissolved, what would be
the share of each stakeholder in case of winding-up
of the organization.
• It further helps in measuring the risks involved in
investing.
IX) Appendix
• The appendix can provide information about the
Curriculum Vitae of the owners, Ownership Agreement
and the like.