Business plan

The business plan is a written document that serves as a road map in the entrepreneur’s journey
from start-up to project implementation. It describes all the relevant elements involved in starting
a new business enterprise. It is often an integration of functional plans such as marketing,
finance, manufacturing and human resources. Potential investors and suppliers too are interested
in a business plan, as it can prove helpful in taking decisions. A business plan would present
your basic business idea and all related operating, marketing, financial and managerial
considerations.

The Purpose of Business Plan

One of the most important steps in establishing any new business is the constructions of a
business plan. Any business plan has the following purposes.
 It can help the owner/manager crystallize and focus his/her idea.
 It can help the owner/manager set objectives
 It can also as a vehicle to attract any external finance needed by the business.
 It can convince investors that the owner/manager has identified high growth
opportunities.
 It entails taking a long-term view of the business and its environment.
 It emphasizes the strengths and recognizes the weaknesses of the proposed venture.
 The plan can uncover weakness or alert the entrepreneur to sources of possible danger.
 Setting objectives and budgets: having a clear financial vision will believable budgets is a
basic requirement of everyone involved in a plan.
 Calculating how much money is needed: a detailed cash flow with assumptions is vital
ingredient to precisely quantify earlier the likely funds required.

The Format of a Business Plan

Executive summary: clearly identified concept and purpose, concise and comprehensive
answers to basic questions like who, what, when, where, and how questions compiled one to two
pages long to generate enthusiasm on the overall plan
Business Description: relevant history and background of the business area, name of the
business and trading name, proposed date for commencement of trading /beginning of a plan, its
legal identity like company/partnership/sole-trade/cooperative details of share or capital
structure, location-address-registered and operational and brief details of premises.

The nature of the business /Industry Analysis:

 Product(s) or service(s):-Description and applications, key suppliers, planned
developments of product or service
 Market and customers:-Definition of overall market, definition of target market,
classification of customers, trend in market place, market size and growth, customer
characteristics, entry barriers, technological factors, seasonality, economic influences,
regulatory issues . An analysis of the current situations of the market place, the
competitions, the business concept and the people involved. It will include any historical
background relevant to the positions to date.
  Competition:- description of current and future competitors; strength and weakness of
major competitors, profiles of primary competitors, competitors' products/services &
market share, distinct competitive advantage
 Marketing and Sales:-determine pricing, distribution, promotion policies and sales
forecasts
 Future Direction (where do we intend going?):-qualitative expression of the
objectives, quantifiable targets will clarify and measure progress towards the
 Operations: Product development, development costs and risks, manufacturing (if
applicable), production processes description, production equipment requirements,
quality assurance, product / service delivery systems, additional facilities requirements
 Management and Organization: Outline of background experience, skills and
knowledge of management team, identify the organizational chart , identify future
requirement , gaps in skills and experience and how they will be filled - future
recruitment intentions
 Financial Analysis and Projections: Determine funding requirement-startup capital,
working capital, asset capital, and timing of funds required, and security offered. State
assumptions (start date, commissions, tax rates, average inventory, sales forecasts, etc.),
financial statements (balance sheet, income statement, and cash flow statement), break
even analysis, and state financial sources

Part one: - Outline of a Business plan

Executive Summary
The Executive Summary of a Business Plan is a one-page distillation of your entire plan, and
often is the last section to be written. Despite the title, it is not written for executives, nor is it a
summary of the plan. Its objective is to capture the reader’s interest, so that they want to read the
entire plan; even better to call you to arrange a meeting. It should be considered a chance to
“sell” the reader on the business opportunity.
The summary should address the following elements of the plan:
 Concept Description Summarize the essence of your business.
 Opportunity Why is this a good opportunity? What evidence do you have to support the
demand? What is the size of your market? What are the critical trends and how will your
company exploit them? What is the compelling need?
 Product/Service Describe the product or service. How is the product or service to be
produced and delivered?
 Value Proposition Who is the target market? What are benefits to the target market?
 Marketing Strategy What are the key elements of your marketing strategy?
 Competitive Advantage Who is the competition? What is your competitive advantage?
 Management: Who is the management team and why will they make a success of the
venture?
 Financial How large will the company become, i.e. what revenues will be achieved in
year 3 or 4? When will the company breakeven?
 Funding How much funding is required? What is the offering? What is the exit strategy?
Company Overview
 The Company Overview is a brief (one page) description of the company you have
founded or want to found. How will it be organized? Will it be a sole proprietorship,
partnership, or corporation? What are your ambitions for the company? Will it always be
 a small company, or do you want to grow it into an international giant? Upon reading this
section, the reader should have a good idea of where you are and where you are going
with your company.
Introduction
In the introduction to the Company Overview, answer the following questions in a single
paragraph:
 What is the name of our company?
 Does our company currently exist, or will it be forming?
 Where is it located? Where will we grow?
 How is our company organized (e.g., sole proprietorship, partnership, corporation)?
Mission Statement
 Your mission statement is a short (one sentence to one short paragraph) inspirational
statement of the vision and goals you have for your company. Too many mission
statements are vacuous exercises in ambiguity e.g., "employees are our most valuable
asset". Be sure that your mission statement is succinct and content rich, and excites your
readers.
History and Current Status:
 Briefly outline the history and current status of your company.
Objectives
In this subsection, spell out the objectives of your company in a single paragraph:
 Where are we going with our company?
 What are our goals for the company (keep it small, grow it big, franchise it, etc.)?
 What is our exit strategy for ourselves and for our investors (sell to larger company, go
public, buy out investors, etc.)?
Industry Analyses
 Future outlook and trends
 Analysis of competitors
 Market segmentation
 Industry forecasts

Description of Venture or Business

 Product (s)
 Services (s)
 Size of business
 Office equipment and personnel
 Background of entrepreneurs

Production Plan
 Manufacturing process /production process/
 Physical plant/ location of factory and layout/
 Machinery and equipment/ quantity, sources/
 Names of suppliers of raw materials
 Cost of raw materials and raw materials availability
 Labor /cost of labor, labor availability, number of labor/
Marketing Plan
 Selling price
 Distribution / Market area, Main customers and total demand/
 Production
 Product forecasts / sales forecasts/
 Comparison of the product with its competitors
 Promotional measures
 Marketing strategy and marketing budget
 Controls

Organization and management plan

 Form of business
 Organizational structure
 Business experience and qualification of entrepreneur
 Roles and responsibilities of members of organization

Financial Plans analysis

 Sources and application of funds
 Cash flow projection
 Break-even analysis
 Net present value analysis
 Internal rate of return analysis
 Payback period and discount payback period analysis
 Pro forma balance sheet