The Business Plan

ENMGMT1
ENTREPRENEURIAL MANAGEMENT
PREPARED &
COMPILED BY
BELEN APOSTOL, MBA
 The Business Plan
• The business plan helps the entrepreneur maintain perspective as to what
needs to be accomplished.
• Potential investors are not likely to consider investing in a new venture until
the business plan has been completed
 Organizing the Enterprise, Planning the
Enterprise
• Entrepreneurs use planning and organizing to outline goals and define how
the organization will accomplish business tasks. They may use a systematic
plan broken down into steps or develop a generalized approach for achieving
goals through various functions or processes.
• Strong planning and organization techniques ensure the enterprise stays
focused on its goals and objectives.
• Proper planning and organization management can also help the business
remain flexible and adjust to changes in the economic environment.
 Concept of a Business Plan
• A business plan is a written document prepared by the entrepreneur that
describes all the relevant external and internal elements involved in starting a
new venture. It is often an integration of functional plans such as marketing,
finance, manufacturing, and human resources.
 Why do we need a Business Plan
1. A business plan is an effective tool for defining the existing realities. It
prompts to analyze the business project or the existing situation
objectively and critically, define a focus and set realistic goals. It may also
constitute the basis for control and evaluation.
2. 2. A good business plan will reveal weaknesses or omissions in planning.
Because good business plans require a guesstimate of risk calculation, it
helps to reduce risks.
 Why do we need a Business Plan
3. It provides a valuable communication tool presented in an organized,
credible manner, which allows lenders, outside directors, investors, banks and
employees to obtain a complex view of your business. Even if, in some cases,
a business plan format is not officially required when applying for a loan,
although most lenders will ask for one, the very existence of a plan
constitutes a plus, a step forward in obtaining the loan.
 Characteristics of a Business
Plan
1. A business plan should be detailed. In listing products and services for
example, it should not stop by just enumerating them, it should
include the descriptions and scope of the products and services.
2. It should include a market research that identifies competitors, the share of
the market and the range of the products produced. By learning how
competitors conduct their operations, tricks of the
trade in the business may be learned and entered to be used as a basis to
excel.
 Characteristics of a Business
Plan
3. It needs to have a list of everything needed which comprises the
equipment, technology, raw materials, financial and other resources
needed when starting and running a business venture. Having all these
listed will give an idea on how much capital is needed before the start-up
and how much money should made in a day to make the business survive.
 Characteristics of a Business
Plan
4. It also needs to be written in formal format and style since a business plan
is something that have to be presented to business partners, financial
firms and banks. Refrain from using slang in any part of the plan
5. A business plan should be error – free. This is important because the
business plan defines the business person.
 Obtaining the facts for a Business Plan
A business plan gives an insight into the entrepreneur's ability to define and
develop policies for the essential areas of the business. This business
document will map out the entire process by considering all the possible
factors.
 Obtaining the facts for a Business Plan
Fundamental factors that is needed in creating a business plan:
1.Consultants and Backing Type: When starting to create a business plan, one must
decide who will be reviewing it as this could help form a great plan.
2.Business Plan Outline: Outlining the plan for the business is the second most vital
point once it has targeted its audience. The target audience will determine the
structure of your document.
3.Research and Information Collection: Once decided on the financial investment
and its sources, it is time to make a research.
The approach from the work experience of the entrepreneur and observation
will help to research the market and the product.
Published information from library, internet and paid database services will
inform the entrepreneur on the market growth, overall industry outlook and
customer requirements. Field research will help in covering interviews with
customers, suppliers, competitors, and industry experts.
 Obtaining the facts for a Business Plan
Fundamental factors that is needed in creating a business plan:
4.Collection Files: sum up all experiences, interviews, and research in files for
the plan analysis.
5.General Industry Overview: have a general understanding of the industry
and the knowledge about the various strategies and services that apply in
developing the business.
6.Analysis: Once data is collected, analyze the process of building an aggressive
profile, a comprehensive plan and consider the risks involved with it.
7.Executive Summary: When all the segments of the business plan is
thoroughly completed write an executive summary highlighting the key points
and including the loan repayment methods and return on investments.
 Obtaining the facts for a Business Plan
Fundamental factors that is needed in creating a business plan:
8. Review and Editing: a well-written business plan opens the doors to success.
It will become a road map to success, which guides the entrepreneur in the
right direction. Therefore, make sure that it has been proofread and checked
for a number of times before giving a final copy.
 Outline of a Business Plan
• The Executive Summary
• The Executive Summary provides a concise synopsis of the business plan, and
highlights the key points raised within. The Executive Summary must
communicate to the prospective investor the size and scope of the market
opportunity, the venture’s business and profitability model, and how the
resources/skills/strategic positioning of the Company’s management team
make it uniquely qualified to execute the plan. The Executive Summary must
be compelling, easy-to-read, and no longer than 2-4 pages.
 Outline of a Business Plan
• The Industry
This section evaluates the playing field in which the company will be
competing, and includes well-structured answers to key market research
questions such as the following:
What are the sizes of the target market segments?
What are the trends for the industry as a whole?
With what other industries do your services
compete?
 Outline of a Business Plan
• Market Analysis
• This section assesses the customer segment(s) that the company serves. In
this section, the company must convey the needs of its target customers. It
must then show how its products and services satisfy these needs to an
extent that the customer will pay for them.
 Outline of a Business Plan
• Competitive Analysis
• An investigation of direct and indirect competitors, with an assessment of
their competitive advantage and an analysis of how it will overcome
any entry barriers to the chosen market.
 Outline of a Business Plan
• Marketing Plan
• A detailed explanation of the sales strategy, pricing plan, proposed advertising and
promotion activities, and product or service's benefits.
• The marketing plan details the strategy for penetrating the target markets. Key
components include the following:
• A description of the company’s desired strategic positioning
• Detailed descriptions of the company’s product and service offerings and potential
product extensions
• Descriptions of the company’s desired image and branding strategy
• Descriptions of the company’s promotional strategies
• An overview of the company’s pricing strategies
• A description of current and potential strategic marketing partnerships/ alliances
 Outline of a Business Plan
• Management Plan /Organizational Plan
• An outline of the business's legal structure and management resources, including
the internal management team, external management resources, and human
resources needs.
• The Management Team section demonstrates that the company has the required
human resources to be successful. The business plan must answer questions
including:
• Who are the key management personnel and what are their backgrounds? What
management additions will be required to make the business a success?
• Who are the other investors and/or shareholders, if any?
• Who comprises the Board of Directors and/or Board of Advisors?
• Who are the professional advisors (e.g., lawyer, accounting firm)?
 Outline of a Business Plan
• Management Plan /Organizational Plan
• An organizational plan is basically a “to do” list for an organization. It lists out the
plan of work, programs and organizational growth over a period of time. The tasks
involved, who is responsible for them, and when they’ll be done.
• An organizational plan helps to:
• Set priorities for work
• Make sure tasks get done on time
• Focus on one thing at a time
• Share work among staff, board members & volunteers
• Make goals clear to investors
• Get a handle on big projects by breaking them down
• See the big picture of what an organization is doing.
 Outline of a Business Plan
• Operating Plan
• A description of the business's physical location, facilities and equipment,
kinds of employees needed, inventory requirements and suppliers, and any
other applicable operating details, such as a description of the manufacturing
process.
• These sections detail the internal strategies for building the venture from
concept to reality, and include answers to the following questions:
• What functions will be required to run the business?
• What milestones must be reached before the venture can be launched?
• How will quality be controlled?
 Outline of a Business Plan
• Financial Plan
• A description of the funding requirements, detailed financial statements, and
a financial statement analysis.
• The Financial Plan involves the development of the company’s revenue and
profitability model. It includes detailed explanations of the key assumptions
used in building the model, sensitivity analysis on key revenue and cost
variables, and description of comparable valuations for existing companies
with similar business models.
 Outline of a Business Plan
• Financial Plan
• In addition, the financial plan assesses the amount of capital the firm needs,
the proposed use of these funds, and the expected future earnings. It
includes Projected Income Statements, Balance Sheets and Cash Flow
Statements, broken out quarterly for the first two years, and annually for
years 1-5. Importantly, all of the assumptions and projections in the financial
plan must flow from and be supported by the descriptions and explanations
offered in the other sections of the plan. The Financial Plan is where the
entrepreneur communicates how he/she plans to “monetize” the overall
vision for the new venture.
 Outline of a Business Plan
• Appendices and Exhibits
• Any additional information that will help establish the credibility of the
business idea, such as marketing studies, photographs of the product, and/or
contracts or other legal agreements pertinent to the business.
• The Appendix is used to support the rest of the business plan. Every business
plan should have a full set of financial projections in the Appendix, with the
summary of these financials in the Executive Summary and the Financial Plan.
Other documentation that could appear in the Appendix includes technical
drawings, partnership and/or customer letters, expanded competitor reviews
and/or customer lists.