BUSINESS PLAN

WHY PLANNING ?
• Planning is essential to survive in the most dynamic situations:

• Planning strengthens the position of entrepreneurs

• Planning gives an overall picture

• Anticipation of problems

• Planning helps in time management

 Areas of Planning :

For the small entrepreneur planning need not be complex.

If he put down on paper what is in his mind, a lot of clarity would emerge.

He should start planning by defining

• His present status: the resources available to him
• His goal: within the constraints of his resources, what can be achieved.
• How best to attain it:: coordinating and mobilizing the above two factors to achieve his
goal in the shortest possible time.
• To plan, then, he will have to start posing a few questions:
• Internal :- To analyze his personal strengths and weaknesses:

• What am I good at ?
• Where can I improve ?
• What are the resources available to me ?
• What is the volume of resources that I can effectively mobilize ?
Areas of Planning :
• Market :- To check if the plans he foresees are supported by demand:
• Will what I produce self ?
• Why will people by it ?
• How does my product compete with others in the market ?

• Environment :- A small entrepreneur should always take into account the outside
factors over which he has no control but which are likely to affect him.
• What are governments policies ?
• How do they affect me ?
• Will changing trends in social customs and culture affect my product demand ?
• Can I diversify if the need arises ? Basically then an entrepreneur should plan for
• Survival
• Profit
• Diversification
PROJECT REPORT
Introduction:
A project report is defined as a
• The project report (Detailed Feasibility Report) is based on a preliminary
report or pre-investment report.

• It would be Technically feasible, financially viable, commercially profitable

and socially desirable to do such a business.

• Project report is an essential document for procuring assistance from

financial institutions and for fulfilling other formalities for implementation of
the project.
CONTENTS OF PROJECT REPORT
• INTRODUCTION: General information regarding the company and production description.
• BACKGROUND OF THE PROMOTER: - Name, address, age, family background, educational qualification, work
experience, investment potential etc.
• PRODUCT: - Details of products to be produced, details of application of the product, proposed product mix,
product standard etc.

• MARKET AND MARKETING:- Market potential analysis, major buyers, area to be covered, trade practices, sales
promotion devices, trade practice and trade channels adopted by the competitors, demand analysis, proposed
market research etc.

• LOCATION:- Locational advantages, criteria for selecting the location, exact location of the project, other choices.

• PRODUCTION PROCESS: - Details of technology, process flow chart, manufacturing process, production program,
etc.

• RAW MATERIAL: - List of raw material required in terms of quality and quantity, sources of requirement, cost of
raw material etc.
CONTENTS OF PROJECT REPORT
• UTILITIES: -Water, power, steam-sources and costs, effluent disposal etc.

• TRANSPORT AND COMMUNICATION: - Method, possibility of getting and costs of transport.

• MANPOWER REQUIREMENT: -Requirement of skilled, semi skilled personnel, technical and non-technical
personnel, cost of procurement, capacity, and suppliers cost, alternatives available, cost of miscellaneous
assets.
•
• LAND AND BUILDING: - Land area, construction area, cost of construction, detailed plan, plant lay out along
with cost.

• PLANT AND MACHINERY: - Details of machinery and equipment required.

• COST OF PROJECT AND SOURCES OF FINANCE: - Working capital required, preliminary and pre-operative
expenses, contingencies and arrangements for the meeting the cost of project.

• FINANCIAL VIABILITY OF THE PROJECT: - Cost of production and profitability for the first years, break even
analysis, and analysis of cash flow and fund flow statements.
FIXED CAPITAL & WORKING CAPITAL

Fixed Capital investment

• Land
• Building/shed
• Machinery
• Tools & Equipment
• Furniture
• Electrification
working Capital Investment
• Raw material
• Salaries & Wages
• Utilities like Rent, Power bill, Water, transport, stationery, etc
Proforma for Project Report Preparation
Name of the Promoter
Name of the Enterprise:
Name of the Product:
Location of the Unit:
Locational advantages
Promoter’s Background:
Machinery details:
Raw-material Details:
Market Details:

Project Cost
Profitability Details
Proforma for Project Report Preparation
A Fixed Capital Investment No. of items Price per I item Total cost

a Land Rs.
b Building Rs.
c Machinery
1 Rs. Rs.
2 Rs. Rs.
3 Rs. Rs.
Total Rs.
d Tools & equipment
1 Rs. Rs.
2 Rs. Rs.
3 Rs. Rs.
Total Rs.
e Furniture
1 Rs. Rs.
2 Rs. Rs.
3 Rs. Rs.
Total Rs.
f Electrification Lumsum Rs. Rs.
Total Fixed Capital Investment (a+b+c+d+e+f) Rs.
B Working Capital Investment (1 Month)
a Raw Materials
1 Rs. Rs.
2 Rs. Rs.
3 Rs. Rs.
Total Rs.
b Salaries & wages
1. Technical Rs. Rs.
2. Skilled Rs. Rs.
3.Semi Skilled Rs. Rs.
4.Supporting Staff Rs. Rs.
5.Watchmen/Attenders Rs. Rs.
Total Rs.
c Utilities
1.Rent Rs. Rs.
2.Power bill Rs. Rs.
3.Water bill Rs. Rs.
4.Transport expenses Rs. Rs.
5.Publicity expenditure Rs. Rs.
6.Marketing expenditure Rs. Rs.
7.Stationery expenditure Rs. Rs.
8. loading & unloading Rs. Rs.
9. Others if any Rs. Rs.
Total Rs.
Total working Capital Investment (a+b+c) Rs.
 C Pre-Operative Expenditure

1. Project report fee Rs. Rs.

2 Fee for power etc Rs. Rs.

3 Trail run expenses Rs. Rs.

4. Inaugural expenses Rs. Rs.

5. Others Rs. Rs.

Total Pre-Operative Expenditure Rs.

D Project Cost

a Total fixed Capital Investment Rs.

b Total working Capital Investment Rs.

c Total Pre-operational expenditure Rs.

Total Project Cost (a+b+c) Rs.

E Cost of Production (1 Month)

a Total working Capital Investment Rs.

b Interest on total investment Rs.

c Depreciation on Machinery Rs.

d Promotional expenditure Rs.

Total cost of Production (a+b+c+d) Rs.

F Sales Revenue Per month (product wise )
1 Rs.
2. Rs.
3. Rs.
4. Rs.
5. Rs.
Total Sales revenue per month Rs.
G Profitability per month

a Total sales Revenue per month (F) Rs.

b Total Cost of Production per month (E) (-) Rs.

Total profit (a-b) Rs.

H Means of finance

1. Own Investment 10 % Rs.

2. Bank Loan 65% Rs.

3. Margin Money / 25% Rs.

subsidy
4. Others % Rs.

Total Rs.
H Repayment schedule

1. Moratorium period _____ months

required

2. First installment starting ______ Month

3. EMI Per month Rs

4. No. of Months 60 months