Business Plan

INTRODUCTION

BUSINESS PLAN

1

Business Plan

A business plan, in its simplest form, is important for starting a business as blueprints are for building your house.

A business plan will lay out the direction for the future of your company and begin to establish standards for success.

A business plan should define how you would like to operate your business. This includes describing the management team, the marketing strategy, and the methods in which you will interact with customers. The definition should be clear but flexible.

2

Need for Business Plan

Business plans are developed for many purposes. One company might be looking for funding from investors

Another company might be looking for a loan from a bank

Your company might just need to plan out the companys strategy to make sure it is successful.

Whatever the case, every business needs a business plan

3

Need for Business Plan

To Attract Investors.

To See If Your Business Ideas Will Work.

To Set Up Milestones

To Learn About the Market.

To Secure Additional Funding or Loans

To Determine Your Financial Needs.

To Monitor Your Business.

4

ANATOMY OF BUSINESS PLAN

Executive Summary

Single most important part of business plan

Highlights the important aspects of business

Summarizing the key points of business

Busy investors and lenders start reading the executive summary to get an understanding of the business quickly.

Overall it provides a brief snapshot of the business

What to be conveyed in the Executive Summary

The basic business concept

The through plan of the business itself

The capability of the management

The existence of the market

Significant competitive advantages

Realistic financial projections

The chance of the investors and the lenders to make money

Two types of Executive Summary

1. The Synopsis Summary

It simply relates in abbreviated fashion, the conclusions of each section of the completed business plan.

It covers all aspects of your business plan and treats each of them relatively equally, although briefly.

Adv - It is easy to prepare and less dependent on a talented writer.

Dis -Adv The tone of a synopsis Summary tends to be rather dry.

Two types of Executive Summary

2. Narrative Summary

The narrative summary is more like telling the reader a story.

It can convey greater drama and excitement in presenting the business.

It communicates the necessary information and creates enthusiasm.

It is useful for businesses that break new ground, either with a new product, new market or new operational techniques that requires explanation.

Writing the Summary

Clear writing pays off in the executive summary and it makes the difference between a plan being considered or being discarded.

If the writing ability is not sure hire a professional or seek the help from friends and relatives.

Length and Design of the Summary

The great advantage to the reader of the Executive summary is that it is short.

It should be read in five minutes and should not exceed two or three pages.

Use white space to make the page less intimidating.

Bullet points can also be used in the summary.

Make little provisions for visual considerations since it makes the plan more inviting.

Company Name

There may be number of different names including

Your own name

The Legal Corporate or Company name

A dba (doing business as)

Brand name

Model name

Subsidiary company name

Domain name

Company Description

It informs the basic details of the business.

The Company Description is relatively simple for the existing businesses.

It gives details of legal status, ownership, products or services, company mission and mile-stones achieved to date.

Business Location

Location of the Companys headquarters.

Main place of business and the branch locations.

If location not decided, indicate the whereabouts of your intended operation.

Companys Objectives / Statement of Mission

The Companies describe the main goal of their internal planning process as their Philosophy of mission.

The Mission Statements are the principles and objectives that guide all other aspects and activities of the business.

One statement should encapsulate the nature of the business, business principles, financial goals. Corporate culture and how the company to be viewed in the market place.

Legal Issues

The type of legal entity to choose for the company (Sole proprietary or partnership or Pvt or public limited)

Incorporated companies provide greater protection for the personal liability.

Incorporated companies should decide their form, the state in which it will be incorporated, the number of shares to be issued.

Licensing, trademarks, patents, copyrights also to be decided.

Products and Services

Technical, complicated, innovative products need to be explained in detail to motivate the potential funders.

Describe the nature of products or services .

Also indicate the future products or services planned.

Management/Leadership

The name of the chairperson, Board of Directors, President and chief executive officers to be mentioned.

The details of advisory board or other governing entities and their frequency of meetings to be mentioned.

Industry analysis and trends

Seasonality

Technological Change

Regulation/ Certification

Supply and Distribution Channels

Financial Characteristics

Preparing the Industry Analysis for your Business Plan

Target market

Defining the Target Market- Definable, Meaningful, Sizable and reachable

Demographic Description

Geographic Description

Lifestyle/Business-style Description

Psychographic Description

Purchasing pattern Description

Buying Sensitivities Description

Market Size and Trends

Competition

Competitive Position

Evaluating the competition

Customers Perception Product/Service features, Indirect/Peripheral costs, Quality, Durability/Maintenance, Image/Style/Perceived Value, Customer Relationships and Social Consciousness

First Mover Advantage

Market Share Distribution

Future Competition

Strategic Position

For young companies whose resources are limited , a clear strategic position assists in figuring out how to allocate those resources.

A clear strategic position helps in saving a lot of time and also makes more confident in making business decisions.

Defining a strategic position is about creating a meaningful place for yourself a position in the market.

Clear Strategic Position

Differentiates you from your competitor

Enables you to capture a particular place in the market.

Different companies may sell a similar product ,but each may have a very different sense.

Example- suppose three companies are making shirts. All Times shirts defines itself as selling formals and casuals ,Shelton shirts defines itself in the business of selling work clothes but the last company has never clarified its mission

23

Risk Assessment

Every business involves risk

Risk assessment helps to prepare for and prevent threats to the success.

It is not an exercise in fear and fearing the potential investors.

It will make them feel that the scope of the threats is understood.

Kinds of Risk

Market Risk

Competitive Risk

Technology Risk

Product Risk

Execution Risk

Capitalization Risk

Balancing Risks and Opportunities

Development Stage and Milestones achieved to Date

Explain how far the company is in its development and the progress made to build the company.

Start-up companies can give the details of technology already developed, seed fund raised, indications of interest from key customers and strategic partnerships made.

Financial Status

Sources of funding

Major financial obligations

Loans or Investments received

Need for funding if any.