Definition Business Plan

A business plan is a written document that gives details of the new venture. It is the entrepreneurs roadmap for a successful enterprise. It must describe the current status, expected needs and projected results of the new business. It must demonstrate a clear picture of what the venture is, where it is projected to go, and how the entrepreneur proposes to get there. Every aspect of the venture needs to be covered, project, marketing, research & development, manufacturing, management, critical risks, financing and milestones (timetable).

Business Plan Features

Also referred to as venture plan, loan proposal, investment
prospectus etc.. Minimum document required by a financial source. Entrepreneur should prepare his own plan, or at least to be the lead motivator. It encapsulates the strategic development of the project It should be used as a working document once the venture is established. The emphasis is the implementation of the venture. The assumptions made are also captured. [Realistic] Various projected revenue and costs of the various actions and activities are outlined. It is wise to take outside advise [professionals]

Business Plan Benefits

Forces entrepreneur for strong analysis.
Prepares effective strategy to deal with uncertainties. Helps avoid a doomed project. Gives over view of the entire operation. Is a communication tool for the entrepreneur. Provides contingency plans. It tries to capture all the events that effects the venture. Allows entrepreneur entry into the investment process.

Business Plan - Development

There has to be excitement and accuracy Keep in mind the readers: venture capitalists,
bankers, investors, potential large customers, lawyers, consultants, suppliers, etc Specifically the three viewpoints: 1. The Entrepreneurs. 2. The Marketplace. 3. The investors Six evaluations of the venture capitalist: 1.Characteristics of the venture and industry 2. Financial Structure. 3. Latest balance sheet 4. Quality of Entrepreneurs. 5. Unique feature of venture 6. Entire plan especially graphs, charts, exhibits etc

Business Plan - Format

It is important for the plan look good ( not too good) ,of right length, not contain bad grammar, typographical or spelling errors. Appearance: Good printing, No lavish presentation,
spiral binding- held together by plastic cover sheets of single color is best (rather than stapled or bookbinding) Length: Limit it to max 50 pages after editing of first draft), within 40 pages is ideal. Additional information can be given in another volume after expression of initial interest

Cont..
The Cover Page and Title Page: Cover Page: It should have the name of the company,
address and phone number, month and year when plan is issued.

Title Page: Inside the front cover page is the title page. Here the information is repeated along with the legend copy number. *less than 20 is best+ The Executive Summary: Should immediately follow the title page, should be of two to three pages. It should contain information like, companys current status, its products or services, benefits to customers,

Cont..
the financial forecasts, ventures objectives in three to
seven years, financing needed, and how investors will benefit. This section will either generate interest or it will make them forget the entire thing.
The Table of Contents: This comes after the executive summary, It should be well designed. List each of the business plan sections and mark the pages for each section.

Business Plan Guidelines for Development

Keep the plan respectably short

Organize and package the plan appropriately Orient the plan to the Future Avoid Exaggeration Highlight critical risks

Cont..
Give evidence of an effective

entrepreneurial team Do not over diversify Identify the target market Keep the plan written in third person Capture the readers interest

Business Plan - Writing

Prewriting

Writing Revising Editing Proofreading

Business Plan - Presentation

Oral presentation is the key in selling the business plan to potential investors. Should be organised, well prepared, interesting and flexible. Develop and follow the outline, but also feel free to add and delete bits of information Do not memorize It will lack excitement, energy and interest

Cont..
Know the outline thoroughly Use key words in the outline to recall examples, visual aids, etc Rehearse the presentation to get a feel of its length. Be familiar with the equipment used for presentation OHP, slide projector, VCR etc The day before Practice the complete presentation using visual aids and equipment On the day Arrive early to setup and test equipment. Organise notes and visual aids.

Business Plan Presentation Audience

Mostly financial sources Antagonistic They put the entrepreneurs under pressure to test both the venture as well as the entrepreneur. Be prepared for a critical and skeptical audience Be prepare to handle the questions and learn. Never feel defeated, have commitment to improve. The goal is not as much to succeed the first time, as to succeed.

Business Plan Format

Section I: Executive Summary

Section II: Business Description A. General description of the business B. Industry background C. Goals and potential of the business and milestones D. Uniqueness of product and service

Section III: Marketing A. Research and Analysis 1. Target Market(Customers) identified 2. Market size and Trends 3. Competition 4. Estimated market share B. Marketing Plan 1. Market strategy-Sales and Distribution 2. Pricing 3. Advertising and Promotions

Section IV: Operations A. Identify location 1. Advantages 2. Zoning 3. Taxes B. Proximity to Supplies C. Access to transportation

Section V: Management A. Management team- Key personnel B. Legal structure- stock agreements, employment agreements, ownership. C. Board of directors, advisors, consultants.

Section VI: Financial A. Financial forecast 1. Profit and Loss 2. Cash flow 3. Break-even analysis 4. Cost Controls 5. Budgeting Plans

Section VII: Critical Risks A. Potential problems B. Obstacles and risks C. Alternative courses of action

Section VIII: Harvest Strategy A. Transfer of asset B. Continuity of business strategy C. Identify successor
Section IX: Milestone Schedule A. Timing and objectives B. Deadlines and milestones C. Relationship of events Section X: Appendix or Bibliography

I. Executive Summary
Not more than three pages. What, how, where, etc must be covered. Complete this section after finishing the business plan. To be presented very well, else rejection chance.

II. Business Description

The name of your Business A background of the industry with history of your company (if any) should be covered here. The potential of the new venture should be clearly described. Any uniqueness or distinctive features should be clearly described.

III. Marketing segment

Convince investors that sales projections and competition can be met. Use and disclose market studies. Identify target market, market position and market share. Evaluate all competition and specifically cover how and why you will be better than competitors. Identify all market sources and assistance used for this segment. Demonstrate pricing strategy since your price must penetrate and maintain a market share to produce profits. This need not be the lowest price. Identify your advertising plans with cost estimates to validate proposed strategy.

IV. Operations Segment

Describe the advantages of your location (zoning, tax laws, wage rates). List the production needs in terms of facilities (plant, storage, office space) and equipment (machinery, furnishings, supplies). Describe the access to transportation (for shipping an receiving). Indicate proximity to your suppliers. Mention the availability of labor in your location. Provide estimates of operations cost. Dont underestimate.

V. Management Segment
Supply the resumes of all key people in the management of your venture. Describe the legal structure of your venture. (sole proprietorship, partnership, corporation). Cover the added assistance(if any) of advisors, consultants, directors. Give information of how and how much everyone is to be compensated.

VI. Financial Segment

Give actual estimated statements. Describes the need sources for your funds and the uses you intend for the money. Develop and present a budget. Create stages for financing for purposes of allowing evaluation by investors at various points.

VII. Critical Risks Segment

Discuss potential risks before investors point them out for example,
Price cutting by competitors. Any potential unfavorable industry-wide trends. Design or manufacturing costs in excess of estimates. Sales Potential not achieved. Product development schedule not met. Difficulties of long lead times encountered in procurement of raw-materials or parts. Greater than expected innovation required.
Provide some alternative courses of action.

VIII. Harvest Strategy Segment

Outline a plan for the orderly transfer of companys assets (ownership). Describe the plan for transition of leadership. Mention the preparations (insurance, trusts etc) needed for continuity of the business.

IX. Milestone Schedule Segment

Develop a timetable or chart to demonstrate when each phase of the venture is to be completed. This shows the relationship of events and provides a deadline for accomplishment.

X. Appendix or Bibliography