For class room discussion By Prof. S.

Suryanarayanan

CREATING A BUSINESS PLAN

Why have a business plan? What is the purpose? Who is the audience?

Define your purpose Gather resources Develop a strategy Gain support

TYPICAL STRUCTURE FOR A BUSINESS PLAN

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Cover page and table of contents Executive summary Business description Business environment analysis Industry background Competitive analysis Market analysis Marketing plan Operation plan Management summary Financial plan Attachments and milestones

COVER PAGE AND TABLE OF CONTENTS

1.

What to include in the first elements your readers will look at.

2.

Signals professionalism; first impression is the best impression

EXECUTIVE SUMMARY

How to provide a helpful summary of your plan for readers. A quick understanding of the proposal; appears first in the plan but written last. A. Industry and market environment B. Special and unique business opportunity C. Key strategies for success D. Financial potential E. Management team F. Resources and or capital requested

BUSINESS DESCRIPTION

Gives details like history and nature of business, purpose of business; states objective of business and how will be successful Introducing businessshare the enthusiasm for the venture Right information like what kind of business, which market, what product/ services, customer profile, why they will use this product, financial status etc Highlight the business model Tips: Business description may be rewritten after completion of first draft of business plan; some areas could have changed or developed during the process of writing business plan.

1.

BUSINESS ENVIRONMENT ANALYSIS

Strategies for Conveying business potential. Understanding industry ,competition and market fundamental BE analysis shows what business opportunity available in industry and market. Questions to be answered: What is industry? Who are competitors? What is the market? Who are customers in the market?

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INDUSTRY BACKGROUND

To clarify the big picture

Information to understand the shape, size,trends and key features in the industry.
Define existing products and services

Sizing of the industry industrys production capacity

Identify important trends Anticipate barriers to industry technology, regulations etc Tip: Record sources of data and information to substantiate the trend analysis.

COMPETITIVE ANALYSIS

Competition can be from industry of same product manufacturers or from other industry solving same problems of customers Identify competitors Distinguish business from rivals Assess threat from competition Tip: World changes constantly; competitor research is constant process

MARKET ANALYSIS

Strategies to clarify who customers will be. Focus on target market Assess market size and growthpotential and opportunity Define the target market Articulate value proposition ( unique set of benefits to customers ).

Tip: Claims about market growth and potential should be supported by verifiable information

MARKETING PLAN

Tips to show how to attract customers

Environment analyzed; studied the competition; target market identified; opportunity discovered. Now a plan required to reach product/ services to customers who will be encouraged to respond in preference to competition or alternative option. Develop market plan-marketing objective, understand consumer behaviour Define marketing mixproduct ,price, place, promotion.
Tip: Marketing plan is dynamic; to be used to monitor business progress

OPERATION PLAN

To articulate business daily activities Gives overview of flow of daily activities; transforming raw material (ideas ) to products ( services ). Identifies key factors sourcing of materials, technological innovation, location advantages, assessment of skilled employees etc. Flow charts, process description etc. Capacity determination ,utilisation etc. Tip: Assess breakeven point while determining capacity.

MANAGEMENT PLAN

To introduce management team. Describe the team members and their qualifications and experience
a. b. c. d. e.

Past work experience Past achievements Reputation in industry Knowledge, skills and special abilities Commitment to the venture

Introduce team as a unit

FINANCIAL PLAN

Suggestions to show how numbers will work.

Very critical; translates all other parts of the business into anticipated financial results
Readers perspective investment committee member, investor/ venture capitalist / lender/ banker/ entrepreneur himself. Hurdle rate, ROI, debt servicing capacity, pay off to all efforts. Capital requirement Sources and applications of funds Financial projections ( details in appendix ) Break even analysis Risk analysis

TIPS WHILE PREPARING FINANCIAL PLAN

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Do not over burden business with too much debt; debt can weigh down company's growth. Entrepreneur should do the number crunching himself even if expert advice is taken. Pay attention to cash flow; do not think of profits only initially. Appendix to financial plan to consist of:
1. 2. 3. 4.

Assumptions Projected income statement Projected balance sheet Projected cash flow statement