Planning is a process leading to the formulation of a plan
A plan is the outcome of the planning process The planning process (thinking, researching, consulting, discussing) is at least as important as the final written plan Business plans A business plan is: A report showing the plans of the business, often used to attract finance from investors and creditors A document that is designed to provide information about a new business or venture to persuade financial backer to invest in a business The business plan describes out the market opportunities the business intends to exploit, how it will do so and what resources are required Business plans & raising finance A business plan is essential to: Persuade people to invest in an enterprise Convince creditors about the credit worthiness of the enterprise To persuade banks and others to lend or invest money it is necessary to: Demonstrate the lender/investor has a good chance of being repaid or getting a good return on their investment Build confidence about the firm and owners capabilities Demonstrate that there is a good market for the product or service Internal uses of a business plan Clarify objectives Provide a sense of direction, purpose and urgency Plan all aspects and ensure that nothing is overlooked Provide a checklist to help run and control the business Monitor progress and success Improve performance Improve motivation and communication Allocate responsibility Better control and co-ordination and greater consistency Failing to plan makes an organisation reactive, vulnerable to threats and closed to opportunities Key planning questions Where are we now? How did we get here? Where would we like to be? How do we get there? Are we on course? Stages in business planning (1) Situational analysis Analyse the external environment Analyse the internal environment (2) Objectives Define the business and mission Set corporate objectives (3) Strategy Formulate strategies (4) Tactics Make tactical plans (5) Actions Implement the plan (6) Control Build in procedures for monitoring and controlling Charactertistics of effective business plans Business plans are more effective if They are carefully researched They contain detailed market analysis They are used as a reference point for decisions Actual performance is compared with objectives and objectives are regularly updated They evolve over time to ensure that growth targets are realistic and challenging Ten common mistakes in producing a business plan 1. Failing to plan in the first place 2. Shrugging off values and vision - these are there to remind the entrepreneur where he/she wants to go 3. Second guessing the customer - ignore your customer at your peril 4. Underestimating the competition 5. Ignoring the firms own strengths and weaknesses 6. Mistaking a budget for a plan 7. Shying away from reasonable risk 8. Allowing one person to dominate the plan 9. Being afraid to change 10. Forgetting to motivate and reward
A well-prepared, attractive written business plan is an essential document in the quest for either debt or equity financing, to provide a benchmark against which to compare actual company performance, and to refine strategies and develop ideas on how the business should be conducted. Although the written business plan of a start-up venture must be tailored to the particular business and industry, the essential items in a written business plan include the following: COVER PAGE The cover page should include the following: A. Company Name B. Logo C. Contact Person D. Address and Phone Number E. Date and State of Incorporation F. Confidentiality and Nondisclosure Statement TABLE OF CONTENTS AND TABLE OF APPENDICES The table of contents and table of appendices should refer the reader to the sections and subsections of the business plan. EXECUTIVE SUMMARY The executive summary is the first part of the business plan to be read by potential lenders and investors. In the case of a poorly written executive summary, the executive summary is often the only part of the business plan that gets read. Accordingly, you should take the time necessary to prepare a dynamic executive summary that describes the business, identifies the stage of the company and its strategic direction, describes the company's market and marketing plan, briefly discusses the background of management, and states the company's revenue and profit expectations. Remember, you only get one chance to make a good first impression. BODY OF BUSINESS PLAN The body of the business plan should include detailed discussions of the following subjects: I. Background and Purpose A. History - a brief overview of the history of the company B. Current Status of Company C. The Product or Service Concept D. Business Objectives II. Market Analysis A. Overall Industry or Market B. Specific Market Segment C. Competition D. Sales Forecasts III. Product or Service Development A. Research and Development B. Production Requirements and Process C. Proprietary Features and Protections Thereof D. Quality Assurance Measures E. Contingency Plans IV. Marketing A. Survey Results B. Marketing Strategy C. Contingency Plans V. Financial Data A. Current Financial Position B. Accounts Payable C. Accounts Receivable D. Cost Control Measures E. Break-Even Analysis F. Financial Ratios G. Financial Projections VI. Organization Structure and Management A. Key Personnel -- describe the qualifications and responsibilities of management. The quality of management is often the key factor in obtaining debt or equity funding. B. Other Personnel C. Directors and Advisors D. Professional Advisors. E. Key Future Personnel F. Forecasted Labor Force VII. Ownership A. Business Structure B. Current Capitalization C. Forecasted Capitalization -- how much money will be sought, the form of the proposed investment, how the funds will be used, and the percentage of ownership to be provided in exchange for the investment D. Exit Strategy -- how and when investors will be able to get their money out of the business E. Royalty or Licensing Arrangements VIII. Risk Factors Describe the key risks facing the company, including risks presented by: A. Cost Overruns B. Failure to Meet Production Deadlines C. Problems with Labor, Suppliers, or Distributors D. Sales Projections not Met E. Unforeseen Industry Trends F. Competition G. Unforeseen Economic, Social, or Political Developments H. Technological Developments I. Inadequate Capital J. Business Cycles K. Other Risks IX. Conclusion A. Summary B. Timetable for Funding and Future Developments APPENDICES A. Photograph of Product or Service B. Sales and Profitability Objectives C. Market Surveys D. Production Flowchart E. Marketing Materials F. Advertisements G. Press Releases H. Historical Financial Statements I. Table of Current Profit and Loss Statement J. Projected Profit and Loss Statement K. Cashflow Projections L. Balance Sheet M. Projected Balance Sheet N. Asset Acquisition Schedule O. Break-Even Statement P. Key Contracts