BUSINESS PLAN

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BUSINESS PLAN

11/18/15

a systematic evaluation of a ventures chances for success.

a way to determine the risks facing a venture.

a game plan for managing a business successfully.

a tool for comparing actual and target results.

an important tool for attracting capital.

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Why is a business plan important?

1. Serves as a developmental tool for the
organizational founders
2. Useful for helping to clarify the ventures
vision and mission
3. Defines planning and evaluation guidelines
for managing the ongoing entrepreneurial
venture
4. Helps an entrepreneur secure needed
financial resources
5. Its an effective tool for guiding growth

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WHO WRITE A BUSINESS PLAN

New business owner

New business owner seeking outside
funding
Existing business owner seeking outside
funding for expansions
Any Business owner who want to increase
the success of their business.

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GENERAL RULES
Make

it an interesting read!

Bullet points
Balance creativity while still getting your point across
Use short (1-3 sentence) paragraphs
Be careful with using industry jargon

Write

with objectivity

Consider using the third-person

Focus

more on initial future (1-2 years), less on

later years
Average 30-40 pages ( length depends on the
business and industry), take 6 months to 1
year).
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GENERAL RULES

Ten characteristics
1.
2.
3.
4.
5.
6.
7.
8.
9.

Clear, realistic financial projections

Detailed market research
Detailed competitor research
Descriptions of key decision makers
Thorough summary
Proof of vision
Good formatting clear writing
Brief and concise
Writing that demonstrates and
understanding of the importance of the
bottom line
10. A plan that captures you
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OUTLINE OF A BUSINESS PLAN

INTRODUCTORY

SECTION
BUSINESS SECTION
FINANCIAL STATEMENTS
APPENDICES

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Identity
information
The words Business
Plan
Your name and
business name
Company logo
Address
Telephone number
Fax Number
Email Address
Web Address (URL)
COVER SHEET

Submission date
Looks vs. content

Executive Summary
Most

important part of the plan

Concise explanation

Venture objectives
Market prospects
Financial forecasts
Sources and uses

WRITTEN

LAST
Average 2-3 pages
Interesting to read.

Table of Contents
Include

page numbers
List of headings
Major
Subsections
Same

font!

BUSINESS SECTION
INDUSTRY
An overview of the industry, competitors, growth in the market.

If market is not growing then, the plan must convince the investors
about the potential of business

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BUSINESS SECTION
PRODUCT

OR SERVICE

In-depth and clear description of product and services provided in

the market.

Describe the product and service considering the audience in mind.

Also in this section, investors look for identification of a core

competency.

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BUSINESS SECTION
THE

MARKET

Evaluation of target market, customers and competitors.

What is the gap between your product and competitors product.

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BUSINESS SECTION
MARKETING

PLAN

How Business plans to attract, educate and retain customers.

It includes selected medium to advertise your business

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BUSINESS SECTION
MANAGEMENT
Most important section, as most of the investors thinks that without
right team none other part of the business really matters.

Invest in people not in ideas

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FINANCIAL STATEMENTS
Thousands

of potentially successful businesses fail because of poor

financial management.
Providing financial data in a business plan is necessary for all businesses
The financial section of a business plan begins with a brief narrative
summarizing the projections, addressing key figures including those for
sales, expenses, net income, and total growth in assets and net worth
(Arkebauer, 1995).
including an income statement, balance sheet, statement of cash flows,
and break-even analysis.
Typically, five-year projections are used, with month-to-month projections
for the first year, quarterly for the second and third year, and annual
projections for the fourth and fifth years.
Readers of business plans realize that projections are a best guess but
similar to the pricing of products or services.
If the assumptions are realistic and logically developed they are more
believable. Before presenting a business plan to a prospective financier, it
is recommended that the owner have the financials reviewed by a
certified accountant.
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Income statement
The

principal purpose of the income statement is to report

whether or not the entity operated at a profit for the reporting
period.

The

income statement begins by stating revenues from

operating activities.

Revenues

are measured by the amount of cash received or

expected to be received from a transaction.

To

calculate net income, the costs and expenses incurred in

generating those revenues are subtracted.

The

income statement is also valuable as a planning tool to

control business operations (Brown, 1996).
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Balance sheet
A

balance sheet reports what assets,

liabilities, and owners equity an entity has
at a given point in time.

The

business plan should include a current

balance sheet in addition to a projected
balance sheet showing the expected
growth.
In writing a business plan for a start-up
business a personal balance sheet for the
owner, outlining personal assets and
liabilities, is also included.
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Statement of cash flows

The

statement of cash flows is the most important of the

financial statements because the single thing that
distinguishes a business that is going to make it from one that
is not is the capacity of the entrepreneur to manage the cash
flow (Gracie, 1997).

This

is because one of the greatest threats to start-up

businesses is lack of liquidity. Using expected cash inflows and
outflows can help management determine when additional
cash will be needed throughout the year and plan accordingly.

the

cash flow statement is also critical because of its

importance to the readers of business plans. Bankers use it to
determine how the loan will be repaid, and an equity investor
uses it to determine the compensation expected from the
investment (OHara, 1995).

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Appendix of a business plan

Writing

a business plan requires an

entrepreneur to use a variety of assumptions
in order to forecast future events.
These assumptions range from how fast the
market will grow, to how the competition will
react to a new entrant into the marketplace.
The appendix also includes any information to
supplement important references in the
business plan.
Appendix information typically includes
research data, additional financial information,
diagrams, and personal testimonials.
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