The Business Plan :The Business Plan :Creating and Starting Creating and Starting

The VentureThe Venture

The Business Plan :The Business Plan :Creating and Starting Creating and Starting

The VentureThe Venture

Why develop a Business Plan?

• “All the work you do in thinking up your idea, testing it, studying it, and producing it, has been for nothing if you can’t sell it. Whether you start your own business to produce and sell your invention, subcontract out the manufacturing part, or sell your rights in return for a percentage of the proceeds, you need a business plan.”

Who Reads The Plans?

• The business plan may be read by employees, investors, bankers, venture capitalists, suppliers, customers, advisors, and consultants.

• There are three perspectives should be considered in preparing the plan :– Perspective of the entrepreneur– Marketing perspective– Investor’s perspective

Presenting The Plan

• It is often necessary for an entrepreneur to orally present the business plan before an audience of potential investors.

• In this typical forum the entrepreneur would be expected to provide a short (perhaps 20-minutes or half-hour) presentation of the business plan.

What is a Business Plan ?

• “A business plan is vital for enterprises needing investment, grant funding or significant borrowing; more so for innovation ventures, as the greater number of ‘unknowns’ makes it even harder to attract backing. But don’t make the mistake of thinking that only other people need your business plan. It’s primarily a tool to reveal possibly awkward truths about your business to you.”

• It is a means of communicating your vision to the outside world to help you attract talent and money to your enterprise

• The quality of a business plan is measured by its ability to hire employees, gain contracts from potential customers and negotiate monetary investment from an investor who’s interest is solely to make profit

A business plan is a written document prepared by the entrepreneur that describes all the relevant internal and external elements and strategies for starting a new venture.

It is a integration of functional plans such as marketing, finance, manufacturing, sales and human resources

Business Plan ?

Some questions •Explain how you make money

•Who pays you?•How do you collect?•What are your channels of distribution?•How do you integrate suppliers?

•Define your primary, secondary, and other audiences•Show some numbers•How will you find, sell, and retain customers?•Advertising and promotion budget•Provide a complete view of the competitors•Direct and indirect competitors•Current and anticipated competitors•Competitor strengths and weaknesses•Your competitive advantages

Describe your key players

•Management Team•Board of Directors•Board of Advisors•Major Investors

•Who are you missing? Financial Projections

•Cash Flow Projections•Income Projections•Balance Sheets•Assumptions

Some questions

Plan for the Future while being Successful Today

• Understand the Components of a Business Plan • Develop Goals and Objectives to get your

Business on a Path to Success• Improve both the Short-Term and Long-Term

Vision of your Business• Find New Business Opportunities • Attract Investors • Grow your Business • Gain a better Understanding of your Market

Start Planning Your Success Today

Who should write the plan?

• The business plan should be prepared by the entrepreneur.

• The entrepreneur may consult with many other sources in its preparation, such as lawyers, accountants, marketing consultants, and engineers.

Qualities of a good Business Plan

• Well thought out and can be visualized

• •Articulates the strengths and the vision of your business

• •Clearly outline the risks associated• •Present clear evidence of the

viability of the venture• •Should compel action and get

investors excited

Business Plan Components

Business Plan Components

Business Plan Components

• Business summary• Market analysis• Business Team• Strategy Information• An overview of the product/service• Financial information

Business Summary

• Describe your business and how it’s different from the other businesses

• An overview of the team and relevant skills/experiences they bring to the biz

• Define the customer and how you business will reach her/him

• Who are your potential competitors?• How much money do you need to raise

and how much profit should investors expect?

Market Analysis• How did your company identify the opportunity? • What is the market size in Selling's ?• What resources does the company have that

allows it to fulfill the needs?• How will you enter the market?• How will you expand?• Where do you see the company in the future?• What value does your company create?• Who is your competition and what edge do you

have?

Business Team• What are the backgrounds of the

management team and directors?• What does each team member bring to

the business?• What are the team’s previous

successes in new ventures?• How does the management team form

a cohesive unit which can work efficiently together?

Business Team Qualities

• Opportunity cost: Does the team have any highly skilled professionals?

• Can the team work together as a unit?• What management and leadership

principles will the team employ?• Does the team reflect that it has very

good knowledge of the market?

Strategy Information (Battle Plan)

• Describe the customer’s demographics• How will the customer realize value from

your product or service?• How does the company intend to reach

the customer and keep her/him?• How will the company safeguard the

customer from the competition?• How does the company intend to keep

customers and enter new markets?

Product Overview• Describe your product in as much

detail as you can.• If possible, have a prototype of

your product or service• Show how the product/service

would be used by the consumer • Explain the requirements for

producing your product

Financial Information

• In this part you show a budget for your business

• Explain how much you intend to raise to get started

• What are your projected expenses and revenues

• In what period do you expect to be profitable and show a return to your investors?

Information Needs

• Before committing time and energy to preparing a business plan, the entrepreneur should do a quick feasibility study of the business concept to see whether there a any possible barriers to success.

• Internet can be a valuable resource.

Outline of a Business Plan• Introductory Page

– Name and address of business– Name(s) and address(es) of

principal(s)– Nature of business– Statement of financing needed– Statement of confidentially of report

Outline …

• Executive Summary – Three to four pages summarizing the complete business plan– What is the business concept or model?– How is this business concept or model

unique?– Who are the individuals starting this

business?– How will they make money and how much?

Outline …

• Environmental and Industry Analysis– Future outlook and trends– Analysis of competitors– Market segmentation– Industry and market forecasts

• Description of Venture– Product(s)– Service(s)– Size of business– Office equipment and personnel– Background of entrepreneurs

Outline …

• Production Plan– Manufacturing process (amount

subcontracted)– Physical plant– Machinery and equipment– Names of suppliers of raw materials

• Operational Plan– Description of company’s operations– Flow of orders for goods and/or services– Technology utilization

Outline …

• Marketing Plan– Pricing– Distribution– Promotion– Product forecasts– Controls

• Organizational Plan– Form of ownership– Identification of partners or principal shareholders– Authority of principals– Management-team background– Roles and responsibilities of members of organization

Outline …

• Assessment of Risk– Evaluate weakness of business– New technologies– Contingency Plans

• Financial Plan– Pro forma income statement– Cash flow projections– Pro forma balance sheet– Break-even analysis– Sources and applications of funds

Outline …

• Appendix (contains backup material)– Letters– Market research data– Leases or contracts– Price lists from suppliers.

Using and Implementing The Business Plan• The business plan is designed to guide the

entrepreneur through the first year of operations.

• Implementation of the strategy contain control

point to ascertain progress and to initiate contingency plan if necessary.

• Business plan not end up in a drawer somewhere once the financing has been attained and the business launched.

Measuring Plan Progress

• Entrepreneur should check the profit and loss statement, cash flow projections, and information on inventory, production, quality, sales, collection of accounts receivable, and disbursements for the previous month.– Inventory control– Production control– Quality control– Sales control– Disbursements

Updating the Plan

• The most effective business plan can become out-of-date if condition change.

• If the change are likely to affect the business plan, the entrepreneur should determine what revisions are needed.

• In this manner, the entrepreneur can maintain reasonable targets and goals and keep the new venture on a course that will increase probability of success.

Why Some Business Plans Fail

• Goals set by the entrepreneur are unreasonable.

• Goals are not measurable• The entrepreneur has not made a total

commitment to the business or to the family.• The entrepreneur has no experience in the

planned business.• The entrepreneur has no sense of potential

threats or weaknesses to the business.• No customer need was established for the

proposed product or service.

The EndThe EndThe EndThe End