Business Plan Development

The process of setting up a business is preceded by the decision to choose entrepreneurship as a career and identification of promising business ideas upon a careful examination of the entrepreneurial opportunities. Generation of ideas is not enough; the business ideas must stand the scrutiny from techno-economic, financial and legal perspectives. That is, after the initial screening of the ideas that do not seem promising prima facie, you should conduct an in-depth examination of the chosen three-four before settling for the one where you would like to exert your time, money and energies.

You should prepare a business plan that will serve as the road map for effective venturing, whether you may require institutional funding (in which case it is necessary to do so) or not. Setting up of new business enterprises is a very challenging task; you are likely to encounter many problems en route. It's advisable to be aware of these problems as to forewarn means to fore arm.

The feasibility analysis of the chosen 3-4 project ideas would help you zero in on to the one where you would like to commit yourself. Now, is the time to decide in advance on how you intend to go about everything related to the launch of your business and its subsequent operations? The difference between the feasibility report and business plan essentially lies in 'action orientation.' As such, a business plan is a blue print of entrepreneurial intentions. The business plan is a written document that serves as a road map in the entrepreneur's journey from start-up to project implementation. It describes all the relevant elements involved in starting a new business enterprise. It is often an integration of functional plans such as marketing, finance, manufacturing and human resources. Potential investors and suppliers too are interested in a business plan, as it can prove helpful in taking decisions.

The depth and detail of the business plan depends upon the size of the market, nature of business [manufacturing/trading/service] and degree of competition. For, e.g., an entrepreneur planning to market a new washing machine will need a comprehensive business plan. On the other hand, an entrepreneur who plans to open a general provisions corner store will not need such a comprehensive business plan. Business plan is important due to the following reasons:

(i) It helps the entrepreneur to decide where he wants to go.
(ii) It helps him to determine the viability of the venture.
(iii) It provides guidance to the entrepreneur in planning realistic goals and targets, in organizing and even in identifying possible roadblocks.
(iv) It is a pre-requisite to obtain finance.

While outlining a business plan, you should start with describing about your business and product or services. Then indicate the market you are targeting and the stage of development your company is in. If you get stuck at a particular part of the plan, leave it for a while and get back to it later and finish it. You cannot make a perfect first draft. So just get some thoughts down to start the process. You can always come back and change it or polish it up later. While making a business plan keep the following points in mind.

1. The target audience: While working your business plan, keep in mind the intended audience and why you are writing plan. For example, if you are trying to get debt financing, the emphasis should not be on the huge profit potential but on the certainty that the debt can be repaid.

2. Business strategy: The first part of the business plan should be geared towards helping develop and support solid business strategy. The plan should explain the market, the industry, target customers and competitors. The second half of the business plan should explain how to execute your selected business strategy. Your products, services, marketing and operations should all closely tie in with your strategy.

3. Competition: As an entrepreneur, you need to identify where you will do things in a manner similar to your competitors and where you will do things differently, what will be your real strengths and real weaknesses. Focus your plan on being different than your competitors'. Think over the points-Can you find a unique strategy? Can you position your products differently? Can you use different sales or marketing vehicles? Your business plan should be able to answer these questions.

4. Be realistic: So many business plans do not work in the real life as there are always going to be some unseen expenditures, cost overruns, expensive problems and items that you simply overlooked. So forecast realistically and try to have a contingency reserve.

5. Involvement of people for creating the business plan: In seeking funds from banks, venture capitalists or other outside investors, the chances of success are greater if your management team includes a person whose name carries some weight, to get the plan in synchronized fashion, and to get any disagreements, out in the open. The more input people have in creating the plan, the more responsibility they will feel towards it.

6. About the contents of a bus: A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. A business plan will have: -

1.0 Executive Summary

Chart: Highlights

1.1 Objectives

1.2 Mission

1.3 Keys to Success

2.0 Company Summary

2.1 Company Ownership

2.2 Start-up Summary

Table: Start-up

Chart: Start-up

2.3 Company Locations and Facilities

3.0 Services

3.1 Service Description

3.2 Competitive Comparison

3.3 Sales Literature

3.4 Fulfilment

3.5 Technology

3.6 Future Services

4.0 Market Analysis Summary

4.1 Market Segmentation

Table: Market Analysis

Chart: Market Analysis (Pie)

4.2 Target Market Segment Strategy

4.2.1 Market Needs

4.2.2 Market Trends

4.2.3 Market Growth

4.3 Service Business Analysis

4.3.1 Business Participants

4.3.2 Distributing a Service

4.3.3 Competition and Buying Patterns

4.3.4 Main Competitors

5.0 Strategy and Implementation Summary

5.1 SWOT Analysis

5.1.1 Strengths

5.1.2 Weaknesses

5.1.3 Opportunities

5.1.4 Threats

5.2 Strategy Pyramid

5.3 Value Proposition

5.4 Competitive Edge

5.5 Marketing Strategy

5.5.1 Positioning Statement

5.5.2 Pricing Strategy

5.5.3 Promotion Strategy

5.5.4 Distribution Strategy

5.5.5 Marketing Programs

5.6 Sales Strategy

5.6.1 Sales Forecast

Table: Sales Forecast

Chart: Sales Monthly

Chart: Sales by Year

5.6.2 Sales Programs

5.7 Strategic Alliances

5.8 Milestones

Table: Milestones

Chart: Milestones

6.0 Management Summary

6.1 Organizational Structure

Org. Chart: Organizational Chart

6.2 Management Team

6.3 Management Team Gaps

6.4 Personnel Plan

Table: Personnel

7.0 Financial Plan

7.1 Start-up Funding

Table: Start-up Funding

7.2 Important Assumptions

7.3 Key Financial Indicators

Chart: Benchmarks

7.4 Break-even Analysis

Table: Break-even Analysis

Chart: Break-even Analysis

7.5 Projected Profit and Loss

Table: Profit and Loss

Chart: Profit Monthly

Chart: Profit Yearly

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

7.6 Projected Cash Flow

Table: Cash Flow

Chart: Cash

7.7 Projected Balance Sheet

Table: Balance Sheet

7.8 Business Ratios

Table: Ratios

7.9 Long-term Plan

Table: Sales Forecast

Table: Personnel

Table: Profit and Loss

Table: Cash Flow

Table: Balance Sheet

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