The Business Plan
The nature of a Business Plan is that its content, and even its form, will vary
considerably from company to company. A service company will have a different
“product” than a manufacturing company and that needs to be reflected in the answers
to the questions below which are primarily manufacturing oriented.
We have organised the subject matter of the Business Plan into the following
headings:
Description of the Company
The Product
Relevant Market
Marketing
Production Facilities
Impact of the Proposed Investment Project
Historical Financial Information
Investment Plan
Financing Plan
Financial Projections
Description of the Company
When was the business founded: who were the founders?
What is the corporate structure: partnership, joint-stock company?
If there are shareholders, indicate how many and whom? How are shareholders
represented in a Board of Directors?
Who are the senior management and the most important line management? What is
the management structure? Will additional line management be needed as a
result of the investment program?
What, if any, have been all external sources of equity or of debt? How much of any
equity or debt provided by third parties currently exists?
Is there a JV: provide the JV contract if so.
How many employees does the company employ?
Are there any planned redundancies?
What are the company's principal labour unions? What is their involvement in the
management of the company?
The Product
What are the company's products? These should be spelled out in detail.
On which products will the investment program focus?
What are the major inputs required for production?
Who are the principal suppliers?
What proportion of inputs do they supply?
What are the terms of payment to suppliers?
How, in layman's terms, does the production process work?
What if any patents or licensing agreements exist with reference to particular
products?
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Provide a description of the principal production facilities and their respective
functions?
Relevant Market
What are the company's principal markets, including the specific sub-markets for
important individual product lines? Which companies are the major customers?
Does the company have any large single customers?
Who are the company's chief competitors?
Which, if any, new competitors will arise as a result of the proposed investment
program?
From which competitors does the company propose to take market share, and how?
How do the company's products compare to those of their competitors? Are they less
expensive, better (if so, in what way better), have they more flexible production
schedules?
Marketing
How are products marketed?
Is distribution done differently for different product lines?
How does this compare with the industry norm?
How many people work on marketing, and how are they organised?
How are products priced? How will new product be priced?
What if any promotional plan will be used to introduce new product into the market?
Production Facilities
What are the company's current production facilities?
Show the date of construction of each facility, noting redevelopment dates where
significant
Provide a short general explanation of the production processes employed:
What are the basic raw materials?
From where are these sourced?
What is the time schedule from raw material to finished product(s)?
What is the volume of production for different products?
At what percentage of available capacity are plants currently operating?
What other assets does the company have? What is the value of these assets?
What additional capital expenditure requirements, not associated with the proposed
investment program, will occur over the term of the funding.
Impact of the Proposed Investment Project
In the context of the production process described above, what is the investment
project?
Will new production facilities be built?
Which existing facilities will be altered? Describe proposed alterations to each
facility in turn.
How will any of the characteristics of the process as described above be changed?
How many new staff will be required to work new facilities?
How many existing staff will be re-employed?
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What training will be necessary, and how long is it expected to take?
Provide a detailed breakdown of the proposed investment program and the time
schedule for its implementation.
Historical Financial Information
Provide annual profit & loss statements for the last 3 years.
Provide an estimate of the annual profit & loss statement for the current year.
Provide balance sheets for the last 3 year-ends.
This information can be provided in IAS format.
Financing Plan
Show in tabular format the timing of expenditures related to the investment program
and the corresponding timing requirement for financing.
What are all sources of financing for the project? Show equity funding, all sources of
domestic funding, and all sources of foreign currency funding.
Indicate clearly the amount and required timing of funding from the EIP Investment.
Financial Projections
Show full cash flow projections for the proposed funding term. These should be
prepared on a quarterly basis for at least the first year of forecasts, and on an
annual basis thereafter.
Particular attention should be paid to revenue forecasts.
For companies with existing revenues, revenues generated by on-going production
facilities should be identified separately from those generated as a result of the
investment program.
Revenue forecasts should in any event be constructed "from the bottom up": units of
production should be forecast for all major product lines, and prices separately
forecast and applied to unit forecasts.
Cost forecasts should be similarly detailed: Costs of Goods Sold should be identified
for all major product lines, and major fixed costs separately identified.
Working capital requirements should be separately forecast.
All cash flow forecasts should also include a proposed schedule of interest payment
and debt repayment.
All assumptions contained in the cash flow forecasts should be explicitly stated on a
separate sheet: annual increase in unit sales, annual increase in unit price,
increase in number of employees, increase in wage cost per employee, inflation
rate, etc.
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