Elements of a business plan - City University of Science and by malj

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									Elements of a Business Plan                                               Focus of this phase
                                                                          Part of this phase

                                                                 Draft     ‘Final’
                                                    Business   business   business
                                                    concept      plan       plan
              1. Executive summary

              2. Product or service

              3. Management team
 Importance




              4. Market and competition

              5. Marketing and sales

              6. Business system and organisation

              7. Implementation schedule

              8. Opportunities and risks

              9. Financial planning and financing

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Key questions – 1. Executive Summary

Business concept                  Draft business plan            ‘Final’ business plan

• What is your business           • What do you estimate         • What are the results of
    idea? In what way does it         your financing needs to        your detailed business
    fulfil the criterion of           be?                            planning?
    uniqueness?                   •   What are the sales, cost   •   What are your exact
•   Who are your target               and profit situations?         financing needs?
    customers?                    •   What are the most          •   How will you delegate
•   What is the value for those       important milestones           management tasks?
    customers?                        along the way to your      •   How much production
•   What market volume                goal?                          capacity is necessary?
    and growth rates do           •   What test customers have   •   How will the
    you forecast?                     you approached/could           implementation of your
•   What competitive                  you approach?                  business idea be
    environment do you face?      •   What distribution              organised?
•   What additional stages of         channels will you use?     •   What are your next
    development are needed?       •   What partnerships would        concrete steps?
•   How much investment is            you like to enter into?
    necessary (high level         •   What opportunities and
    estimation)?                      risks do you face?
•   What long term goals have     •   What is the picture on
    you set?                          patents?


                                                                                              1
BUSINESS PLAN

The Business Plan is a written document prepared by the
Entrepreneur that describes all the internal and external
elements involved in starting a NEW venture.

It is an integration of functional plans such as marketing,
finance, HR and manufacturing.

It is sometime referred as Game plan, Roadmap – answer
the questions.
• Where am I now?
• How will I get there?
• Where am I going?

                                                              2
                    • Title or cover page which provides the complete summary of
Introductory Page     the business plan’s content.

   Executive        • It should contains;
   Summary                • The name and address of the company.
                          • The name of the Entrepreneur(s) and their respective
Industry Analysis         Telephone numbers.

  Description of         • A paragraph describing the company and the nature of the
    Venture               business.
                         • The amount of financing needed the entrepreneur may
 Production Plan          offer a package that is stock or debt.
                         • A statement of the confidentiality of the report. This is for
 Marketing Plan           security purposes and is important for the Entrepreneur.
                    • Investors consider it is important because they can determine
                      the amount NEEDED without having to read through the entire
Operational Plan
                      plan.

 Assessment of
     Risk

  Financial Plan


    Appendix


                                                                                           3
Introductory Page

   Executive        • This section of the business plan prepared after the complete
   Summary            business plan is written.
                    • About 3-4 pages in length, the executive summary should
Industry Analysis     stimulate the interest of the potential investor.
                    • The investor uses the summary to determine if the entire
 Description of
                      business plan is worth reading.
   Venture
                    • Thus it would highlight in a concise and convincing manner.
Production Plan     • The key points in the Business Plan;
                        • The nature of the Venture.
 Marketing Plan         • Financing Needed
                        • Market Potential
Operational Plan
                        • Support, as to why it will succeed.
 Assessment of
     Risk

 Financial Plan


    Appendix


                                                                                      4
Introductory Page

   Executive
   Summary
                    • The potential investor, while assessing the venture on a
Industry Analysis     number of criteria, needs to know which industry the
                      Entrepreneur will be competing in.
 Description of
   Venture
                    • Competitive Analysis is also an important part of this section.
                    • Each major competitor should be identified with appropriate
Production Plan       strength and weaknesses described particularly, how will they
                      affect the new venture’s potential success in the market.
                    • Who are the customers?
 Marketing Plan
                    • The market should be segmented and the target market for the
                      entrepreneur should be identified.
Operational Plan
                    • A high growth market may be viewed more favourable by the
                      potential investors.
 Assessment of
     Risk

 Financial Plan


    Appendix


                                                                                        5
Introductory Page

   Executive
   Summary

Industry Analysis

 Description of     • Venture should be described in detailed;
   Venture              • The size and scope of the business.
Production Plan         • Key elements of product (s).
                        • The location of the business.
 Marketing Plan         • The personnel and office equipment that will be needed.
                        • The background of the Entrepreneurs and the history of
Operational Plan          the venture.
                    • LOCATION of the business may vital to its success,
 Assessment of        particularly if the business is retail or involves a service.
     Risk

 Financial Plan


    Appendix


                                                                                      6
                    • If a NEW VENTURE is a manufacturing operations, a production
                      plan is necessary.
Introductory Page
                    • This plan should describe the complete manufacturing process.
   Executive        • If some or all of the manufacturing process sub contracted, the
   Summary            plan should describe the sub contractor;
                         • Location.
Industry Analysis
                         • Reasons for selection.
 Description of          • Costs.
   Venture
                         • Any contract that had completed.
Production Plan     • If the manufacturing is carried out in whole / in parts by
                      Entrepreneur , he/she will need to describe the;

 Marketing Plan          • Physical plan layout.
                         • The machinery and equipment needed.
Operational Plan         • To perform the manufacturing operations.
                         • Raw material and supplier’s names.
 Assessment of
     Risk                • Addresses and terms.
                         • Cost of manufacturing.
 Financial Plan
                    • If a venture is not manufacturing operation but a RETAIL store
                      or service, this section would be titled “Merchandising Plan”
    Appendix             • The purchasing of merchandise.
                         • Inventory control system
                         • Storage needed should be described                           7
Introductory Page

   Executive
   Summary

Industry Analysis

 Description of
   Venture

Production Plan


 Marketing Plan     • It described how product/service will be;
                          • Priced
Operational Plan          • Promoted
                          • Distributed
 Assessment of
     Risk           • Specific forecasts for product (s) or service (s) are indicated in
                      order to project profitability of the venture.
 Financial Plan     • The budget and appropriate control needed for marketing
                      decisions.

    Appendix


                                                                                           8
Introductory Page

   Executive
   Summary

Industry Analysis

 Description of
   Venture

Production Plan     • It should describe the form of venture;
                          • Proprietorship
 Marketing Plan           • Partnership
 Organizational
                          • Corporation
     Plan           • If the venture is Corporation, it is important to detail the shares
                      of stock authorized, names and addresses of the resumes of
 Assessment of        the directors and the officers of the corporation.
     Risk
                    • Also provide an organization chart indicating the line of
                      authority and the responsibilities of the members of an
 Financial Plan
                      organization.
                    • This section will provide the information to the investor that
    Appendix          who will control the organization and how other member will
                      interact in performing their management functions.

                                                                                            9
Introductory Page

   Executive
   Summary          • Identify the constraints and alternative strategies to meet
                      business plan objectives.
Industry Analysis
                    • FIRST, the Entrepreneur should indicate the RISK to new
                      Venture.
 Description of
   Venture          • What happen if these risks become reality.
                    • Finally, the Entrepreneur should discuss the strategy that will
Production Plan       employed to either prevent, minimize or respond to the risk
                      should they occur.

 Marketing Plan     • Major risks for a new venture could result from a;
                        • Competitors’ reaction
Operational Plan        • Weaknesses in the marketing
                        • Production
 Assessment of
     Risk               • Management team
                        • New advances in technology that might render a new
 Financial Plan           product obsolete.
                    • Contingency plans and strategies illustrate to the potential
    Appendix          investor that the Entrepreneur is sensitive to important risks
                      and is prepared should they occur.

                                                                                        10
                     • It determine the potential investment commitment needed for
Introductory Page      the new venture and indicates whether the business plan
                       economically feasible.
    Executive
                     • Generally three Financial Areas are discussed in this section.
    Summary
                         • Entrepreneur should summarize forecasted sales and
Industry Analysis          expenses.
                              –For at least first three years.
  Description of
                              –It includes;
    Venture
                                  •   Forecasted sales
 Production Plan                  •   Cost of goods sold
                                  •   General and Administrative expenses.
 Marketing Plan
                                  •   Net profit after taxes can then be projected by
                                      estimating income taxes.
 Operational Plan    • Second area is cash flow figures for three years with the first
                       year projection provided monthly.
 Assessment of
     Risk
                     • Projected Balance Sheet;
                         • This shows the financial condition of the business at a
Financial Planning         specific time.
                     • It summarizes;
    Appendix               • Asset of a business
                           • Liabilities (what is owed)
                           • The investment of the Entrepreneur and any partner.         11
Introductory Page

   Executive
   Summary

Industry Analysis

 Description of
   Venture

Production Plan
                    • Contains the backup material that is not necessary in the text of
                      the document.
                    • Reference to any of the document should be made in the plan
 Marketing Plan       itself.
                    • Letters from customers, subcontractors, distributors are
Operational Plan      examples of information that should be included in Appendix.
                    • Any documentation of the information .i.e. secondary data or
 Assessment of        primary research data used to support plan decision should be
     Risk             included.

  Financial Plan
                    • Lease , contract, or any other types of agreement that have
                      been initiated may also be included in appendix.
                    • Finally, price lists from suppliers and competitors may be
  Appendix            added.


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