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Business plan template

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Simplified outline for a business plan. This is better used as a guideline than as a rigid framework that needs to be followed in sequence.

Simplified outline for a business plan. This is better used as a guideline than as a rigid framework that needs to be followed in sequence.

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  • 1. Business Plan TemplateIntroductionOnce the broad strategy, business model or growth areas have been determined, the next stepis to create a detailed business plan.The business model describes the revenue opportunity, market size etc at a high level. Itprovides executive leadership an opportunity to determine whether the competing proposals/business models are aligned with their objectives.The next step is to understand how and when this new product or service will be created, whatfinancial return it will bring and what external or internal barriers need to be overcome to make itsuccessful. Great rigor is required to make sure that the estimates are realistic becauseexecutives make the go/ no go decision based on the business plan. Further, the business planis used as the basis for a test, pilot or initial launch. At this stage, the company’s plans maybecome public so the business plan has to minimize the chance of adverse reactions. Business plan completes the planning stage Plan Pilot Launch Select business Develop business Plan for pilot Run the pilot Modif y solution & Soft launch Final launch model plan plan for launchProcessCreating a business plan may take anything between a few days and a few months, dependingon the complexity of the industry, the organization and number of resources available. Itgenerally helps to dedicate at least one person to the task, to ensure speed as well asconsistency. However, a broader group should be involved in making decisions. Anyone who isexpected to contribute to the success of the new venture should have a role. If the leader of thenew venture has been identified, he/ she should lead the business planning as well.A common fallacy is to focus on the “plan” part rather than the “business” part of the businessplan. Many analysts get caught up in spreadsheets, projections etc and miss the whole point –which is to answer questions like: “How will this business really work?” and “How will we get itstarted?”TemplateWhile there are no rigid templates, there are a few areas that the plan must describe.1. What is the product or solution offered?While this should have been defined broadly in the business model, it needs to be explainedhere in much more detail. The focus now is on: • How does it work?Insightory Inc. 1
  • 2. • What is the delivery model? • What resources are required to build and deliver the product?2. What is the market size? What are the projected revenues?A preliminary market size would be available from the previous stage. However, the productdefinition may have changed somewhat and that may result in a smaller or larger market size.Adding a competitor analysis at this stage will help determine potential market share, price-points and key differentiators.The revenue projection, in particular, may change a lot at this stage. However, revenueprojections tend to be very inexact and hence this shouldn’t be a major focus area.3. What is the start-up cost?Even the most successful product will have a period of time before it becomes breaks even. Thestart-up cost is the cumulative cost incurred till this happens. Major categories of start-up costinclude: • Labor • Facilities • Raw material/ inventory/ working capital • Technology – hardware, software and services (e.g. website development) • Marketing • Training • Travel & transportation • Insurance • Vendor and professional fee (legal, financial, consulting etc) • Shipping & mailing • Regulatory & licensing • Other overhead costsSometimes there is a trade-off between start-up cost and time i.e. higher cost may enable aquicker start-up.4. How profitable is the product/ service?In order for the product/ service to be sustainable, the revenues must exceed the cost. Aprofitability analysis shows if that is possible, and what level of demand and pricing is requiredto make it possible. The analysis must be done at two levels: • Gross i.e. including only the variable costs such as labor, raw material etc. • Net i.e. includes overhead costs such as management, branding, corporate support etcA key consideration in this analysis is whether – and how – to value staff time. In most cases,the staff time should be valued at least at cost.Insightory Inc. 2
  • 3. In many businesses, the gross margin must be high (typically much higher than 10-20%) for thebusiness to be successful overall.The profitability analysis is also typically accompanied by a return on investment (ROI) analysis.Comparing ROIs helps executives choose between multiple investment priorities.5. What are the main risks?The risk analysis shows reasons why the new business venture may not work. It generallymakes sense to divide this into two parts – showstoppers and others. Showstoppers are thoserisks that could prevent the business from being launched or from being successful. Thereshould be an appropriate mitigation plan for each of these. Other risks may be significant, butcan be dealt with as the plan progresses.Risk estimates are subjective, so it is best to solicit input from different sources.The main categories of risk are: • Revenue & market risk: What are the chances that it won’t work? What is the potential fall-out? What is the impact on the current revenue base? • Brand risk: How will this impact the company’s reputation in the market - with customers and other stakeholders? • Legal risk: Includes many sub-categories like employment, general liability, tax, industry/ licensing, foreign laws etc • Organizational risk: Competencies available, impact on roles, responsibilities, organizational structure, leadership bandwidth and “change capacity” • Execution (implementation) risk: This category isn’t always used, but may be used by organizations that have a history of starting initiatives and not following through. • Technology risk: Generally used for technology-based or technology-dependent ventures. It refers to the chance that the technology selected will become obsolete or will not be adopted by customers.6. What is the best organizational form?The new product or service will be created, marketed and serviced by a team. The key questionis – where does this team “fit” in the larger organization? Choices include: • New for-profit company (generally a subsidiary; “company” may include a corporation, partnership, LLC etc) • New non-profit company • New department or division within current company • A new “unit” within the department or division • An added responsibility for existing staffThe first two choices may make sense if the key drivers are liability protection, distinct branding,new management, separate Board of Directors etc. However, they add a lot of time and alsosome cost into the process. The remaining choices require less time to set up, but make itharder to measure and manage key metrics. They may also require resource-sharingagreements or SLAs between departments, which are complex to create and manage.Insightory Inc. 3
  • 4. 7. What is the project plan?The project plan is generally divided into three stages: • Planning • Testing (or piloting) • LaunchProject plans have huge value, especially in highly complex environments with high inter-dependence. However, they can sometimes have life of their own. Care should be taken thatmanaging the project plan doesn’t consume more time than actually implementing it.At a minimum, even a basic project plan should show start and end dates, main dependencies,critical path items and responsibilities for each key item.Insightory Inc. 4

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