MAKING A BUSINESS PLAN CHAPTER 9 ENTREPRENEURSHIP

Chapter Objectives To understand how a business plan is divided into sections To list the uses of a business plan To lay out the steps involved in writing a business plan To list out data required in drawing up a business plan To discuss about the various types of business plan To understand the significance of an executive summary To understand the structure and composition of various sections of a business plan To list the various appendices and exhibits needed in a business plan

To understand how a business plan is divided into sections

To list the uses of a business plan

To lay out the steps involved in writing a business plan

To list out data required in drawing up a business plan

To discuss about the various types of business plan

To understand the significance of an executive summary

To understand the structure and composition of various sections of a business plan

To list the various appendices and exhibits needed in a business plan

Uses of a Business Plan Equity funding Bank finance Alliances Recruitment Clarify the business Others

Equity funding

Bank finance

Alliances

Recruitment

Clarify the business

Others

Kinds of Business Plans Summary Plan Executive summary Full Business Plan Operational Business Plan The oral presentation

Summary Plan

Executive summary

Full Business Plan

Operational Business Plan

The oral presentation

Steps in Writing a Business Plan Define purpose Collect Information Put it down The rough draft. Financial analysis Finishing Review

Define purpose

Collect Information

Put it down

The rough draft.

Financial analysis

Finishing

Review

Data Required Company details Documents relating to formation Shareholding details Permits and registrations Management Organization chart Details of key employees Consultants and advisors Compensation and other employee agreements Industry and Competitors Market statistics from secondary sources Reports on trends, etc Competitor data Customer surveys

Company details

Documents relating to formation

Shareholding details

Permits and registrations

Management

Organization chart

Details of key employees

Consultants and advisors

Compensation and other employee agreements

Industry and Competitors

Market statistics from secondary sources

Reports on trends, etc

Competitor data

Customer surveys

Data Required Operations Product specifications Contracts and purchase orders for raw materials Competitive advantages Details of Intellectual Property (Patent, license, and trademarks) Regulatory approvals Industry standards as per regulations Plant layout and operations plan Research and development plans Marketing and Sales Marketing plan Advance orders, if any Marketing materials Financial Information Data on fixed and variable costs to be incurred Financial forecasts

Operations

Product specifications

Contracts and purchase orders for raw materials

Competitive advantages

Details of Intellectual Property (Patent, license, and trademarks)

Regulatory approvals

Industry standards as per regulations

Plant layout and operations plan

Research and development plans

Marketing and Sales

Marketing plan

Advance orders, if any

Marketing materials

Financial Information

Data on fixed and variable costs to be incurred

Financial forecasts

Key Sections of a Business Plan Executive summary The company The management team The industry and the market Operations The marketing plan Financial plan Risks and contingencies Appendices

Executive summary

The company

The management team

The industry and the market

Operations

The marketing plan

Financial plan

Risks and contingencies

Appendices

Executive Summary The executive summary is probably the most important section of the business plan. It is basically the whole business plan condensed into a few pages The main objective of the executive summary is to entice the reader to go through the entire plan.

The executive summary is probably the most important section of the business plan.

It is basically the whole business plan condensed into a few pages

The main objective of the executive summary is to entice the reader to go through the entire plan.

The Company History Current Status Future

History

Current Status

Future

The Management Team Technical and professional qualifications Quality of work experience Experience in the relevant sector Reputation in the business community Evidence of moral integrity Financial capacity Networking with other vital people in the industry

Technical and professional qualifications

Quality of work experience

Experience in the relevant sector

Reputation in the business community

Evidence of moral integrity

Financial capacity

Networking with other vital people in the industry

The Industry and the market An industry is a collection of sellers A market is a collection of buyers Concentrate on the relevant segments Competition

An industry is a collection of sellers

A market is a collection of buyers

Concentrate on the relevant segments

Competition

Operations Gantt chart outline setup Technology Raw material strategy Production planning Quality HR policy

Gantt chart outline setup

Technology

Raw material strategy

Production planning

Quality

HR policy

Marketing Target Segments Branding Product Packaging Pricing Distribution Promotion

Target Segments

Branding

Product

Packaging

Pricing

Distribution

Promotion

Finance Funds sought Projected financial statements Costing details Break even and payback analysis

Funds sought

Projected financial statements

Costing details

Break even and payback analysis

Risks and Contingencies Identify major threats and risks Outline strategies for countering them

Identify major threats and risks

Outline strategies for countering them

Appendices Copy of documents pertaining to incorporation or formalisation of partnership. CV’s of the entrepreneur/s and of key employees Copies of various permits or permissions granted. Copies of papers pertaining to sale or lease of land for the business Copies of documentation of proprietary intellectual property Graphical representation of schedule including milestones and dates Photographs of location Factory or plant layout Graphical representation of production process

Copy of documents pertaining to incorporation or formalisation of partnership.

CV’s of the entrepreneur/s and of key employees

Copies of various permits or permissions granted.

Copies of papers pertaining to sale or lease of land for the business

Copies of documentation of proprietary intellectual property

Graphical representation of schedule including milestones and dates

Photographs of location

Factory or plant layout

Graphical representation of production process

Appendices Findings of market survey conducted Photograph of product or prototype Storyboards or mock-ups of advertisements Projected balance sheets Projected profit and loss accounts Projected cash flow statements Sensitivity analysis of P&L a/c Break even analysis Financial ratios

Findings of market survey conducted

Photograph of product or prototype

Storyboards or mock-ups of advertisements

Projected balance sheets

Projected profit and loss accounts

Projected cash flow statements

Sensitivity analysis of P&L a/c

Break even analysis

Financial ratios