Business Plan

1. BUSINESS PLAN
Rajeev Ranjan

2. Business Plan
Definition: A written document describing the
nature of the business, the sales and marketing
strategy, financial background, and containing a
projected financial statement.
Owners own description of Business

3. What Is a Business Plan?
IDENTIFICATION AND ARTICULATION OF:
 Opportunity, Market, Customers
 Management Capable of Seizing It
 Minimal Required Resources
 Entry Strategy & Tangible Vision for Growth
 Financial Requirements & Cash Flows
 Critical Risks & Assumptions
 Harvest Options

4. Why a Business Plan?
 Strategic Guide
 Lenders
 Investors
 Alliances
 Explain Business

5. Goals of a Business Plan
 Evaluate feasibility of the idea
 Development of strategy
 Entry, early growth, harvest, etc.
 Assist in obtaining resources/approval
 Establish credibility

6. Essentials of a Successful Plan
 Clear description of the idea
 Overview of industry to suggest need/opportunity
 Evidence that demand exists (or can be created or
stolen)
 Clear description of resource requirements:
marketing, operations, financing
 Background of management team
 Schedule
 Discussion of risks, rewards, and offer

7. Elements of Business Plan
Table of Contents
Executive Summary
Industry, Products or
Services
Market Research
Marketing Plan
Management Team
Development Plan
Operations Plan
 Schedule
 Critical Risks
 Financial Plan
 Proposed Offer
 Appendices
 Financial Projections
 Start-up Costs
 Breakeven Chart

8. Business Plans: Investor Decision Process
Market Attractiveness
•Market Need
•Size of Market
•Market Growth
•Access to Market
Managerial Capabilities
•Management Skills
•Marketing Skills
•Financial Skills
•References
Resistance to Threats
•Barriers to Entry
•Obsolescence Risk
•Downside Risk
•Economic Cycle Risk
Product Differentiation
•Uniqueness
•Product Life
•Profit Margin
•Value Added
Expected
Return
Perceived
Risk
Decision
to Invest
+
--

9. Key Points to Remember
 General Guidelines
 Clear, concise, professional style
 Well-researched and documented
 Consistent and cohesive
 Business plans are:
 Very specific
 Not promotional tools, selling is subtle

10. Executive Summary
 Clear description of idea
 Arguments for success
 Overview of Industry, Market, Need, Demand
 Benefits to Customer / Company
 Fit with Company Objectives
 Team
 Financial Characteristics
 Sales, profits, investment, risk and returns

11. Industry Section
 Industry Overview
 Size, growth rate, segmentation, trends,
regulatory environment
 Opportunity
 Product Overview
 Competitive Advantage
 Entry and Exit Strategies

12. Market Research
 Identify Market Area and Size
 Description of Primary Customers
 Who, how many, what they want, what they do
 Research and Support for Demand
 Competitor Analysis
 strengths, weaknesses, likely competitive
response

13. Marketing Plan
 Mission Statement
 Product Characteristics
 Features
 Pricing
 Sales/Channel Strategies
 IMC
 Support Policies
 Sales Projections
 On-going Evaluation
The key is to build on your market research ...

14. Management Team
 Managerial Positions Required
 Responsibilities
 Biography
 Ownership Structure
 Key Advisors
 Professional Support

15. Design and Development Plans
 Development Status and Tasks
 Costs
 Difficulties and Risks
 Proprietary Issues (partial, not complete)
 Product Improvement and New Products

16. Operations Plan
 Facility and Location Requirements
 Equipment Requirements
 Non-managerial staffing
 Sources of Supply
 Production Process and Controls
 Distribution logistics
 Regulatory and other compliance
issues

17. Schedule
 Gantt Chart showing:
 Tasks
 Time frame
 Cost
 Person responsible

18. Critical Risks:
Identification, Evaluation, Mitigation
 Identify major risks (7-10 is typical)
 Look beyond the simplistic (sales fall short)
 Evaluate impact should risk occur
 Describe how the risk will be mitigated and
how you will respond should it happen
To get Unbiased Views Ask others what holes they see in your plan.
What can go wrong ?
Entrepreneurs frequently get too close to their ideas.

19. Critical Risks: An Example
 Accident during Construction:
Evaluation: All safety precautions will be taken and
regular sessions for construction workers will be
held to update them about safe working. Also poster
will be put up to remind them of saftey precautions
they need to take.
Contingency: All workers will be insured for accidents
as well as third part insurance will be taken

20. Critical Risks: Another Example
Key Member of the Management Team is Injured
Evaluation: Management is in excellent health and will refrain
from dangerous activities. Thus, it is considered unlikely that a
member of the management team will be incapacitated.
Contingency: The company will ensure that key members of
the management team undergo physical examinations
annually.
In addition, the company will provide key-man life insurance
sufficient to protect outside investors’ capital in the event of an
emergency.

21. Financial Plan
 Start-up Requirements (Investment required)
 Review of Financial Characteristics
 Sales, margins, profits
 Return Measures (NPV,IRR, ROI)
 Be careful not to promise
 Breakeven Concerns
 Extraordinary financial events
Avoid describing assumptions.

22. Appendices:
(Could Include Such Items As)
 Lists, pictures of products, systems, software
 List of customers, suppliers, references
 Appropriate location factors, facilities or technical
analysis
 Independent reports by technical expert, consultants
 Detailed resumes of founders, key managers
 Any critical regulatory, environmental or other
compliance, licenses or approvals
 Sales or other financials assumptions (in brief)

23. Key Considerations
 Have a “story to tell”
 Be confident but objective and dispassionate
 Understand the financial characteristics of your
business
 Avoid promises
 Tease to stimulate interest, never bore

24. Some Points to Remember
 Length is typically 20-40 pages, excl. exhibits
 Required appendices
 Financial statements (3-5 years)
 Statement of Start-up Costs
 Breakeven Chart
 Resumes
 Use bullet points, tables, and small charts
 Don’t use first person (“I”, “We”, “Our”)
 Be Careful about Format and Spelling (they count (a
lot)

25. Remember:
A business plan is a specific plan to open a new
business or to expand an existing one, not the
writer’s wishes and dreams !

26. Pitfalls and Omissions:
Traps for Entrepreneurs
 Seeking premature approval
 Believing Plan is more important than Orders
 Develop Complete Business Plan First v.
Floating Trial Balloons
 Selling the plan to the wrong audience
 Selling the plan to the right audience poorly

27. Pitfalls and Omissions:
Traps for Entrepreneurs
 Phantom or Gingerbread Advisors
 Spreadsheet Diarrhea (Financials = Business)
 Poor understanding of product acceptance
 Under-estimation of competitive reaction
 Pricing strategy too low
 Capital requirements too low or undefined

28. Business Plans:
What Investors Look For
 Evidence of Customer Acceptance: Orders
 Evidence of Focus / Niche
 Appreciation of Financial Goals
 Proprietary Position, Exclusivity
 Team with experience, commitment, and
integrity

29. Business Plans:
What Turns Investors Off
 Projects which deviate excessively from
industry norms
 Unrealistic growth projections
 Inadequate management experience / depth

30. ANY QUESTIONS
THANK YOU