BUSINESS PLAN
Answers the question
“How your business will be created (expanded)
and how it will be successful”
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Putting the pieces together in a logical manner:
 Is internal logic of your proposal consistent ?
 Do the pieces fit together?
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Creating a blueprint for action:
 The more specific your business plan, the easier to implement it
 A two-stage process. The first stage is creating the plan and the second is
implementing the plan.
A business plan is worthless if it is not properly implemented.
 Focuses on founders/management team
 Presents issues in an organized manner. It tends to bring structure to a
process that may be become chaotic.
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Obtaining financing:
 Often used to obtain financing from banks or other lenders. 
business plan is a promotional piece to present and describe your
business venture
 Basic premise is to show that you know what you are doing and why
your business will be successful.
 Look upon lenders as partners. They can point out shortcomings and
deficiencies of the plan. Lenders’ concerns about financing your
business should be looked upon as opportunities to strengthen your
project and increase its chances of success.
 Understand the lenders role in your project, lenders purpose is to
generate returns for the lending institution while protecting their
investment.
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Attracting equity investment
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Attracting key managers/employees
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Obtaining contracts
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Creating joint ventures, mergers and acquisitions
Leeds to action
Builds a shared vision
 Is an inclusive and participatory process in which the team
can claim ownership
 Holds individuals accountable to the organization and
stakeholders
 Is both externally and internally focused and sensitive to the
organization’s enviroment
 Is based on quality data
 Requires openness to questioning the status quo
 Is a key part of effective management
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Business plan should be written in plain, easy-to-read language.
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Short simple sentences and easy to understand terms.
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Determine what you want to cover in your business plan and make
headings for each of the items.
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Begin each major section on a new page with the appropriate title (e.g.
Marketing Plan)
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Fine tune your business plan: review, revise and rewrite.
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The business plan is a promotional document. Consider the viewpoint of
others you are writing the plan for (banker, investor, customer, etc.).
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Represent your company’s image and convince the reader you
understand all aspects of the business.
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Be honest. Do not be overly optimistic or try to hide limitations or
weaknesses.
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Good idea to have someone proofread your business plan who is not
involved in the project. Help you identify aspects of your business plan
that may need additional clarification and explanation.
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Be sure to support the goals and the claims you make in the business
plan. Include supporting evidence. (statistics, studies,research report
etc.)
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Goals are important. Set your short-term and long term goals.
 Goals affect everything – “Painted white lines, keep you on the road”
 Quantify your goals
▪ Be Specisif: ex: achieve a gross profit margin of %55 or greater, have the
products in 5000 retail outlets by year 5 of the buiness plan
▪ Be Realistic: Establish targets reasonable and achievable
ex: opening a fast-food restaurant and to say “Want to be bigger than
McDonald’s within six months” is not a realistic.
▪ Be Aggressive: Don’t set goals that are too easily achieved. Don’t sell
yourself short. ex: “Want to be bigger than McDonald’s within 20 years”
▪ Be Consistent: Avoid setting inconsistent goals.
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Business plan needs to be tailored to the reader.
 Businesses have several types of stakeholders
 Different stakeholders have different priorities. Priorities need to be
balanced in the business plan.
Check list of the plan
1. Who are we?
2. What do we do?
3. What do we have to offer and to whom?
4. Why will someone pay for our product/service?
5. What resources do we have?
6. Why will we be successful?
7. Why would someone finance/invest?
8. How will we measure performance?
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There are ten broad business planning categories.Each broad
category contains sub-categories
Help you identify the type of information to include.
Don’t be scared off by the large number of categories and
subcategories.
Complete only those subcategories that are relevant to your
situation and skip that are not relevant.
I. Cover Sheet
II. Table of Contents
III. Executive Summary
IV. Company Overview
V. Product and Service Description
VI. Market Analysis
VI. Marketing and Sales Strategy
VII.
Management and Personnel Plan
VIII. Operational Plan
IX. Financial Projections
X. Appendix
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Should include:
 Full legal name of business
 Location of buiness, telephone numbers
 Date of the business plan
 Main contact person(s), titles
 A brief business paragraph giving your promotional description of
business goals, potential and outlook
 Include the amount and type of funding request, how it will be used,
why it will help the business profitable  the lender will know
immediatly what you are asking for.
 Keep as simple as possible, identify yourself, your business, to the
institution, party
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Provides lender a road map
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Give impression that you are organised
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Ables to manage the big picture
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Type of the table of contents and include accurate page
numbers
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Encapsulates the business plan by giving the most brief statement about
the nature and objectives of the business.
“Crystallizaion” of the entire business plan in a quick overview format.
Write this section last.
Make it between 2-5 pages
Make it enthusiastic, professional, complete, and concise.
Provide a comprehensive summary,many topics need to be covered
(each topic should be covered 1 or 2 sentences)
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The company (project)
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Name
When founded (started)
What does it do (expect to do)
What is the legal organization (expected legal organization)
Where is it located (expected to be located)
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Business model (essence of what the business does and how
it functions)
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Business/project stage(s) (the stages covered by the business
plan) (Investigation, Seed, Start-up,Consolidation/merge )
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Purpose(s) of the business plan
▪ Implementation guide
▪ Attract equity investment
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Vision and mission (broad terms)
▪ Where do you want to go
▪ How will you get there
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Description of the product, market and competition
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Describe the function and attributes of the product.
What is the target market and who are the target customers.
Describe why the target market customers will buy your product.
Describe the product distribution structure.
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Founders and management team
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Names
Background/experience/education
Role in company (project)
Describe why the founders/managers will succeed
Location and description
▪ Offices
▪ Facilities
▪ Technology
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Summary of financial projections
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Production, processing, distribution and/or marketing budgets.
Sales projections
Cash flow budgets
Pro forma income statements
Pro forma net worth statements
Why will the business be successful?
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Provide information on your company who you are, where you have
been, where you plan on going, how your company fits into your
industry and marketplace.
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Identify and discuss following:
 Precise nature of your business
 Brief history of business (How you developed your products and service)
 How your facilities will be able to handle your future growth
 Organizational details, including legal structure of your business
 Your growth potential
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Describe your business concept. Should include those
elements:
 Business/Project Description and Background
 Mission Statement,Vision Statement, Goals and Objectives
 Business Structure
 Products/Services
 Research and Development
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Business/Project Description
 Briefly describe the business or project.
 What type of business are you planning (production, processing, manufacturing,
marketing, service, other)?
 Describe the strengths of your business or project and its core competencies
(what are you good at doing).
 The results of any business or project analysis that has been conducted like a
feasibility study, market assessment, etc.
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Mission Statement,Vision Statement, Goals and Objectives
 Vision: mental picture of what you want to achieve
 Mission: defines how you will achieve your vision.
 Goal: What you need to achieve to accomplish the vision
specific time-sensitive milestone used to measure your
progress towards achieving your goals and vision.
 Objective:
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Business Structure
 Describe the business model (how the business functions and
how it will make money).
 Why will the business be successful?
 What is the existing or proposed legal structure – new
generation cooperative, Limited Liability Company,
corporation, etc.?
 What is the organizational structure?
 Include any joint venture partners, subsidiaries, affiliates, or
other important stakeholders.
 Describe your overall business strategy (e.g. low cost producer,
differentiated product, niche market, etc.). Will the company
focus on growth or cash returns to investors)?
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Products/Services
 Describe the product or service and its features.
 Is the product ready for the market or in development (if so,
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what stage of development and what obstacles remain)?
Is the product a consumer product, ingredient, commodity,
etc.?
Describe what is unique or different about your product/service.
Compare the product and its features to those of competitors.
Describe how the product will be packaged and any specific
features of the package.
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Research and Development
 Describe plans for ongoing research and development (e.g.
plans for process improvement or new product development).
 Identify the extent to which resources will be committed to
future research and development.
 How will research and development efforts be inter-connected
with customer needs (e.g. ISO)?
 Identify the use of third parties and any strategies related to the
outsourcing of future research and development capabilities.
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Determine who you are targeting?
Describe and define the market.
Is it a specialty or niche market?
What sets the market apart from other markets?
Describe the current size, the forces driving the market and
the speed at which it is growing.
Identify major customer segments and key customers in this
market.
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Determine who your competitor is
 Target Market
▪ Will the product be sold into a commodity or differentiated
product/service market?
▪ Will the product be sold to consumers or as an ingredient in another
market?
▪ If you are targeting a niche market, identify the relevant market
segments and how they are defined.
▪ Describe the demand and usage trends of the target market in
which the proposed product will be offered.
▪ Who are your target market customers (consumers, manufacturers,
retailers, etc.)?
▪ What need does your product fill in the target market?
▪ Examine the potential for emerging, niche or segmented market
opportunities.
▪ Assess the opportunity and potential for a branded product.
▪ Assess potential market usage.
▪ What share of the market do you expect to capture?
 Customer Analysis
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What type of customer will you focus on – consumers, retailers,
manufacturers, etc.
▪ Name specific potential customers (or types of customers) for this
product.
▪ Are customers dissatisfied with the current products in the
market?
▪ Identify any trials or tests of your product currently being
conducted by potential customers.
▪ Describe any on-going contract negotiations with potential
customers.
▪ What will motivate their buying decisions – product quality, price,
public relations, etc.?
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Competitive Assessment
 Identify similar products/services in the market that are direct
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competitors to your product/service.
Compare your product/service to these products/services (ie. features,
service, quality, price, distribution, brand, etc.).
Describe the companies that produce these products/services.
Describe the concentration within the market (ie. large number of
small players or small number of large players).
Describe the current competitive intensity within the market
(cutthroat competition or live and let-live).
Describe the ease of entry of competitors into this market (can
competitors easily enter the market and drive prices down).
Describe how you will compete against these competitors and their
products – ie. low cost, niche market, product differentiation, etc.
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Access to Market Outlets:
 Will the product/service be sold directly to consumers or
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directly to wholesalers/retailers?
Will an intermediary such as a broker, distributor or
marketer be used?
Identify the potential intermediate and end buyers of the
product/service and the associated marketing costs to
access each.
Outline the product/service distribution system and the
costs involved.
Any strategic marketing partners that will be used to reach
key customers (for example, brokers, other
manufacturers, distributors.)
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Pricing Plan:
 Explain how you set your selling price.
 Why will customers pay this price?
 How does your price compare to that of competitors? Why should it be
different?
 Will your pricing plan include selling on credit? How will you manage accounts
receivable?
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Marketing Message and Promotion
 Establish marketing objectives
 describe how you will promote your product. Identify marketing themes or
product propositions that will be utilized with key customer segments.
 Describe the use of third parties to be used in the development or deployment
of marketing messages (eg, advertising agencies, consultants, etc.).
 Describe the selling strategies to be used by sales or marketing personnel
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Marketing Message and Promotion (Con’t)
 Describe advertising and communications programs that will be
deployed, and the media in which they will be deployed.
 Identify strategic selling partners (e. g. entities that will co-promote
your product, include it within their sales bundle, etc.).
 Identify any plans for marketing research to assess customer
acceptance of the sales strategy.
 For very large potential customers, identify specific market
development objectives for those customers.
 Identify marketing and sales incentives to be used for third parties and
for sales staff.
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Show that your management team is capable of managing the
business
 Project Leadership
▪ List the leaders/founders of the project.
▪ Provide resumes of their background and experience
▪ Lists advisors and consultants used in the project and their qualifications.
(Accounting, legal services,industry consultants/service providers
 Business Management
▪ Describe the primary management skills that will be required
▪ Prepare an organizational chart showing lines of authority and
responsibilities.
▪ Identify the key management positions (CEO, CFO, COO)
▪ Present expected salaries for key positions
▪ Incentives,reward systems for management
* Show how you will supply your product/service to the marketplace.
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Facility Requirements and Site Selection:
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Describe the access to markets.
Describe the access to raw materials.
Describe the access to transportation.
Describe the access to labor supply.
Describe the access to production inputs (electricity, natural gas, water, etc.).
Describe the general design and technical requirements.
Outline the size and type of production facilities.
What is the need for related buildings, equipment, rolling-stock, other.
Technical Analysis
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Current Industry State of the Art
Technology to be Utilized
Suitability of Production Technology
Proprietary Protection/Rights/Claims
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Operations Plan:
* Describes how you will deliver value to your customer. As a result, it is closely linked to
your marketing plan.
▪ Outline the operations activities of your business.
▪ What activities will be conducted in-house and which will be outsourced (make or
buy decisions).
▪ Describe your relationship with venders, suppliers, others.
▪ Are there any contracts or letters of intent in place?
▪ Describe how operations will meet the needs of the customers in your target market.
▪ Specify how operations will deliver dimensions such as quality, cost, timeliness,
service, flexibility, etc.
▪ If your operations plan gives you a competitive advantage, describe it.
▪ Describe the general design and technical requirements.
▪ Determine the size and type of production facilities.
▪ Assess the need for related buildings, equipment, rolling-stock, etc.
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Labor Plan
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Describe the type and amount of labor needed for the business.
Determine the accessibility of labor including wage rates, skills level, etc.
Describe any labor training programs you plan to provide.
Describe the projected wage rate and benefits programs you plan to provide.
Describe the extent to which organized labor may be a potential issue for the
business.
Regulatory and Environmental Requirements
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Licensing and bonding requirements
Permits
Health, workplace, or environmental regulations
Special regulations covering your industry or profession
Zoning or building code requirements
Insurance coverage
Trademarks, copyrights, or patents (pending, existing, or purchased)
Show that your business make money
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Budget Projection
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Capital and Contingency Plans
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Financing Plan
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Financial Data and Analysis
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Economic Variability and Risk Management
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Budget Projections
 Operations Budgeting: Budgets for production, processing,
distribution/transportation, marketing, entire supply chain,
others.
 Volume-Cost-Profit Analysis: Analysis for computing the
volume of sales needed to break-even.
 Capital Budgeting: Analyzing investment decisions through
Net Present Value and Internal Rate of Return.
 Cash-Flow Budgeting: Projecting the expected sources and
uses of cash during various time periods.
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Capital and Contingency Plans
 Capital Plans
▪ Project the capital cost of major facilities, equipment and peripheral
facilities. Make a list of these items.
▪ Project the capital cost of working capital including inventories, etc.
▪ Project the capital cost for the marketing plan.
 Contingency Plans
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Identify risk factors
Identify and assess internal weaknesses of the business
Use sensitivity and what-if analysis to identify deficiencies.
Develop plans or alternative courses of action in case these
weaknesses or deficiencies occur.
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Financial Data and Analysis
 Forecast Information during Start-Up & Under Full Production
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Balance Sheet
Income Statement
Cash Flow Statement (monthly)
Sources and Uses of Funds Statement
 Sensitivity Analysis
▪ What are the key variables affecting profitability and cash-flow?
▪ Identify the levels of these variables (worst case, best case, expected).
▪ Project profitability and cash-flow under various combinations of these
variables.
▪ Project profitability and cash-flow breakeven under various assumptions.
▪ Conduct Monte Carlo simulation
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External Risk Factors
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Input and output price volatility.
Shortages of production inputs and raw materials
Price cutting by competitors
Unfavorable industry trends
Unfavorable legislation
 Unavailability of trained labor
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Internal Weaknesses and Risk Factors
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Construction delays and/or cost over-runs
Plant specifications not met
Production capacity goals not met
Inferior management
Sales projections not achieved.
Difficulties in obtaining credit
Risk Management Tools
 Input&Output , construction and performance contracts, insurance, hedging.
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Supporting documents
Graphs and charts
Copies of contracts and agreements
Biographies and résumes
Glossary of terms
References: Lenders, investors, or other bankers, suppliers, trade
creditors, etc., who can give positive feedback on your past performance
Brochures and product information sheets
Media information
Surveys
Bibliographies
* Do not overload your appendix with too much information. Include
only what is relevant, and add value to your business plan.
The main difference between a feasibility report and
a business plan is purpose.
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A feasibility study is not a business plan. The feasibility study
provides an investigating function.
It addresses the question of “Is this a viable business
venture?”
BUSINESS PLAN
FEASIBILITY REPORT
•
Outlines and analyzes several
alternatives or methods of achieving
business success.
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feasibility study helps to narrow the
scope of the project to identify the
best business model.
•
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Helps to narrow the scope of the
project to identify and define two or
three scenarios or alternatives.
•
Provides a planning function. Outlines
the actions needed to take the
proposal from “idea” to “reality.”
•
Deals with only one alternative or
scenario.
•
Business plan is prepared only after
the business venture has been
deemed to be feasible.
•
If a proposed business venture is
considered to be feasible, a business
plan is usually constructed next that
provides a “roadmap” of how the
business will be created and
developed.
•
The business plan provides the
“blueprint” for project
implementation.
The feasibility study is conducted
before the business plan.
http://womeninbusiness.about.com/od/businessplans/a/feasibilitystud.ht
m
http://www.readyplanning.com/home/how-to-write-a-businessplan/feasibility-report
http://www.extension.iastate.edu/agdm/wholefarm/html/c5-65.html
http://www.togetherworks.org.uk/index.php?q=node/61
http://www.fao.org/docrep/w6864e/w6864e09.htm#TopOfPage
http://bestentrepreneur.murdoch.edu.au/Business_Feasibility_Study_Ou
tline.pdf
http://www.cs.toronto.edu/~sme/CSC340F/slides/05-feasibility.pdf
Thank you …