Constructing the ‘Elementary’
Business Plan
*Based on inputs from venture capitalists and from commercial banks
Session Objectives
• 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 understand the ‘Elementary’ business plan
• 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
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Equity funding
Bank finance
Alliances
Recruitment
Clarify the business
Others
The Elementary Business Plan
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What is the product/service?
Who is your customer?
How will you reach the customer?
Why you? How will you defend your market?
How will we make money?
Kinds of Business Plans
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Summary Plan
Executive summary
Full Business Plan
Operational Business Plan
The oral presentation – Slide Deck
Steps in Writing a Business Plan
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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
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Organization chart
Details of key employees
Consultants and advisors
Compensation and other employee agreements
• Industry and Competitors
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Market statistics from secondary sources
Reports on trends, etc
Competitor data
Customer surveys
Data Required
• Operations
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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
Data Required
• Marketing and Sales
– Marketing plan
– Advance orders, if any
– Marketing materials
• Financial Information
– Data on fixed and variable costs to be incurred
– Financial forecasts
Schilit (1987, Business Horizons)
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Executive summary
Background and purpose
Objectives
Market analysis
Development and production
Marketing
Financial plans
Organisation and management
Ownership
Critical risks and problems
Summary and conclusions
Appendices
Key Sections of a Business Plan
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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 Company
• History
• Current Status
• Future
The Management Team
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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
Operations
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Gantt chart outline setup
Technology
Raw material strategy
Production planning
Quality
HR policy
Marketing
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Target Segments
Branding
Product
Packaging
Pricing
Distribution
Promotion
Finance
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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
Appendices
1. Copy of documents pertaining to incorporation or
formalization of partnership.
2. CV’s of the entrepreneur/s and of key employees
3. Copies of various permits or permissions granted.
4. Copies of papers pertaining to sale or lease of land
for the business
5. Copies of documentation of proprietary intellectual
property
6. Graphical representation of schedule including
milestones and dates
7. Photographs of location
8. Factory or plant layout
9. Graphical representation of production process
Appendices
10. Findings of market survey conducted
11. Photograph of product or prototype
12. Storyboards or mock-ups of advertisements
13. Projected balance sheets
14. Projected profit and loss accounts
15. Projected cash flow statements
16. Sensitivity analysis of P&L a/c
17. Break even analysis
18. Financial ratios