6..creating a business plan

7/29/2019 6..Creating a Business Plan

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CREATING A BUSINESS PLAN

For class room discussion

By

Prof. S.Suryanarayanan


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Why have a business plan?

What is the purpose?

Who is the audience?

Define your purpose

Gather resources

Develop a strategy

Gain support


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TYPICAL STRUCTURE FOR A BUSINESS PLAN

1. Cover page and table of contents

2. Executive summary

3. Business description

4. Business environment analysis

5. Industry background6. Competitive analysis

7. Market analysis

8. Marketing plan

9.

Operation plan10. Management summary

11. Financial plan

12. Attachments and milestones


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COVER PAGE AND TABLE OF CONTENTS

1. What to include in the first elements your readers will look at.

2. Signals professionalism; first impression is the best impression


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EXECUTIVE SUMMARY

How to provide a helpful summary of your plan for readers.

A quick understanding of the proposal; appears first in the plan but

written last.

A. Industry and market environmentB. Special and unique business opportunity

C. Key strategies for success

D. Financial potential

E. Management team

F. Resources and or capital requested


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BUSINESS DESCRIPTION

Gives details like history and nature of business, purpose of business;

states objective of business and how will be successful

Introducing businessshare the enthusiasm for the venture

Right information like what kind of business, which market, what

product/ services, customer profile, why they will use this product,financial status etc

Highlight the business model

Tips:

1. Business description may be rewritten after completion of first draft ofbusiness plan; some areas could have changed or developed during

the process of writing business plan.


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BUSINESS ENVIRONMENT ANALYSIS

Strategies for Conveying business potential.

Understanding industry ,competition and market fundamental

BE analysis shows what business opportunity available in industry andmarket.

Questions to be answered:

1. What is industry?

2. Who are competitors?

3. What is the market?

4. Who are customers in the market?


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INDUSTRY BACKGROUND

To clarify the big picture

Information to understand the shape, size,trends and key features in theindustry.

Define existing products and services

Sizing of the industryindustrys production capacity

Identify important trends

Anticipate barriers to industry technology, regulations etc

Tip:

Record sources of data and information to substantiate the trend analysis.


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COMPETITIVE ANALYSIS

Competition can be from industry of same product manufacturers or

from other industry solving same problems of customers

Identify competitors

Distinguish business from rivals Assess threat from competition

Tip:

World changes constantly; competitor research is constant process


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MARKET ANALYSIS

Strategies to clarify who customers will be.

Focus on target market

Assess market size and growthpotential and opportunity Define the target market

Articulate value proposition ( unique set of benefits to customers ).

Tip:

Claims about market growth and potential should be supported by

verifiable information


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MARKETING PLAN

Tips to show how to attract customers

Environment analyzed; studied the competition; target market identified;opportunity discovered. Now a plan required to reach product/ servicesto customers who will be encouraged to respond in preference to

competition or alternative option.

Develop market plan-marketing objective, understand consumerbehaviour

Define marketing mixproduct ,price, place, promotion.

Tip:

Marketing plan is dynamic; to be used to monitor business progress


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OPERATION PLAN

To articulate business daily activities

Gives overview of flow of daily activities; transforming raw material

(ideas ) to products ( services ).

Identifies key factors sourcing of materials, technological innovation,location advantages, assessment of skilled employees etc.

Flow charts, process description etc.

Capacity determination ,utilisation etc.

Tip:

Assess breakeven point while determining capacity.


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MANAGEMENT PLAN

To introduce management team.

Describe the team members and their qualifications and experience

a. Past work experience

b. Past achievements

c. Reputation in industry

d. Knowledge, skills and special abilities

e. Commitment to the venture

Introduce team as a unit


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FINANCIAL PLAN

Suggestions to show how numbers will work.

Very critical; translates all other parts of the business into anticipatedfinancial results

Readers perspective investment committee member, investor/ venturecapitalist / lender/ banker/ entrepreneur himself.

Hurdle rate, ROI, debt servicing capacity, pay off to all efforts.

Capital requirement

Sources and applications of funds Financial projections ( details in appendix )

Break even analysis

Risk analysis


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TIPS WHILE PREPARING FINANCIAL PLAN

1. Do not over burden business with too much debt; debt can weigh down

company's growth.

2. Entrepreneur should do the number crunching himself even if expert

advice is taken.

3.

Pay attention to cash flow; do not think of profits only initially.4. Appendix to financial plan to consist of:

1. Assumptions

2. Projected income statement

3. Projected balance sheet

4. Projected cash flow statement

6..creating a business plan

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