The Business Plan : Creating and Starting The

Venture

Planning as Part of The Business

Operation
• Planning is a process than never ends for a
business.
• As the venture grow up to mature business,
planning will continue …

What is a Business Plan?

• A business plan is a written document prepared by the
entrepreneur that describes all the relevant internal and
external elements and strategies for starting a new
venture.
• It is a integration of functional plans such as marketing,
finance, manufacturing, sales and human resources.
Who should write the plan?
• The business plan should be prepared by the
entrepreneur.
• The entrepreneur may consult with many other sources
in its
preparation, such as lawyers, accountants, marketing
consultants, and engineers.

Who Reads The Plans?

• The business plan may be read by employees, investors,
bankers, venture capitalists, suppliers, customers,
advisors, and consultants.
• There are three perspectives should be considered in
preparing the plan : – Perspective of the
entrepreneur
– Marketing perspective
– Investor’s perspective

Why Have a Business Plan?

 • The business plan is valuable to the entrepreneur,
potential investors, or even new personnel, who are trying
to familiarize themselves with the venture, it goals, and
objectives.
– It helps determine the viability of the venture in a
designated market
– It provides guidance to the entrepreneur in organizing
his or her planning activities
– It serves as an important tool in helping to obtain
financing.

Presenting The Plan

• It is often necessary for an entrepreneur to orally present

the business plan before an audience of potential
investors.
• In this typical forum the entrepreneur would be
expected to provide a short (perhaps 20-minutes
or half-hour) presentation of the business plan.

How Detailed Should Your Plan Be?

• Business plans differ widely in their length, appearance,

content, and the emphasis placed on different aspects
of the business.
• Depending on your business and your intended use, you
may need a very different type of Business Plan:
– Mini-plan: Less emphasis on critical details. Used to test
your assumptions, concept, and measure the interest of
potential investors.
– Working Plan: Almost total emphasis on details. Used
continuously to review business operations and progress.
– Presentation Plan: Emphasis on marketability of the
business concept. Used to give information about the
business to bankers, venture capitalists, and other
external resources.
 Assembling a Business Plan

Every Business Plan should include some essential components:

– Overview of the Business: Describes the business,
including its products and services.
– The Marketing Plan: Describes the target market
for your product and explains how you will reach that
market.
– The Financial Management Plan: Details the costs
associated with operating your business and explains
how you will pay for those costs, including the amount of
financing you may need.
– The Operations and Management Plan: Describes how
you will manage the core processes of your business,
including use of human resources.
Information Needs

• Before committing time and energy to preparing

a business plan, the
entrepreneur should do a quick feasibility
study of the business concept to see
whether there a any possible barriers to
success.

• Internet can be a valuable resource.

Seven Common Parts of a

Good Business Plan

• Business plans must help investors understand and gain

confidence on how you will meet your customers’ needs.
• Seven common parts of a good Business
Plan are: 1. Executive Summary
 2. Business Concept
3. Market Analysis
4. Management Team
5. Marketing Plan
6. Financial Plan
7. Operations and Management Plan

Part 1: Executive
Summary

• The Executive Summary of a Business Plan is a 3-5 page

introduction to your Business Plan.
• The Executive Summary is critical, because many
individuals (including venture capitalists) only
read the summary.
• The Executive Summary section includes:
– A first paragraph that introduces your business.
• Your business name and location.
• A brief explanation of customer needs and your products
or services. • The ways that the product or service meets
or exceeds the customer needs. • An introduction of the
team that will execute the Business Plan.
– Subsequent paragraphs that provide key details about your
business, including projected sales and profits, unit sales,
profitability, and keys to success.
– Visuals that help the reader see important
information, including highlight charts, market
share projections, and customer demand charts.

Part 2: Business Concept

• The business concept shows evidence that a product or
service is viable and capable of fulfilling an organization's
particular needs.
• The Business Concept section:
– Articulates the vision of the company, how you plan to
meet the unique needs of your customer, and how you
 plan to make money doing that.
– Discusses feasibility studies that you have conducted for
your products.
– Discusses diagnostics sessions you had with
prospective customers for your services.
– Captures and highlights the value proposition in your product
or service offerings.

Part 3: Market Analysis

• A Market Analysis defines the target market so that

you can position your business to get its share of
sales. • A Market Analysis section:
– Defines your market.
– Segments your customers.
– Projects your market share.
– Positions your products and services.
– Discusses pricing and promotions.
– Identifies communication, sales, and distribution channels.

Part 4: Management Team

The Management Team section outlines:

– Organizational Structure: Highlights the
hierarchy and outlines responsibilities and
decision-making powers.
– Management Team: Highlights the track record
of the company’s managers. You may also offer
details about key employees including
qualifications, experiences, or outstanding skills,
which could add a competitive edge to the
image of the business.
– Working Structure: Highlights how your management
team will operate within your defined organizational
structure.
– Expertise: Highlights the business expertise of your
management and senior team. You may also
include special knowledge of budget control,
 personnel management, public relations, and
strategic planning.
– Skills Gap: Highlights plans to improve your
company’s overall skills or expertise. In this section,
you should discuss opportunities and plans to acquire
new information and knowledge that will add value.
– Personnel Plan: Highlights current and future staffing
requirements and related costs.

Part 5: Marketing Plan

▪ The Marketing Plan section details what you propose to

accomplish, and is critical in obtaining funding to
pursue new initiatives.
▪ The Marketing Plan section:

– Explains (from an internal perspective) the impacts and

results of past marketing decisions.
– Explains the external market in which the business is
competing.
– Sets goals to direct future marketing efforts.
– Sets clear, realistic, and measurable targets.
– Includes deadlines for meeting those targets.
– Provides a budget for all marketing activities.
– Specifies accountability and measures for all activities.

Part 6: Financial Plan

• The Financial Plan translates your company's goals into

specific financial targets.
• The Financial Plan section:
– Clearly defines what a successful outcome
entails. The plan isn't merely a prediction; it implies a
commitment to making the targeted results happen
and establishes milestones for gauging progress.
 – Provides you with a vital feedback-and-control tool.
Variances from projections provide early warnings of
problems. When variances occur, the plan can provide a
framework for determining the financial impact and the
effects of various corrective actions.
– Anticipate problems. If rapid growth creates a cash
shortage due to investment in receivables and inventory,
the forecast should show this. If next year's projections
depend on certain milestones this year, the assumptions
should spell this out.

• The Financial Plan is the most essential part of your

Business Plan. It shows investors the timeframes you
have scheduled to make profits.
• Some elements of the Financial Plan
include: – Important Assumptions
– Key Financial Indicators
– Break-even Analysis
– Projected Profit and Loss
– Projected Cash Flow
– Projected Balance Sheet
– Business Ratios
– Long-term Plan

Different Financial
Planning Options

▪ Short-term Forecast: Projects either the current year or a

rolling 12-month period by month. This type of forecast
should be updated at least monthly and become the main
planning and monitoring vehicle.
▪ Budget: Translates goals into detailed actions and interim
targets. A budget should provide details, such as specific
staffing plans and line-item expenditures.
 – The size of a company may determine whether the same
model used to prepare the 12-month forecast can be
appropriate for budgeting.
– In any case, unlike the 12-month forecast, a budget
should generally be frozen at the time they are
approved.

▪ Strategic Forecast: Incorporates the strategic goals of the

company into the projections. For startup companies, the
initial Business Plan should include a month-by-month
projection for the first year, followed by annual projections
for a minimum of three years.
▪ Cash Forecast: Breaks down the budget and 12-month
forecast into more detail. The focus of these forecasts is on
cash flow, rather than accounting profit, and periods may
be as short as a week in order to capture fluctuations.

Part 7: Operations and Management

• The Operations and Management section outlines how

your company will operate.
• The Operations and Management section includes: –
Organizational structure of the company. Provides a
basis for projected operating expenses and financial
statements. Because these statements are heavily
scrutinized by investors, the organizational structure has
to be well-defined and realistic within the parameters of
the business.
– Expense and capital requirements to support
the organizational structure. Provides a basis to
identify personnel expenses, overhead expenses,
and costs of products/services sold. These
expenses/costs can then be matched with capital
requirements.
 Using and Implementing The Business
Plan
• The business plan is designed to guide the entrepreneur
through the first year of operations.
• Implementation of the strategy contain control point to
ascertain progress and to initiate contingency plan if
necessary.
• Business plan not end up in a drawer somewhere
once the financing has been attained and the
business launched.
Measuring Plan Progress

• Entrepreneur should check the profit and loss statement,

cash flow projections, and information on inventory,
production, quality, sales, collection of accounts receivable,
and disbursements for the previous month.
– Inventory control
– Production control
– Quality control
– Sales control
– Disbursements

Updating the Plan

• The most effective business plan can become out-of-
date if condition change. • If the change are likely to
affect the business plan, the entrepreneur should
determine what revisions are needed. • In this manner,
the entrepreneur can maintain reasonable targets and
goals and keep the new venture on a course that will
increase probability of success.

Why Some
Business Plans Fail

• Goals set by the entrepreneur are

unreasonable. • Goals are not
measurable
• The entrepreneur has not made a total commitment
to the business or to the family.
• The entrepreneur has no experience in the
planned business.
• The entrepreneur has no sense of potential threats
or weaknesses to the business.
• No customer need was established for the
proposed product or service.

The End