Lesson 4: business plan

• Functional Plans


  • Marketing Plan
  • Production Plan
  • Management Plan
  • Financial Plan
• Information about Operations


  • Location
  • Service Operation
  • Equipment
  • Space Requirement
  • Labor Requirement
  • Raw Materials
  • Potential Suppliers
  • Utilities
  • Furniture and Fixtures
• Major Sections of a Business Plan

  • Executive Summary
  • Environmental and Scanning Analysis
  • Description of the Business
  • Production Plan
  • Operations Plan
  • Marketing Plan
  • Organizational Plan
  • Financial Plan
  • Assessment of Risk
  • Timetable/Milestone
  • Appendices 1st is introductory
• Financial Information includes the list of all sources of revenue and a list of all possible expenditures during the first year of operation
• Competition


  The threat of a large competitor who has the resources to come up with a similar or even better product at a much lower price
• How to present a Business Plan

  1. Tell a compelling story

  2. Avoid complex tables and charts

  3. Select information that supports major points

  4. Avoid highly-technical language

  5. Exhibit confidence and professionalism

  6. Cover the basics

  7. Adopt a cooperative attitude when answering questions
• In case the audio-visual equipment malfunctions, be ready with several printed copies of the presentation that can be distributed to the audience
• Impatience or annoyance in answering questions

  Could signal a lack of emotional maturity on your part, which might not sit well with your audience
• Business plan: It is a document that describes the various external and internal elements of a business. It also serves as a guide for short-term and medium-term decision-making.
• The Road Map:

  Where i am now

  Where i am going?

  How can i get there?
• 3 importance of a business plan:

  • Determine whether a proposed or existing business venture.
  • Mobilizing the resources needed
  • Serves as a tool in helping financing for the business
• information about operations:

  • Location, Service operation, equipment,
  • space requirements, labor requirements, raw materials
  • Potential suppliers, utilities, furniture and mixtures
• financial information: It includes the lists of all sources of revenue.
• Introductory page: cover page provide brief summary of the business plan. consist of the following:

  1. Name and address of the company
  2. Name of entrepreneur and contact information
  3. A brief description about the company and its nature of business
  4. The amount of financing needed.
• Executive summary: prepared after the total plan has been written. should be interesting to the audience.

  Key questions:

  1. what is the basic idea for this new product or service? what makes it unique
  2. How will the idea for this proposed venture be realized
  3. Is the potential market is big enough to make the business viable?
  4. How much revenue and income is the business expected?
  5. Who are the people behind the knowledge?
• environmental and scanning analysis: It is important to describe the general conditions.

  environmental factors:

  1. Sociocultural conditions: description of shifts in the characteristics of the population.
  2. Technological conditions: a major development in science and technology
  3. Economic conditions: description of growth of national and local economies.
  4. supply and demand: important to know whether his proposed venture belongs to an industry conditions.
  5. competition: The threat of large competitor who has the resources to come up with a similar or even better
• Description of business: this section is the venture's mission statement, which could serve as a guide in decision-making.

  key questions:

  1. Will be the building be bought or leased?
  2. Is the building old/new
  3. Will it require for a renovation?
  4. What equipment needed?
  5. will these be purchased or leased?
• Production plan: The entrepreneur must prepare a production plan that describes the complete manufacturing process:

  Key guides:

  1. description of the layout of the physical plant
  2. Machinery and equipment needed
  3. name, address, and terms of payment of the suppliers of the raw material
  4. Production costs
  5. Future capital needs and capital equipments
• Operations plan: It must be included whether the business plan is concerned with manufacturing or service. for manufacturing business, this section must describe the flow of goods and services. For service businesses, this section must describe the procedure for completing a business transaction.
• Marketing plan: This section describes the target market for the new product or service. Who will want to buy and use the product?
• Organizational plan: provide documentation of the venture's form of ownership, that is proprietorship, partnership, and corporation. have a nice organizational chart, indicates the position and job description of the management team. formulate the employees salary and compensation and other benefits.
• Financial plan: These sections determine the investment that must poured into the business is an economically viable undertaking. This must provide a summary of the assets, projected liabilities, expected investment, and potential retained earnings. This must be the projected sales, pro forma balance sheet, statement of retained earnings, cash flow projections, and financial ratios.
• Assessment of risk:

  • price cutting by competitors
  • operating costs that exceed initial estimates
  • failure to achieved sales forecast
  • sudden unavailability or a steep increase in the price of raw materials
  • Difficulty in raising capital
  • Unforeseen environmental conditions
• Timetable/milestone:

  Key milestone:

  • Forms of registration of the business
  • Completion of product/service design
  • completion of prototypes
  • Hiring of initial personnel
  • Agreement with suppliers and distributors
  • Actual production plan
  • Receipt of initial orders
  • Initial sales and deliveriesAgreements
• Appendices: this items typically include market research data, and detailed financial projections, the full resume of the founders and members of the top management team even the profile of key competitors.
• Why do some business plan fail?

  • Document is sloppy and looks unprofessional
  • Executive summary is not coherent and is too long
  • Unclear on why people would want to buy the product or service
  • Unclear on whether the product can be readily produced
  • Sales and financial projections are unreasonably optimistic
  • Inadequate description of the qualifications and experience of the management team
  • Inadequate assessment of the potential threats to the business.
• How to present a business plan? Tell a compelling story:

  1. Avoid tables and charts
  2. select pieces of information that will support your major point
  3. Avoid highly-technical language, as much as possible.
• Exhibit confidence and professionalism:

  1. Preparing well and rehearsing the presentation
  2. present in a relaxed and natural manner
• Cover the basics:

  • equipment ahead of time Make sure that you set up your audio-visual
  • In case the equipment malfunctions, be ready with several printed copies of your presentation that can be distributed to your audience.
• Adopt a cooperative atitude when answering questions:

  • Do not be surprised if certain members of the audience ask tough and pointed questions.
  • If you show impatience or annoyance in answering questions, this could signal a lack of emotional maturity on your part, which might not sit well with your audience.
  • Try to answer the question as best as you can, no matter how tough