entrep

• Business Plan


  A comprehensive set of guidelines for a new venture
• Business Plan


  A planned course of action devised to achieve specific business objectives within a specific period of time
• Business Plan


  A formal written expression of the entrepreneurial vision, describing the strategy and operations of the proposed venture
• Business Plan


  A written document that summarizes a business opportunity and defines how the opportunity is to be exploited
• Business Plan


  An integrated plan of Functional Plans (Marketing, HR, Finance, Manufacturing)
• Business Plan


  A game plan or road map to reach the destination determined by the entrepreneur
• Who should write the Business Plan


  • Small Business Administrator (SBA)
  • Service Core of Retired Executive (SCORE)
  • Small Business Development Centre (SBDC)
• Scope and Value of Business Idea


  • Creativity/Techniques in new firm
  • Marketing perspective
  • Financial projection
• Value of Business Plan to Entrepreneur

  • To determine venture
  • Guidance in planning activity
  • Tool to get finance
• Contents of a Business Plan

  • Goals for the enterprise (short-term and long-term)
  • Description of products or services
  • Market opportunities
  • Resources and means to achieve goals
• Importance of a Business Plan


  • Action Plan: Helps move entrepreneur to action, break down tasks
  • Road Map: Keeps entrepreneur focused and communicates vision
  • Sales Tool: Convinces investors, suppliers, customers
  • Communication Tool
  • Tool to manage and prepare for business success
• Preparation of Business Plan

  1. Narrative part is the body

  2. Value is in the research and thinking process, not just the finished product

  3. Takes several weeks to complete a good plan
• Importance of a comprehensive, thoughtful business plan
• Points to keep in mind when preparing a Business Plan

  • Carefully thought-out document
  • Helps deal with problems before they get out of hand
  • Sets out vision and strategy
  • Easier to set targets, timetables and budgets
  • Should be interesting and thought-provoking, but set realistic goals
• Questions to consider before writing a Business Plan

  • What service or product does your business provide?
  • Who are potential customers?
  • How will you reach potential customers?
  • Where will you get financial resources?
• Typical Business Plan Format

  • Executive Summary
  • Description of the Business
  • Products and Services
  • Management
  • Financial Requirements
  • Organization Description
  • Product, Service or Product Line
  • Description of the Industry
  • Description of Major Customers
  • Overall Marketing Strategy
  • Ownership
  • Production/Operation Plan
  • Management
  • Key Personnel
  • Other Personnel
  • Accounting and Record keeping
  • Financial back up information
  • Appendices
• me statement of cash flow, including balance sheet, income statement, cash flow history & proforma
• Unit 4 - Business Plan

  • Future projections - sales plan - cost of goods, margin break even analysis
  • Capital investment plan
  • Source and use of funds
  • Proforma cash flow statement
  • Any other documentation that might be pertinent
• Appendices


  • Identify bank and name of loan officer, legal counsel, outside management or directors
  • Background financial information (previous year tax forms and supporting documents)
  • Attach resumes of principals (if applicable)
  • Catalogs, sales brochures or other collateral information
  • Relevant public relations material, newspaper articles about your business
  • Aged accounts receivable if any
  • Current customers list, if any
  • Letter is commitment from present or potential customers
  • Market research data
• Appendices

  • Photographs of your facilities or plans for modification
  • Reference letters, customer feedback letters
• BUDGETING PROJECT PROFILE PREPARATION
• Introduction

  Mild steel with one head on one side and pointed on other side, used in office, shops, schools etc.
• Scope


  • Stationery items dealers
  • Manufacture of pins increasing every year
• Production Target


  3000 cartons per month, each pin approximately 350gms
• Details of Manufacture


  1. Bright mild steel wire, automatic manufacturing machine

  2. Pins are pickled and cleaned

  3. Pins are tin plated and resist rusting
• Inspection


  • Check well formed round shape
  • Do not bend in use
  • Clean and bright
• Land and Building


  Covered area 75 sq.meters, Rs.400.00
• Machinery and Equipment


  • Automatic paper pin machines (200 to 250 pieces/minute, 4 Nos, Rs.40,000.00)
  • Plating barrel with 12V. Dynamo set and other accessories including initial plating salts (1 No, Rs.12,500.00)
  • Drier drum with motor (1 No, Rs. 4,500.00)
  • D.E. Grinder 200mm wheel size (1 No, Rs. 1,000.00)
  • Office Furniture etc. (Rs. 2,000.00)
  • Installation and electrification (Rs. 5,000.00)
• Raw material (Monthly requirement)


  Hard drawn bright wire 21 to 23 swg, Rs. 4,000.00
• Staff and Labour (Per month)


  • Skilled Worker (1 No, Rs. 500.00)
  • Unskilled Worker (2 No, Rs. 400.00)
  • Welfare facilities for labour (Rs. 300.00)
• Expenses (Per month)


  • Rent (Rs.400.00)
  • Electricity and Water (Rs. 125.00)
  • Packing cost (Rs. 1,000.00)
  • Sales Expenses (Rs. 325.00)
  • Stationary, postage etc (Rs. 200.00)
  • Plating chemicals (Rs. 650.00)
• Working Capital (Per month)


  • Raw materials (Rs. 4,000.00)
  • Staff labour (Rs. 1,200.00)
  • Other expenses (Rs. 2,700.00)
• Total capital invested


  • Machinery and equipment (Rs. 65,000.00)
  • Working capital for 3 months (Rs. 23,700.00)
• Total Sales (Per month)


  By sale of 3,000 card board cartons of 400 gms gross weight at Rs.3.75 each = Rs.11,250.00
• Total Profit (Per month)

  • Monthly Profit = Total Sales - Manufacturing cost = 11,250 - 9,550 = Rs. 1,770
  • Annual Profit = 1,700 x 12 = Rs. 20,400
  • % of Profit on Sales = Profit per month x 100 = 1,700 x 100 = 15.1%

  Sales per month 11,250

  • % of profit on Capital Investment = Annual Profit x 100 = 20,400 x 100 = 23%

  Capital investment 88,701
• Common pitfalls to be avoided in preparation of business plan

  • Capacity Utilization
  • Understanding of Market
  • Overestimation of demand
  • Selection of appropriate machineries
  • Lack of understanding of appropriate technology
  • Project planning and implementation strategies
  • Underestimation of project cost
  • Wrongful selection of business location
  • Unrealistic pricing strategies
  • Unrealistic cash flow estimates
  • Lack of understanding of trading channels
  • Capability of firm to market its products in competitive market
  • Fail to asses market potential
  • Inaccurate information of demand and supply conditions
  • Fail to understand the seasonality of the business
  • Unrealistic market estimates and production estimates
• A entrepreneur must clearly indicate his financial plans
• Assumptions


  • Revenue forecasts (prices, volume discounts, margins)
  • Cost of Goods sold (materials, labor, major indirect expenses)
  • Sales and Marketing expenses (no. of people, key salaries, commissions, advertising & promotion)
  • Development expenses (subcontract, major expenses)
  • Administrative expenses (profit sharing, rent, major expenses)
  • Extraordinary income and expenses
  • Tax rate
  • Capital expenditures: prepare a detailed list of fixed asset items (equipment, vehicles, buildings, fixtures, etc.)
  • Working capital (accounts receivable, inventory, accounts payable)
  • Funding (amount and timing of equity and debt, interest rate)
  • Other key assumptions
• Financial Summary


  • Revenue
  • Gross Profit
  • EBIT
  • Net earnings
  • Capital expenditures
  • Dividends
  • Cash
  • Total Equity
• Growth


  • Revenue growth rate
  • Net earnings growth rate