ED - UNIT III BUSINESS PLAN PREPARATION

Business Idea Generation Techniques

TECHNICAL SOURCES Scientist from R & D Engineers from Production Field Staff

Ideas from marketing sources Focus groups Brainstorming Reverse brainstorming Rawlinson Brainstorming Checklist Free association Forced relationships Heuristics

Scientific method Value analysis Big-dream approach Parametric analysis Taguchi method Trigger sessions Creative listening Collective notebook method Attribute listing

OTHER SOURCES OF BUSINESS / PROJECT IDENTIFICATION OPPORTUNITIES I. INTERNAL SOURCES OF INNOVATION

1. a. Unexpected success 1. b. Unexpected failure 2. Incongruity 3. Process need 4. Industry & market structure

EXTERNAL SOURCES OF INNOVATIVE OPPORTUNITIES 1. Demography 2. Changes in perception 3. New knowledge

Trade fair Positioning Success stories of known entrepreneurs Consultants Professional magazines Watching emerging trends in demands for certain products Meeting with government agencies Competitors

CRITERIA FOR SELECTION OF PRODUCT OR STAGES IN NEW PRODUCT DEVELOPMENT 1. Idea generation 2. Screening 3. Concept development and evaluation 4. Business analysis 5. Product development and evaluation 6. Development and evaluation of marketing mix 7. Test marketing 8. Commercialization of the product

PROJECT IDENTIFICATION & SELECTION Meaning: Project is a business plan or idea that is intended to be carried out.

PROJECT CLASSIFICATION 1.Quantifiable Project & Non-quantifiable 2.Sectoral Projects 3.Techno - economic project A. Factor intensity oriented a. Capital Intensive b. Labour intensive B. Causation -oriented c. Demand based project d. Raw material based

C. Magnitude – oriented project I.Large scale II.Medium scale III.Small scale How would you select a project?

PROJECT FORMULATION Meaning of project report Project report or business plan is a written statement of what an entrepreneur proposes to take up. It is a guide or course of action what the entrepreneur hopes to achieve in his business and how is he going to achieve it. Significance of project report

CONTENTS OF PROJECT REPORT 1.General information 2.Promoter 3.Location 4.Land & Building 5.Plant & Machinery 6.Production Process 7.Utilities 8.Transport & communication 9.Raw material 10.Manpower 11.Products 12.Markets 13.Requirement of working capital 14.Requirement of funds 15.Cost of production and profitability of first ten years 16.Break-even analysis 17.Schedule of implementation

FORMULATION OF A PROJECT REPORT STAGES General information Project description Market potential Capital costs and source of finance Assessment of working capital Other financial aspects Economic and social variables Project implementation

1.GENERAL INFORMATION a. bio data of promoter b. Industry Profile c. Constitution and Organization d. Product Details

2. PROJECT DESCRIPTION Site Physical infrastructure raw material Skilled labour Utilities power fuel water pollution control Communication system Transport facilities Other common facilities Production process Machinery & equipment Capacity of the plant Technology selected Research & development

3. MARKET POTENTIAL Demand and supply position Expected price Marketing strategy After sales and service Transportation

4. Capital cost and sources of finance 5. Assessment of working capital requirement 6. Other financial aspects

7. Economic and social variables Employment generation Import substitution Ancillarisation Exports Local resource utilization Development of the area

8. PROJECT IMPLEMENTATION

PROJECT APPRAISAL Project appraisal is the cost benefit analysis of different aspects of proposed project with an objective to determine its viability.

METHODS OF PROJECT APPRAISAL Economic Feasibility Financial Feasibility Market Feasibility Technical Feasibility Managerial Feasibility Locational Feasibility

Economic Feasibility Requirement for raw materials Level of capacity utilization Anticipated sales Anticipated expenses Probable profits Government policies, incentives and subsidies

Financial Analysis Assessment of financial requirement fixed capital working capital

Market Analysis 1. Opinion polling method i.Complete enumeration method ii.Sample survey iii.Sales experience method iv.Vicarious method 2. Life cycle segmentation method

Technical Analysis Technical know-how Skilled labour Availability of machinery Availability of service Coping with anti pollution law

Managerial Analysis Locational feasibility

Distinction between Pvt and public company Basis of difPvt CoPublic Co Members – no limit ProspectusNo FilingFiling must Documents 2 signs7 signs Allotment of share Commence before minimum subscription Commence after min subs commencementAfter incorporation After certified

Transfer of shares Restricted by articles Freely transferable Filing of balance sheet not necessaryNecessary before registrar Statutory meetNeed not hold or report to registrar must do Directors no provisions 3