1. BUSINESS PLAN

2. What is Business Plan?
Answers the question “How your business will be created (expanded) and how it will be successful”

3. Why do we need business plan?
Putting the pieces together in a logical manner:
Is internal logic of your proposal consistent ?
Do the pieces fit together?
Creating a blueprint for action:
The more specific your business plan, the easier to implement it
A two-stage process. The first stage is creating the plan and the second is implementing the plan. 
A business plan is worthless if it is not properly implemented.
Focuses on founders/management team
Presents issues in an organized manner. It tends to bring structure to a process that may be become chaotic.

4. Why do we need business plan (Con’t)
Obtaining financing:
Often used to obtain financing from banks or other lenders.  business plan is a promotional piece to present and describe your business venture
Basic premise is to show that you know what you are doing and why your business will be successful.
Look upon lenders as partners.  They can point out shortcomings and deficiencies of the plan.  Lenders’ concerns about financing your business should be looked upon as opportunities to strengthen your project and increase its chances of success.
Understand the lenders role in your project, lenders purpose is to generate returns for the lending institution while protecting their investment.

5. Why do we need business plan (Con’t)
Attracting equity investment
Attracting key managers/employees
Obtaining contracts
Creating joint ventures, mergers and acquisitions

6. Successful business planning:
Leeds to action
Builds a shared vision
Is an inclusive and participatory process in which the team can claim ownership
Holds individuals accountable to the organization and stakeholders
Is both externally and internally focused and sensitive to the organization’s enviroment
Is based on quality data
Requires openness to questioning the status quo
Is a key part of effective management

7. How to Write the Business Plan
Business plan should be written in plain, easy-to-read language.
Short simple sentences and easy to understand terms.
Determine what you want to cover in your business plan and make headings for each of the items.
Begin each major section on a new page with the appropriate title (e.g. Marketing Plan)
Fine tune your business plan: review, revise and rewrite.
The business plan is a promotional document. Consider the viewpoint of others you are writing the plan for (banker, investor, customer, etc.).

8. How to write the Business Plan (Con’t)
Represent your company’s image and convince the reader you understand all aspects of the business.
Be honest. Do not be overly optimistic or try to hide limitations or weaknesses.
Good idea to have someone proofread your business plan who is not involved in the project. Help you identify aspects of your business plan that may need additional clarification and explanation.
Be sure to support the goals and the claims you make in the business plan. Include supporting evidence. (statistics, studies,research report etc.)

9. How to write the Business Plan (Con’t)
Goals are important. Set your short-term and long term goals.
Goals affect everything – “Painted white lines, keep you on the road”
Quantify your goals
Be Specisif: ex: achieve a gross profit margin of %55 or greater, have the products in 5000 retail outlets by year 5 of the buiness plan
Be Realistic: Establish targets reasonable and achievable
ex: opening a fast-food restaurant and to say “Want to be bigger than McDonald’s within six months” is not a realistic.
Be Aggressive: Don’t set goals that are too easily achieved. Don’t sell yourself short. ex: “Want to be bigger than McDonald’s within 20 years”
Be Consistent: Avoid setting inconsistent goals.

10. Know Who are the Readers of Your Plan
Business plan needs to be tailored to the reader.
Businesses have several types of stakeholders
Different stakeholders have different priorities. Priorities need to be balanced in the business plan.

11. Questions to Answer in Writing the Business Plan
Check list of the plan 1. Who are we? 2. What do we do? 3. What do we have to offer and to whom? 4. Why will someone pay for our product/service? 5. What resources do we have? 6. Why will we be successful? 7. Why would someone finance/invest? 8. How will we measure performance?

12. OUTLINE AND TEMPLATE OF A BUSINESS PLAN
There are ten broad business planning categories.Each broad category contains sub-categories
Help you identify the type of information to include.
Don’t be scared off by the large number of categories and subcategories.
Complete only those subcategories that are relevant to your situation and skip that are not relevant.

13. OUTLINE I. Cover Sheet II. Table of Contents III. Executive Summary
IV. Company Overview
V. Product and Service Description
VI. Market Analysis
VI. Marketing and Sales Strategy
VII. Management and Personnel Plan
VIII. Operational Plan
IX. Financial Projections
X. Appendix

14. I. Cover Sheet Should include: Full legal name of business
Location of buiness, telephone numbers
Date of the business plan
Main contact person(s), titles
A brief business paragraph giving your promotional description of business goals, potential and outlook
Include the amount and type of funding request, how it will be used, why it will help the business profitable  the lender will know immediatly what you are asking for.
Keep as simple as possible, identify yourself, your business, to the institution, party

15. II. Table of Contents Provides lender a road map
Give impression that you are organised
Ables to manage the big picture
Type of the table of contents and include accurate page numbers

16. III. Executive Summary (Con’t)
Encapsulates the business plan by giving the most brief statement about the nature and objectives of the business.
“Crystallizaion” of the entire business plan in a quick overview format.
Write this section last.
Make it between 2-5 pages
Make it enthusiastic, professional, complete, and concise.
Provide a comprehensive summary,many topics need to be covered
(each topic should be covered 1 or 2 sentences)

17. III. Executive Summary The company (project)
Name
When founded (started)
What does it do (expect to do)
What is the legal organization (expected legal organization)
Where is it located (expected to be located) 
Business model (essence of what the business does and how it functions)
Business/project stage(s) (the stages covered by the business plan) (Investigation, Seed, Start-up,Consolidation/merge )

18. III. Executive Summary Purpose(s) of the business plan
Implementation guide
Attract equity investment
Vision and mission (broad terms)
Where do you want to go
How will you get there
Description of the product, market and competition
Describe the function and attributes of the product.
What is the target market and who are the target customers.
Describe why the target market customers will buy your product.
Describe the product distribution structure.

19. III. Executive Summary Founders and management team
Names
Background/experience/education
Role in company (project)
Describe why the founders/managers will succeed
Location and description
Offices
Facilities
Technology
Summary of financial projections
Production, processing, distribution and/or marketing budgets.
Sales projections
Cash flow budgets
Pro forma income statements
Pro forma net worth statements
Why will the business be successful?

20. IV. Company Overview
Provide information on your company who you are, where you have been, where you plan on going, how your company fits into your industry and marketplace.
Identify and discuss following:
Precise nature of your business
Brief history of business (How you developed your products and service)
How your facilities will be able to handle your future growth
Organizational details, including legal structure of your business
Your growth potential

21. V. Product and Service Description
Describe your business concept. Should include those elements:
Business/Project Description and Background
Mission Statement,Vision Statement, Goals and Objectives
Business Structure
Products/Services
Research and Development

22. V. Product and Service Description (Con’t)
Business/Project Description
Briefly describe the business or project. 
What type of business are you planning (production, processing, manufacturing, marketing, service, other)?
Describe the strengths of your business or project and its core competencies (what are you good at doing).
The results of any business or project analysis that has been conducted like a feasibility study, market assessment, etc.
Mission Statement,Vision Statement, Goals and Objectives
Vision: mental picture of what you want to achieve
Mission: defines how you will achieve your vision.
Goal: What you need to achieve to accomplish the vision
Objective: specific time-sensitive milestone used to measure your progress towards achieving your goals and vision.

23. V. Product and Service Description (Con’t)
Business Structure
Describe the business model (how the business functions and how it will make money).
Why will the business be successful?
What is the existing or proposed legal structure – new generation cooperative, Limited Liability Company, corporation, etc.?
What is the organizational structure?
Include any joint venture partners, subsidiaries, affiliates, or other important stakeholders.
Describe your overall business strategy (e.g. low cost producer, differentiated product, niche market, etc.).  Will the company focus on growth or cash returns to investors)? 

24. V. Product and Service Description (Con’t)
Products/Services
Describe the product or service and its features.
Is the product ready for the market or in development (if so, what stage of development and what obstacles remain)?
Is the product a consumer product, ingredient, commodity, etc.?
Describe what is unique or different about your product/service.
Compare the product and its features to those of competitors.
Describe how the product will be packaged and any specific features of the package.

25. V. Product and Service Description (Con’t)
Research and Development
Describe plans for ongoing research and development (e.g. plans for process improvement or new product development). 
Identify the extent to which resources will be committed to future research and development. 
How will research and development efforts be inter-connected with customer needs (e.g. ISO)? 
Identify the use of third parties and any strategies related to the outsourcing of future research and development capabilities. 

26. VI. Market Analysis Determine who you are targeting?
Describe and define the market. 
Is it a specialty or niche market? 
What sets the market apart from other markets? 
Describe the current size, the forces driving the market and the speed at which it is growing. 
Identify major customer segments and key customers in this market.
Determine who your competitor is

27. VI. Market Analysis (Con’t)
Target Market
Will the product be sold into a commodity or differentiated product/service market? 
Will the product be sold to consumers or as an ingredient in another market? 
If you are targeting a niche market, identify the relevant market segments and how they are defined.  
Describe the demand and usage trends of the target market in which the proposed product will be offered. 
Who are your target market customers (consumers, manufacturers, retailers, etc.)? 
What need does your product fill in the target market?
Examine the potential for emerging, niche or segmented market opportunities. 
Assess the opportunity and potential for a branded product. 
Assess potential market usage. 
What share of the market do you expect to capture?

28. VI. Market Analysis (Con’t)
Customer Analysis
What type of customer will you focus on – consumers, retailers, manufacturers, etc. 
Name specific potential customers (or types of customers) for this product. 
Are customers dissatisfied with the current products in the market?  
Identify any trials or tests of your product currently being conducted by potential customers. 
Describe any on-going contract negotiations with potential customers. 
What will motivate their buying decisions – product quality, price, public relations, etc.?

29. VI. Market Analysis (Con’t)
Competitive Assessment
Identify similar products/services in the market that are direct competitors to your product/service.  
Compare your product/service to these products/services (ie. features, service, quality, price, distribution, brand, etc.). 
Describe the companies that produce these products/services. 
Describe the concentration within the market (ie. large number of small players or small number of large players). 
Describe the current competitive intensity within the market (cutthroat competition or live and let-live). 
Describe the ease of entry of competitors into this market (can competitors easily enter the market and drive prices down). 
Describe how you will compete against these competitors and their products – ie. low cost, niche market, product differentiation, etc.

30. VII. Marketing and Sales Strategy
Access to Market Outlets:
Will the product/service be sold directly to consumers or directly to wholesalers/retailers?
Will an intermediary such as a broker, distributor or marketer be used?
Identify the potential intermediate and end buyers of the product/service and the associated marketing costs to access each. 
Outline the product/service distribution system and the costs involved. 
Any strategic marketing partners that will be used to reach key customers (for example, brokers, other manufacturers, distributors.) 

31. VII. Marketing and Sales Strategy
Pricing Plan:
Explain how you set your selling price.   
Why will customers pay this price?
How does your price compare to that of competitors? Why should it be different?
Will your pricing plan include selling on credit? How will you manage accounts receivable?
Marketing Message and Promotion
Establish marketing objectives
describe how you will promote your product.  Identify marketing themes or product propositions that will be utilized with key customer segments. 
Describe the use of third parties to be used in the development or deployment of marketing messages (eg, advertising agencies, consultants, etc.). 
Describe the selling strategies to be used by sales or marketing personnel

32. VII. Marketing and Sales Strategy (Con’t)
Marketing Message and Promotion (Con’t)
Describe advertising and communications programs that will be deployed, and the media in which they will be deployed. 
Identify strategic selling partners (e. g. entities that will co-promote your product, include it within their sales bundle, etc.). 
Identify any plans for marketing research to assess customer acceptance of the sales strategy. 
For very large potential customers, identify specific market development objectives for those customers. 
Identify marketing and sales incentives to be used for third parties and for sales staff.

33. VIII. Management and Personnel Plan
Show that your management team is capable of managing the business
Project Leadership
List the leaders/founders of the project.
Provide resumes of their background and experience
Lists advisors and consultants used in the project and their qualifications. (Accounting, legal services,industry consultants/service providers
Business Management
Describe the primary management skills that will be required
Prepare an organizational chart showing lines of authority and responsibilities. 
Identify the key management positions (CEO, CFO, COO)
Present expected salaries for key positions 
Incentives,reward systems for management

34. IX. Operations
* Show how you will supply your product/service to the marketplace.
Facility Requirements and Site Selection:
Describe the access to markets.  
Describe the access to raw materials.  
Describe the access to transportation.
Describe the access to labor supply. 
Describe the access to production inputs (electricity, natural gas, water, etc.).
Describe the general design and technical requirements.
Outline the size and type of production facilities.
What is the need for related buildings, equipment, rolling-stock, other.
Technical Analysis
Current Industry State of the Art
Technology to be Utilized
Suitability of Production Technology
Proprietary Protection/Rights/Claims

35. IX. Operations (Con’t) Operations Plan:
* Describes how you will deliver value to your customer. As a result, it is closely linked to your marketing plan.
Outline the operations activities of your business.
What activities will be conducted in-house and which will be outsourced (make or buy decisions).
Describe your relationship with venders, suppliers, others.
Are there any contracts or letters of intent in place?
Describe how operations will meet the needs of the customers in your target market.
Specify how operations will deliver dimensions such as quality, cost, timeliness, service, flexibility, etc.
If your operations plan gives you a competitive advantage, describe it.  
Describe the general design and technical requirements.
Determine the size and type of production facilities.
Assess the need for related buildings, equipment, rolling-stock, etc.

36. IX. Operations (Con’t) Labor Plan
Describe the type and amount of labor needed for the business. 
Determine the accessibility of labor including wage rates, skills level, etc. 
Describe any labor training programs you plan to provide. 
Describe the projected wage rate and benefits programs you plan to provide. 
Describe the extent to which organized labor may be a potential issue for the business.
Regulatory and Environmental Requirements
Licensing and bonding requirements
Permits
Health, workplace, or environmental regulations
Special regulations covering your industry or profession
Zoning or building code requirements
Insurance coverage
Trademarks, copyrights, or patents (pending, existing, or purchased)

37. X. Financial Projections
Show that your business make money
Budget Projection
Capital and Contingency Plans
Financing Plan
Financial Data and Analysis
Economic Variability and Risk Management

38. X. Financial Projections (Con’t)
Budget Projections
Operations Budgeting: Budgets for production, processing, distribution/transportation, marketing, entire supply chain, others.
Volume-Cost-Profit Analysis: Analysis for computing the volume of sales needed to break-even. 
Capital Budgeting: Analyzing investment decisions through Net Present Value and Internal Rate of Return.
Cash-Flow Budgeting: Projecting the expected sources and uses of cash during various time periods.

39. X. Financial Projections (Con’t)
Capital and Contingency Plans
Capital Plans
Project the capital cost of major facilities, equipment and peripheral facilities. Make a list of these items.
Project the capital cost of working capital including inventories, etc.
Project the capital cost for the marketing plan.
Contingency Plans
Identify risk factors
Identify and assess internal weaknesses of the business
Use sensitivity and what-if analysis to identify deficiencies.
Develop plans or alternative courses of action in case these weaknesses or deficiencies occur.

40. X. Financial Projections (Con’t)
Financial Data and Analysis
Forecast Information during Start-Up & Under Full Production
Balance Sheet
Income Statement
Cash Flow Statement (monthly)
Sources and Uses of Funds Statement
Sensitivity Analysis
What are the key variables affecting profitability and cash-flow? 
Identify the levels of these variables (worst case, best case, expected). 
Project profitability and cash-flow under various combinations of these variables. 
Project profitability and cash-flow breakeven under various assumptions. 
Conduct Monte Carlo simulation

41. X. Financial Projections (Con’t)
External Risk Factors
Input and output price volatility. 
Shortages of production inputs and raw materials 
Price cutting by competitors 
Unfavorable industry trends 
Unfavorable legislation 
Unavailability of trained labor 
Internal Weaknesses and Risk Factors
Construction delays and/or cost over-runs
Plant specifications not met 
Production capacity goals not met
Inferior management 
Sales projections not achieved. 
Difficulties in obtaining credit 
Risk Management Tools
Input&Output , construction and performance contracts, insurance, hedging.

42. XI. Appendix Supporting documents Graphs and charts
Copies of contracts and agreements
Biographies and résumes
Glossary of terms
References: Lenders, investors, or other bankers, suppliers, trade creditors, etc., who can give positive feedback on your past performance
Brochures and product information sheets
Media information
Surveys
Bibliographies
* Do not overload your appendix with too much information. Include only what is relevant, and add value to your business plan.

43. Feasibility Study vs. Business Plan Do not mix Feasibility report and business plan!
The main difference between a feasibility report and a business plan is purpose.
A feasibility study is not a business plan. The feasibility study provides an investigating function.
It addresses the question of “Is this a viable business venture?”

44. Feasibility Study Vs. Business Plan
FEASIBILITY REPORT
Outlines and analyzes several alternatives or methods of achieving business success.
feasibility study helps to narrow the scope of the project to identify the best business model.
Helps to narrow the scope of the project to identify and define two or three scenarios or alternatives.
The feasibility study is conducted before the business plan.
BUSINESS PLAN
Provides a planning function. Outlines the actions needed to take the proposal from “idea” to “reality.”
Deals with only one alternative or scenario.
Business plan is prepared only after the business venture has been deemed to be feasible.
If a proposed business venture is considered to be feasible, a business plan is usually constructed next that provides a “roadmap” of how the business will be created and developed.
The business plan provides the “blueprint” for project implementation.

45. REFERENCES

46. Thank you …