INTRODUCTION A business plan is an important document for any business and it can be written for a variety of reasons. Internally, it can help owners and managers crystallise their ideas, focus their efforts and monitor performance against established objectives. Externally, the business plan can act as a medium for attracting finance for start-ups or expansion. INTRODUCTION For many people, the experience of raising finance is a new one. Many opportunities presented to financiers are subsequently rejected. It is essential, therefore, that the entrepreneur prepares a quality document. The objective of this work-pack is to help you prepare just such a document by providing you with the headings which need to be covered. CONTENTS The business plan should summarise the proposed activity and the prospects for success for the venture, paying particular attention to factors that are critical to success or failure. The contents should be tailored to the particular individual requirements, circumstances or characteristics of the proposal. In general, they have the following categories: CONTENTS Executive Summary Current position Objectives Product/Service and Operations Marketing and Sales Plan Competition Management and Staff Financial plan Information and control Risk factors and mitigation

1. Presented By
Himansu S M

2. INTRODUCTION
 A business plan is an important document for
any business and it can be written for a variety
of reasons.
 Internally, it can help owners and managers
crystallise their ideas, focus their efforts and
monitor performance against established
objectives.
 Externally, the business plan can act as a
medium for attracting finance for start-ups or
expansion.
2

3. INTRODUCTION
 For many people, the experience of raising
finance is a new one.
 Many opportunities presented to financiers
are subsequently rejected.
 It is essential, therefore, that the
entrepreneur prepares a quality document.
 The objective of this work-pack is to help
you prepare just such a document by
providing you with the headings which
need to be covered.
3

4. CONTENTS
 The business plan should summarise the
proposed activity and the prospects for
success for the venture, paying particular
attention to factors that are critical to success
or failure.
 The contents should be tailored to the
particular individual
requirements, circumstances or characteristics
of the proposal.
 In general, they have the following categories:
4

5. CONTENTS
 Executive Summary
 Current position
 Objectives
 Product/Service and Operations
 Marketing and Sales Plan
 Competition
 Management and Staff
 Financial plan
 Information and control
 Risk factors and mitigation
5

6. WHOSE RESPONSIBILITY
 The business plan should be written by the
management, albeit with the help of
professional advisers.
 The investor is backing the management and
the plan must be an expression of your
objectives.
 Experience has shown that the advisers
provide a useful role to determine the overall
structure of the plan and can provide helpful
ideas and reactions.
6

7. HOW TO WRITE IT
 Do keep the length of the plan under control
and remember that the reader is unlikely to
know the sector as well as you!
 Avoid jargon and use plain & simple language
 Explain acronyms / abbreviations – in some
cases a Glossary is a good idea.
 Do include a title page containing address and
contact details, together with an Index.
7

8. EXECUTIVE SUMMARY
 Although preferably written last, the Summary
should appear at the front of the proposal.
 It is essential that the Summary 'catches the eye'
and grasps the imagination of the reader by
providing enough information for him to decide in
principle if he would be interested in the deal.
 Financiers have different preferences and are
looking to invest in different situations. The
Summary must be clear enough for them to
establish from the start whether or not the case is
worth pursuing.
8

9. EXECUTIVE SUMMARY
 The Summary should include:
 What your product or service is, in a
clear, concise description;
 What your market is;
 The unique aspects (USP) of your product;
 Why customers will buy from you rather than
your competitors;
9

10. EXECUTIVE SUMMARY
 In the case of new or innovative products, what
barriers there are to prevent competition entering
the market;
 Management experience and funding input;
 The financial highlights, both achievements to
date (if appropriate) and expectations of growth;
 The finance required;
 The potential 'Exit" route / returns for the investor
or the ability of the business to service
borrowings.
10

11. CURRENT POSITION
 This section should be a brief resume of the
stage the business has reached and how the
company has developed in the last few
years, with reference to factual information.
 The following questions should be addressed:
 What is the corporate structure?
 Who owns the company and shareholdings?
 Who are the senior managers?
11

12. CURRENT POSITION
 What is the management structure?
 How many employees are there?
 What is the location?
 What is the trading history?
 What are the key financial ratios?
 What are the strengths and weaknesses of the
business?
 What is the detailed SWOT analysis?
12

13. OBJECTIVES
 A clear and concise statement of the current
objectives.
 Some factors are easily measured such as turnover or
profitability targets.
 Others are qualitative in nature and these should not
be disregarded simply because of their subjective
nature.
 The performance will be monitored against these
targets by external investors at a later stage;
consequently they must be achievable.
 Future positive and negative variances will have to be
explained.
13

14. OBJECTIVES STATEMENT
 Any turnover targets by product, if relevant;
 Any profit or cost reduction target;
 Any market share target;
 Any non-financial objectives such as improving
your:
 - customer service;
 - industry reputation;
 - product quality;
 Any relevant personal objectives.
14

15. PRODUCT/SERVICE AND OPERATIONS
 This section gives manufacturing & operational
details of the business, as following:
 Existing products & services.
 How each can be improved, developed or replaced to
maintain competitiveness.
 New goods or service is being offered with its side
effects. For example, more staff and production space
may be required; raw materials purchased and stocks
held may need to be increased, or specialist staff
recruited.
 Describe the following in details:
15

16. PRODUCT/SERVICE AND OPERATIONS
 Products or Services;
 Unique qualities and any intellectual property rights;
 Regulatory issues (if appropriate);
 For a new product, the path to launch;
 Any plans for diversification;
 Facilities;
 Manufacturing processes;
 Plant and machinery used in processing;
 Organisational structure and identify key
positions, roles and responsibilities.
16

17. MARKETING AND SALES PLAN
 This is a vital area, which should be explained in
detail. The location and size of your market will need
to be defined, together with your share of the total. It
has to be very accurate - guesswork will not do!
 The specific steps you are going to take in marketing
your business and the impact you expect these to
have.
 If you are assuming that your market share will
increase then explain why.
 Explain the following details:
17

18. MARKETING AND SALES PLAN
 Absolute size of your domestic market;
 Absolute size of your export market (if appropriate);
 Trends and developments expected in the market in
the future;
 Your target market and share;
 The factors influencing the market;
 The risks associated with new markets;
 Results of market research;
 Routes to market;
 Sales pipeline.
18

19. COMPETITION
 How influential are your competitors and to what
extent are they in a strong position to influence your
market share?
 Is your market dependent on external factors over
which you have no control? These need to be pre-
planned by identifying:
 Who they are;
 What their strengths and weaknesses are;
 What the response of the competition will be;
 How your product is superior;
 The relative importance of each competitor.
19

20. MANAGEMENT AND STAFF
 It is said in the industry that financiers back
people not businesses.
 The quality of the management team is
recognised as the key factor in any investment
decision.
 This should be borne in mind both when
preparing the plan and during negotiations with
potential backers.
 Demonstrate that the team can work together
and that there are unlikely to be conflicts or
confusion of roles in the future. 20

21. MANAGEMENT AND STAFF
 Evidence of the track record of key individuals and their
experience in the industry;
 Future executive requirements;
 Curricula vitae for senior managers (usually relegated to
appendices);
 Identification of the key function areas e.g. marketing,
finance etc. and that each of these is covered by
management with appropriate experience;
 The financial rewards to the senior executives;
 The ages of the senior executives. If they are likely to
retire soon, what provisions have been made for
succession;
21

22. FINANCIAL PLAN
 Many business plans fail to raise finance due to
the inadequacy of the financial information
provided.
 Investors will be assessing the projected funding
requirement and the anticipated profitability to
establish whether the proposition is commercially
viable, and the potential return sufficient.
 Ensure that the financial plan reflects the
objectives set out in the other constituent parts of
your business plan.
 Give details of the following:
22

23. FINANCIAL PLAN
 The funding requirement;
 A summary of the projections;
 A summary of key financial statistics;
 The detailed assumptions behind the forecasts;
 A summary of the sensitivity of the forecasts to the
key assumptions.
 The detailed projections for up to 3 years including
profit and loss accounts, cash flow statements, and
balance sheets;
 The most recent financial statements; and
 Details of any sensitivity analysis.
23

24. INFORMATION AND CONTROL
 Writing a business plan is not a one-time exercise.
It becomes a more valuable management tool by
being used and reviewed regularly as the business
develops.
 Internal review of the business is only possible by
ensuring that adequate management information
and control systems are in place.
 Furthermore, external investors are likely to
require that regular financial information is
forthcoming from the company.
24

25. INFORMATION AND CONTROL
 The business plan should therefore contain the
following:
 An outline of the transaction recording
systems;
 Details of the regular management reports;
 A demonstration that the business has staff
with adequate financial skills;
 Details of how the business will be managed
on a day to day basis
25

26. RISK FACTORS AND MITIGATION
 It may seem strange to include risk factors in what
is intended to be a selling document; however, it
has the definite advantage of lending credibility to
the proposal.
 Including the major risks, financial and
otherwise, that are likely to affect the business
demonstrates that the entrepreneur understands
that all businesses have potential stumbling
blocks and has taken steps to identify these and
developed a strategy to overcome these
problems.
26

27. RISK FACTORS AND MITIGATION
 The best method to consider risk factors is by a
sensitivity analysis of the forecasts. Most
forecasting software is capable of being used
extensively in this way.
 The main results of such analysis should be
incorporated into the plan particularly with
regard to sales not reaching budgeted levels
and the resultant effect on cash flow which is
the demise of many new ventures.
27

28. Himansu S M
15-07-2013
28