Crafting A Business Plan

CRAFTING A BUSINESS PLAN
What to do
How to do it
When to do it
What to expect in
the future
Value of Developing a Business Plan
• The business plan serves two essential functions:
1. It provides an 2. To attract potential

operational guide investors and lenders to
finance the business venture.
A good business plan should address the following:
a. Who is the primary customer? What are the characteristics and

demographic profiles of this costumer base?
b. Where do they live, work and shop?
c. Why choose this customer base and how large it is?
d. Why do they buy? What needs and wants of the target market
drive their purchasing decision?
e. What can my business do to meet those needs and wants better
than the competitors?
f. Knowing my customer’s needs and wants, what should be the basis
for differentiating my business in their minds?
Elements of a Business Plan
Section I: Executive Summary Section IV-A: Market Analysis

 Market segmentation and market selection
Section II: Company Description  Buyer behavior
 Company description  Competitor analysis
 Company History
 Mission Statement Section IV-B: Marketing Plan
 Products and Services  Overall marketing strategy
 Legal Status and Ownership  Product, price, promotion, and distribution
Section III: Industry Analysis Section V: Management Team and Company

 Industry size, growth rate, and sales Structures
projection  Management team (key personnel)
 Industry structure  Board Directors
 Nature of participants  Board of Advisers
 Key success factors  Company structure
 Industry trends
 Long-term prospects
Section VI: Operations Plan Section VIII: Financial Projections
 The general approach to operation  Source and uses of funds statement
 Business location  Assumption sheets
 Facilities and equipment  Pro forma balance sheets
 Pro forma cash flows
Section VII: Product Design and Development Plan  Ratio analysis
 Development status and tasks
 Challenges and risks
 Intellectual property
Sample format
From Hisrich and Peters
I. Introductory Page b. Physical Plant
a. Name and address of business c. Machinery and equipment
b. Name s and address of the principals d. Names of suppliers of raw materials
c. Nature of Business VI. Marketing Plan
d. Statement of confidentiality report a. Pricing
II. Executive Summary b. Distribution
III. Industry Analysis c. Promotion
a. Future outlook and trends d. Product forecast
b. Analysis of Competitors e. Controls
c. Market segmentation VII. Organizational Plan
d. Industry Forecast a. Form of Ownership
IV. Description of Venture b. Identification of partners or principal
a. Produtc(s) shareholders
b. Service (s) c. Authority of principals
c. Size of business
d. Office equipment and personnel
f. Background of entrepreneurs
V. Product Plan
a. Manufacturing Process
d. Management-team background e. Source and applications of funds
e. Roles and responsibilities of members X. Appendix (contains back-up material)
or organization a. Letters
VII. Assessment of Risk b. Market research data
a. Evaluate weakness of business c. Leases or contracts
b. New technologies d. Price list from suppliers
c. Contingency plan
IX. Financial Plan
a. Pro forms income statement
b. Cash flow projections
c. Pro forma balance sheet
d. Break even analysis
From other books of entrepreneurship:
• Cover sheet: Name of business, name of principals, c. Balance Sheet
addresses, and phone numbers d. Break-even analysis
e. Income Projections (profit and loss statement)
• Business Goals -Five-year summary
• Strategies -Detail by month for first year
-Detail by quarter for second, third,
• Table of Contents fourth, and fifth years
Section 1: The Business -Notes of explanation
a. Description of Business f. Cash Flow Projection
b. Product/Service -Detail by month for first year
c. Market -Detail by quarter for second, third,
d. Location of Business fourth, and fifth years
e. Competition -Notes of explanation
f. Management g. Deviation Analysis
g. Personnel h. Historical financial reports for existing business
h. Application and Expected Effect of Loan (if -Balance sheet for past five years
needed) -Income statement for past five years
i. Summary -Tax returns
Section 2: Financial Data Section 3: Supporting Documents
a. Source and Application of funding
b. Capital equipment list
Benefits of a Business Plan
• The importance of exerting effort and time in making business plan will
give more benefits that exceed the costs made during the planning
activities
• A well-prepared plan can prove to the investors and stakeholders that a
business has potential in the market and will succeed.
• To have better financing, the entrepreneurial plan must pass the three
tests with the potential investors and lenders such as the
real test, competitive test, and value test.
Remember:
• A business plan helps the entrepreneur to understand the business idea better,
• A business plan makes the entrepreneur more proactive than reactive since he is aware of the
possible threats and risks in the industry.
• A business plan quantifies objectives, providing measurable benchmarks for comparing forecasts
with actual results.
• A business plan converts the business idea to reality.
• A business plan creates a detailed action plan for the enterprise.
• A business plan helps the entrepreneur to prioritize his time, effort, and resources strategically.
• A business plan also shows hot the ventures manage cash flows and how the entrepreneurs intend
to pay a debt or provide an attractive return on investment.
Difference Between Strategic Management,
Feasibility Study, and Business Plan
Feasibility Study
Is a detailed investigation and analysis of a proposed business
venture to determine its viability.
Business Plan
 It is a planning tool for transforming an idea into reality.
Strategic Management
 It is the formulation and implementation of the goals, initiatives,
and decisions that enable an organization to achieve its
objectives.
Thank You!

Crafting A Business Plan

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CRAFTING A BUSINESS PLAN

• The business plan serves two essential functions:

1. It provides an 2. To attract potential

a. Who is the primary customer? What are the characteristics and

Section I: Executive Summary Section IV-A: Market Analysis

Section III: Industry Analysis Section V: Management Team and Company

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