Business Plan

Considerations and pitfalls

Business Plan
Business Plan

1. What is a business plan: A business plan is a written document outlining what you plan to do
as a business and how you plan to do it, in a concise way

2. Purpose of a business plan: to provide information about your company’s goals and objectives.
This information is important to many people associated with the company like employees,
investors, vendors, and customers. Other reasons to create a business plan include:

▪ Committing to a roadmap for your company

▪ Summarise what success looks like

▪ Highlight corporate socially responsible activities

▪ The future plans of a company

3. How to do a business plan

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Components of a Business Plan
1.0 Executive Summary
1. The Executive Summary is the most important part of a business plan

2. Often, it’s the only part that a prospective investor or lender reads before deciding whether or not to
proceed

3. An executive summary should convey your enthusiasm for your business idea and get a prospective
investor or reader excited about it, too

4. An executive summary includes:

▪ An overview of the business idea (one or two sentences)

▪ A description of the product and/or service. What problems is the business solving for target customers?

▪ Business goals: Where do you expect the business to be in one year, three years, five years?

▪ Proposed target market. Who are your ideal customers?

▪ The competition and what differentiates your business. Who are you up against, and what unique selling
proposition will help you succeed?

▪ Management team and its prior experience. What do they bring to the table that will give your business a
competitive edge?

▪ Financial outlook for the business. If you’re using the business plan for financing purposes, explain exactly
how much money you want, how you will use it, and how that will make your business more profitable.
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2.0 Company Description
1. Company mission statement

▪ A mission statement is a brief explanation of your company’s reason for being. It can be as short as a
marketing tagline

2. Company philosophy and vision

▪ Philosophy: What values does your business live by? Honesty, integrity, fun, innovation and community are
values that might be important to the business

▪ Vision: What does the business ultimately want to become?

3. Company goals

▪ Specify long and short-term goals as well as any milestones or benchmarks used to measure progress.

4. Target market or size of the opportunity

5. Industry

▪ What makes the business competitive: is the industry growing, mature or stable?

6. Legal structure

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2.0 Company Description Worksheet
Business Name

Company Mission
Statement

Company
Philosophy/
Values

Company Vision

1.

Goals & Milestones

2.

3.

Target Market

1.
Industry/
Competitors 2.

3.

Legal Structure/
Ownership

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2.1 Market Opportunity / Size

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3.0 Products and Services

1. What are the company’s products and services

▪ What does the company sell and how is it manufactured or provided

2. Problem the product aims to solve for its customers

▪ Explain the problem and how the product solves it

3. Product’s competitive edge

▪ Exclusive agreements with suppliers or patents?

4. Product / service pricing

▪ Is it competitive?

▪ Competitive landscape

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3.0 Products and Services Worksheet
Business
Name

Product/
Service Idea

Special
Benefits

Unique
Features

Limits and
Liabilities

Production
and Delivery

Suppliers

Intellectual
Property
Special
Permits

Product/
Service
Description
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4.0 Marketing Plan
1. Market research

▪ Primary or secondary research

▪ This section of your plan should explain:

o The total size of your industry

o Trends in the industry – is it growing or shrinking?

o The total size of your target market, and what share is realistic for you to obtain

o Trends in the target market – is it growing or shrinking? How are customer needs or preferences changing?

2. Barriers to entry
▪ High start-up costs

▪ High production costs

▪ High marketing costs

▪ Brand recognition challenges

▪ Finding qualified employees

▪ Need for specialized technology or patents

│ 11
4.0 Marketing Plan contd.

3. Threats and Opportunities

▪ Explain how the following could affect your startup:

▪ Changes in government regulations

▪ Changes in technology

▪ Changes in the economy

▪ Changes in your industry

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4.0 SWOT Analysis Worksheet
Strengths Weaknesses Opportunities Threats

Product/ Service
Offering

Brand/
Marketing

Staff/HR

Finance

Operations/
Management

Market

Can any of your strengths help with improving your weaknesses or combating your
threats? If so, please describe how below.

Based on the information above, what are your immediate goals/next steps?

Based on the information above, what are your long-term goals/next steps?

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5.0 Competitor Data Collection
1. Product/service features and benefits

▪ Describe the most important features. What is special about it?

▪ Describe the most important benefits. What does it do for the customer?

2. Target customer Price

Competitor A Competitor B
3. Key competitors
Benefits/Features

Size/profitability

Market strategy

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5.0 Competition

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6.0 Pricing Strategy
1. How do you plan to set prices? Keep in mind that few small businesses can compete on
price without hurting their profit margins. Instead of offering the lowest price, it’s
better to go with an average price and compete on quality and service.

2. Does your pricing strategy reflect your positioning?

3. Compare your prices with your competitors’. Are they higher, lower or the same? Why?

4. How important is price to your customers? It may not be a deciding factor.

5. What will your customer service and credit policies be?

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6.0 Pricing Strategy Worksheet
Business Name

Which of the following pricing strategies will you employ? Circle one.

Cost Plus Value Based Other:

The costs of making/obtaining Based on your competitive

your product or providing your advantage and brand (perceived
service, plus enough to make a value)
profit

Provide an explanation of your pricing model selection.

Include strategy info on your major product lines/service offerings. List industry/market practices
and any considerations to be discussed.

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7.0 Distribution Channels

1. Distribution channels may include:

▪ Retail

▪ Direct sales

▪ Ecommerce

▪ Wholesale

▪ Inside sales force

▪ Outside sales representatives

▪ OEMs (Original Equipment Manufacturer)

2. Any strategic partnerships or key distributor relationships that may factor in the business’ success,
explain them here.

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7.0 Distribution Channel Assessment Worksheet
Distribution Channel 1 Distribution Channel 2 Distribution Channel 3

Ease of Entry

Geographic
Proximity

Costs

Competitors’
Positions

Management
Experience

Staffing
Capabilities

Marketing Needs
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8.0 Sales Forecast

│ 20
8.0 Sales Forecast

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8.1 Traction

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 9.0 Organisation Chart TITLE

This section should give readers an

understanding of the people behind TITLE
TITLE TITLE TITLE

the business, their roles and

responsibilities, and their prior
experience. If you’re using your TITLE TITLE TITLE
business plan to get financing, know
that investors and lenders carefully
assess whether you have a qualified
management team TITLE TITLE TITLE

TITLE TITLE

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Financial Plan
3 Financial Statements

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 3 Financial Statements

1. Making sales allows business to maintain cash balance. Any sales on credit
generates accounts receivable and this means increase in accounts receivable in the cash
flow statement which is debited

2. Cost of goods sold- when a business buys products and are unused they are stored
in inventory. The inventory is decreased or credited in cash flows when a product is used
to make a sale, also called cost of goods expense in the income statement. If the
products are bought on credit, it adds to accounts payable in the balance sheet and is
noted as an increase or credit in the cash flow.

3. Depreciation & Amortization- Depreciation is recorded for fixed assets & amortisation
for intangible assets such as patents. Depreciation does not reduce the fixed asset itself
but is recorded in a different account as accumulated depreciation. The Capital
expenditure accounts in cash flow statement maintains the credit for the purchase of the
fixed assets (Property, plant and equipment)

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3 Financial Statements
4. Operating Expenses-These include broad range of expenses like selling,
administration & other general expenses. They are distributed across prepaid
expenses (when costs are prepaid before recording expense), Accounts
payable (when purchases are made on credit), & accrued expenses
payable (For all the unpaid expenses).

5. Interest Expense- Borrowing money from short term and long term
notes causes the interest expense or income.

6. Income tax Expense- When income tax is unpaid at the year end, it is
recorded under accrued expense liability.

7. Net Income- A positive net income increases retained earnings, which is also
the starting point of a statement of cash flows. “Bottomline” of a statement is
the net cash increases or decrease from the 3 types of activities in a cash flow
statement, which is the increase in cash during year. When sufficient cash flow
from profit is generated it can afford to pay cash dividends to share-owners.
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Profit and Loss Projections

PnL Projection
300

250

200
PnL Projection
150

100

50

-50

Total Revenue (Sales) Gross Profit

Net Profit Before Taxes Net Operating Income

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Balance Sheet

Balance Sheet
Projected

│ 29
Statement of Cash
Flows

Statement of
Cash Flows

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3 Financial Statements Linked – Net Income and
retained earnings

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3 Financial Statements Linked – D&A and PP&E*

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*Depreciation & Amortisation & Property Plant and Machinery
3 Financial Statements Linked – Working Capital

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3 Financial Statements Linked – Debt Repayment

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3 Financial Statements Linked – Change in Cash

│ 35
Breakeven Analysis

Breakeven
Analysis exercise

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