Business Plan Preparation

Business Plan Preparation

Business Plan is like a “Blue Print” telling your investors how you will operate your business. You do need a business plan for your business to get funded, also it offers a step by step guide as you start your business. It acts as a guidance and directs every decision you make going forward.

• Running out of cash before you open your doors because you haven’t anticipated your start-up costs
• Missing sales projections because you don’t really know who your customers are and what they want
• Losing customers because your quality or service falls short
• Becoming overwhelmed by too many options because you never took the time to focus on a mission and vision for your company
• Going bankrupt because you don’t have a rational business model or a plan for how to make money

Business plan is a document that is prepared by the entrepreneur, which describes all the relevant internal as well as external information that is required in starting a new business. It is a combination of the functional plan like finance, marketing, human resource, and manufacturing plan related to business activity.

Business Plan or Project Report may be Required to Syndicate Bank Loan or Enter into a Joint Venture with a Partner.

Professional Business Plan Preparation for Start-ups and Businesses having Annual Turnover Less than 25L.

If you are embarking on a significant endeavor that’s likely to consume a significant amount of time, money, and resources, then you need a BUSINESS PLAN.

Any  entrepreneur can use a business plan – so can a banker, an investor, or a venture capitalist, depending on which end of the funding chain you’re thinking of. Some people use business plans just to get a physical road map together for their business or develop a get-to-market strategy; other people want to know how much they need to sell to keep their current staff employed; still others only want to determine whether a new market is worth exploring for their product or concept.

 

Business plans can…
• Help you obtain investment capital
• Learn what sales benchmarks you need to reach
• Figure out how many people to hire
• Determine who your competitors are
• Find the trends that are impacting your business today

Importance Of Writing A Business Plan

A Plan can be used by an entrepreneur for a variety of objectives. It is primarily used to get funding but there can be a number of other uses too. Even small one-page business plans have importance; it gives

Clarified direction

Clarifying the purpose and direction of your business allows you to understand what needs to be done for forward movement. Clarifying can consist of a simple description of your business and its products or services, or it can specify the exact product lines and services you’ll offer, as well as a detailed description of your ideal customer.

Future vision

Businesses evolve and adapt over time, and factoring future growth and direction into the business plan can be an effective way to plan for changes in the market, growing or slowing trends, and new innovations or directions to take as the company grows.

Manages company

A business plan conveys the organizational structure of your business, including titles of directors or officers and their individual duties. It also acts as a management tool that can be referred to regularly to ensure the business is on course with meeting goals, sales targets or operational milestones.

Attract financing

By putting statistics, facts, figures and detailed plans in writing, a new business has a better chance of attracting investors to provide the capital needed for getting started.

Reasons Why Writing A Business Plan Is Important

1. It helps you get organized

There are a number of pieces that all have to come together to make your business profitable. A business planensures that you won’t skip any important steps that could derail your efforts down the line. When your plan is clearly spelled out in writing, it helps you see the big picture and identify potential problems before you make blunders.

2. It helps your business to stay on track

The plan makes it easier to follow each business development step in order so you don’t miss any important elements along the way. A well-written plan provides you with a starting point and outlines a timetable that drives your activities, keeping you grounded and on track as you progress.

It provides you clarity of the goals you have for your business

It spells out your purpose, vision and means of operation. It also serves as your company’s resume, explaining your objectives to investors, partners, employees and vendors. A good business plan clearly states the amount of capital you need to make the company work and where the investment is coming from. It clarifies the means by which you will pay back borrowed money and how you will invest profits.

4. It prepares your business for future

Market research in the business plan should include projections based on consumer needs and your ability to fulfill those needs. A well-developed business plan also documents actions the company will follow in case the projections turn out to be too optimistic.

5. It helps you determine your financial needs and attract investors

A lot of ideas sound great on paper and even in discussions. However, simple math can make or break an idea. Before we launch any new idea, we at least create a financial model to project the ROI from several realistic scenarios. You can save a lot of time and frustration thinking through the numbers, and making sure it’s possible to hit your revenue and profit goals.

Benefits Of Having Business Plan

• An opportunity to test out a new ideas to see if it holds real promise of success
• A set of values that can help you steer your business through times of trouble
• Benchmarks you can use to track your performance and make midcourse corrections
• A clear-eyed analysis of your industry, including opportunities and threats
• A portrait of your potential customers and their buying behaviors
• A rundown of your major competitors and your strategies for facing them
• An honest assessment of your company’s strengths and weaknesses
• An explanation of your marketing strategies
• An analysis of your revenues, costs, and projected profits
• A résumé you can use to introduce your business to suppliers, vendors, lenders, and others

Given that valuing firms is notoriously difficult and subjective, a well-written business plan will clearly highlight the opportunity for the incoming investors, the value of it and increase the likelihood of a successful exit by the current owner.

Any person starting or extending their business which can consume resources like money or time should draft a business plan for smooth functioning.

Start-ups

The main reason for a start-up to have a business plan is because start-up focuses mainly on the idea and not on the execution of those ideas.

A business plan will help start-ups to have proper management by setting up objectives and tracking down those. If they work according to their business plan, it will help them to achieve their targets in a more organized manner.

Cash inflow and outflow and future requisites can be monitored if you have a full-proof plan.

Established firm

The business plan will help the firms to develop a strategy and allocate the resources according to their strategy.

A business plan helps you in keeping a look on the valuation of the business. Companies can use a business plan to set new targets.

The business plan is divided into six types-

Start-up business plan

This type of business plan includes sections that describe the kind of company, purpose, product and service that the start-up is going to provide. The investors will require the financial analysis^[1] with spreadsheet providing detailed information about financial areas not limited to income, benefit and cash flow projections.

Internal business plan

It is drafted to target the specific group of people within the business, like the marketing team which needs to analyze a particular project. An internal business plan describes the current position of the company, which includes operational costs, profitability, and calculations during the project.

Strategic plan

The strategic business plan is a plan laying down the foundation of a company. It varies from company to company. The company includes the following five elements in its strategic business plan-

• Vision;
• Mission statement;
• Success factors;
• Objective achieving strategies;
• Implementation schedules.

Feasibility plan

Feasibility Business plan describes the need for product or service the company is offering and capital required. This type of plans recommendations for further growth.

Operational plan

These are the internal plans which describe the elements that are related to the company operations. This summarizes employee responsibility.

Growth Plan

These are the in-depth description of proposed growth, that is drafted for the internal as well as external purpose. It includes a complete description of the company. The plan provides detailed information to the potential investor.

Business Plan process?

The business plan process is as follow-

Generation of idea

It is the first step in the business planning process. It distinguishes entrepreneurs from the usual business. Sources of new ideas that entrepreneurs can get are from-

• Customers
• Existing companies
• Research and development
• Employees
• Dealers and retailers

Environmental scanning

The next step is to scan the factors that will affect the business ideas. The elements are external and internal environment surrounding the business

• External environment includes-
• Socio-cultural appraisal
• Technological appraisal
• Economic appraisal
• Demographic appraisal
• Government appraisal
• Internal environment includes-
• Raw materials
• Production
• Finance
• Market
• Human resource

Feasibility analysis

It refers to conduct a detailed report on every aspect that is relevant to the business. The analysis includes-

Market analysis is undertaken to calculate the demand and market share of products and services in the future.

Technical and operational analysis is conducted to assess the functional ability of the proposed business enterprise

Project report preparation

It is a document which describes step by step strategies involved in running the business.

Evaluation, Control And Review

The company operates in a dynamic environment, so it has to monitor and review strategies as well as policies to compete in an existing market.

What is the content of the project report?

• Cover page

Cover page of the project report contains the title of the project, name, address so that the person reading the report can quickly contact the entrepreneur if there are any queries of the report.

• Table of contents:

Table of content consists of topics covered in the project report along with the page number.

• Executive summary:

It has to be written after the completion of the project report as it gives brief gist of the project.

• Company information and industry:

The ownership form of the company, which contain the reason for forming into the proposed plan and It can also consist of the SWOT analysis of the company

• Technical plan:

The critical aspect is analysed during the technical feasibility. This report should be highlighted. The choice of the product and service that is to be offered should be justified.

• Marketing plan:

This plan should focus on the industry and market feasibility that is conducted at an earlier stage. It describes the pricing policy, market research, product to be offered by the company, marketing strategy promote the product and target customers.

• Operations plan:

It explains the innovative idea that is involved in the process of production, which makes it better when compared to existing competitors.

• Organizational plan:

It provides information about the management team who are part of the company. It focuses on the technical skills possessed by the employees in the company.

• Project timeline:

It includes the network diagram, which illustrates the time duration required for the project. The graph shows the various activities in the project, which are organized and the time duration required for the execution of the project.

• Critical risk and assumption:

It explains the various assumption made during the creation of the company like considering the previous sales forecast. There can be multiple risks involved in the product and kind of service company is planning to offer

• Social plan:

It explains how the company project will benefit society. It should highlight how a company will generate employment opportunities and lead to skill development, provision of goods and services, utilization of resources etc.

• Exit strategy:

It is a negative aspect of the business. Still, the company should explain how they would close down the business if the company is not able to earn the expected profit, the investors will be keen to know how their investment can be recovered.

• Financial plan:

It is an essential part of the report which will contain brief content all the sections with monetary terms. It explains the financial composition of the company, sources through which the company has acquired finance, the total expenditure incurred by the company.

• Conclusion:

The report should be ended on a positive note so that the readers develop a positive image of the report.

Final thought

Every business needs to have a plan for attracting investors and to provide business with a direction. A business plan plays a vital role in the success of the business. It contains detailed plan budget and objective being set for the business.