Understanding Business Plan

Business Plan
Sub topics
Meaning and definition
Objectives of business plan
Components of business plan
Developing business plan
BUSINESS PLAN
Business planning is the process of setting goals,
explaining the objectives and then mapping out a document
to achieve these goals and objectives.
Simply Business plan is defined as a written document that
defines and describe thee business, its managements, and
products, market and strategies direction
The business plan is a comprehensively written down
document prepared by the entrepreneur describing formally
all the relevant external and internal elements involved in
starting a new venture.
OBJECTIVE OF BUSINESS PLAN
To seek loans from financial institutions

To persuade others to join business
To identify actual strength and weakness of business and
compotators
To attract major human resource/personnel
To give direction to the vision formulated by the
entrepreneur
To monitor the progress after implementing business plan
To guide entrepreneur in actual implementation of plan
Types of business plan
Start up business plans these are plans that developed by
entrepreneurs in the actual starting and running a new business.
These plans based on information and assumption and predictions
without the benefits of actual operating experience.
Existing business plans, these are the plan developed for the
that have been in operation for one or more years.
The plans based on refining operations, correcting defects,
planning for ongoing sales and growth.
Tasks; please read
1. Strategic plan
2. Operational Planning
Some of the salient issues a small business entrepreneur
should consider when writing a business plan include:
The business plan should be as brief as possible. The
relevant audience may not want to read a long-winded
document.
A business plan should be easy to read and
comprehend, without typographical or grammatical
errors.
A business plan should inform the relevant audience
concerning the large and profitable market
opportunities for the business enterprise.
A business plan should convey the strength and depth
of the companys management team, among others.
miscomputation of business plan
Business plans are only for start-up companies
Reality: Companies at all stages of development need to

prepare Business Plans either for the planning and
financing of a specific project.
A company operating for 15 years or more will need to
draft a Business Plan in order to raise the necessary
capital to reach the next stage in its development
Business plans should be as detailed as possible; the
longer the plan, the better chance that the company will
be financed.
Reality: The plan must be concise, well-written and
should focus on the lenders or investors principal areas
of concern.
and not be cluttered with lots of exhibits or irrelevant
market studies.
Business plans should emphasize ideas and concepts, not

people
Reality: Financiers and venture capitalists prefer to
invest in a company that has great people and only a
Only the founding entrepreneur should prepare business
plans
Reality: this myth has no grounds since a business plan
is as technical aspect as the business itself.
Thus it should be developed by a team of managers
within the company and then reviewed by qualified
experts, such as accountants, attorneys and the board of
directors.
A BUSINESS PLAN CONSISTS OF THE FOLLOWING
SECTIONS
1. Executive summary
2. Business Description
3. Marketing Plan
4. Competitive analysis
5. Organization and Management Plan
6. Financial Plan
7. Appendices
The executive summary
The executive summary is the introduction to a companys
business plan and may be seen as the most important
section in a business plan.
The statement should be short, may be of one or two pages.
It should explain the fundamentals of the proposed
business.
Although it comes first in a business plan document.
It is advisable to write it last, because it summarizes the
entire business plan
Executive summaries of business plans are expected to cover
the following major issues:
The companys origin/background/history.
The products, ideas, or services offered (or to be offered) by
the company
The companys goals and objectives.
The market potential for the products or services of the
company
A three to five year summary of key financial forecasts,
especially sales and profit/loss.
The management team for the business concern and its track
record
Other relevant issues, policies and strategies.
The company description
The company description section of the business plan should
convey a sense of the history and origins of the company, as well
as its goals.
Relevant pieces of information that can be included in this
section are:
Mission Statement
Company Objectives
Company Ownership
Start-up Summary
Company Locations
Services and facilities
Marketing Analysis
Marketing analysis forces the entrepreneur to become familiar with

all aspects of the marketing so that the target market can be defined
and the company can be positioned in order to collect its share of
sales.
Market segment
Target market
Market Needs
Market trend
Pricing strategies
Promotional strategies
Competitive Analysis
The purpose of the competitor analysis is to determine the
strengths and weaknesses of the competitors within the
market.
Identify your competition
Analyze strengths and weaknesses
Look at opportunities and threats
Determine your position
Organization and Management Team
This section identifies the key members of the companys

management team, describes their responsibilities, and
documents the relevant experience and accomplishments of
each member of the team.
Form of Business
Organizational Structure
Business Experience and Qualifications
Administrative Expenses
Financial plan
It explain about the financial composition of the company,
various sources through which company has raised required
finance, total expenditure incurred by the company.
The profit and loss statement tells how much money the
business earns over a given period of time.
The cash flow statement is an information tool telling how
much cash is needed to meet obligations, when will it be
needed and where is it coming from.
Balance sheet is a summary of all the financial data giving a
macro view of the company at a given point of time.
Appendices
It includes details and studies used in the business plan; for
example:
Brochures and advertising materials
Drawings and plans
Maps and photos of location
Magazine or other articles
Detailed lists of equipment owned or to be purchased
Copies of leases and contracts
Letters of support from future customers
Once a business has been established, a business plan is
not required as it is meant only for startup companies.
Critically evaluate this statement

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Business Plan

To seek loans from financial institutions

Reality: Companies at all stages of development need to

Business plans should emphasize ideas and concepts, not

Marketing analysis forces the entrepreneur to become familiar with

This section identifies the key members of the companys

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