Unit -3

Business Plan for Start-ups in

Respective Industry
Planning as Part of The Business Operation

 Planning is a process than never ends for a

business.
 It is extremely important in the early stages of
any new venture when the entrepreneur will
need to prepare a preliminary business plan.
 As the venture grow up to mature business,
planning will continue …
 Plan may be short term or long term, strategic
or operational.
 What is Business Plan?
 Business plan is a written document prepared by
entrepreneur that describes all the relevant
external and internal elements involved in starting
new venture.
 It is an integration of functional plans such as
marketing, finance , manufacturing and human
resource plan.
 A business plan is a blue print of step by step
process that would be followed to convert business
idea into successful business venture.
 Scope and Value of the Business Plan –
Who Reads The Plans?
 The business plan may be read by employees,
investors, bankers, venture capitalists, suppliers,
customers, advisors, and consultants.
 There are three perspectives should be
considered in preparing the plan :
Perspective of the entrepreneur
Marketing perspective
Investor’s perspective
 Scope and Value
 The business plan is valuable to the entrepreneur,
potential investors, or even new personnel, who are
trying to familiarize themselves with the venture, it
goals, and objectives.
– It helps determine the viability of the venture in a
designated market
– It provides guidance to the entrepreneur in
organizing his or her planning activities
– It serves as an important tool in helping to obtain
financing.
 How do Potential Lenders and Investors
Evaluate The Plan?
• Four Cs of Credit:
– Characters
– Cash flow
– Collateral
– Equity of Contribution
• Another …
– Marketable
– Payback period
– Risk
– Feasibility, etc
OUTLINE OF BUSINESS PLAN
I. Introductory Page
A. Name and address of business
B. Name(s) and address(es) of principal(s)
C. Nature of business
D. Statement of financing needed
E. Statement of confidentiality of report
II. Executive Summary—Three to four pages summarizing the complete business
plan
III. Industry Analysis
F. Future outlook and trends
G. Analysis of competitors
H. Market segmentation
I. Industry and market forecasts
IV. Description of Venture
J. Product(s)
K. Service(s)
L. Size of business
M. Office equipment and personnel
N. Background of entrepreneur(s)
V. Production Plan
O. Manufacturing process (amount subcontracted)
P. Physical plant
Q. Machinery and equipment
R. Names of suppliers of raw materials
VI. Operational Plan
A. Description of company’s operation
B. Flow of orders for goods and/or services
C. Technology utilization
VII. Marketing Plan
A. Pricing
B. Distribution
C. Promotion
D. Product forecasts
E. Controls
VIII. Organizational Plan
A. Form of ownership
B. Identification of partners or principal shareholders
C. Authority of principals
D. Management-team background
E. Roles and responsibilities of members of organization
IX. Assessment of Risk
F. Evaluate weakness(es) of business
G. New technologies
H. Contingency plans
X. Financial Plan
I. Assumptions
J. Pro forma income statement
K. Cash flow projections
L. Pro forma balance sheet
M. Break-even analysis
N. Sources and applications of funds
XI. Appendix (contains backup material)
O. Letters
P. Market research data
Q. C. Leases or contracts
R. D. Price lists from suppliers
 Writing the Business Plan
II. Executive Summary
 About two to three pages in length summarizing the complete
business plan.
 Exit Plan
 Supportive evidence and highlight key factors
III.Environmental and Industry Analysis
 The environmental analysis assesses external uncontrollable
variables that may impact the business plan.
 Examples: Economy, culture, technology, legal concerns, etc.
 The industry analysis involves reviewing industry trends and
competitive strategies.
 Examples: Industry demand, competition, etc.
Critical Issues for Environmental and
Industry Analysis
IV. Describing the Venture
V. Production Plan
 VI. Operation Plan
• All businesses (manufacturing or nonmanufacturing) should include an operations plan as
part of the business plan.
• Goes beyond the manufacturing process.
• Major distinction between services and manufactured goods is services involve intangible
performances.
• It includes:
• Inventory or storage of manufactured products, shipping, inventory control procedures
and customer support service.
If a Retail Operation or Service:
1.From whom will merchandise be purchased?
2.How will the inventory control system operate?
3.What are the storage needs of the venture and how will they be promoted?
4.How will the goods flow to the customer?
5.What are the steps involved in a business transaction?
 VII. Marketing Plan
• Written Statement Of Marketing objectives,
strategies and Activities to be followed in
Business Plan
• Market Research involves gathering of data in
order to determine such information:
 Marketing Research for the New Venture
 Market Research involves gathering of data in
order to determine such information:
• Who will buy the product or service ?
• What is the size of the potential market ?
• What price should be charged ?
• what is the most appropriate distribution channel
?
• What is the most effective promotional strategy to
reach and inform potential customers ?
 The Marketing Mix
• Combination of product, price, promotion, and distribution and other marketing activities
needed to meet marketing objectives

Marketing Mix Variable Critical Decisions

Quality of components or materials, style,

features, options, brand name,
Product
packaging, sizes, service availability, and
warranties.
Quality image, list price, quantity,
Price discounts, allowances for quick payment,
credit terms, and payment period.

Use of wholesalers and/or retailers, type

of wholesalers or retailers, how many,
Channels of distribution length of channel, geographic coverage,
inventory, and transportation.

Media alternatives, message, media

budget, role of personal selling, sales
Promotion promotion (displays, coupons, etc.), and
media interest in publicity.
 Defining the Target Market/ Opportunities
& Threats
• Target market: specific group of potential customers toward which venture
aims its marketing plan.
– Knowledge of this provides a basis for determining the appropriate marketing
action strategy.
• Market segmentation: process of dividing a market into definable and
measurable groups for purposes of targeting marketing strategy
• Divide market into smaller groups based on:
– Characteristics of the customer
• Geographic
• Demographic
• Psychographic
– Buying situation
• Desired benefits (e.g., product features)
• Usage (e.g., rate of use)
• Buying conditions
• Awareness of buying intention
 Organizational Plan
Describes form of ownership and lines of authority and
responsibility of members of new venture.
• Organization chart.
• Terms of partnership
Proprietorship: Form of Business with single owner who has
unlimited liability, controls all decisions, and receives all
profits.
Partnership: Two or more individuals having unlimited liability
who have pooled resources to own a business.
Corporation: Separate legal entity that is run by stockholders
having limited liability.
 Assessment of Risk
Assessment of risk should be based on:
• Potential risks to the new venture.
• Discussion of what might happen if risks become
reality.
• Strategy employed to prevent, minimize, or respond.
Major risks for a new venture could result from:
• Competitor’s reaction.
• Weaknesses in marketing/ production/ management
team.
• New advances in technology.
 Financial Plan

• Projections of key financial data that determine economic

feasibility and necessary financial investment commitment.

Three financial areas:

• Summarize the forecasted sales and the appropriate
expenses for at least the first three years.
• Cash flow figures for three years.
• Projected balance sheet.
• Break-Even Point
 Appendix
Contains any backup material that is not
necessary in the text of the document.
May include:.
• Secondary data or primary research data used
to support plan decisions.
• Leases, contracts, or other types of
agreements.
• Price lists from suppliers and competitors.