Business Plan
Introduction to business plan
•When an entrepreneur intends to start a business or to expand the
existing business, it is wise to prepare and use a business plan.
•In the preparation of a business plan, one can put into practice the
personal entrepreneurial competencies.
•A business plan is a written document prepared by the individual
entrepreneur or partners that describes the goals and objectives of the
business along with steps necessary to achieve those goals.
Cont.
•A Business Plan sets objectives, defines budgets, engages partners, and
anticipates problems before they occur.
•The preparation of a business plan requires considerable investment of
time, effort, and energy.
Uses of the Business Plan?
•Once completed, there are many potential uses of a business plan for entrepreneurs.
•First, it is a powerful sales document for raising money.
•A business plan is a prerequisite for talking to a venture capitalist, and/or other
investors. If entrepreneurs want to borrow money, it is an impressive document to
convince bankers to consider a request for a loan.
•As a rule of thumb, the more entrepreneurs want to borrow, or the more money
entrepreneurs want to raise capital from investor, the more thorough the business
plan must be.
Cont.
•A second major use of a business plan is that it serves as an operational
plan to direct entrepreneur’s operations.
•Like a blueprint for a house, entrepreneur’s plan will tell what
entrepreneur to do and when to do it.
•Many entrepreneurs use their business plan for the critical start-up and
expansion periods of operation so that they will stay both on target and on
budget.
Cont.
Generally, the business plan benefits the internal and external users
The plan helps the enterprise to develop a “road map” to follow in
executing its strategies and plans.
The plan introduces potential investors and other stakeholders the
business opportunity the firm is pursuing and how it plans to pursue
it.
Contents of the business plan
•There is no a general all-purpose business plans because each venture
has its own unique set of factors and conditions.
•For example, the new start-up has no financial history; hence, none of
its financial projections can be based on past sales, profits, and so on.
•Besides, a purely service-oriented firm, such as a consulting firm, must
present a different kind of business plan from that of a manufacturing
firm.
Cont.
•It should be remembered that a business plan is not the same as a
financial proposal or “loan package”.
•A loan package may be extracted from a business plan since a package
is mostly comprised of the financial portion of the business plan.
•Not all business plans are intended for financing however, and some
may be used only as an operational plan
A standard business plan contains the following elements
1. Cover page
2. Executive summary
3. Company Description
4. Product/service
5. Market Analysis
6. Marketing Plan
7. Operation Plan
8. Management Plan
9. Financial Plan
10.Exist Strategy
11.Economic Analysis
12.Environmental Analysis
13.Risk Analysis
The brief reference to each content of the business plan
1. Cover page contains the name of the business, name of the applicant and the date .
2. Executive Summary gives an overview of the whole document in which the main
contents are summarized.
3. Company description presents organizational set up, vision, mission, objective,
core values and success factors.
4. Product/service. this part describes the type of products or service the prospective
business has to offer to the market
5. Market analysis presents the market situation including industry analysis,
competition, current and future markets trends
Cont.
6. Marketing plan sets out the plan to reach target customers and get
products/services sold
7. Operation Plan deals with how the work is organized and done
8. Management plan shows the human resource requirement for the
planned operation and appropriate structure is proposed.
9. Exit Strategy talks about future development plan and milestone.
10. Financial Plan projects the financial requirement to start up and run
the business
Cont.
11. Economic Analysis points out the economic benefits of the
business to the individual entrepreneur, the local community and
the nation
12. Environmental Analysis presents the impact of the business on
the ecosystem of the environment and mitigation strategies
13. Risk Analysis project potential risks and risk management plan.
Business model Canvas
•Business model canvas is a model that Summarize a series of untested
hypotheses of framework, use customer development to test their hypotheses and
Practice agile development (developing a product iteratively and incrementally).
•Business model describes how a company creates value for itself while
delivering products and services for customers.
• Business model canvas is a language that describes, challenge, design and
invent business models more systematically.
• It is used for preparation and easily understands main components of business
plan.
Component of business model canvas
1. Customer Segments
Define the different groups of people or organizations a business targets to reach and serve
Make a conscious decision about which segments to serve and which segments to ignore
Separate customer segments if:
Their needs require and justify a distinct offer;
They are reached through different distribution channels;
They require different types of relationships;
They have substantially different profitability’s; and
They are willing to pay for different aspects of the offer
Value proposition
It solves a customer problem or satisfies a customer need.
It also describes the uniqueness of a business.
For each customer segment identified
Describe the bundle of products and services that create value for
each specific customer segment
Identify the reason why customers will turn to your company over its
competitors. It solves a customer problem or satisfies a customer need
Distribution Channels
Describes how your company communicates with and reaches its
customer segments to deliver the value proposition
Functions of distribution channels include:
raising awareness among customers about a company’s products
and services;
helping customers evaluate a company’s value proposition;
allowing customers to purchase specific products and services;
delivering a Value Proposition to customers; and
Providing post-purchase customer support.
Customer Relations
Describes the types of relationships your company needs to
establish and nurture with specific customer segments
Focused on:
Customer acquisition
Customer retention
Revenue streams
For what value is each customer segment truly willing to pay?
Identify and quantify the cash your company can generate from each
customer segment through one or more revenue streams (sales
pipelines)
Consider two different types of revenue streams:
Transaction revenues (resulting from one-time customer payments)
Recurring revenues (resulting from ongoing payments)
Cont.
•Key Resources
Identify, describe and quantify assets required to deliver on the value proposition to
each of the identified customer segments
e.g. Land, Buildings, Equipment ,Facilities ,Platforms ,Systems ,Technology
• Key Activities
Identify, define and describe the most important things (actions) your start-up company
must do to: create and offer a value proposition ,reach markets, maintain customer
relationships ,earn revenues, to make its business model work and to operate
successfully
Key Partnerships
Identify and describes the network of suppliers and partners that
make the business model work, e.g.:
strategic alliances between non-competitors;
co-operation: strategic partnerships between competitors;
joint ventures to develop new businesses;
buyer-supplier relationships to assure reliable supplies
Cost Structure
Describe the most important costs incurred while operating under a
particular business model to:
o creating and delivering value,
o maintaining customer relationships,
o Generating revenue.
Such costs can be calculated relatively easily after defining key
resources, key activities, and key partnerships.
