Business plan format_

Business Plan

Format and Contents

Contents of Business Plan

Executive summary Industry and Company and ts products /Services Market Research and Analysis Economics of the Business Marketing Plan Design and Development Plans Manufacturing and operations plan Management Team Overall Schedule Critical risk problems and assumptions Financial Plan Proposed Company offering Appendices

Executive Summary

Description of the Business Concept and the Business

Opportunity and strategy Target market and projections Competitive advantage Costs Sustainability The Team The Offering - Finance needed (Debt equity

and your contribution)

Industry ,Company and Product/Service

The industry current state, size, growth competitors, new product/devp, environmental profile –energy

intensity, supply chain, waste, green technology –carbon credits CER)

Company and the Concept

Company and the Concept – present biz, products service

offered /will offer, background of growth and promoters

involvement, prior sales and profit performance or

discuss losses and why and improvements done or envisaged

Product or Service Product and or service – describe of new product

service , application of its use , delivery system unique features how they add value, differentiation

from those current available, possible drawbacks, present state of development, first mover of head start advantage any features which give you unfair advantage over

others like patents trade secrets or proprietary features,

opportunities of expansion of product lines or related products.

Entry and Growth Strategy

Entry and growth strategy – Key success variables in mktg plan

innovative product, timing advantage, marketing approach, pricing , channels of distribution advertising and promotion

Market Research and Analysis

Customers Market size and trends Competition and competitive edges Estimated market share and sales Ongoing market evaluation

Customers

Who are they? Classified by groups segments-common identifiable characteristics

Where are they? Segment and region How they buy (retail /wholesale), reached and

receptiveness? Where buying decisions are made and length of

decision cycle, customers purchase process, basis of decisions (price, quality timing, delivery training, service personnel, contacts, political pressures) and can they change current buying decisions?

Customers(2)

What orders contracts or letters of commitment or potential customers you have in hand?

What you are doing to overcome negative customer reaction?

If in existing business , current customers and sales trends

Market Size

Five year projections of size and your share, by segment, region or country for product or service

Potential annual growth for at least 3 years Major factors for market growth ( industry

trends, socio economic trends, govt. policy, envrt. impact, population shifts)

review previous trends

Competition and Competitive Edge

Realistic SWOT of Competitors, assess substitute and alternatives ,list of suppliers of these

Compare competing and substitute products or services on market share, price ,quality, performance , delivery, timing service, warranties, other features

Current advantages and disadvantages of these products

Competition and Competitor’s Edge

Knowledge of competitors actions that could lead to improved products (R&D)

Are they awake or asleep? SWOT of competing companies their market share sales

and distribution Financial position ,costs and profitability of competitors Who are service providers pricing, performance ,cost and quality leaders-why co

exiting or entered the business Discuss 3-4 key competitors and why customers buy

from them What you know of competitor’s operations

Economics of the business

Gross and operating margins Profit potential and durability Fixed variable and semi variable costs Months to breakeven Months to reach positive cash flow

Marketing plan

Overall marketing Strategy Pricing Sales and tactics Service and warranty policies Advertising and promotion Distribution

Design and development plan

Development status and tasks Difficulties and risks Product improvement and new product Costs Proprietary Issues

Manufacturing and Operation plan

Operating cycle Geographical allocation Facilities and improvements Strategy and Plans Regulatory and Legal teams

Management team

Organisation Key management personnel Management Compensation and Ownership Other investors Employment and other agreements and stock

options and Bonus Plan Board of Directors Other shareholder’s rights and restrictions Supporting professional advisers and services

Overall Schedule

A schedule that shows the timing and interrelationship of the major necessary to launch the venture and realise its objectives.

Cash conversion cycle will underline key inputs

Deadlines indicated Indicates to investors your depth of planning

and resource use Indicate methods of calculations

Critical Risks Problems and Assumptions

Demonstrate that you have thought out and can handle them

Description of risks implicit in plan Assumptons- use objectivity to deal with

it – sales projections, orders Consequences of adverse outcomes –

industry, company, personnel, product, market appeal

Unstated negative factors of investors

Contingencies – Indicate critical ones

Running out of cash before orders come in Price cutting by competitors Potentially unfavorable industry trends Costs excess of estimates Sales projections not achieved’ Unmet product development schedule Difficulty in procuring long lead items Difficulties in obtaining bank credit Increase in R&D costs Running out of cash after orders come in

Financial Plan -Best Estimate of Reqt.

Indicate venture’s potential and timetable for financial viability

Operating plan for fin mgt using fin benchmarks Prepare exhibits Use three year income statements and balance

sheets and break even analysis. For cash flow statement use cash system instead of accrual system

Give assumptions behind -sales levels, growth, inventory requirements, cash balances, operating and cash conversion cycles

Fin Plan (2)

Proforma income statement – plan for profit indicates potential fin. feasibility of the venture.

Initially, level of profits cannot finance operating assets and cannot match the actual cash flow on a short term basis, hence a forecast of cash needs should take care of such conditions is recommended.

Fin Plan (3)

Proforma balance sheets are used to detail the assets required for the projected level of operations and how they will be financed (liablilities)

Indicate projected debt equity ratios, working capital, current ratios, inventory turnover within the limits required to justify future financing

Financial Plan (2)

acceptable limits to justify future financing Break even chart showing level of sales that

will cover all costs including those that vary with production and those that do not

Income statements -In Proforma statements fully discuss bad debts, discounts, assumptions for sales expenses, general and administrative costs

Fin Plan(2)

,show effect of sales reduction say 20%, learning curve and level of productivity snesitivity of profits to risks

Prepare Balance sheets, cash flow analysis, Break even charts ,cost control measures and budget overrun

Highlight important conclusions, including maximunm amount and timing of cash required , amount of debt and equity needed, how fast debts will be repaid

Financial Plan

Actual Income Statements and balance Sheet

Proforma Income statements Proforma Balance Sheets Proforma Cash Flow Analysis Breakeven Chart and Calculations Cost control Highlights

Proposed Company offering

Amount of money being sought Nature of security offered to investors Summary of how the investor can expect to

achieve his targeted rate of return Terms for financing your company spelt out here

Description of Uses of Capital Desired Financing –how much

Proposed Company Offering

Offering – common stock, convertible,debentures, debts with warrants, debt plus stock,unit price, total amount of securities (if not common , interest rate,type,maturity and conversions conditions, percentage others can hold before and after conversion, private placement –restrictred securities for a period of time

Capitalisation – current and proposed (post offfering number of outstanding shares and how the holding will change after on completion of fnancing), authorised and issued capital, stock options

Offering (3)

Use of funds – how capital raised will be used- R&D,capital eqpt, marketing , working capital

Investors Return- Indicate how your valuation and proposed ownership pattern will result in in desired rate of return for investors whom you have targeted

Appendices

Information too extensive in the body but necessaryProduct specificationPhotosList of referencesSuppliers of critical componentsSpecial location factorsFacilitiesTechnical analysisConsultant reportsCritical regulatory approval or licences