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Module 3 Business Planning Process

Apr 07, 2018

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    Topics

    Meaning of Business Plan

    Business Plan Process

    Advantages of Business Planning Marketing Plan

    Production/ Operation Plan

    Organizational Plan

    Financial Plan

    Final Project report with feasibility study

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    Business Plan

    Written document describing all relevant

    internal and external elements and strategies

    for starting a new business.

    Who should write the plan?

    Who reads the plan?

    How do potential lenders and investorsevaluate the plan?

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    Who should write the plan?

    1. Entrepreneur

    2. Consult: Lawyers, Accountant, Marketing

    consultants, Engineers3. Services are also offered by:

    SBA: Small Business Administration

    SCORE: Service Core Of Retired Executives SBDC: Small Business Development Centre

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    Who reads the plan?

    Employees, Investors, Advisors, consultants It should address all their issues

    Sound financial projections are required

    Market, competition and potential growthaffect the scope of the plan

    3 perspectives:

    Clearly articulate what the venture is all about View it from consumers perspective

    View from investors perspective

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    How do potential lenders and

    investors evaluate the plan?

    Lenders are interested in the ability to pay

    back the debt including the interest with in

    designated period

    Focus on 4 C: Character, Cash Flow,

    Collateral and Equity Contribution

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    Business Plan Process

    1. Preliminary investigation

    2. Idea generation

    3. Environmental scanning4. Feasibility analysis

    5. Project report preparation

    6. Evaluation, control and review

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    Business Plan

    1. Introductory pagea) Name and address of Business

    b) Name and address of principals

    c) Nature of businessd) Statement of financing needed

    e) Statement of confidentiality of report

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    Business Plan

    2.Executive Summary- Summarizing Business

    Plan

    3. Industry Analysis:a) Future outlook and trends

    b) Analysis of competitors

    c) Market segmentation

    d) Industry forecasts

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    Business Plan

    4. Description of venture:

    a) Product

    b) Servicec) Size of Business

    d) Office Equipment and Personnel

    e) Background of Entrepreneurs

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    Business Plan

    5. Production Plan:

    a) Manufacturing Process

    b) Physical Plantc) Machinery and Equipment

    d) Names of suppliers of raw material

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    Business Plan

    6.Marketing Plan:

    a) Price

    b) Distributionc) Product Forecast

    d) Promotion

    e) Controls

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    Business Plan

    7.Organizational Plan:

    a) Form of ownership

    b) Principal Shareholdersc) Authority of Shareholders

    d) Management Team Background

    e) Roles and responsibilities of members

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    Business Plan

    8. Assessment of risk:

    a) Evaluate weakness of Business

    b) New Technologiesc) Contingency plan

    9. Financial Plan:

    a) Income statement

    b) Cash Flow Projections

    c) Break-even Analysis

    d) Sources and Application of Funds

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    Business Plan

    10.Appendix (Back up Material):

    a) Letters

    b) Market Research Datac) Leases or Contracts

    d) Price Lists from Suppliers

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    Advantages of Business Planning

    To determine viability of the venture in

    designated market

    Guidance to the entrepreneur Tool to obtain finance

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    Feasibility study

    A feasibility study is an evaluation of a

    proposal designed to determine the difficulty

    in carrying out a designated task.

    In other words, a feasibility study is an

    evaluation or analysis of the potential impact

    of a proposed project.

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    Feasibility study

    Five common factors (TELOS)

    1.Technology and system feasibility

    The assessment is based on an outline design of system

    requirements in terms of Input, Processes, Output, Fields,Programs, and Procedures.

    Can be quantified in terms of volumes of data, trends,

    frequency of updating, etc. in order to estimate whether the

    new system will perform adequately or not. It is carried out to determine whether the company has the

    capability, in terms of software, hardware, personnel and

    expertise, to handle the completion of the project

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    Feasibility study

    2.Economic feasibility Also known as cost/benefit analysis, the procedure

    is to determine the benefits and savings that areexpected and compare them with costs.

    If benefits outweigh costs, then the decision is madeto design and implement the system.

    An entrepreneur must accurately weigh the costversus benefits before taking an action.

    Cost Based Study: It is important to identify cost andbenefit factors, which can be categorized as follows:Development costs and Operating costs.

    Time Based Study: This is an analysis of the time

    required to achieve a return on investments.

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    Feasibility study

    3.Legal feasibility

    Determines whether the proposed system conflicts with

    legal requirements, e.g. a data processing system must

    comply with the local Data Protection Acts.

    4.Operational feasibility

    Is a measure of how well a proposed system solves the

    problems, and takes advantage of the opportunities

    identified during scope definition and how it satisfies therequirements identified in the requirements analysis

    phase of system development.

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    Feasibility study

    5.Schedule feasibility

    project will fail if it takes too long to be completed before it is

    useful.

    Typically this means estimating how long the system will take

    to develop, and if it can be completed in a given time periodusing some methods like payback period.

    Schedule feasibility is a measure of how reasonable the

    project timetable is.

    Given our technical expertise, are the project deadlinesreasonable? Some projects are initiated with specific

    deadlines. You need to determine whether the deadlines are

    mandatory or desirable.

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    Other feasibility factors

    1. Market and real estate feasibility

    2. Resource feasibility

    3. Cultural feasibility4. Output

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    Why some Business Plan Fail?

    1. Goals unreasonable

    2. Goals are not measured

    3. Not total commitment towards Business4. No previous experience of the entrepreneur

    5. Potential threats and weaknesses not

    identified6. Customer needs not established

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    Questions

    1. State advantages of business plan.

    2. Explain institutions supporting exports in

    India.3. Explain contents of a project report in detail.

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    Thank you

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