Module 3 Business Planning Process

8/6/2019 Module 3 Business Planning Process

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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

Module 3 Business Planning Process

Documents

Module 3 Business Planning Process