UNIT 5

BUSINESS PROPOSAL GUIDELINES

BUSINESS PROPOSAL GUIDELINES

Leaning Outcome:

Understand the importance of business proposal

Know the content of business proposal

Able to prepare a simple business proposal

ContentPurpose

Summary Unit 5

Business Proposal

Guidelines

Plan

Benefits

Type

BUSINESS PLANBUSINESS PLAN Business Plan

A business plan is a written narrative, typically 25 - 35 pages long, that describes what a new business plans to accomplish & how to accomplish.

For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm.

Inside the firm, the plan helps the company develop a “road map” to follow in executing its strategies and plans.

Outside the firm, it introduces potential investors and other stakeholders to the business opportunity the firm is pursuing and how it plans to pursue it.

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BENEFITS OF A BUSINESS PLAN BENEFITS OF A BUSINESS PLAN (1 OF 2)(1 OF 2)

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BENEFITS OF THE BUSINESS PLAN BENEFITS OF THE BUSINESS PLAN (2 (2

OF 2)OF 2)

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WHO READS THE BUSINESS PLAN? AND WHO READS THE BUSINESS PLAN? AND WHAT ARE THEY LOOKING FOR?WHAT ARE THEY LOOKING FOR?

Who? What are they looking for?

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GUIDELINES FOR WRITING A BUSINESS GUIDELINES FOR WRITING A BUSINESS PLANPLAN

Structure of the Business PlanTo make the best impression, a business plan should

follow a conventional structure.

Although some entrepreneurs want to demonstrate creativity in everything they do, departing from the basic structure of the conventional business plan format is usually a mistake.

Typically, investors are very busy people and want a plan where they can easily find critical information.

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GUIDELINES FOR WRITING A BUSINESS GUIDELINES FOR WRITING A BUSINESS PLANPLAN

Structure of the Business Plan cont… Software Packages

There are many software packages available that employ an interactive, menu-driven approach to assist in the writing of a business plan.

Some of these programs are very helpful. However, entrepreneurs should avoid a boilerplate plan that looks as though it came from a “canned” source.

Sense of Excitement Along with facts and figures, a business plan needs to project a sense of

anticipation and excitement about the possibilities that surround a new venture.

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GUIDELINES FOR WRITING A BUSINESS GUIDELINES FOR WRITING A BUSINESS PLANPLAN

Content of the Business Plan

The business plan should give clear and concise information on all the important aspects of the proposed venture.

It must be long enough to provide sufficient information yet short enough to maintain reader interest.

For most plans, 25 to 35 pages is sufficient.

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GUIDELINES FOR WRITING A BUSINESS GUIDELINES FOR WRITING A BUSINESS PLANPLAN

There are 3 Types of Business Plans

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OUTLINE OF BUSINESS PLANOUTLINE OF BUSINESS PLAN

A suggested outline of a business plan is shown on the next slide.

Some business plans do not include all the elements introduced in the sample plan; we included them here for the purpose of completeness.

Each entrepreneur must decide which elements to include in his or her plan.

OUTLINE OF BUSINESS PLANOUTLINE OF BUSINESS PLAN

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BUSINESS PLANBUSINESS PLAN

1. Cover Page and Table of Contents

The cover page should include: name, logo, address and phone number of

the company, the date, and name & contact information of the entrepreneur.

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BUSINESS PLANBUSINESS PLAN2. The Executive SummaryThe executive summary is a short overview of the

entire business plan; - It provides a busy reader with everything that

needs to be known about the new venture’s distinctive nature.

- Normally 2-3 pages. - Drafts should be written in order to expose any

loopholes or weaknesses of the proposal. In many instances, an investor will first ask for a

copy of the executive summary and request a copy of the full business plan only if the executive summary is sufficiently convincing.

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BUSINESS PLANBUSINESS PLAN

3. The BusinessThe most effective way to introduce the business is to describe: - the opportunity the entrepreneur has identified– that is, the

problem to solve or the needs to be filled–and then describe how the business plans to address the issue.

a brief history of the company, along with the company’s vision / mission statement & objectives.

• the company’s competitive advantage. the business model.• how the firm is legally structured/ type of business (refer to

previous chapter) e.g. sole trader / partnership / Pvt. Lmt.• ownership

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BUSINESS PLANBUSINESS PLAN

4. Management Plan One of the most important things investors want to see

when reviewing the viability of new ventures is the strength of its management team.

The material in this section should include a brief summary of the qualifications of each member of the management team, e.g. relevant employment and professional experiences, significant accomplishments, and educational background. (not resume!!)

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EXPLORING EACH SECTION OF THE EXPLORING EACH SECTION OF THE PLANPLAN4. Management Plan cont..

This section should also describe Company Structure and Responsibility :

the organisational structure of the new venture. (which including the reporting relationships among the management team.)

Authority and responsibility. (The roles / functions of each management team member.)

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BUSINESS PLANBUSINESS PLAN 5. Products / Services / Process

This section discusses the uniqueness of the main products/service/process of the business venture.

Entrepreneur should emphasis the uniqueness of product/service/process of this business, e.g. the benefits

- may included the intellectual property the firm owns, e.g. patents, trademarks & copyrights.

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BUSINESS PLANBUSINESS PLAN 6. Industry & Market Analyses

This section discusses: a. the major trends in the industry along with important

characteristics of the industry, such as its size, attractiveness, and profit potential.

b. the competition faced in the market, e.g. competitors and substitute products, & how the firm will diminish or sidestep the competitive forces that suppress its firm’s profitability.

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BUSINESS PLANBUSINESS PLAN 6. Industry & Market Analyses cont.

This section discusses:

c. Market analysis should be discussed next by including information about the market/customers e.g. market size, market segment and preference/demand of potential customers.

The information is collected by doing market research.

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BUSINESS PLANBUSINESS PLAN 7. Marketing Plan

This marketing plan should provide details about the business’s planning to market products or services, along with a description of how it will compete in that market.

A description of the target market (consumer) must be included here.

Entrepreneur should make sure that the product strategy, pricing strategy, channels of distribution, and promotional strategy (4P) are in sync with one another and make sense. (A synchronise plan)

After reading this section of the plan, an investor should be confident that the firm’s overall approach to achieve its target market.

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BUSINESS PLANBUSINESS PLAN 8. Operations Plan

This section of the plan deals with the day-to-day operations of the company.

An overview of the manufacturing plan (or service delivery plan) should be followed by a description of the network of suppliers, that will be necessary to build the product or produce the service the firm will sell.

Details of production method & process, workforce planning, stock management, raw material used, etc. should be included.

Any risks or regulations pertaining to the operations of the firm should be disclosed, such as non-routine regulations regarding waste disposal and worker’s safety.

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BUSINESS PLANBUSINESS PLAN 9. Financial Plan

The financial section of the plan must demonstrate the financial viability of the business. A careful reader of the plan will scrutinize this section.

The financial plan should begin with an explanation of the funding that will be needed by the business (sources of funding) during the next 3-5 years along with an explanation of how the funds will be used.

The next portion of this section includes financial projections which are intended to further demonstrate the financial viability of the business.

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BUSINESS PLANBUSINESS PLAN 9. Financial Plan cont.

The financial projections should include three to five years of pro forma income statements, balance sheets, and statements of cash flows.

It is important to remember that the business plan should be based on realistic projections (sales forecasts) If it is not and the company gets funding or financing, there will

most certainly be a day of reckoning. Investors and bankers hold entrepreneurs accountable for the numbers in their projections.

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BUSINESS PLANBUSINESS PLAN10. Assessments of Risks & Solutions

Although a variety of potential critical risks may exist, a business should tailor this section to depict its truly critical risks.

Business should also included the contingency plan/plan B to taker the risks that likely to incure.

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BUSINESS PLANBUSINESS PLAN11. Conclusion

Entrepreneurs conclusion on the expected successfulness of this proposal.

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BUSINESS PLANBUSINESS PLAN

12. Appendix

Any material that does not easily fit into the body of a business plan should appear in an appendix. Examples of materials that might appear in the appendix include:Resumes of the top management team members, photos or

diagrams of product or product prototypes, certain financial data, and market research projections.

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Business PlanBusiness Plan Making a Presentation to Investors

If the business plan successfully elicits the interest of potential investors, the next step is to meet with the investors and present the plan in person.

The first meeting with an investor is generally very short, about one hour. The investor will typically ask the firm to make a 20-30 minutes presentation using PowerPoint slides and use the rest of the time to respond to questions.

If the investor is impressed and wants to learn more about the venture, the firm will be asked to prepare for a second meeting.

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Business PlanBusiness Plan Tips on Making an Oral Presentation to Investors

Prepare a set of PowerPoint slides that will fill the time slot permitted. The slides should be sharp and not cluttered with material.

The presentation should be smooth and well rehearsed.

The first rule in making an oral presentation is to follow instructions. If an investor tells an entrepreneur that he or she has one hour and that

the hour will consist of a 30-minute presentation and a 30-minute question-and-answer period, the presentation shouldn’t last more than 30 minutes.

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Business Plan Presentation Business Plan Presentation PowerPoint Slides to be Included in an Presentation

1. Title

2. Problem / Opportunity

3. Solution (products / services)

4. Business (vision/objectives)

5. Management team (organisational structure)

6. Industry and target market (who are the potential customers?)

7. Marketing plan

8. Operational plan

9. Financial projections (Current status, amount of money requested, and projected use of funds)

10. Risk Management

11. Conclusion

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Thank you