Business Plan by Dr.Vidya Hattangadi

8/14/2019 Business Plan by Dr.Vidya Hattangadi

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BUSINESS PLANBUSINESS PLAN

Dr.Vidya HattangadiDr.Vidya Hattangadi


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Why make a business plan?Why make a business plan?

A business plan is a Road Map of a business. RegularA business plan is a Road Map of a business. Regularreviews of a business plan are a must for a business as itreviews of a business plan are a must for a business as itguides the entrepreneur to take the right measures andguides the entrepreneur to take the right measures andmake the right strategies for his business.make the right strategies for his business.

Every business must have a business plan for it irrespectiveEvery business must have a business plan for it irrespective

of whether the business needs financial assistance or not.of whether the business needs financial assistance or not. Irrespective of the size of the business, it is important for anIrrespective of the size of the business, it is important for an

entrepreneur to make a formal business plan because:entrepreneur to make a formal business plan because:

It helps the entrepreneur and his management to clarify,It helps the entrepreneur and his management to clarify,focus and research their business.focus and research their business.


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Why make a business planWhy make a business plan

It provides a considerable and logical framework withinIt provides a considerable and logical framework withinwhich business can develop and pursue strategies overwhich business can develop and pursue strategies overyears.years.

It serves as a basis of discussions with third parties such asIt serves as a basis of discussions with third parties such asshareholders, agencies, banks, investors etc.shareholders, agencies, banks, investors etc.

Offers benchmark against which actual performance canOffers benchmark against which actual performance canbe measured and reviewed after suitable intervals.be measured and reviewed after suitable intervals.

No two business plans can look alike, as no two businessesNo two business plans can look alike, as no two businessesare alike. Some issues can be relevant for some businessare alike. Some issues can be relevant for some businessbut need not be relevant for every business. Tailoringbut need not be relevant for every business. Tailoring

contents into the business plan as per requirement iscontents into the business plan as per requirement istherefore an art.therefore an art.


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Business Plan OutlineBusiness Plan Outline

Cover SheetCover Sheet::

Name(s) of the owner(s), Name ofName(s) of the owner(s), Name of

the business/venture, Address, Phonethe business/venture, Address, Phone

Numbers, Fax Numbers, e-mailNumbers, Fax Numbers, e-mail

address etc.address etc.


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Statement of purposeStatement of purpose

Statement of purpose:Statement of purpose: your business planyour business planshould start with a simple statement of purpose.should start with a simple statement of purpose.The statement of purpose should be brief butThe statement of purpose should be brief butwith clarity and logic. It should specifywith clarity and logic. It should specify

The amount of loan requiredThe amount of loan required The amount of money you are putting inThe amount of money you are putting in The loan period for how many years you require theThe loan period for how many years you require the

loan amount forloan amount for The impact of the loan and the purpose it will have onThe impact of the loan and the purpose it will have on

your businessyour business The collateral that will be used to support the loanThe collateral that will be used to support the loan

Table of Contents:Table of Contents:


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Description of what theDescription of what the

business does:business does: Your business description is your corporate vision, whichYour business description is your corporate vision, which

should be the first point to be written in your businessshould be the first point to be written in your businessplan. Your corporate vision should include a wholesomeplan. Your corporate vision should include a wholesomepicture of your strengths and how best you will make usepicture of your strengths and how best you will make useof them. The language has to be simple, understood byof them. The language has to be simple, understood byeverybody.everybody.

Many entrepreneurs make a mistake of operating withoutMany entrepreneurs make a mistake of operating withouta vision. When they dont have vision, they tend toa vision. When they dont have vision, they tend tostumble. A vision gives an ability to grow and prosper.stumble. A vision gives an ability to grow and prosper.When an entrepreneur does not have a vision he tends toWhen an entrepreneur does not have a vision he tends togive a hazy or blur picture of his enterprise. He just usesgive a hazy or blur picture of his enterprise. He just uses

big jargons and goes on giving rambling description of hisbig jargons and goes on giving rambling description of hisbusiness. AN ideal Business Description should discussbusiness. AN ideal Business Description should discussthe following points in detail:the following points in detail:


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Description of what yourDescription of what your

business doesbusiness does

An overview of the industry in which inAn overview of the industry in which inthe entrepreneur plan to begin histhe entrepreneur plan to begin hisventureventure

Discuss the company/venture in detailDiscuss the company/venture in detailDescription of the product/serviceDescription of the product/servicePositioning plan of the productPositioning plan of the productPricing strategyPricing strategy


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Financial Data:Financial Data:

Source of fundingSource of funding Application of fundingApplication of funding Capital equipment and furniture listCapital equipment and furniture list Projected balance sheetProjected balance sheet Break-even analysisBreak-even analysis Projected income statement for 1st year, 2nd year and 3rd yearProjected income statement for 1st year, 2nd year and 3rd year

Notes on explanation on the figuresNotes on explanation on the figures Cash-flow projections for 1st year, 2nd year and 3rd yearCash-flow projections for 1st year, 2nd year and 3rd year Details by month for 1st year, 2nd year and 3rd yearDetails by month for 1st year, 2nd year and 3rd year Notes on explanationNotes on explanation

Tax returns of all principals (you and your partners) for last threeTax returns of all principals (you and your partners) for last threeyears.years.

Personal financial statement (all banks have these forms)Personal financial statement (all banks have these forms) Copy of proposed lease or purchase agreement for building spaceCopy of proposed lease or purchase agreement for building space Copy of licenses, patents, and other legal documentsCopy of licenses, patents, and other legal documents Copy of the resumes of all principalsCopy of the resumes of all principals Copies of letters of intent from suppliers, etc.Copies of letters of intent from suppliers, etc.


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Supporting Documents along withSupporting Documents along with

the financial data:the financial data:

Personal CV, personal financialPersonal CV, personal financial

statement, credit reports, bankstatement, credit reports, bank

statements, letters of references,statements, letters of references,

credit reports, letter of intent, leasecredit reports, letter of intent, lease

deeds, contracts, other legaldeeds, contracts, other legaldocuments and any other documentdocuments and any other document

of relevance.of relevance.


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The MarketThe Market

The competition and feasibility study, describe here again yourThe competition and feasibility study, describe here again yourproduct/serviceproduct/service

Competition:Competition: who are your five nearest competitors, list them inwho are your five nearest competitors, list them inorder, how will you operate better than them, how is their businessorder, how will you operate better than them, how is their businessgrowing, if their growing why and if they are not growing why so,growing, if their growing why and if they are not growing why so,how are their operations similar or dissimilar to yours, what are theirhow are their operations similar or dissimilar to yours, what are theirstrengths and weaknesses, what have you learnt by watching them,strengths and weaknesses, what have you learnt by watching them,their operating style, what controls you wish to adopt for studyingtheir operating style, what controls you wish to adopt for studyingthe competitors.the competitors.

MarketMarket:: Start by definingStart by defininggroup of customers or organizations thatgroup of customers or organizations thatis interested in a product/service and has the resources to purchaseis interested in a product/service and has the resources to purchaseit. You should discuss here how large is the potential of the market,it. You should discuss here how large is the potential of the market,

how many businesses are operating in it, how many prospects canhow many businesses are operating in it, how many prospects canuse your product, is the market growing, flattening or shrinking.use your product, is the market growing, flattening or shrinking.


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Market segmentation:Market segmentation: almost every market has some majoralmost every market has some majorand distinctive segmentation. The probability that it could orand distinctive segmentation. The probability that it could orwill be is a good sign. This is particularly true id the marketwill be is a good sign. This is particularly true id the marketplace for your product or service is multi-regional or multiplace for your product or service is multi-regional or multinational. If it so then segmentation is necessary especially,national. If it so then segmentation is necessary especially,for a small firm to be competitive.for a small firm to be competitive.

You will need to discuss segmentation within your businessYou will need to discuss segmentation within your businesscategory and how you intend to do so. This may have anycategory and how you intend to do so. This may have anypositive or negative affects on your business category. Aspositive or negative affects on your business category. Aswhen those affects take place how you intend to cope with it.when those affects take place how you intend to cope with it.Almost all markets are segmented by price and quality issues.Almost all markets are segmented by price and quality issues.Generally, price and quality issues do not provide the mostGenerally, price and quality issues do not provide the mostclear or definite market segmentation. Much strongerclear or definite market segmentation. Much strongersegmentation can usually be found through evaluation ofsegmentation can usually be found through evaluation ofproduct or service uses and importance to various consumers.product or service uses and importance to various consumers.


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Establish marketing goals that are quantifiableEstablish marketing goals that are quantifiable Describe your customer profile the demographic and psychographic profileDescribe your customer profile the demographic and psychographic profile What is the present size of the marketWhat is the present size of the market What percent of the market share you are going to haveWhat percent of the market share you are going to have What is the market growth potentialWhat is the market growth potential As the market grows your market share will increase or decrease?As the market grows your market share will increase or decrease? How will you attract customers here spell out your marketing and sales strategiesHow will you attract customers here spell out your marketing and sales strategies How are you going to price your product/serviceHow are you going to price your product/service With your pricing are you going to make profitsWith your pricing are you going to make profits Is your price competitiveIs your price competitive Why should your customer agree to pay you the price which you are demandingWhy should your customer agree to pay you the price which you are demanding Why did your arrive at this priceWhy did your arrive at this price What special advantages you will be offering your customers justify your priceWhat special advantages you will be offering your customers justify your price Are you going to offer credit to your customersAre you going to offer credit to your customers

Is it really necessary are your competitors offering credit to their customersIs it really necessary are your competitors offering credit to their customers Justify whether you are in a position to offer creditJustify whether you are in a position to offer credit


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Location:Location:

your business location is more than just choosing a place foryour business location is more than just choosing a place fordoing business, be it a building or an office space. Besides thedoing business, be it a building or an office space. Besides thecommercial factors, psychological factors, status, safety andcommercial factors, psychological factors, status, safety andsecurity are equally important for the business. First andsecurity are equally important for the business. First andforemost the location has to be liked by you, because you willforemost the location has to be liked by you, because you willhave to go and work there everyday. Your comfort level is ofhave to go and work there everyday. Your comfort level is ofutmost importance. Then you have to think of your customers.utmost importance. Then you have to think of your customers.The customer is the king/queen. Your customer will visit theThe customer is the king/queen. Your customer will visit theplace if only he/she is comfortable to visit your location. Toplace if only he/she is comfortable to visit your location. Toattract good employees and retain them again your location isattract good employees and retain them again your location isone of the key factors. Strategic partners are not considered aone of the key factors. Strategic partners are not considered akey issue, but it is a reality why some locations are developedkey issue, but it is a reality why some locations are developedinto hubs; it is purely because of the easy accessibility of theinto hubs; it is purely because of the easy accessibility of thestrategic partners a business mushrooms. E.g: Gurgaon. Yourstrategic partners a business mushrooms. E.g: Gurgaon. Yourpotential investors also look at the long-term value of thepotential investors also look at the long-term value of thebusiness. Location thus is an important factor of the business.business. Location thus is an important factor of the business.The following points decide the worth of the location.The following points decide the worth of the location.


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FactorsFactors

They are:They are: Cost:Cost: the cost of the premise should suit your, your employees and customersthe cost of the premise should suit your, your employees and customers

budget.budget.

Convenience:Convenience: your business location should beyour business location should beconvenient for you as well as yourconvenient for you as well as yourcustomers.customers.

Safety:Safety: find out whereabouts of the area. Is the area safe from communal violence,find out whereabouts of the area. Is the area safe from communal violence,crime, how is the law and order in the area, you have to look after the safety of bothcrime, how is the law and order in the area, you have to look after the safety of bothyour employees and customers.your employees and customers.

Prestige:Prestige: your business location should add credibility to your businessyour business location should add credibility to your business

Transportation:Transportation: You business location should be connected by the localYou business location should be connected by the localtransportation easily.transportation easily.

Facilities:Facilities: water supply, electrical supply and sanitation are very important forwater supply, electrical supply and sanitation are very important forrunning the business.running the business.

Zoning:Zoning: Many cities have strict zoning requirements. Make sure that you areMany cities have strict zoning requirements. Make sure that you areoperating your business in commercial zone. Make sure of the zone before you signoperating your business in commercial zone. Make sure of the zone before you signthe deal.the deal.


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Management:Management:

The management team of your business is The management team of your business isimportant for your business to prosper. You needimportant for your business to prosper. You needto form a team of like-minded people. Theto form a team of like-minded people. Themanagement team shapes up the business. Themanagement team shapes up the business. Themanagement team does the mentoring job for themanagement team does the mentoring job for the

employees as well as it does the networking foremployees as well as it does the networking foryour business, gives direction from time to time, ityour business, gives direction from time to time, italso helps to deal with the change management. Italso helps to deal with the change management. Itgives a purpose to the business and helps ingives a purpose to the business and helps inpersisting your goals and vision. Therefore pickingpersisting your goals and vision. Therefore picking

up the right people is your responsibility. Whileup the right people is your responsibility. Whilementioning about your management team youmentioning about your management team youneed to mention the following points:need to mention the following points:


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What is your business backgroundWhat is your business background How will it help you in running the businessHow will it help you in running the business What management experience do you have? From whereWhat management experience do you have? From where

did you acquire itdid you acquire it Is it helpful in a particular way in your businessIs it helpful in a particular way in your business

What are your weak areas as far as this business isWhat are your weak areas as far as this business isconcerned?concerned?

Are you going to appoint consultants/employees toAre you going to appoint consultants/employees toovercome those weaknessesovercome those weaknesses

What are your educational qualifications (mentions bothWhat are your educational qualifications (mentions bothformal and informal), which have bearing on yourformal and informal), which have bearing on your

managerial abilities or knowledge?managerial abilities or knowledge? Personal Data: age, residential address, special abilities andPersonal Data: age, residential address, special abilities and

interests and reasons for going for businessinterests and reasons for going for business Your physical strengths and weaknessesYour physical strengths and weaknesses


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What skills and qualities of your can make your business successfulWhat skills and qualities of your can make your business successful

Who is on your managerial teamWho is on your managerial team

How are they qualified to help you ventureHow are they qualified to help you venture

What are their business backgrounds, their qualificationsWhat are their business backgrounds, their qualifications

What duties have you allotted to each one of themWhat duties have you allotted to each one of them

Are these duties clearly definedAre these duties clearly defined

Who does what?Who does what?

Reporting system: who reports to whomReporting system: who reports to whom

Who will take the final decisionWho will take the final decision

How do plan to pay the management?How do plan to pay the management? What additional human resource you have arranged for theWhat additional human resource you have arranged for the

business? (Accountant, Lawyer)business? (Accountant, Lawyer)


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It is important that these biographies are notIt is important that these biographies are not

merely resumes that include the educationalmerely resumes that include the educational

backgrounds and previous job titles andbackgrounds and previous job titles and

responsibilities of the team members. Rather,responsibilities of the team members. Rather,biographies should highlight the mostbiographies should highlight the most

relevant past positions that the individualsrelevant past positions that the individuals

have held and specific successes in each.have held and specific successes in each.

These successes could include launching andThese successes could include launching andgrowing new businesses or managinggrowing new businesses or managing

divisions of established companiesdivisions of established companies


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Staff:Staff:

is defined is filling, and keeping vacanciesis defined is filling, and keeping vacancies

filled. This includes identifying work-forcefilled. This includes identifying work-force

requirement, inventorying people available,requirement, inventorying people available,

selecting, recruiting, placing, and training,selecting, recruiting, placing, and training,promoting, appraising and planning theirpromoting, appraising and planning their

careers. Staffing must be closely linked tocareers. Staffing must be closely linked to

the structure of your business. The followingthe structure of your business. The following

points need to be described in your businesspoints need to be described in your businessplan:plan:


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StaffStaff

What are your present staffing needsWhat are your present staffing needs What are going to be your immediate future staffing needsWhat are going to be your immediate future staffing needs

(after 3 and 5 years)(after 3 and 5 years) What skills must your employees possessWhat skills must your employees possess How many full-time and how many part-time vacancies youHow many full-time and how many part-time vacancies you

havehave What salary structure you want to offerWhat salary structure you want to offer Are you aware of the employee befits rules and regulationsAre you aware of the employee befits rules and regulations Are you going to provide any fringe benefits to yourAre you going to provide any fringe benefits to your

employeesemployees If yes, which onesIf yes, which ones

Have you calculated the cost of the fringe benefitsHave you calculated the cost of the fringe benefits Are you going to utilize over timeAre you going to utilize over time Are you ready for the OT benefits to be paidAre you ready for the OT benefits to be paid What about the training needs of your employees both inWhat about the training needs of your employees both in

operation as well as management?operation as well as management?

Business Plan by Dr.Vidya Hattangadi

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