ELEMENTS OF THE BUSINESS PLAN

A business plan comes in a variety of shape and forms, depending on the size of the deal, the leads on the lender and the sophistication the entrepreneur. Entire books have been written of the subject of business plan and even computer software is available to lead the first time business plan developer through the process. The entrepreneur who is seeking serious financing should not cut corners when developing a business plan. Plenty of information is available. The entrepreneur in search of capital should either (a) read one of the many books written specifically about business plans (all the major accounting firms have free business planning brochures available to the public); (b) purchase some business planning software; (c) ask his or her accounting, lawyer, or counselor for a copy of someones already successful business plan; Or (d) hire a consultant (business plan consultant can be found in most major cities) to assist in developing the plan. The following are the important elements that should be included in every business plan.

The Company
1. Management: At first include complete biographical sketches of the entrepreneur and his key employees. The reader will be looking for specific accomplishments, not just job history. Suppose if I starting any small business, at first I make my biographical sketches and include organization chart like Chairman, Vice chairman, Director, Marketing Director, Financial director, Manager. Also include a prospective organization chart, along with a management philosophy statement including how entrepreneur will be managing your team. Remember, experienced investors and creditors look first for quality and experience in the entrepreneur and his team members. 2. Mission: Company must include a mission statement like Tiger Energy Drink- Recharge yourself. Here I mention the benefit of my product & services for the customer and society. 3. Recruitment: Explain how and where entrepreneur intends to find employees. Here I selected internal source and External source. 4. Training: Describe the training that will be provided for the entrepreneurs existing team and his new hires. I trained my employees, especially those who are related in sell. Here I train them how to convince people to bye my product.

5. Organization: Indicate the type of nation the entrepreneur has chosen. Here entrepreneur choose those nation where he can sell his product. 6. Location: include a description of all offices and warehouse and physical facilities. Here I mention my selected place for my shop and head office.

The service or Product

What is the entrepreneurs service or product? As an entrepreneur here I choose Grocery shop and my product are all type of grocery. What are its benefits? I am fulfilling my customers daily needs. Whats makes it special? I am keeping all type of convenient goods which is new and fresh. That is made my shop special.

The market
1. The industry: I am collecting my commodity from local market. My shop is not so big. I have a bakery back of my shop where I produce dry food like biscuit, breed etc. My markets growth prospects 45% and competition is high. 2. The competition: My main competitors are the local market. I have no market share. The strengthens of my competitor is their skilled manpower and weakness are they dont have quality goods. 3. The customers: My first target is my local market. I am serve quality goods and services thats why customer purchasing their convenient goods from my shop. I am always serving my product in different style and shape comparing with my competitor thats why other Companys customers some interest to purchase my product.

Distribution

The marketing process is continuous. It should start with the end result desired and permeated the entire organization. Customer are the king, they should remain satisfied with the service or product offered to them. As an entrepreneur, I am choosing the best and appropriate distribution channel to serve my goods and services to my ultimate consumer. I am also determine intermediaries needs and motivate them for serve my product effectively.

Financial
1. Financial Organization: My first investment is approximately 10,00,000tk. Its included my own money, bank loan and other dept. My additional capital approximately 5,00,000tk. My business is self oriented and I have not any share holder. 2. Compensation: My business is self oriented and individually I am the owner of my business. So I am compensatory of my business.

3. Financial Projection: My first year profit is approximately 1,50000tk and second year profit is approximately 2,50000tk. Now I am in growth stage. I am try to modified my product into new look and search new market segment for increase my sale volume.

Risk and Reward

1. Risk: Every new venture has a risk. So as an entrepreneur I am looking for honesty here. 2. Reward: Include expectations regarding dividends, loan repayment, and reinvestment of profits. Expansion, public offering and so on. With this thought in mind the entrepreneur should ask himself this question once he has finished assembling his business plan: Does this reflect the way he wants to be perceive? If it does he has done everything he possibly can do? The entrepreneur must not be in a hurry in preparing the business plan. It should be made with adequate information to be processed by person with experience & vision. Else the whole exercise may prove to useless and irritating.

The entire business planning process forces the entrepreneur to analyze all aspects of the venture and to prepare an effective strategy to deal with the uncertainties that arises. Thus a business plan may help an entrepreneur avoid a project doomed to failure. As one researcher states, if you proposed venture is marginal at best, the business plan will show you why and may help you avoid paying the high tuition of business failure. It is far cheaper into to begin an ill-fated business than to learn by experience what your business plan could have taught you at a cost of several hours of concentrated work. It is important entrepreneurs prepare their own business plan. if an entrepreneurial team is involved, then all of the key members should be part of writing the plan; in this case it is important the lead entrepreneur understand the contribution of each team member. If consultants are sought to help prepare a business plan, the entrepreneur must remain the driving force behind the plan. Seeking the advice and assistance of outside professionals is always wise, but entrepreneurs need to understand every aspect of the business plan, since it is they who come under the scrutiny of financial sources. Thus the business plan stands as the entrepreneurs description and prediction for his or her venture.

And it must be defended by the entrepreneur-simply put. It is the entrepreneurs responsibility. Other benefits are derived from a business plan for both the entrepreneur and the financial sources that read it and evaluate the venture. Especially for the entrepreneur, the following benefits are gained: The time, Effort, research, and discipline needed to put together a formal business plan force the entrepreneur to view the venture critically and objectively. The business plan quantifies objectives, providing measurable benchmarks for comparing forecasts with actual results. The completed business provides the entrepreneur with a communication tool for outside financial sources as well as an operational tool for guiding the venture toward success. The competitive, economics, and financial analyses included in the business subject the entrepreneur to close scrutiny of his or her assumptions about the ventures success. Since all aspects of business venture must be addressed in the plan. The entrepreneur develops and examines operating strategies and expected results for the out side evaluators.

These 9 (nine) areas include multidimensional factors which are required for starting a Business.

Financial Record

Experience

Capital

Location Coordination of The Business Business Success Lease Competition Customer Inventory Management Demographic
Figure- Factors Required for Starting a Business Starting a new firm the entrepreneur should approach to make a comprehensive Flexibility study in order to:

Make a through analysis of the available relevant adequate information before finally deciding the line activity to be chosen the location where to set up the business the type of machinery & equipments needed and from where to procure those, the raw materials sources & prices, skill and work force needed. The number of competitors in the target market their strengths, manageable market share, location of the showrooms, channels of distributions, sales force available etc. The entrepreneur should estimate a realistic sales volume over the period of initial 3 years The entrepreneur should proceed step by step in order to establish the business, setting an appropriate organization structure, recruitment & training of personnel, starting production, setting sales force arranging fixed and working capital in right proportion and at right time etc.

Managing small business will differ in each of the three stages such as the following: First Stage One person operation, where the owner does all the activities. It is the simplest of all the forms the owner himself if acting as both the manager and the worker. Here lies no employer employee problem. It is the owner who does everything there is no problem of community & payment of benefits, hence no question of motivation arises.

Owner Manager Worker

Owner/Manager

Owner/Worker
Figure: Showing one person Operation in small Business Second Stage Separation of management and non-management functions; hired subordinates to do some of the manual and/or mental activities while owner manages. Here, there is need to manage one/two subordinates. The problem of offering benefits that of motivation, the need for communication and disciplining remains though in a simple manner. Owner/Manager

Worker (s) Figure: Showing the owner and one/two Assistants in the Small Business Operation Third Stage Separation of ownership and management functions; owner begins to relinquish the responsibilities for the day-to-day running of the business activities to a professional manager. Owner Manager (s) Worker (s) In the first stage there is no problem of management as the owner does everything himself. He is supposed to take all the decision for the best interest of the business. In the second stage owner is also the manager but more than one worker and employees need be managed. Here also managing the subordinates is not very difficult since the size is seemingly smaller. In the third stage where there is separation of management from owner & worker, there appears the necessity of plan, instructions, control, coordination, motivation etc that speak of the style of traditional management.

An essential step in getting a new venture off the ground is the preparation of a business plan. The process forces the entrepreneur to anticipate the potential market, the potential of satisfying that market, the potential pitfalls of organizing a new venture, and the early signals of progress or failures. The plan itself is the basis on which the entrepreneur runs the business, and in which investors and creditors make their decision to help the entrepreneur. There are 25 steps in preparing a business plan: Step 1: Make a commitment to go into business for yourself. Step 2: Analyze your strengths and weaknesses Step 3: Choose the product or service that best fits your strengths and desires.

Step 4: Determining what profit you want from this business, recognizing the time you will give and the investment you will have then complete a projected income statement based upon your decision. Step 5: Review all aspects of our merchandising plan. Step 6: Analyze your estimated expenses in terms of their fixed or variable nature. Step 7: Determining the firms break-even point. Step 8: If you are considering sales on credit review the advantages and administrative decisions involved. Then established a credit policy. Step 9: Develop a production plan. Step 10: Survey and test the market our plan to serve to ascertain if the necessary sales volume required producing the profit called for in step 1is obtainable. Step 11: Prepare a statement of assets to be used. Step 12: Prepare an opening day balance sheet. Step 13: Determine the sources of assets needed. Step 14: Study the location and the particular site chosen for specific characteristics. Step 15: Prepare a layout for the entire space to be used for business activity. Step 16: Choose your legal form of organization. Step 17: Develop a marketing plan. Step 18: Develop an organizational plan. Step 19: Review the risks to which you are subject and how you plan to cope with them. Step 20: Establish a human resources policy at the beginning. Step 21: Establish an adequate system of accounting records. Step 22: Develop a computer plan. Step 23: Develop a program of total quality management. Step 24: Develop a financial plan. Step 25: Develop a letter that summarizes the business plan, stressing its purpose and promise. These steps interconnect and overlap. This means that certain key steps cannot be taken until earlier steps are completed. In almost every stage of the development of a business plan, the entrepreneur must gather facts, opinions, and judgments from many sources .Market research is perhaps the critical steps in the preparation of a business plan. The more the entrepreneur knows about the market, the greater the chance of attracting customers and earning a profit. This plan binds all the preceding steps in the preparation of a business plan by translating operating plans into money.

A business plan should take into consideration the check list in the process of its preparation. It is advisable in order to avoid defects in the plan resulting from missing some important variables. The art of preparing a good business plan should include nine sections: introduction, basic consideration, competitive advantage, production, marketing, management, accounting and finance, collusion and appendixes. This may be seen below: 1. A business plan to be complete in order to satisfy the needs of the entrepreneur should include the following: a. Introduction b. History c. Description of the business 2. Basic Consideration a. Acceptability of products or services b. Legality of Products or Services 3. a. b. c. d. e. f. 4. a. b. c. 5. a. b. c. d. e. f. Accounting and Finance Balance sheet (current and projected) Income statement Ratio analyses (current and projected) Cash flow analysis (current and Projected) Break-even analysis (current and Projected) Profitability (Current and Projected) Competitive Advantage Potential Market Share of the proposed enterprise Market Share of the existing company. Likely response of the competitor. Production Choosing a product or service for production or delivery Maintenance and servicing Insurance Make or buy to resale Equipments and machinery Quality Control Delivery schedule 8

6. a. b. c. d. e. f. g. h. l.

Marketing Product or service description Advertising and promotion Price determination Distribution Target customers Market demand Marketing area description Market segmentation Location

7. Buying habits and capacity of the target customers. 8. Management a. Managerial skills requirements b. personnel management policies c. Organizational hierarchy d. Customer relations policies e. Inventory control 9. Conclusion a. Individual and overall impression of the study by the consultant. b. Benefits gained by the owners c. Additional references for business owner on the subject matter. 10. a. b. c. d. Appendix Maps Trade association material Layouts Flyers

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Appendix:
Entrepreneurship Small Business and Lives of Successful Entrepreneurs By Dr A R Khan. Class Lecture Internet

THANK YOU

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