Business Plan

Presentation 3
Definition of Business Plan
A business plan is a very important strategic tool for entrepreneurs. A
good business plan not only helps entrepreneurs to focus on the
specific steps necessary for their to make business ideas succeed, but it
also helps them to achieve both their short-term and long-term
objectives.
4 reasons why a business plan is important
1. To raise money for your business
Potential investors or lenders want a written business plan before they give
you money. A mere description of your business concept is not enough.
Instead, ensure you have a thorough business and financial plan that
demonstrates the likelihood of success and how much you will need for your
business to take off.
2. To make sound decisions
As an entrepreneur, having a business plan helps you to define and focus on
your business ideas and business strategies. You not only concentrate on
financial matters, but also on management issues, human resource planning,
technology and creating value for your customer.
3. To help you identify potential weaknesses
Having a business plan helps you to identify potential pitfalls in your
idea. You can also share the plan with others who can give you their
opinions and advice. Identify experts and professionals who are at a
position to give you invaluable advice, and share your plan with them.
4. To communicate your ideas with stakeholders
A business plan is a communication tool that you can use to secure
investment capital from financial institutions or lenders. It can also be
used to convince people to work for your enterprise, to secure credit
from suppliers, and to attract potential customers.
15 Reasons You Need a Business Plan
1. Set specific objectives for managers
2. Share your strategy, priorities and specific action points with your spouse, partner or significant other.
3. Deal with displacement
4. Decide whether or not to rent new space
5. Hire new people
6. Decide whether you need new assets, how many, and whether to buy or lease them
7. Share and explain business objectives with your management team, employees and new hires
8. Develop new business alliances
9. Deal with professionals
10. Sell your business
11. Valuation of the business for formal transactions related to divorce, inheritance, estate planning and tax issues
12. Create a new business
13. Seek investment for a business, whether it's a startup or not
14. Back up a business loan application
15. Grow your existing business
Top 10 Components of a Good Business Plan
Executive Summary
• Your executive summary should appear first in your business plan. It
should summarize what you expect your business to accomplish.
Since it’s meant to highlight what you intend to discuss in the rest of
the plan, the Small Business Administration suggests that you write
this section last.
2. Company Description

• The next section that should appear in your business plan is a

company description. It’s best to include key information about your
business, your goals and the customers you plan to serve.
• Your company description should also discuss how your business will
stand out from others in the industry and how the products and
services you’re providing will be helpful to your target audience
3. Market Analysis
• Ideally, your market analysis will show that you know the ins and outs
of the industry and the specific market you’re planning to enter. In
that section, you’ll need to use data and statistics to talk about where
the market has been, where it’s expected to go and how your
company will fit into it. In addition, you’ll have to provide details
about the consumers you’ll be marketing to, such as their income
levels.
4. Competitive Analysis
A good business plan will present a clear comparison of your business
to your direct and indirect competitors. You’ll need to show that you
know their strengths and weaknesses and you know how your business
will stack up. If there are any issues that could prevent you from
jumping into the market, like high upfront costs, it’s best to say so. This
information will go in your market analysis section.
5. Description of Management and
Organization
• Following your market analysis, your business plan will outline the
way that your organization will be set up. You’ll introduce your
company managers and summarize their skills and primary job
responsibilities. If you want to, you can create a diagram that maps
out your chain of command.
6. Breakdown of Your Products and Services
• If you didn’t incorporate enough facts about your products and
services into your company description (since that section is meant to
be an overview), it might be a good idea to include extra information
about them in a separate section. Whoever’s reading this portion of
your business plan should know exactly what you’re planning to
create and sell, how long your products are supposed to last and how
they’ll meet an existing need.
7. Marketing Plan
• In your business plan, it’s important to describe how you intend to get
your products and services in front of potential clients. That’s what
marketing is all about. As you pinpoint the steps you’re going to take
to promote your products, you’ll need to mention the budget you’ll
need to implement your strategies.
8. Sales Strategy
• How will you sell the products you’re building? That’s the most
important question you’ll answer when you discuss your sales
strategy. It’s best to be as specific as possible. It’s a good idea to
throw in the number of sales reps you’re planning to hire and how
you’ll go about finding them and bringing them on board. You can
also include sales targets.
9. Request for Funding

• If you need funding, you can devote an entire section to talking about
the amount of money you need and how you plan to use the capital
you’re trying to raise. If you’ll need extra cash in a year or two to
complete a certain project, that’s something that’s important to
disclose.
10. Financial Projections
In the final section of your business plan, you’ll reveal the financial
goals and expectations that you’ve set based on market research. You’ll
report your anticipated revenue for the first 12 months and your
annual projected earnings for the second, third, fourth and fifth years
of business.
7 Steps to a Perfectly Written Business Plan
• Executive summary -- a snapshot of your business
• Company description -- describes what you do
• Market analysis - research on your industry, market and competitors
• Organization and management -- your business and management structure
• Service or product -- the products or services you’re offering
• Marketing and sales -- how you’ll market your business and your sales
strategy
• Funding request -- how much money you’ll need for next 3 to 5 years
• Financial projections -- supply information like balance sheets
• Appendix -- an optional section that includes résumés and permits
Research, research, research.

“Research and analyze your product, your market and your objective
expertise,” William Pirraglia, a now-retired senior financial and
management executive, has written. “Consider spending twice as much
time researching, evaluating and thinking as you spend actually writing
the business plan.
Determine the purpose of your plan
A business plan, as defined by Entrepreneur, is a “written document
describing the nature of the business, the sales and marketing strategy,
and the financial background, and containing a projected profit and
loss statement.” However, your business plan can serve several
different purposes.
Create a company profile.
• Your company profile includes the history of your organization, what
products or services you offer, your target market and audience, your
resources, how you’re going to solve a problem and what makes your
business unique. When I crafted my company profile.
Document all aspects of your business.

• Investors want to make sure that your business is going to make them
money. Because of this expectation, investors want to know
everything about your business. To help with this process, document
everything from your expenses, cash flow and industry projections.
Also, don’t forget seemingly minor details like your location strategy
and licensing agreements.
 Have a strategic marketing plan in place.
• A great business plan will always include a strategic and aggressive marketing plan. This typically
includes achieving marketing objectives such as:
• Introducing new products
• Extending or regaining market for existing products
• Entering new territories for the company
• Boosting sales in a particular product, market or price range. Where will this business come from?
Be specific.
• Cross-selling (or bundling) one product with another
• Entering into long-term contracts with desirable clients
• Raising prices without cutting into sales figures
• Refining a product
• Having a content marketing strategy
• Enhancing manufacturing/product delivery
6. Make it adaptable based on your audience.
• “The potential readers of a business plan are a varied bunch, ranging
from bankers and venture capitalists to employees,”
states Entrepreneur. “Although this is a diverse group, it is a finite
one. And each type of reader does have certain typical interests. If
you know these interests up-front, you can be sure to take them into
account when preparing a plan for that particular audience.”
7. Explain why you care.
• Whether you’re sharing your plan with an investor, customer or team
member, your plan needs to show that you’re passionate
and dedicated, and you actually care about your business and the
plan. You could discuss the mistakes that you've learned, list the
problems that you’re hoping to solve, describe your values, and
establish what makes you stand out from the competition.
Research and present a case analysis regarding business plan.