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Business Plan

Step by step procedure that would be followed to convert a business idea into a successful business venture.

Objectives of the Business plan

Give direction To monitor the progress after implementing the plan. To persuade others to join the business. To seek loan from financial institutions. To identify strengths and weakness of the plan. To identify resources that would be required to implement the plan.

Preparing a business plan

Preliminary investigation Business planning process

Idea generation Environmental scanning Feasibility Analysis Project report preparation Evaluation, control and review

Idea Generation
Various sources of new ideas :Consumers Existing companies Employees Dealers, retailers

Various methods of generating new ideas :Brainstorming, Reverse brainstorming Group discussion Data collections through questionnaires /schedules etc. Invitation of ideas through advertisement, mails, internet Market research

Environmental scanning
External Environment : Socio-cultural appraisal Technological appraisal Economic appraisal Demographic appraisal Government appraisal

Internal Environment : Raw material Production/Operation Finance Market Human resources

Feasibility Analysis
Market Analysis : Estimate demand of the proposed product/service in future. To estimate the market share of the proposed product/service in future.

Technical / operational Analysis : Cost and availability of the technology may be of critical importance to the feasibility of a project. Key questions answered here are :-

1. 2. 3. 4.

What are the technological needs of the proposed business? What other equipment does the proposed business need? From where will this technology and equipment be obtained. From where can the raw material be obtained?

Technical / Operational analysis collects data from : Material availability Material requirement planning Plant location Plant capacity Machinery and equipment

Financial Feasibility : Cost of land and building Cost of plant and machinery Preliminary cost estimation Provision for contingencies Working capital estimates Cost of production

Drawing a functional plan

Marketing Plan Marketing mix Segmentation of the market Identification of the target market Strategies

Production / Operation Plan : Location and reasons for selecting the location Physical layout List of suppliers and distributors Cost of manufacturing Quality management

Organization plan : Type of ownership Organizational structure HR management practices

Financial Plan :Projected cash flow Projected income statement Projected balance sheet

Project Report preparation

Cover sheet Table of contents Executive summary The business Funding requirement The product or service The plan Critical risk Exit strategy Appendix