MAKING A BUSINESS PLAN

CHAPTER 10 ENTREPRENEURSHIP, 2e

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Chapter Objectives
To understand how a business plan is divided into sections To list the uses of a business plan To lay out the steps involved in writing a business plan To list out data required in drawing up a business plan To discuss about the various types of business plan To understand the significance of an executive summary To understand the structure and composition of various sections of a business plan To list the various appendices and exhibits needed in a business plan
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Uses of a Business Plan

Equity funding Bank finance Alliances Recruitment Clarify the business Others

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Kinds of Business Plans

Summary Plan Executive summary Full Business Plan Operational Business Plan The oral presentation

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Steps in Writing a Business Plan

Define purpose Collect Information Put it down The rough draft. Financial analysis Finishing Review
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Data Required

Company details

Documents relating to formation Shareholding details Permits and registrations Organization chart Details of key employees Consultants and advisors Compensation and other employee agreements Market statistics from secondary sources Reports on trends, etc Competitor data Customer surveys
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Management

Industry and Competitors

Entrepreneurship, 2e Oxford University Press

Data Required

Operations

Product specifications Contracts and purchase orders for raw materials Competitive advantages Details of Intellectual Property (Patent, license, and trademarks) Regulatory approvals Industry standards as per regulations Plant layout and operations plan Research and development plans Marketing plan Advance orders, if any Marketing materials Data on fixed and variable costs to be incurred Financial forecasts
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Marketing and Sales

Financial Information

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Key Sections of a Business Plan

Executive summary The company The management team The industry and the market Operations The marketing plan Financial plan Risks and contingencies Appendices
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Executive Summary
The executive summary is probably the most important section of the business plan. It is basically the whole business plan condensed into a few pages The main objective of the executive summary is to entice the reader to go through the entire plan.
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The Company
History Current Status Future

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The Management Team

Technical and professional qualifications Quality of work experience Experience in the relevant sector Reputation in the business community Evidence of moral integrity Financial capacity Networking with other vital people in the industry
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The Industry and the market

An industry is a collection of sellers A market is a collection of buyers

Concentrate on the relevant segments

Competition

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Operations
Gantt chart outline setup Technology Raw material strategy Production planning Quality HR policy

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Marketing
Target Segments Branding Product Packaging Pricing Distribution Promotion

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Finance
Funds sought Projected financial statements Costing details Break even and payback analysis

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Risks and Contingencies

Identify major threats and risks Outline strategies for countering them

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Appendices
Copy of documents pertaining to incorporation or formalisation of partnership. CVs of the entrepreneur/s and of key employees Copies of various permits or permissions granted. Copies of papers pertaining to sale or lease of land for the business Copies of documentation of proprietary intellectual property Graphical representation of schedule including milestones and dates Photographs of location Factory or plant layout Graphical representation of production process

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Appendices
Findings of market survey conducted Photograph of product or prototype Storyboards or mock-ups of advertisements Projected balance sheets Projected profit and loss accounts Projected cash flow statements Sensitivity analysis of P&L a/c Break even analysis Financial ratios
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