Business Plan

A business plan is a formal statement of a set of business goals, the reasons why they are believed to be attainable, and the plan for reaching these goals. The information provided here is for external stakeholders- for example a bank (if you are approaching them for finance), venture capital firm, a private equity firm and any others from whom you seek investment or a loan.

Content of a Business Plan

Before reading this section, please do note that the content provided here is just for guidance purposes. Your business is unique and your plan should reflect this fact. The content here is not specific to any type of business.

The material provided here is to guide you on what aspects to consider when preparing a business plan.

Executive Summary

A business plan should contain an executive summary. This summarizes the key points of a business plan. If you are approaching a bank for a loan, or a venture capital firm for investment, you must include the following points:

• Company Information: Name, Proposed legal structure, minority and majority investors. We have provided a section on Forms of Business Organisation for your information. We also have a section on Legal Basics to help you better understand the legal environment.
• Brief description of project
• Amount and length of loan (if approaching a bank)
• Amount of investment required (if approaching a venture capital firm)
• Show that the company can pay the bank back by including details on:
• Past financial performance
• Future revenue streams
• Any contracts that build some confidence on future revenue streams
• Terminal value (for venture capital firms)

• Description of market opportunity and how the company seeks to take advantage of this opportunity.

Background Information

Some information may be included in the executive summary (mentioned above) and details may be provided in this section.

Current Status of Company:

Some information you may want to include-

·   Number of employees, annual sales figures, key product lines

·   Current stage of development (for start-ups)

·   Corporate structure-

o Sole proprietorship

o Partnership

o Limited Liability Partnership

o Private Limited

o Public Limited

History of company

You may want to include the founding date, major successes and strategically valuable learning experiences.

A profile of the management team

Talk about the owners, board members, promoters (in case of venture capital funding), partners and other key positions in your company.

Marketing Plan

Usually, a marketing plan has five objectives. For in-depth information, please visit our Marketing section.

1)Product

Here you should seek to differentiate your product from its substitutes. Questions such as why your product is better, how will customers adapt to your new product (any switching costs involved) should be answered here.

2)Pricing

   How will you price your new product, and pricing strategy should be included here.

3)Distribution/Positioning

How are you planning to distribute your goods? Are you partnering with any distributors? Include any on-going negotiations here as well. Read our Distribution Channels section for more information.

4)Demand Management

This term refers to the management and distribution of, and access to goods and services based on needs.

5)Promotion and Brand Development

Mention the steps you have taken or plan to take in relation to building your brand name and promoting your product. Visit our section on Marketing Communications for ideas and help on how to promote your product.

6)   User Experience

Apart from the traditional marketing functions, a lot of companies are now focusing on the user experience. Factors such as the purchase process, the retail environment, exclusivity of the product are some important considerations here.

Operational Plan

In this section you should talk about how to service your clients effectively and efficiently. You may want to include the following:

Manufacturing Plan- talk about your supply chain, inputs required for production, facility requirements, equipment requirement and warehousing needs (if any).

Information and Communications Technology Plan- what technology and communications mechanisms do you plan to include? Talk about software requirements- off the shelf or custom made. Read our section on how to integrate Information and Communication Technology in your company. If you plan to have a website, include the development plan here.

Team Building- Define key roles of staff, compensation, list of roles and management structure here. We have provided a section on Human Resources which will help you in determining what to write here. Similarly, training needs and methods need to be talked about here. Visit our Training and Skill Development Section to gain further insights.

Intellectual Property Plan- your intellectual property is a very important asset to your company. Talk about how you plan to protect your IPR (trademarks, patents, copyrights etc) in this section. We have provided a database on IPR where more information is available.

If your company faces a lot of variable costs, then you may want to include a cost allocation model.

Financial Plan

A financial plan is a series of steps which are carried out, or goals that are accomplished which relate to a business’ financial affairs. You may want to include the following:

Current Financing- key investors or owners, existing loans and liabilities, any financing received prior to approaching a bank or venture capital firm.

Funding Plan

Financial Forecasts-

• Balance sheets, 
• Income statements, 
• Cash flow statements

The above should all be mentioned here. Sometimes you may want to include projections for future earnings (may be useful if you are approaching a bank for a long term loan or a venture capital firm).

Risk Analysis

1.Risk Evaluation

Market Risks- threat of new competitors, slower than expected adoption are some of the risks involved which fall under market risks.

Operational Risks- risks that may arise in the day to day running of operations

Staffing Risks- any risks related to your workforce should be identified and mentioned here.

Financing Risks- liabilities, cash flows, working capital are some of the financing risks that companies face. Clearly identify the risks your business faces here.

Managerial Risks

Regulatory Risks- Government policies and rules may change at any given time and some of these changes may adversely affect your business.

2.Risk Management Plan

Now that you have identified the risks your organisation faces, in this section you will have to talk about how you plan to mitigate these risks. Examples are- methods and procedures to limit liabilities, reserve funds, continuity of operations plan.