Procedure of preparation business-plan
Business plans are an important test of clarity of thinking and clarity of the business. Reasons for writing a business plan. Market trends and the market niche for product. Business concept, market analysis. Company organization, financial plan.
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- 1. What's in a business plan?
- 1.1 What makes a successful business plan?
- 1.2 Executive Summary
- 2. Background
- 2.2 Business Concept
- 3. Market Analysis
- 3.1 Market research
- 3.2 Marketing program
- 3.3 Competitive factors
- 4. Company organization
- 4.1 Operations Plan
- 4.2 Management
- 5. Financial Plan
- 5.1 Financial Forecasts
- 5.2 Sources of Capital
- 6. Risk Management
- 7. Technology / System Summary
Business plans are an important test of clarity of thinking and clarity of the business. It is important that everyone involved in your effort has a clear understanding of your objectives. A good plan achieves that.
Anticipating the next stage of business growth, and planning for it, can help to minimize the surprises your business will face "Surprises can be great for birthdays, but potentially fatal for businesses".
Business plan is typically designed for either or both of the following purposes:
1. To establish a framework for management to use as they pursue the enterprise objectives
2. To convince an investor that a capital investment in the enterprise's business is a sound financial decision
Help tools for preparation of different types of business plans are provided below. If you prepare it for venture capital investors, it is also important to know in advance how investors read a business plan and how they would evaluate your business plan.
The best way to show bankers, venture capitalists, and angel investors that you are worthy of financial support is to show them a great business plan. Make sure that your plan is clear, focused and realistic. Then show them that you have the tools, talent and team to make it happen. Your business plan is like your calling card, it will get you in the door where you'll have to convince investors and loan officers that you can put your plan into action.
Once you have raised the money to start or expand your business, your plan will serve as a road map for your business. It is not a static document that you write once and put away. You will reference it often, making sure you stay focused and on track, and meet milestones. It will change and develop as your business evolves.
Not everyone who starts and runs a business begins with a business plan, but it certainly helps to have one. If you are seeking funding from a venture capitalist, you will certainly need a comprehensive business plan that is well thought out and contains sound business reasoning.
Reasons for writing a business plan include:
- support a loan application;
- raise equity funding;
- define and fix objectives and programs to achieve those objectives;
- create regular business review and course correction;
- define a new business;
- define agreements between partners;
- set a value on a business for sale or legal purposes;
- evaluate a new product line, promotion, or expansion.
Professional investors will expect your plan to provide proof, not just promises. They'll want to see market data, competitive advantage, and management track records. They'll want to see robust and comprehensive financial projections. True, you'll hear stories about investors backing new companies without a plan, but those are the exceptions, not the rule. So, however you cut it, your business plan is very important, even at the early start-up stage, and even if you can keep it in your head. Before you purchase business stationery, telephones, or rent a location, you should do a business plan.
1. What's in a business plan?
A business plan should prove that your business will generate enough revenue to cover your expenses and make a satisfactory return for bankers or investors:
1. Executive Summary - features the highlights of your plan and sells your idea in two pages or less;
2. Company Summary - a factual description of your company, ownership, and history;
3. Products (or Services or both) - describes your products and/or services and how they stand out from competitive products and services;
4. Market Analysis - provides a summary of your typical customers, competitive landscape, market size, and expected market growth;
5. Strategy and Implementation - describes how you will sell your product, how you will put your plan into action, and establishes milestones;
6. Management Summary - provides background on the management team, their experiences, and key accomplishments;
7. Financial Plan - contains key financials including sales, cash flow, and profits.
1.1 What makes a successful business plan?
- a well thought out idea;
- clear and concise writing;
- a clear and logical structure;
- illustrates management's ability to make the business a success;
- shows profitability.
Only one out of 20 business plans are read by prospective investors beyond the executive summary and only 6 out of 1000 business plans get funded in average. The quality of the business plan is crucial for winning attention of investors, especially for a first-time entrepreneur who has no track record in managing own business. It is not only important for a business plan to have the right content, but it also must be organized into logical and clearly defined sections and presented in a way that is informative and maintains readers interest.
Your business plan should:
- provide a roadmap showing how your company plans to achieve its goals;
- provide Strengths-Weaknesses-Opportunities-Threats (SWOT) analysis;
- discuss your company's plans for the near and long-term future.
In writing your plan, you should keep it as short as possible while ensuring that you cover all the important topics in sufficient detail to substantiate your proposal. Investors only give you one chance. Address every key aspect of your plan: value proposition, financials, deal structure, marketing strategy, valuation and exit strategy - everything investors consider when they decide which projects to invest in.
1.2 Executive Summary
The executive summary is the single, most important part of the business plan. Describe the market opportunity, your product to harvest the market opportunity, your strategy for addressing and selling to that market, financial results in the first years of operation, long term objectives, and the key personnel. This is a "commercial" of your business plan, as investors will read it first. It should be written last ensuring that only vital information is included in most clear and convincing way. As a general rule, your first paragraph should include your business name, what it sells, where it is located, and the nature and purpose of the plan. You might also refer to the keys to success, or at least summarize them briefly.
The outline of the executive summary should include:
1. Disclaimer page (registration number; return instructions; non-proprietary);
2. The Purpose of the Plan (attract investors; document an operational plan for controlling the business; test the financial feasibility of a business concept);
3. The Company (the needs your company will satisfy; the products or services you will offer);
4. Market Analysis (the characteristics and the size of your target market);
5. Product or Service Research and Development (major milestones; ongoing efforts);
6. Marketing and Sales Activities (marketing strategy; sales strategy; keys to success in a competitive environment);
7. Organization and Personnel (key managers and owners; key operations employees);
8. Financial Data (funds required and their use; historical financial summary; prospective financial summary, including brief justification for sales projections; valuation and deal structure; valuation summary and methods used).
Describe the market recent developments, market trends and the market niche for your product. Your business plan must demonstrate clearly the commercial viability of the proposed venture.
2.2 Business Concept
Provide detailed description of the products or service and implementation arrangements for the targeted types of customers: