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Business Plan
Format and Contents
Contents of Business Plan
Executive summary Industry and Company and ts products /Services Market Research and Analysis Economics of the Business Marketing Plan Design and Development Plans Manufacturing and operations plan Management Team Overall Schedule Critical risk problems and assumptions Financial Plan Proposed Company offering Appendices
Executive Summary
Description of the Business Concept and the Business
Opportunity and strategy Target market and projections Competitive advantage Costs Sustainability The Team The Offering - Finance needed (Debt equity
and your contribution)
Industry ,Company and Product/Service
The industry current state, size, growth competitors, new product/devp, environmental profile –energy
intensity, supply chain, waste, green technology –carbon credits CER)
Company and the Concept
Company and the Concept – present biz, products service
offered /will offer, background of growth and promoters
involvement, prior sales and profit performance or
discuss losses and why and improvements done or envisaged
Product or Service Product and or service – describe of new product
service , application of its use , delivery system unique features how they add value, differentiation
from those current available, possible drawbacks, present state of development, first mover of head start advantage any features which give you unfair advantage over
others like patents trade secrets or proprietary features,
opportunities of expansion of product lines or related products.
Entry and Growth Strategy
Entry and growth strategy – Key success variables in mktg plan
innovative product, timing advantage, marketing approach, pricing , channels of distribution advertising and promotion
Market Research and Analysis
Customers Market size and trends Competition and competitive edges Estimated market share and sales Ongoing market evaluation
Customers
Who are they? Classified by groups segments-common identifiable characteristics
Where are they? Segment and region How they buy (retail /wholesale), reached and
receptiveness? Where buying decisions are made and length of
decision cycle, customers purchase process, basis of decisions (price, quality timing, delivery training, service personnel, contacts, political pressures) and can they change current buying decisions?
Customers(2)
What orders contracts or letters of commitment or potential customers you have in hand?
What you are doing to overcome negative customer reaction?
If in existing business , current customers and sales trends
Market Size
Five year projections of size and your share, by segment, region or country for product or service
Potential annual growth for at least 3 years Major factors for market growth ( industry
trends, socio economic trends, govt. policy, envrt. impact, population shifts)
review previous trends
Competition and Competitive Edge
Realistic SWOT of Competitors, assess substitute and alternatives ,list of suppliers of these
Compare competing and substitute products or services on market share, price ,quality, performance , delivery, timing service, warranties, other features
Current advantages and disadvantages of these products
Competition and Competitor’s Edge
Knowledge of competitors actions that could lead to improved products (R&D)
Are they awake or asleep? SWOT of competing companies their market share sales
and distribution Financial position ,costs and profitability of competitors Who are service providers pricing, performance ,cost and quality leaders-why co
exiting or entered the business Discuss 3-4 key competitors and why customers buy
from them What you know of competitor’s operations
Economics of the business
Gross and operating margins Profit potential and durability Fixed variable and semi variable costs Months to breakeven Months to reach positive cash flow
Marketing plan
Overall marketing Strategy Pricing Sales and tactics Service and warranty policies Advertising and promotion Distribution
Design and development plan
Development status and tasks Difficulties and risks Product improvement and new product Costs Proprietary Issues
Manufacturing and Operation plan
Operating cycle Geographical allocation Facilities and improvements Strategy and Plans Regulatory and Legal teams
Management team
Organisation Key management personnel Management Compensation and Ownership Other investors Employment and other agreements and stock
options and Bonus Plan Board of Directors Other shareholder’s rights and restrictions Supporting professional advisers and services
Overall Schedule
A schedule that shows the timing and interrelationship of the major necessary to launch the venture and realise its objectives.
Cash conversion cycle will underline key inputs
Deadlines indicated Indicates to investors your depth of planning
and resource use Indicate methods of calculations
Critical Risks Problems and Assumptions
Demonstrate that you have thought out and can handle them
Description of risks implicit in plan Assumptons- use objectivity to deal with
it – sales projections, orders Consequences of adverse outcomes –
industry, company, personnel, product, market appeal
Unstated negative factors of investors
Contingencies – Indicate critical ones
Running out of cash before orders come in Price cutting by competitors Potentially unfavorable industry trends Costs excess of estimates Sales projections not achieved’ Unmet product development schedule Difficulty in procuring long lead items Difficulties in obtaining bank credit Increase in R&D costs Running out of cash after orders come in
Financial Plan -Best Estimate of Reqt.
Indicate venture’s potential and timetable for financial viability
Operating plan for fin mgt using fin benchmarks Prepare exhibits Use three year income statements and balance
sheets and break even analysis. For cash flow statement use cash system instead of accrual system
Give assumptions behind -sales levels, growth, inventory requirements, cash balances, operating and cash conversion cycles
Fin Plan (2)
Proforma income statement – plan for profit indicates potential fin. feasibility of the venture.
Initially, level of profits cannot finance operating assets and cannot match the actual cash flow on a short term basis, hence a forecast of cash needs should take care of such conditions is recommended.
Fin Plan (3)
Proforma balance sheets are used to detail the assets required for the projected level of operations and how they will be financed (liablilities)
Indicate projected debt equity ratios, working capital, current ratios, inventory turnover within the limits required to justify future financing
Financial Plan (2)
acceptable limits to justify future financing Break even chart showing level of sales that
will cover all costs including those that vary with production and those that do not
Income statements -In Proforma statements fully discuss bad debts, discounts, assumptions for sales expenses, general and administrative costs
Fin Plan(2)
,show effect of sales reduction say 20%, learning curve and level of productivity snesitivity of profits to risks
Prepare Balance sheets, cash flow analysis, Break even charts ,cost control measures and budget overrun
Highlight important conclusions, including maximunm amount and timing of cash required , amount of debt and equity needed, how fast debts will be repaid
Financial Plan
Actual Income Statements and balance Sheet
Proforma Income statements Proforma Balance Sheets Proforma Cash Flow Analysis Breakeven Chart and Calculations Cost control Highlights
Proposed Company offering
Amount of money being sought Nature of security offered to investors Summary of how the investor can expect to
achieve his targeted rate of return Terms for financing your company spelt out here
Description of Uses of Capital Desired Financing –how much
Proposed Company Offering
Offering – common stock, convertible,debentures, debts with warrants, debt plus stock,unit price, total amount of securities (if not common , interest rate,type,maturity and conversions conditions, percentage others can hold before and after conversion, private placement –restrictred securities for a period of time
Capitalisation – current and proposed (post offfering number of outstanding shares and how the holding will change after on completion of fnancing), authorised and issued capital, stock options
Offering (3)
Use of funds – how capital raised will be used- R&D,capital eqpt, marketing , working capital
Investors Return- Indicate how your valuation and proposed ownership pattern will result in in desired rate of return for investors whom you have targeted
Appendices
Information too extensive in the body but necessaryProduct specificationPhotosList of referencesSuppliers of critical componentsSpecial location factorsFacilitiesTechnical analysisConsultant reportsCritical regulatory approval or licences