project formulation niyam 2013

8/10/2019 Project Formulation Niyam 2013

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Project Formulation

Tutor: Niyam R. Shrestha


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Defining Business Plan/Project Proposal

Written document describing all relevant

internal/external elements and strategiesfor

starting a new venture.

Written documentprepared by theentrepreneur

It is also referred to road map

It is also known as project proposal A written statement regarding what the

entrepreneur is going to do

12/16/2013 2copyright Niyam Raj Shrestha


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Defining Business Plan (contd.)

Definitions:David H. Holt

A business plan as a comprehensive set of

guidelines for a new venture

S S Khanka

A project proposal can best be defined as a

well evolved course of action devised toachieve the specified objective within a

specified period of time



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Defining Business Plan

An integration of functional plans

such as

marketing, finance,

human resources

Manufacturing and production Raw materials



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Scope and Value of the

Project Report/Business Plan Report may be read by:

employees,

investors,

bankers, venture capitalists,

supplier,

customers, advisors and

consultants for different purposes



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Scope and Value of the Business Plan

1. Provide guidelines2. Attract Investors

3. Provide Leverage

4. Psychological Impact

5. Re-evaluate the strategy



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Scope and Value of Business Plan(contd.)

2. Attract Investors:

it is a powerful tool for the

entrepreneur to persuade: the investors,

lenders,

suppliers and

customers



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Scope and Value of Business Plan(contd.)

3. Provide leverage:

To get loan from financial

institutions for working capital Requirement of capitalfor the

day to day operation of a

business



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Scope and Value of Business Plan (contd.)

4. Psychological impact:

Partners work together to

formulate, revise and modifybusiness plan

Commitmentto work in reality

Increment of understandingbetween the partners



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Scope and Value of Business Plan (contd.)

5. Re-evaluate the strategy: Re-evaluationof strategy of the

business from time to time

Entrepreneur will have answerto allthe questions raising during theoperation of business

It helps them to take correctiveactions to improve



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Structure and Components of Business Plan

contd...

Introduction Page

Executive Summary

Industry Analysis

Description of Venture

Production Plan

Operation Plan

Organizational Plan

Marketing Plan

Financial Plan Assessment of Risk

Appendix (contains backup material)

12/16/2013 copyright Niyam Raj Shrestha 12


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Introductory Page

Structure and Components of Business Plan



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Introductory Page contd...

Name and Address of the Business

Name(s) and Address of the principal(s)

Natureof Business

Statement of Financing needed

Statement of confidentialityof report

Sample Introductory Page.docx

http://localhost/var/www/apps/conversion/tmp/scratch_5/Sample%20Introductory%20Page.docxhttp://localhost/var/www/apps/conversion/tmp/scratch_5/Sample%20Introductory%20Page.docx


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Executive Summary

Project Formulation



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Executive Summary contd

Two to three pages summarizing the

complete business plan

Prepared afterthe total plan is written

It should stimulatethe interest of thepotential investor

It should address no. of questions or issues: What is the business concept or the model?

How is this business concept or model unique?

Who are the individuals starting this business?

How will they make money and how much?



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Executive Summary (contd.)

Executive Summary:

Brief introduction of a business

It creates the interest of the investor or kills the zeal to

read other sections

It concentrates on following subjects:

Description of proposed venture:

time of formation of company, owner of company and

the purpose of company

uniqueness of the company

Description of product or service:

what the business produce or sells

use of effort to develop the product or service



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Executive Summary (contd.)

Description of market characteristics:

description of potential market

market segment to be reached and way tobe adopted to reach there

Description of entrepreneurial team:

inclusion of founder members introduction of persons

Financial Summary:

Summary of initial estimate of profit or loss

It shows how far the business will beprofitable

Need of capital, investment by the foundersand credit to be taken

it-business-plan-sample.pdf

http://localhost/var/www/apps/conversion/tmp/scratch_5/it-business-plan-sample.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_5/it-business-plan-sample.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_5/it-business-plan-sample.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_5/it-business-plan-sample.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_5/it-business-plan-sample.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_5/it-business-plan-sample.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_5/it-business-plan-sample.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_5/it-business-plan-sample.pdf


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Environmental and

Industry Analysis



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Environmental and Industry Analysis

contd

Environmental Analysis

Assessment of external uncontrollable variables that

may impact the business plan

EconomyGNP, unemployment by geographic, disposable income

Cultureevaluation of culture change

Technology

Legal concerns

Industry Analysis

Reviews industry trends and competitive strategies

Industry Demandmarket declining or growing, no of new competitors

Competition




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contd

Critical Issues: What are the major economic, technological, legal,

and political trends on a national and an international

level?

What are the total industry sales over the past fiveyears?

What is the anticipated growth in this industry?

How many new firms have entered this industry in the

past three years? What new products have been recently introduced in

this industry?




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contd

Critical Issues: contd Who are the nearest competitors?

How will your business operation be better that this?

Are the sales of each of your major competitors

growing, declining, or steady? What are the strengths and weaknesses of each of

your competitors?

What trends are occurring in your specific market

area? What is the profile of your customers?

How does your customer profile differ from that of your

competition?




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contd

Provides complete overview of product(s),

services(s), and operationof a new venture

It will enable the investor to ascertain the

size and scope of the business Mission statementguide firm through long-term decision

making

Key elements: The locationand sizeof the business

The personneland officeequipmentthe will be needed

The backgroundof entrepreneurs

The historyof the venture



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contd

Important question the entrepreneurs need

to answer:1. What is the mission of the new venture?

2. What are your reasons for going into business?

3. Why will you be successful in this venture?

4. What development work has been competed to date?

5. What is your product(s) and /or service(s)?

6. Describe the product and/or service, including patent,

copyright, or trademark status.7. Where will the business be located?



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contd

Important question the entrepreneurs need

to answer:8. Is your building new? Old? In need of renovation? (if

renovation needed, state costs)

9. Is the building leased or owned? (State the terms.)

10. Why is this building and location right for your business?

11. What office equipment will be needed?

12. Will equipment be purchased or leased?

13. What experience do you have and/or will you need tosuccessfully implement the business plan?




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Production Plan

Project Formulation



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Production Plan

Contd

All the manufacturing organization prepare

production plan.

Details HOWthe product(s) will be

manufactured The entrepreneur should describe the

physicalplantlayout

Required machineryand equipment, raw materials with their suppliers,

production process of technology



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Production Plan

contd..

costof manufacturing future capital

requirement etc.

if the manufacturing is subcontracted, the subcontracted should explain in terms of

names, addresses, reason of selection ,cost etc.



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Production Plan

contd..

if the business is nonmanufacturingits

should mentioned its operationalplan such as supplier of goods or services,

inventory control system,

type of storage required also should be mentioned in

the business plan



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Production Plan issues /questions

contd..

1. Will you be responsible for all or part of the

manufacturing operation?

2. If some manufacturing is subcontracted,

who will be the subcontractors? (give nameand addresses)

3. Why were these subcontractors selected?

4.

What are the costs of the subcontractedmanufacturing? (include copies of any

written contracts)



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Production Plan issues /questions

contd..

5. What will be the layout of the production process?

(illustrate steps if possible.)

6. What equipment will be needed immediately for

manufacturing?

7. What raw materials will be needed for

manufacturing?

8. Who are the suppliers of new materials and what

are the appropriate costs?

9. What are the costs of manufacturing the product?

10. What are the future capital equipment needs of the

venture?



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Production Plan

contd..

If a retail operation or service:

1. From whom will merchandise be purchased?

2. How will the inventory control system operate?

3. What are the storage needs of the venture andhow will they be promoted?

4. How will the goods flow to the customer?

5. Chronologically, what are the steps involved in a

business transaction?6. What are the technology utilization requirements

to service customers effectively?



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Operation Plan

Project Formulation



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Operation Plan

contd

Manufacturing and non-manufacturing Description of companys operations

Flow of orders for goods and/or services

Technology utilization

This section that produce and sell productor service(servicesintangible)

Elements of this plan includes facilities,inventory management, human resourcerequirements, legal and insurance issues

Goes beyond the manufacturing process



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Organizational Plan

Project Formulation



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Organizational Plan

contd

Form of ownership

Identification of partners or principle

shareholders

Authority of principals

Management-team background

Roles and responsibility of members of

organization

Background of board of directors



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Organizational Plan

contd

It describes

the ventures for line of authority &

responsibility,

subordinate relationship scalar chain, board ofdirectors

the form of ownership

sole proprietorship, partnership or corporation

If it is a partnership form

the term & condition of partners should be

mentioned in the partnership deed.



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Organizational Plan

contd

It describes If it is a joint stock company

the details of shares with majors shareholders

should be mentioned.

The names, addresses and experience of board ofdirectors and

organizational chart indicating the line of authority

& responsibility

The appointment of board of director & theirremuneration should be mentioned.

It should include the job description & job

specification for each individual & activity.



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Organizational Plan

contd

Developing the management team Ownership

Liability of owner

Management control Organizational structure

Planning, measure and evaluation schemes

Reward



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Financial Plan

Project Formulation



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Financial Plan

contd

A comprehensive evaluation of an investor'scurrentand futurefinancial state by using

currently known variablesto predict future

cash flows, asset values and withdrawal plans.

Potential investment commitment Capital Costs andSources of Finance

Assessment of Working Capital Requirements

Indicates whether the business plan iseconomically feasible or not.



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Financial Plan

contd

Pro-forma income statement

Cash flow projections

Break even analysis

Pro-forma balance sheet

Capital Requirement

Fixed and working capital

Source and application of funds



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Marketing Plan

Project Formulation



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Marketing Plan

contd..

SWOT Analysis

Market Research

Distribution Channels

Strategic Alliances

E-commerce & Technology

Marketing Budget Credibility & Risk Reduction



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Project Implementation

Project Formulation



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Project Implementation

Task \ months 1 2 3 4 5 6

1. Formulation of Project Report

2. Application for Term-Loan

3. Term Loan Sanction

4. Possession of Land5. Construction of Building

6. Getting Power and Water

7. Placing Order for Machinery

8. Receipt and Installation of Machinery

9. Manpower Recruitment

10. Trial Production

11. Commencement of Commercial Production



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project formulation niyam 2013

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