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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.
The material provided here is to guide you on what aspects to consider when preparing a business
plan.
1. 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:
i. 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.
ii. Pricing
How will you price your new product, and pricing strategy should be
included here.
iii. 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.
iv. Demand Management
This term refers to the management and distribution of, and access to
goods and services based on needs.
v. 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.
vi. 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.
4. 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).
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.
5. 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:
a. Current Financing- key investors or owners, existing loans and liabilities, any
financing received prior to approaching a bank or venture capital firm.
b. Funding Plan
c. Financial Forecasts-
i. Balance Sheets,
ii. Income Statements,
iii. 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).
6. Risk Analysis
a. Risk Evaluation
i. Market Risks- threat of new competitors, slower than expected adoption
are some of the risks involved which fall under market risks.
ii. Operational Risks- risks that may arise in the day to day running of
operations
iii. Staffing Risks- any risks related to your workforce should be identified and
mentioned here.
iv. Financing Risks- liabilities, cash flows, working capital are some of the
financing risks that companies face. Clearly identify the risks your business
faces here.
v. Managerial Risks
vi. Regulatory Risks- Government policies and rules may change at any given
time and some of these changes may adversely affect your business.
b. 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.