BUSINESS PLAN

A business plan is the written document that details the proposed venture. It must describe
current status, expected needs, and projected results of the new proposal. Business plan must
cover every aspect of the venture: the project; marketing; research and development;
management; critical risks; financial projections and mile stones or a time frame work. A
business plan is means of communicating your vision to the outside world to help you attract
talent and money to your enterprise. The quality of business plan is measured by its ability to
hire employees, gain contracts from potential customers and negotiate monetary investment from
an investor whose interest is solely to make profit
Business plan should be carefully prepared after meeting and discussing with the concerned
people and reflecting the directions of the new venture. It is a primary document for managing
the venture. There may be pitfalls representing the most common errors which must be avoided
which are given below:

Unrealistic Goals: It may be unattainable goals; lack of time frame to accomplish goals;
lack of priorities; and lack of action steps. This pitfall may be avoided by setting up a
time table of specific steps to accomplish within a specific period.
Failure to Anticipate Roadblocks: Failure to anticipate problems which may arise. It may
be due to reasons such as no recognition of future problems; no admission of possible
flaws or weaknesses; no contingency or alternative plans. This pitfall may be avoided by
listing all the possible obstacles that may arise and the alternatives that might be taken to
overcome the obstacles.
No Commitment or Dedication: Indications of lack of commitment or dedication are no
desire to invest personal money, excessive procrastination, missed appointments, and the
appearance of making fast buck from a hobby or whim. It may be avoided by acting
quickly, ensure to follow up all the professional appointments and showing willingness to
demonstrate financial commitment to the venture.
Lack of Demonstrated Experience: Many entrepreneurs have actual business and
technical experience which they demonstrate by stating background they possess. Thus,
when beginners attempt to promote ideas they have no prior knowledge, they are doomed
to fail. To avoid this pitfall they need to give evidence of their experience and
background for the venture. If they lack it they should obtain assistance from those who
possess this knowledge or these skills. May be useful. Demonstrating a team concept
about those who help out also
No market Niche (Segment): An entrepreneur may promote an idea just because he likes
the product or service without having an idea who the potential customers will be. Many
inventions which though have been patented never reach the market place because no
market was established for them. The best possible way to avoid this pitfall is to have a
market segment specifically targeted and to demonstrate why and how the specific
product or service will meet the needs or desires of the target group.

Benefits of Business Plan: The process of preparing business plan forces the entrepreneur to
analyze all aspects of the venture and to prepare an effective strategy to deal with the
uncertainties that may arise. Thus, it helps an entrepreneur avoid a project that would hve
been a failure. Since the entrepreneurial team is involved in preparing the plan, the lead
entrepreneur understands the contribution of each member. Other benefits of business plan
are:

The time, efforts, resources, research and discipline needed to prepare a business plan
force the entrepreneur to view the venture critically and objectively;
The competitive, economic, and financial analyses included in the business plan
subject the entrepreneur to close scrutiny of his/her assumptions about the ventures
success;
Since all the aspects of the business venture must be addressed in the plan, the
entrepreneur develops the operating strategies and expected results for outside
evaluators;
The business plan quantifies objectives, providing measurable benchmarks for
comparing forecasts with actual results;
The business plan provides the entrepreneur with a communication tool for outside
financial sources as well as an operational tool for guiding venture toward success;
The business plan provides the details of the market potential and plans for securing a
share of that market;
Financial statements given in business plan illustrate the ventures ability to service
debt or provide an adequate return on equity;
Financial plan identifies critical risks and crucial events with a discussion on
contingency plans that provide an opportunity for the ventures success;
Business plan contains comprehensive overview of the entire operation and the
documents containing financial projections which helps in thorough business and
financial evaluation;
It helps as a useful guide for assessing the entrepreneurs planning and managerial
ability.

Elements of Business Plan: A detailed business plan usually includes eight to ten sections
having sub-sections as given below:
Section I: Executive Summary
Section II: Business description
A. General description of business

B. Industry background
C. Goals and potentials of the business and milestones (if any)\
D. Uniqueness of product or service
Section III: Marketing
A. Research and analysis
1. Target market (customers) identified
2. Market size and trends
3. Competition
4. Estimated market share
B. Marketing plan
1. Market strategy sales and distribution
2. Pricing
3. Advertising and promotion
Section IV: Operations
A.
B.
C.
D.

Identify location advantages

Specific operational procedures
Personnel needs and uses
Proximity to suppliers

Section V: Management
A. Management team key personnel
B. Legal structure stock agreements, employment agreements, ownership
C. Board of directors, advisors, consultants
Section VI: Financial
A. Financial forecast
1. Profit and loss
2. Cash flows
3. Break even analysis
4. Cost controls
5. Budgeting Plans
Section VII: Critical risks
A. Potential problems
B. Obstacles and risks
C. Alternate courses of action
Section VIII: Harvest strategy

A. Liquidity event (IPO or sale)

B. Continuity of business strategy
C. Identify successor
Section IX: Milestone schedule
A. Timing and objectives
B. Deadlines and milestones
C. Relationship of events
Section X: Appendix or Bibliography