BUSINESS PLAN : UNIT I

The Meaning Why of Business Plan - Basic parameters : - Timing of Decisions Undertaken - Project Parameters :The Common Considerations Factor of successful business capital management eligibility to attract motivates financial control Anticipating change and adaptability.

What is a Business Plan?

The Business Plan is perhaps the most important document an entrepreneur can create. The Business Plan helps guide the direction of the company's first several years in business and gives potential investors an idea of the company structure, goals, and future plans. Companies at all levels of success create business plans. It is a working document that should be updated on quarterly or yearly basis.

Meaning of Business plan

A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. A written document that details a proposed revenuegenerating activity. It includes, at minimum, a description of the activity and a comprehensive breakdown of costs and revenues.

Why- business plan

A plan can help you move forward, make decisions, and make your business successful.

Business plan includes

1.0 Executive Summary

Highlights
1.1 Objectives 1.2 Mission 1.3 Keys to Success

2.0 Company Summary

Startup Startup

3.0 Product Description

4.1 Market Segmentation 4.2 Target Market Segment Strategy 4.3 Market Needs

5.0 Strategy and Implementation Summary

<5.1 Competitive Edge 5.2 Sales Strategy Sales Forecast

6.0 Management Summary 7.0 Financial Plan

7.1 Break-even 7.2 Projected Profit and Loss 7.3 Projected Cash Flow Cash Flow Cash Flow

Who needs the business plan

You need a business plan if you re running a business. A business plan is like a map and a compass for a business. Without it youre traveling blind. With a plan you set objectives, establish priorities, and provide for cash flow.

You need a business plan if you re applying for a business loan.

Most banks require it, and even those that don t strictly require it expect it. They expect it to be a summary of the business, with some predictable key points.

Who needs the business plan

You need a business plan if you re looking for business investment.
The plan won t get you the investment, but not having a plan will mean you won t get investment. Investors require a business plan. They invest in the people, the idea, the track records, the market, the technology, and other factors; but they look to the business plan to define and explain the business. You need a business plan if you re working with partners. You need a business plan to communicate with a management team. The day-to-day business routine is distracting, problems come up, opportunities appear, and commitments should be followed and tracked. How do you know where you are in business without establishing where you started and where you intended to go? How can people commit to a plan they can t see?

Project Parameters :The Common Considerations Simple business plan outline

Executive Summary: Write this last. It s just a page or two of highlights. Company Description: Legal establishment, history, start-up plans, etc. Product or Service: Describe what you re selling. Focus on customer benefits. Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc. Strategy and Implementation: Be specific. Include management responsibilities with dates and budgets. Make sure you can track results. Web Plan Summary: For e-commerce, include discussion of website, development costs, operations, sales and marketing strategies. Management Team: Describe the organization and the key management team members. Financial Analysis: Make sure to include at the very least your projected Profit and Loss and Cash Flow tables.

Basket of Goodies
Introduction Basket of Goodies (BOG) is a premier gift basket retailer. BOG is concentrating on making gourmet gift baskets out of a wide range of high-quality ingredients. In addition to having several flagship baskets, BOG will also offer the option of a custom basket allowing the customer to choose the ingredients themselves. BOG will be selling to individuals as well as corporations. Initially the bulk of BOG's business will be generated by individuals from word-of-mouth referrals, but as time passes, corporations will become a growing percentage of sales.

Basket of Goodies
The Company

The Basket of Goodies' mission is to create the finest gift baskets available. BOG, soon to be located in Salem, OR, will be hand assembling our products out of premier ingredients, local when possible. The business will be based out of Susan Presento's home. Although this will be a homebased business, toward the end of year one Susan will have an employee. Susan Presento, founder and owner, managed a flower shop in Salem for three years and this has given her insight to the gift giving practices of Oregonians. The primary gift baskets that will be offered are: smoked fish basket, fruit basket, pasta dinner basket, and picnic basket that has caviar, crackers, fruit, and smoked fish. BOG also offers a custom basket which allows customers to pick items from a list and BOG will assemble the basket with its custom ingredients

Basket of Goodies
The Market

The purchasing of gift baskets is very "seasonal." More than half of the gift basket purchasing occurs during a wide variety of holidays. BOG's competitive advantage will be based on two factors, low overhead which allows reasonable prices, and an unrelenting desire for the highest quality product and service. Low overhead. Highest quality product and service. BOG's sales strategy will be targeted at obtaining both the individual and corporate clients through word-of-mouth referrals. Customers will be able to place an order at the office, over the phone or via the website.

Basket of Goodies
1.1 Mission The Basket of Goodies' mission is to create the finest gift baskets available. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our products and services will exceed the expectations of our customers. 1.2 Objectives The objectives for the first three years of operation include: To create a home-based company whose primary goal is to exceed customer's expectations. To increase the number of clients served by at least 20% per year through superior performance and word-of-mouth referrals. To develop a sustainable home business, surviving off its own cash flow.

UNIT II
Business Plan process Sources of Information Internet , government sources and statistics offline research resources- Library SBDC s Trade and industries association sources of Market research evaluating data - Benefits of Market Study - Coverage of Market Study Information Sources - Market Demand : A Five Dimensional Concept

UNIT III
Business Plan Components The Executive Summary Company Description Industry Analysis & Trends Target Market Competition Strategic Position & Risk Assessment Marketing Plan & Sales Strategy operations Technology Plan management & Organization Community Involvement & Social Responsibility Development, Milestones & Exit Plan The Financials.

Marketing plan
Marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives. It can be for a product or service, a brand, or a product line. A marketing plan may be part of an overall business plan.

Analysis & Trends Target Market Competition Strategic Position & Risk Assessment

Marketing Strategy
If you understand the market well, you can probably break it down into different segments - groups of similar customers.

For example, you can break the business market down into businesses operating in the same sector and/or of a similar size. For more information, see our guide on how to segment your customers.
For each segment, you need to look at what customers want, what you can offer and what the competition is like. You want to identify segments where you have a competitive advantage. At the same time, you should assess whether you can expect high enough returns to make the segment worthwhile.

Target Market Analysis

This provide the reader with thorough understanding of the target market you are looking to market your products and/or services This section of your plan can contain the following: - Market Size and Trends - Targeted Market Research including: - Demographics - Psychographics - Purchasing Patterns - Factors that Affect the Market including - Seasonality - Technological - Regulatory Challenges - Barriers to Entry

The Competitive & Strategic Position and Risk Assessment

This section of the business plan assesses who the current players are in the industry and how you will compete with them. It gives you the opportunity to plan how you will enter the market and differentiate yourself from the current players
This section of your plan can contain the following: - Competitive Position - Competitive Analysis - Market Share and Distribution - Barriers to Entry - Potential / Future Competitive Challenges

Sales & Marketing Plan

The sales and marketing plan details what marketing activities the business will put in place to generate sales and lays out the cost associated with each activity. Remember, the purpose of marketing for a new business is to create awareness and drive sales. The sales and marketing plan should concisely explain how your business will achieve those goals.

Operations & Technology

This section should provide an overview of the strategy for the day-to-day implementation of the business model.

The objective here is to demonstrate that you understand how the daily operations of the business will work Also, this section will help you focus on relevant costs associated with implementing the plan. You must remember to incorporate the assumptions made in this section into the assumptions in the financial section of the Business Plan. Depending on the type of business, you should address the key areas listed below.

Exit plan
with the end in mind- says Stephen Covey in his book, "The Seven Habits of Successful Living

.Begin

The growth and exit strategy outlines methods that will take the business through each stage of development. When a company gets to a certain point the owners may look at removing themselves from the operation.
The exit strategy details two things:

1. The owners participation or lack of participation in the business at some future point in time; 2. How any and all investors who are involved in the business are repaid i.e.
do you sell the company and pay them off? How will it happen?

Exit plan
 Death -At the meeting, you arbitrarily decide how much insurance you can
afford and how much your company is worth, when in fact you do not know.

 Disability-If the person is important to the business, the financial strain

impacts the business and the family who depends on the income

 Divorce- You can imagine the torn feelings if a disability occurs, but what if the partners cannot get along? How do we split a partnership without financially ruining each other? It may be complicated by many personalities, some may not even be a part of the dispute, yet may be affected financially  Departure

UNIT IV
Exploratory cum-Desk Research (EDR) Field Interviews : An Essential Skill Field Interviews useful Tips - Product / Service and EDR /DMR Detailed Market Research (DMR) Other Methods Analysis of Information - Need for Judgments Soft Drink Illustration Errors and Precautions Manufacturing Process Sources of Technical Know-how - Reassurance on Manufacturing Process Plant and Machinery Supplier Identification Interaction with Suppliers Supplier Selection - Tips on Supplier transaction.

Exploratory cum-Desk Research (EDR)

Explanatory research is research conducted in order to explain any behavior in the market. It could be done through using

Questionnaires, Group discussions, Interviews, Random sampling, etc.

Field Interviews-An essential skill

Nothing replaces the power of direct observation..

Field studies help users and allow them to observe critical details for which there is no other way of discovering. Field studies are the best way to learn about your customers' goals and needs. Visiting people in their own environment can help you learn very different kinds of information from that collected in usability labs or other methods.

Results of field study

watched people shopping in malls, giving insight into how they manage shopping lists and purchase items on impulse.( From this researchers learned a lot to guide successful e-commerce designs.) Researchers spent weeks sitting alongside system administrators, watching how they interact with software documentation as they solve problems and maintain systems. (We garnered new perspectives on the roles of printed and online documentation, helping us understand the unique problems that each medium favors).

Market Research
Market Research is a systematic, objective collection and analysis of data about a particular target market, competition, and/or environment. It always incorporates some form of data collection whether it be secondary research (often referred to as desk research) or primary research which is collected direct from a respondent.

Other Methods

Analysis of Information: There are also other circumstances, such as in applied social research, when it is unfeasible or impractical to conduct probability sampling.

Other Methods Analysis of Information

- Need for Judgments:

These judgments are quick, inexpensive and convenient.
Lower cost of sampling Lesser time involved in the process A select number of people who are known to be related to the topic are part of the study which means that there are lesser chances of having people who will distort the data Good method for pre testing instruments like questionnaires

Errors and precautious

Overspending. Not knowing what exactly they want Poor choice of reference materials - Internals Researching the wrong group. Before accumulating first-hand research from your customers, you need to have an idea of who they are. For example, a focus group must meet your demographic needs, and a survey must be answered by prospective customers. Often businesses make the mistake of gathering random data, much of which does not apply to their business needs.

Errors and precautious

Relying on one set of data.
Whether it is the U.S. Census or a survey you personally conducted, one set of data is rarely enough to get an overview of your target audience. Use various data, including information from primary and secondary resources.

Technical know -how

knowing how to use tools or equipment or machinery, knowing about products and services, specialist knowledge and/or skill in using one's hands. Sources: Internet Videoes books

UNIT V
The Lay out Built-up Area Raw materials - Packing Land Requirement Utilities Manpower Search for Location : Reasons Selection CriteriaInformation Sources Location / Site Selection - Purpose of Financial viability Financial viability : Meaning Project Cost Avoid Differences with Loaning Agency Working Capital and Working Capital Margin Assessment of Working Capital Requirement Working Capital Assistance. Capacity Utilization and Income, Expenditure, Profit Estimate Viability Test profitability Cash Flow Estimate Risk Analysis Financial Viability : A Recapitulation Implementation schedule.

Layout
Addresses usability and production issues in the context of physical constraints and required components and behavior of systems.

Financial viability
Provide the financial resources and stability to pursue its activities a set out in this Strategic Plan.

Working capital
It reveals more about the financial condition of a business than almost any other calculation. It tells you what would be left if a company raised all of its short term resources, and used them to pay off its short term liabilities. The more working capital, the less financial strain a company experiences. By studying a company's position (you can clearly see if it has the resources necessary to expand
internally or if it will have to turn to a bank and take on debt)

Working capital
Main advantages of looking at the working capital position is being able to foresee any financial difficulties that may arise in near future.

Poor working capital leads to financial pressure on a company, increased borrowing, and late payments to creditor - all of which result in a lower credit rating. A lower credit rating means banks charge a higher interest rate, which can cost a corporation a lot of money over time.

Risk analysis
Risk analysis, which is a tool for risk management, is a method of identifying vulnerabilities and threats. Assessing the possible damage to determine where to implement security safeguards. Risk analysis is used to ensure that security is cost effective, relevant, timely and responsive to threats. Security can be quite complex, even for well-versed security professionals, and it is easy to apply too much security, not enough security or the wrong security components, and spend too much money in the process without attaining

The End