Writing Business Plan

Chapter 4: (Bruce)

Session 5
Chapter Objectives
• Explain purpose of business plan.
• Describe the primary two reasons for writing the business plan.
• Differentiate summary business plan, full business plan and
operational business plan.
• Importance of executive summary of the business plan.
• Explain different parts of business plan.
• Detail the parts of oral presentation of business plan.
Reasons for Writing Business Plan.
Readers of Business Plan.
Firms’ Employees Investors and Stakeholders

• To operate in sync. • Demonstrate viability of

• To work in a purposeful business idea.
manner. • Business plan should be-
• Overall direction of the • Realistic,
firm. • understanding of
competitive environment,
• distinctive business model
and disclose resource
limitation
Discussion
• Some argue that market place is changing so rapidly that business
plan will become quickly outdated.

• Support or argue against the statement.

Guidelines for Writing Business Plan
Types of Business Plan
Outline of Business Plan
Cover Page
• Company’s name, address, phone no., website address, Facebook or twitter name,
contact detail such as landline phone no, e-mail address, and cell number.
• Bottom of cover page: confidential warning
• Formatting: centered.

Table of Content
Executive Summary
• Sometimes, investors ask for summary at initial stage.
• Should not exceed two pages.
• It should be written at last.

Industry Analysis:
• Size, growth rate and future projections.
• Industry Structure
Outline of Business Plan
Industry Analysis:

• Size, growth rate and future projections.

• Industry Structure- concentrated or fragmented.
• Issues, environmental challenges
• Trends
• Key success factors

Company Description:

• Mission Statement
• Tagline
• Product/Service- including differentiation
• Milestones
Outline of Business Plan
Market Analysis:

• Segmentation and targeting

• Competitors analysis
• firm’s annual sale and expected market share.

Economics of Business:

• Revenue drivers and profit margins

• Fixed and Variable Costs
• Operating leverage and its implications
• Start-up costs
• Break-even Chart and its calculations
Outline of Business Plan
Marketing Plan:

• Overall marketing Strategy- positioning

• 4Ps
• Sales process
• Sales Tactics

Product design and development plan:

• Status of product development –concept, prototype, initial production, full production

• Challenges and risks
• Projected development cost
• Proprietary issues (patent, copyrights, trademarks, license)
Outline of Business Plan
Operations Plan:

• General approach to production

• Business location
• Facilities and equipment

Management Team and company structure

• Management team (skills and profile)

• Board of directors
• Board of advisers
• Company structure
Outline of Business Plan
Overall Schedule

• Major events required to launch venture

Financial Projections

• Sources and uses of fund

• Assumption Sheet
• Pro forma income statement
• Pro forma balance sheet
• Pro forma cash flow statement
• Ratio analysis

Appendix
Presenting Business Plan
to Investors
Discussion
• Michael and Jill Simpson just left their jobs with Microsoft to
start a business that will sell a new type of fax machine. They
wrote a full business plan that they’ve asked you to review.
When reading the plan, you noticed that several key sections
start with the phrase “We believe . . .” Is any knowledgeable
person who reads this plan going to know what “We
believe . . . ” really means? What’s the problem with the
statement “We believe . . . ” in a business plan?
Activity
• Suppose you are asked to serve as a judge for a local
business plan competition. In preparing for the competition,
the organizer has asked you to write a very brief article titled
“What the Judges of Business Plan Competitions Look For”
that she plans to pass along to the entrepreneurs who enter
the competition.
• Individual task