Indian Institute of Management Kozhikode

Executive Post Graduate Program (EPGP)

Business Plan Project (BPP) What is a Business Plan?

The ultimate purpose to develop a Business Plan (BP) is to have a successful business. A good BP is a document that helps raise funds for investment in a new business conceived and so needs to address the long term needs of business and devise strategies that enhance both the overall performance of the company as also bring personal satisfaction. A successful business plan broadly comprises of well developed and thought out aspects of the following: The Business Concept What is something new in the business concept- a product, service, feature or technology? It could be same thing with lower price or better performance, an underserved or new market, new delivery system, distribution system etc. Understanding the Market It is important to know how large a market exists for the product or service, is it accessible. Surveys and demographic data can help here. Learning as much about the market when doing survey or study is important. Industry Health and Trends It is important to know how the macro-economic, social and political, legal factors affect business including how much disposable income people have to buy a product, what is the impact of recession on a business. It is important to know how is the structure of the industry in terms of how fast the industry is growing, number and size of competition, market share, turnover etc. Consistent Business Focus and Strategic Position

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Every successful business needs a clear strategic position that distinguishes it from competition. The strategic focus of the business gives the long term direction of the company. A related factor is developing a corporate culture that is consistent with its strategy. This not only aligns the company to its strategy but helps built trust among all stakeholders of the company. The short term focus of a company is its Mission and helps align its efforts in line with its strategy. Ability to Attract, Motivate and Retain Employees This depends on the HR policies of the company. It ultimately refers to a companys treatment of its employees, enrichment of job and learning opportunities. It is directly linked to employee morale that in turn affects productivity. Financial Control This is all about how a company handles money and refers to estimation of start up costs, cash flow management, plan for risks and contingencies. It is also about signals that indicate dangers in financial performance and that too well in time. It is all about prioritizing allocation of limited financial resources for most productive use. This include focus on credit policy and broader decisions on leverage to be maintained by a company. Anticipating and Adapting to Change This process fist requires following signals that anticipates change and then to respond to change quickly and accurately. Some of these changes include change in technology, sociological change, competitor change. Besides there are changes internal to the organization including change in leadership, development of new precuts etc. Company Values and Integrity Only making profits does not guarantee continued success of firms. Success needs continuous definition of goals and challenges that companies look forward to achieve. It is important not only company and its internal stakeholders well understand its values like that of producing quality products at all costs but the same also be well understood by external stakeholders like suppliers and customers. It is important companies maintain their integrity in all aspects of its dealings whether suppliers or customers. What motivates the person(s) drafting the BP to enter the business? It is worthwhile to identify which one or more of these factors drive the entrepreneur to enter the specific business: o Control Page 2

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Challenge Creativity Cash

Entrepreneur needs to check how far own priorities match those of important and senior employees of the company.

Structure of Business Plan

The following components need to be part of a Business Plan: Executive Summary: An Executive Summary is a clear, concise condensation of a business persuading the reader to spend time understanding the business whether he/she is a venture capitalist or a banker. This section is written last after completing the plan document. The Executive Summary should capture if the business concept makes sense, if the business has been thoroughly planned, if management is capable of handling the plan, if a market exists for the business and if the business incorporates competitive advantage with realistic financial projections. The length of the summary should ideally be of one page (A4) size and should not cross two pages. Company information: This section essentially captures the business to be in and the objective/ mission of the company in pursuing the business with a name given to the company. To identify the business as a legal entity e.g. private limited company or public limited company may also be highlighted here including the names in the management of the company, location of the business/ headquarters and the milestones achieved so far (if any). Industry Analysis This section should highlight major players in the industry including its trends and strategic opportunities existing in the industry. Most of this information should be supported with data and evidence. There needs to be a mention of the growth rate of the industry as also its sensitivity to economic cycles and macro-economic changes like recession. The industry level information on buyers and suppliers in the industry, regulation if any and financial characteristics of the industry need to reflect here. The Market: The primary focus here is to define the target market, arriving at it from demographic and segmentation detailed information and analysis. The focus here is to make an estimate of the potential size of the market, psychographics and purchase pattern, including IIMK EPGP:Business Plan Project (BPP) 2013-14. Page 3

future and emerging trends if any. Here the Business Plan needs to be clear about specific customer needs to be met by the product being sold and the distribution channel and other means to reach these customers. Customer payment plans including inventory details and cash flows needs to be highlighted/ estimated here. Marketing Plan: Here the focus is on reaching customers and delivering not only product and service but also expected value to the customers. The Marketing Plan needs to capture How to make customers aware of products and services Message conveyed to customers about product, service or company Specific methods used to reinforce the message through advertising and media planning. Securing actual sales

Essentially this section focuses on the 4-Ps of marketing namely Product, Price, Place and Promotion. The Competition: It is important to know who the competitors are, what their sizes are and how much market share they control. By understanding, competitor strengths and weaknesses a Business Plan can highlight relative competitive position as also the competitor product and service features customers prefer so as to identify ways and means to beat such competition either by identifying weaknesses or novel ways to deliver superior value like use of internet. It is important to understand what first mover advantage competitors have including captive customer base, factory, warehouse and distribution as also stable internal operation and supplier advantage. The objective being to identify how a fair market share can be obtained for the new business as also create barriers to entry of new competitors. Operations: This section of the Business Plan focuses on how the business is run internally. Beginning with the geographic location of facilities including head quarters, plants,, warehouses, branch offices, showrooms (if any) etc. In production it can include details of production plan including levels of automation, capacity utilization and productivity targets besides issues of inventory control, supply and distribution, order fulfillment and customer service. There has to be mention of R&D activities to be undertaken (indicative spending on R&D) and financial control. Modern issues of environmental norms, safety and insurance regulatory issues if any need to be incorporated in this section. A sub section may be added on technology choice keeping in mind technology development trends in the industry. Critical purchasing and vendor/ supplier development issues may also be included in this section.

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The Management Team: Given that people ensure success of a company this section of the Business Plan describes the organization and the key management team members. This includes key employees, Board of Directors, Advisory Committee, Consultant and other specialists as also key management persons to be added progressively. In defining key personnel, focus is on required skills that these individuals need to possess, track record of these individuals as also management compensation and incentives including bonus schemes to be offered. It is important to decide the Board of Directors structure, the nature of oversight role they will have including the number and nature of independent members in the BOD. This section defines the Organization Structure including reporting relationships, line of authority and informal relationships. Focus on Corporate Social Responsibility of the organization (CSR) may also be included here although the primary focus remains fulfilling the Mission of the organization. Personnel: While concerning with the recruitment and retention of employees with the right skills and experience in the organization this section focuses on developing the Human Resource Policies of the organization including meeting statutory government regulation of Provident Fund and Pension of employees. Financial Plan & Analysis: This section should give the numbers supporting your Business Plan decisions. It should highlight the accounting principles to be adopted e.g. Cash or Accrual, and in the very least make sure to include projected profit and loss and cash flow statements. Ideally it should include principles adopted for depreciation, break-even analysis, sources and uses of funds and start-up costs. The investor here will want to know projected cash flows and time taken to break even and register profit for the business. Risks and contingencies: Every business has risk of failure and so it is important to identify possible sources of this risk of failure and then to develop contingency plans for them. Some of these risks include: Market Risk: Market will not respond to the business product or service because there is no need for the product or the market is not mature for it. Competitive Risk: Possibility that competitive position will change dramatically, new competitors will enter, basis of competition will change

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Technology Risk: The technology currently prevalent in the industry and adopted by this business becomes completely obsolete soon. What is the possibility of quickly adopting to the new technology? Execution Risk: Failure to quickly roll out product to meet launch and sale target dates. It could be due to either internal operational or external license/ permit reasons. Capitalization Risk: Mis-calculation of funds requirement leading to cost and project capital over runs. A preliminary analysis of the risks being faced can be done using the SWOT analysis Strength and Weakness of the organization as matched against the Opportunity and Threats in the business environment.

Appendice : Provide additional supporting documents that reinforce the Business Plan. This section could include:

Letters of intent/ expression to do business by potential clients Endorsement from credible sources highlighting that the company is capable and product/ service is desirable Photos: Of product, location, displays etc to highlight existence of a real business Market research results: Highlighting possibility of success of proposed business Resume of possible key managers/ leaders of the company/ promoters Technical information if any including expertise of key managers in the technology.

While the above is an exhaustive structure of a Business Plan, students are advised to include as much details as possible into their business plan. Thinking through more of the details of the Business Plan and including them in the plan will not only make the plan more robust but help secure funding and launch of the business as also better grade by helping present and defend the plan better.

The Business Plan Project (BPP) writing and presentation details including important timelines:
Nature of Assignment: The Business Plan Project is a two (2) credit compulsory component of the IIMK EPGP. As part of this students will be required to develop Business Plans in groups such that they experience the step-by-step process of developing a business plan for a startup business. The finished project report is an operating tool to help manage a business and IIMK EPGP:Business Plan Project (BPP) 2013-14. Page 6

enables one to achieve greater business success. Students are required to form their own groups of five members. Each group of student is to identify and approach a faculty member of IIMK to be their group mentor for the BPP; alternatively EPGP office will assign a group to a faculty member of IIMK in case the group fails to identify a faculty mentor. Group members should preferably represent multiple functional area expertise and are required to pool in their experience to draw up the BP. As an experiential project for working executives, there are no classroom sessions. This detailed document is developed to act as a guideline for developing the BPP. Students are free to refer to any document including net sources, however the report should strictly adhere to the Structure of the Business Plan stated above. Duration and Important Dates: The Business Plan Project (BPP) begins at the start of the Second year of the EPGP. The following deadlines need to be adhered to: Formation of groups and submission of suggested topic in prescribed format1 to faculty mentor: Interim progress report (BPP) submitted to faculty mentor (copy to EPGP office) for feedback2: Final report (BPP) submitted to EPGP office (in hard copy) duly signed by faculty mentor: Each group will be evaluated on the final report submitted . 15 July, 2013 30 September, 2013 15 December, 2013.

Based on the interim report, faculty mentor is to advise the group on improvements to be made and a copy of the interim report along with final report will be given to the evaluator of the final report to see if changes have been suitably incorporated to improve the final report.
Each student group will be responsible for updating their mentor on progress being made during the course of BPP. A final letter grade awarded to a student based on evaluation of BPP will appear on the final grade sheet of the student.

Evaluation Criteria:
The evaluation for award of satisfactory or unsatisfactory grade will be based on the following criteria:

1 2

Please see the format at the end of the document Final BPP format

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Format of the BPP Executive summary Coverage of headings/sub-headings as indicated in the Structure of Business Plan above Details including linkages and data support for a logical flow of the report Evaluators judgment of the feasibility of the BPP based on group presentation Incorporation of the suggestions made by faculty mentor to the interim report in the final report Adherence to deadlines Proof of group cohesion- contribution of each group member to the BPP. Any other points as found applicable.

Reference: http://www.score.org/resources/business-plans-financial-statements-template-gallery

Format of Proposal to Faculty Mentor

The following format is to be followed: Title of the BPP Name and roll numbers of group members- Group leaders name first. Contact details of group leader Reason for group to choose the topic Competence of group members to draw up BPP in the subject Sources of information Expectations from faculty mentor Basic write up on topic. Alternative topic (if any) for faculty mentor to consider The proposal will be in A4 size and not exceed two pages (4 sides) with one inch margin on all sides, 1.5 spacing and times new roman- 12 point font.

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