Introduction

Planning is a process leading to the formulation of a plan

A plan is the outcome of the planning process
The planning process (thinking, researching, consulting, discussing) is at least as important as
the final written plan
Business plans
A business plan is:
A report showing the plans of the business, often used to attract finance from investors and
creditors
A document that is designed to provide information about a new business or venture to
persuade financial backer to invest in a business
The business plan describes out the market opportunities the business intends to exploit, how it will do
so and what resources are required
Business plans & raising finance
A business plan is essential to:
Persuade people to invest in an enterprise
Convince creditors about the credit worthiness of the enterprise
To persuade banks and others to lend or invest money it is necessary to:
Demonstrate the lender/investor has a good chance of being repaid or getting a good return on
their investment
Build confidence about the firm and owners capabilities
Demonstrate that there is a good market for the product or service
Internal uses of a business plan
Clarify objectives
Provide a sense of direction, purpose and urgency
Plan all aspects and ensure that nothing is overlooked
Provide a checklist to help run and control the business
Monitor progress and success
Improve performance
Improve motivation and communication
Allocate responsibility
Better control and co-ordination and greater consistency
Failing to plan makes an organisation reactive, vulnerable to threats and closed to
opportunities
Key planning questions
Where are we now?
How did we get here?
Where would we like to be?
How do we get there?
Are we on course?
Stages in business planning
(1) Situational analysis
Analyse the external environment
Analyse the internal environment
(2) Objectives
Define the business and mission
Set corporate objectives
(3) Strategy
Formulate strategies
(4) Tactics
Make tactical plans
(5) Actions
Implement the plan
(6) Control
Build in procedures for monitoring and controlling
Charactertistics of effective business plans
Business plans are more effective if
They are carefully researched
They contain detailed market analysis
They are used as a reference point for decisions
Actual performance is compared with objectives and objectives are regularly updated
They evolve over time to ensure that growth targets are realistic and challenging
Ten common mistakes in producing a business plan
1. Failing to plan in the first place
2. Shrugging off values and vision - these are there to remind the entrepreneur where he/she
wants to go
3. Second guessing the customer - ignore your customer at your peril
4. Underestimating the competition
5. Ignoring the firms own strengths and weaknesses
6. Mistaking a budget for a plan
7. Shying away from reasonable risk
8. Allowing one person to dominate the plan
9. Being afraid to change
10. Forgetting to motivate and reward

A well-prepared, attractive written business plan is an essential document in the quest for either
debt or equity financing, to provide a benchmark against which to compare actual company
performance, and to refine strategies and develop ideas on how the business should be
conducted. Although the written business plan of a start-up venture must be tailored to the
particular business and industry, the essential items in a written business plan include the
following:
COVER PAGE
The cover page should include the following:
A. Company Name
B. Logo
C. Contact Person
D. Address and Phone Number
E. Date and State of Incorporation
F. Confidentiality and Nondisclosure Statement
TABLE OF CONTENTS AND TABLE OF APPENDICES
The table of contents and table of appendices should refer the reader to the sections and
subsections of the business plan.
EXECUTIVE SUMMARY
The executive summary is the first part of the business plan to be read by potential lenders and
investors. In the case of a poorly written executive summary, the executive summary is often the
only part of the business plan that gets read. Accordingly, you should take the time necessary to
prepare a dynamic executive summary that describes the business, identifies the stage of the
company and its strategic direction, describes the company's market and marketing plan, briefly
discusses the background of management, and states the company's revenue and profit
expectations. Remember, you only get one chance to make a good first impression.
BODY OF BUSINESS PLAN
The body of the business plan should include detailed discussions of the following subjects:
I. Background and Purpose
A. History - a brief overview of the history of the company
B. Current Status of Company
C. The Product or Service Concept
D. Business Objectives
II. Market Analysis
A. Overall Industry or Market
B. Specific Market Segment
C. Competition
D. Sales Forecasts
III. Product or Service Development
A. Research and Development
B. Production Requirements and Process
C. Proprietary Features and Protections Thereof
D. Quality Assurance Measures
E. Contingency Plans
IV. Marketing
A. Survey Results
B. Marketing Strategy
C. Contingency Plans
V. Financial Data
A. Current Financial Position
B. Accounts Payable
C. Accounts Receivable
D. Cost Control Measures
E. Break-Even Analysis
F. Financial Ratios
G. Financial Projections
VI. Organization Structure and Management
A. Key Personnel -- describe the qualifications and responsibilities of management. The quality of
management is often the key factor in obtaining debt or equity funding.
B. Other Personnel
C. Directors and Advisors
D. Professional Advisors.
E. Key Future Personnel
F. Forecasted Labor Force
VII. Ownership
A. Business Structure
B. Current Capitalization
C. Forecasted Capitalization -- how much money will be sought, the form of the proposed investment,
how the funds will be used, and the percentage of ownership to be provided in exchange for the
investment
D. Exit Strategy -- how and when investors will be able to get their money out of the business
E. Royalty or Licensing Arrangements
VIII. Risk Factors
Describe the key risks facing the company, including risks presented by:
A. Cost Overruns
B. Failure to Meet Production Deadlines
C. Problems with Labor, Suppliers, or Distributors
D. Sales Projections not Met
E. Unforeseen Industry Trends
F. Competition
G. Unforeseen Economic, Social, or Political Developments
H. Technological Developments
I. Inadequate Capital
J. Business Cycles
K. Other Risks
IX. Conclusion
A. Summary
B. Timetable for Funding and Future Developments
APPENDICES
A. Photograph of Product or Service
B. Sales and Profitability Objectives
C. Market Surveys
D. Production Flowchart
E. Marketing Materials
F. Advertisements
G. Press Releases
H. Historical Financial Statements
I. Table of Current Profit and Loss Statement
J. Projected Profit and Loss Statement
K. Cashflow Projections
L. Balance Sheet
M. Projected Balance Sheet
N. Asset Acquisition Schedule
O. Break-Even Statement
P. Key Contracts