UNIT-3

A Business plan is written document that describes all the steps necessary in opening and operating successful business. Writing a business plan is one of the most important things an entrepreneur will do because it is used to convince banks ad lenders to invest in your business. A business plan is a document that summarizes the operational and financial objectives of a business and contains the detailed plans and budgets showing how the objectives are to be realized.

The primary value of your business plan will be to create a written outline that evaluates all aspects of the economic viability of your business venture including a description and analysis of your business prospects.

A business plan for a startup venture is most successful if it serves three purposes: attracting outside funding, helping the managers think through strategy, and providing a road map for future action and evaluation. Many business plans end up serving only one or two of these purposes, leading to problems for the business and contributing to the high rate of new business failure.

1.

Attracting outside funding(Financial Uses):A)Most startups cannot launch without funding from investors and lenders beyond the founders of the company. For most funders, reading a business plan is an important preliminary (but not the only) step to choose who to fund. The business plan must attempt to convince funders to move on to direct talks with the founders, to go through their own process of due diligence, and to move on to negotiations over the financing deal. The business plan cannot convince funders to give money on its own, but it can easily kill the company's chances of getting outside funding it finds to be lacking.

B)In addition to securing the initial business loan, your business plan also has long-term financial uses. The plan can be used to attract new investors, find new suppliers, interest talented employees and keep your financial goals on schedule. The primary purpose of the financial section of the business plan is to develop an evolving strategy for reaching financial goals. You should revisit your business plan often to assess current financial needs. Regularly update the plan with new profit projections and reinvestment strategies as your company grows.

2. Marketing Strategies:-

a) A business plan also serves the purpose of letting entrepreneurs "make mistakes on paper" before making them in wasted dollars, cents, and time. Putting the plan on paper allows time to consider how the elements of a strategy complement the research done and the resources of the firm. It also allows advisors and other managers to give feedback on the plan of action. b) As a start-up, the marketing section of your business plan includes the demographics of potential customers, research on the market you want to penetrate and how you will advertise to that market. As your business develops, the marketing plan evolves to reflect new information about the purchasing habits of your customers and ways to integrate that knowledge into your marketing strategy. Use your business plan to assess effective advertising strategies and address new marketing developments.

3) Creating a road map:a)When strategies are worked out, the plan becomes an excellent tool to direct the company with. It should include the high level actions the firm must take, which can then be broken down into specific schedules and actions by the company's manager or managers. As time goes on, managers can return to the plan and its financial projections to judge the progress of the company, how successful the planning was, and whether company is following the plan well. b)The business plan is also essential to meeting business goals and controlling company growth. Your business plan starts with an outline for financial stability, projected growth and customer satisfaction based on your competitive market analysis. As you gain experience, the plan expands to encompass new goals and growth management strategies. By moving the company into a market it is unprepared for, uncontrolled growth can cause your company to lose its competitive edge. Use your business plan to chart expansion into new markets while maintaining your company's reliability and competitiveness

A business plan is an indispensable tool for an entrepreneur and not only because of its importance to the fundraising process, but because of how it helps business people crystallize their strategy and evaluate their process. A business plan is important to help the owner validate the business concept and set clear goals. It also gives investors, banks, suppliers, partners and potential hires information to make decisions about working with the company.

1)Fundraising:Most literature on business planning focuses on the need for a plan to encourage external investment into the company, whether it is through loans or equity investment. Most funders will not consider putting money into a company without seeing a well-written, convincing business plan. An entrepreneur must make sure the plan speaks in terms the funders will understand, and meets their requirements for the qualifications of the management team, funding requested, and financial return.

2) Strengthening Strategy:When strategy is an amorphous concept, existing in the minds of the various company founders, it is loose and perhaps even contradictory. It also does not necessarily make use of the best research on the market, customers, and competitors. The process of creating a business plan requires the entrepreneurial team to go through this research and analysis systematically, creating a better foundation for strategy. Having to write down the strategy also creates an opportunity to make sure all of the founders are literally on the same page about what they intend to do. If they are not, fruitful discussions can be started which are better to get out of the way at this early stage while plans are still much more flexible.

3) Evaluating Progress: Finally, while the action plan outlined in the business plan is being implemented over the first months and years of operation, the business plan is both a guide and a means to see how well the results of the business stack up to the projections made early on. The pro forma financial statements can make this type of evaluation very easy. Make sure that the original pro-formas are kept in spreadsheet format so that actual financials can be laid out alongside them. If your budgeted targets are saved in your accounting software, such as Quickbooks, this kind of comparison can be even easier and variances can be measured automatically 4) Considerations:A complete, updated business plan is mandatory for merger or partnership discussions.

The most important parts or elements of a business plan , will give more proactive role of an entrepreneur as a person to plan and to start a new company. The intention is to look in a business plan more as a part of an overall planning process not as a physical document, or something that must be written. 1.Business concept. Describes the business, its product and the market it will serve. It should point out just exactly what will be sold, to whom and why the business will hold a competitive advantage. 2.Financial features. Highlights the important financial points of the business including sales, profits, cash flows and return on investment.

3.Financial requirements: Clearly states the capital needed to start the business and to expand. It should detail how the capital will be used, and the equity, if any, that will be provided for funding. If the loan for initial capital will be based on security instead of equity, you should also specify the source of collateral. 4.Current business position: Furnishes relevant information about the company, its legal form of operation, when it was formed, the principal owners and key personnel. 5.Major achievements: Details any developments within the company that are essential to the success of the business. Major achievements include items like patents, prototypes, location of a facility, any crucial contracts that need to be in place for product development, or results from any test marketing that has been conducted

History and background of your idea Goals and Objectives of your company Products and services you will offer Form of ownership Management and Staffing Marketing Current and projected Financial statements

If your initial research about the market supports the notion that you have a potentially successful business idea, you then need research to support the strategies and examples in your business plan. There are two types of research that you may use to create your business plan primary research and secondary research. Primary research includes: Conducting surveys Handing out questionnaires Personally visiting your competitors and taking notes Asking questions of customers, potential customers, suppliers, employees, and even your own friends and family Conducting market research, such as focus groups Studying your own sales and customer records (for example, you can find sales patterns by reviewing what you sell to whom and when you make the most sales) Primary research should be prepared and presented in a manner that is straightforward and easy to follow, yet provides you with objective data.

Secondary research involves utilizing all resources already available, including the Internet, business journals, trade associations, trade publications, business directories, local or national periodicals, and books. Local libraries and even the local Chamber of Commerce may have business records that can be helpful. Make a list of the data you need and then determine where you can find it. A few secondary research sources include: The Small Business Administration and their local and regional offices Small Business Development Centers The Wall Street Journal Business Stats online

When you are involved with a business it is important that you have a clear direction and that your business has a plan of attack. The business plan is a document that will outline a number of key areas that your business will need to consider to achieve success. The business plan will identify your businesses goals, and look at how you can successfully implement processes and procedures to obtain those goals. This will draw on a range of business areas, including accounting, HR, marketing and operations. How you progress with your business plan can be unique as your business; however the key areas that are usually developed for a business plan are as follows. Your organizations background Management structure and plans for your business Organizational marketing plan

Operations planning Financial planning of the business Goals and actions to take with the business Once you have understood these areas are ready to move forward with your business plan then you can consider how to structure it. This is a straightforward process. For those who are great at the ideas generation, but tend to get stuck on the nitty gritty details, a business template is the perfect option for you. A template for your business plan will outline the priority information that is required, and whilst you can pay someone to do this for you, there are a number of free templates available. Try doing a quick search of the net and plenty of options come up. Typically your business focus will dictate the precise contents of your business plan, but getting a basic feel for what is required goes hand in hand with the production of a concise plan, tailored just for your business.

The contents page of your business plan may read something like this. o Executive Summary o Organizational Goals o Management Plan o Research and Analysis on Target Market o Marketing Plan o Operational Planning o Financial Organization o Progress Plans

One of the key areas that you will cover in your business plan is the Executive Summary. Again this can be as individual as your business, but it will need to focus on decisions that need to be made by your organization, and sell the reasons for approval of that course of action. The final thing that you will need to consider with your business plan is who your target audience is. If you are a large corporation with a number of external stakeholders, such as shareholders and board members, then you will need to prepare your business plan to reflect this. A business plan that targets this audience will often be detailed in its financial analysis and its progress reporting.

If you are a smaller business, or you are self employed then your business plan most likely serves a different purpose. Most likely your business plan is focused on distribution to internal stakeholders. This being the case you will want your plan to focus on goals and progress that needs to be made by the key individuals or departments in the company. An example of this is the strategic business plan, which states internal targets for the organization, as well as giving information about how to reach the goals laid out in the strategic planning. Whatever you organization is involved in, a business plan is a vital document. Even in its simplest form, there is no doubt that having a set of guidelines and goals is a key to ensuring success and progression in your chosen field of business.