http://business.gov.in/starting_business/creating_plan.

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Creating a Business Plan

expression of the entrepreneurial vision, describing the strategy and operations of the proposed venture.
The business plan also goes by other names, depending on its intended audience. Presented to a banker, it
may be called a "loan proposal." A venture capital group might call it the "venture plan" or "investment
prospectus."

The advantages of writing a business plan far outweigh the costs. The purpose of the plan is to enable the
top executives of the firm to think about their business in a comprehensive way, to communicate their
objectives to individuals who may have a stake in the firm's future, to have a basis for making decisions,
and to facilitate the planning process.

Entrepreneurs should undertake the task of preparing the business plan personally. Although outsiders -
consultants, accountants, and lawyers - should be tapped for their advice and expertise, the promoter or the
initial top management team should be responsible for the writing. Personally drafting the plan will enable
the entrepreneurs to think through all aspects of the proposed business and ensure that they are familiar
with all the details, for they will have to make decisions about the new venture and be responsible for those
decisions. Moreover, investors expect the founders to be involved in and knowledgeable about the proposed
enterprise.

The Benefits of Business Planning

The business plan can personally benefit the entrepreneurial team. Founding a new business can be
enormously fulfilling and exhilarating, but it is also an anxiety-ridden and tense experience. Usually a great
deal of money is at stake, and the consequences of poor decisions can affect many people for a long time.
In developing and writing a business plan, the entrepreneurial team reduces these anxieties and tensions by
confronting them in advance. By projecting the risks of the new venture into the future, the team comes to
grips with potential negative outcomes and the possibility of failure. The knowledge that comes from this
experience can reduce the fear of being taken by surprise by problems that could have been foreseen and
provided for at the very outset.

Every Business Plan must have:

Cover Page
Every Business Plan should have a cover page, which includes:

 The Company's name, address, telephone, fax, e-mail and website address, if any.

 The name and designation of the contact person - who should be one of the top
executives of the enterprise and one who is familiar with and was part of the team that
formulated the business plan and will be able to answer any queries relating to the
business plan.

 Names of organizations from where funding is being sought.

  The Company's logo - every company being established should have a logo in place,
which could be an image, design or picture representing the company's ideology
pictographically.

Table of Contents
Once the cover page has been made, a formal table of contents must be written for easy
navigation to the rest of the plan, by numbering each section.

Executive Summary
The executive summary is the most important part of a business plan, especially to the investors.
Most investors do not go beyond the executive summary, as they have too many plans to read.
So make sure that your executive summary is able of conveying clearly and succinctly exactly
what you want your investors to read.

The summary should include:

 Kind of Business - a brief description of the industry your firm is focusing on.

 Profile of the company's management - listing the names of top executives and their
qualifications and industry experience.

 Financial requirements - briefly state how much finance is required. Also make sure you
indicate the degree of flexibility you are willing to show in case the investor suggests any
changes in your plan. This will allow the investor to consider your plan with few changes
rather than rejecting your plan outright due to rigidity on your part.

 Budget allocations - the financial section of the business plan should be able to explain
how you will be using the finance.

Objectives - The business plan should present in a well defined format the short term and long
term objectives of the new business venture.

The objectives can be broadly divided into quantitative and qualitative objectives.

Market Analysis - The business plan should be able to convince the investor that the
entrepreneur understands the prevailing competitive environment and is able to prove that his/her
product/service is a niche product or service with substantial prospects for growth and capable of
attaining a competitive position in the market.

Environmental Influences - Demonstrate your knowledge and competence by evaluating the

impact of the environmental influences such as political, economic, technological, socio-
demographic and ecological factors that affect your area of business.

Development and Production

Detail the stages of development and production of your product/service, spelling out how time
and money will be allocated at each stage.

Resource Requirement
Analyse the type of resources required at each stage of production such as financial, human,
physical, technological, etc.

Quality - Discuss the quality control measures to be put into place by your firm to ensure the
quality of the product/service.

Marketing - Once again underscore the market potential for your product by describing your
product's exclusivity, describe how it will exploit your competitors weaknesses.

Identify the target market which should be substantiated by a thorough market research.

Once the target market has been identified, focus on the communication strategy including
advertising, branding, packaging etc. Like always list the costs involved for each segment of
marketing.

Sales Forecast - Sales forecast is primarily dependent on three factors - size of the market,
fraction of the market you will be able to capture as a result of your marketing strategy and the
pricing strategy.

Financial Plans - A new venture must show projected profit and loss statements and cash flow
statements.

Human Resources - Make an organisation chart with details of key executives and profiles of
individuals likely to be hired.

Form of Business - Describe the legal form of your business - whether it is a sole proprietorship
or a partnership, public limited co. etc.

Critical Risks - As a legal and moral obligation, the entrepreneur must, in the business plan,
envision risks the investor would be undertaking in case he makes a choice to invest in your
business. This will protect you from civil and criminal liability.

Conclusion - Briefly once again point out the highlights and key features of your business plan.

Also mention the time schedules against each stage of your venture. Along with your business
plan make sure to support your document with flow charts, photographs, market surveys, sample
brochures, advertisements, tax returns, resumes of board members, letters of recommendations
etc. All this should form a part of appendixes.

Format and Presentation

Physical Appearance - The document should not look too ornate or too plain. The document
should have a neat business feel to it. It must look professional and not shabby. Ideally it should
be a neatly typed document which is spiral bound. The pages should be crisp with wide margins
and easy to read size and style of font. Graphs and photographs should be of high quality.

Writing and Editing

It is extremely important that the business plan is well written in crisp and easy to comprehend
language, is to the point and does not contain irrelevant information.

Summary
The essential elements of the plan are generally recognized. The preliminary sections set the
stage for the reader. Make the first impression professional, concise, and informative because the
reader may spend only a few minutes reviewing each plan. The major sections of the business
plan describe the new venture's strategy, operations, marketing, management, financial plan, and
ownership structure. These sections need to be as detailed as possible and internally consistent.
The concluding sections provide details on timing, schedules and milestones, and a summary.
The appendix contains reference material for documentation.

Each plan must be well written and organized, and it must anticipate the many questions that the
reader will have about the business. No plan, however, can answer all questions that may arise. It
is important, therefore, that entrepreneurs be familiar with all the details so they can respond to
potential unanswered questions and critiques.