BUSINESS PLAN

Bellatreche Razika
UNIV-MEDEA
 I. MEANING AND NATURE OF BUSINESS PLAN
1

Business Plan is a written document that describes the business idea

and all the relevant internal and external elements involved in launching a new
venture. It describes the nature and context of the business opportunities and the
plans to exploit the opportunity. It is usually an integration of functional plans in
finance, marketing, manufacturing, and human resources. It serves as a road map
for the entrepreneur. The business plan is prepared by the entrepreneur in
consultation with lawyers, accountants, consultants, engineers, etc. Investors,
venture capitalists, bankers, and suppliers read the business plan. Each group reads
it for a different purpose. The focus and contents of the business plan will differ
from one venture to another depending on its nature and size.
Three main perspectives must be considered in every business plan.
(1) The perspective of the entrepreneur who must articulate what the
venture is all about.
(2) Marketing perspective.
(3) Investors perspective.

Business plan is the blueprint that provides a clear view of what the
entrepreneur wants to do and key variables influencing success. It must describe
where you are, where you want to go and how you propose to get there. A business
plan is a blueprint or roadmap for building a business. It is a word picture of what
the entrepreneurial dream is, why the dream can be economically viable for those
involved and how the dream will be realized. A business plan is an operating
document. Starting a new enterprise is highly risky. If the venture fails, it can spoil
career, wealth, reputation, family and even life. Therefore, through thinking and
planning is needed before starting.
II. IMPORTANCE OF BUSINESS PLAN:
The Business Plan is a valuable document for the entrepreneur, potential
investors and even for the employees. The business plan is important to these
people due to the following reasons:
1. It helps determine the viability of the venture in a target market.
 2. It guides the entrepreneur in starting the enterprise.
2

3. The thinking involved in the preparation of the business plan makes the
entrepreneur aware of the issues that could impede the venture’s success.
4. It serves as a guide to investors and thereby helps in obtaining finance.
5. Writing the business plan forces the founders to think about all aspects of the
venture.
6. A clear business plan articulates the vision and goals of the founders.
7. A business plan communicates to all stakeholders. They can judge the venture’s
future based on the business plan.
8. The business plan helps identify the important variables that will determine the
success or failure of the firm.
9. The business plan is used as a selling document to outsiders.
III. SIGNIFICANCE OF WRITING THE BUSINESS PLAN/PROJECT PROPOSAL:
Business Plan is a formal documentation which contains the set of business
goals which are attainable for the business. It can be regarded as significant because
of the following reasons:
1. Helps in Setting Objectives for Managers: A detailed business plan helps in
setting short- and long-range objectives for the business. Specific objectives can be
set and appropriate strategies can be built around within a limited time frame.
2. Managing Workforce: With business plans the managers have the luxury to pre-
determine the requirements of the organizations in terms of the total manpower
required. The rationale for hiring people should be there in the business plan.
3. Creating a New Business: A business plan is a must have document when an
entrepreneur is planning to have an entirely new business in place. What could be
the right steps in starting a business, what are the pre-requisites and what are the
resources which need to be arranged should be necessary part of a business plan.
4. Providing Credibility: A good business plan converts a good business into a
credible, understandable and attractive business.
 5. Makes Prospects Familiar: The business world is dynamic and diverse at the same
3

time. A good business plan brings in familiarity for people who do not know much
about the business.
IV. CONTENTS OF BUSINESS PLAN /PROJECT PROPOSAL:
The content of business plan depends upon the objectives and goals set for
the business undertaking. A business plan should include a market plan, financial
plan, human plan, resource plan, etc.
1. Title Page and Table of Contents: A business plan is a professional document and
should contain a title page with the company’s name, logo, and address as well as
the name and contact information of the company’s founders. Many entrepreneurs
also include the copy number of the plan and the date on which it was issued on
the title page.
2. Executive Summary/Management Summary: It will usually contain a brief
statement of the problem or proposal covered in the major documents, background
information, concise analysis and main conclusions. It is intended as an aid to
decision making by managers. Executive summary should be concise a maximum of
two pages and should summarize all of the relevant points of the business venture.
3. Business Description, Vision & Mission Statement: Business description
summarizes the key technology, concept, or strategy on which the business is
based. The mission statement clearly states the company’s long- term mission. In
the mission statement the use words should be such that which would help direct
the growth of the company. For example, McDonald’s mission statement reads like
this- “To provide the fast food customer food prepared in the same high-quality
manner would world-wide that has consistent taste, serving time, and price in a
low-key décor and friendly atmosphere.
4. Business and Industry Profile: In industry analysis future outlook and trends of
the industry needs to be looked into. A proper analysis of the competitors in the
market and industry should also be carried out properly and the results should
reflect in the business plan drafted.
5. Description of the Company’s Product or Service: The business plan should
include the overall description of what the company is going to offer to its
 customers in terms of product/services on offer. Product/service detail should be
4

written in a terminology-free style so that it is easy for others to understand.

6. Market Analysis: The most important section in the business plan, the market
analysis section should include conclusive information of how the company will
react to changes in the market, generate sales, and explain why the company should
be invested in. The market analysis section should include:
(a)Market opportunity
(b)Competition analysis
(c)Marketing strategy
(d)Market research
(e)Sales forecasts
7. Management Team: The management team section should share in detail the
management team, as investors usually invest in people not their ideas. Included
within this section should be:
(a) Management Talent and Skills
(b)Organizational chart
(c) Policy and strategy for employees
(d)Board of Directors and Advisory Board
8. Managerial and Structural Aspects: In this the entrepreneur needs to decide
which kind of organization structure should be adopted. Further, the authority
responsibility relationship also needs to be planned out. It is also necessary for the
organization to specify the type of business process being followed.
9. Technical Analysis: In technical analysis the results of the technical feasibility
carried out earlier is drafted. In this generally the requirements of the plant and
machinery, plant capacity utilization, location of the plant etc. is analyzed and
drafted.
10. Production Analysis: In this a comprehensive budgetary proposal with sub-
budgets for all necessary elements is drafted. In addition to this the quality control
 system of the organization and inventory control systems detail should be there in
5

the business plan.

11. Financial Plan: In this the source of capital whether it be fixed or working
capital is elaborated. Secondly, the capital structure in a broad-based manner
should also be a part of the financial plan. Thirdly, schemes and strategies to
ensure financial control and financial discipline needs to be drafted firsthand.
Other details such as agreements or Memorandum of Undertakings (MOU) with
banks, financial institutions, underwriters etc. should also be a part pf the
financial plan.
12. Human Resource Plan: The manpower planning and the need of human
resource for the organization should be analyzed and assessed. Business would do
well to draft the procedures for recruitment, selection, placement, career
advancement plans, training and development programmers, system of personnel
compensation etc. in the business plan to draw in clarity about the priorities of
the business.