How to make a Business Plan

( This is written as an introduction for PGP1s to the art of making Bplans)

An entrepreneur must not think just in terms of inches but think in terms of miles. As an entrepreneur, you must think in terms of how far you are going to go.

As one goes through life it is the little things that matter and make a huge difference. One must not look at the purpose or the benefits gained when doing something. Things that seem totally futile might also make a big difference one day.

Once you are an entrepreneur or you have decided to be one, you need a sound business model. A sound business model will look at what kind of services or products you have and how does the real market need it or is it a perceived need. Earlier business models lasted a long time. You made a business model and it stayed. However, today a business model needs to be sound enough only for today and tomorrow because day after tomorrow you might have to change this model.

The key of any B-plan is to optimise their business for “flexibility and adaptability” before “cost and performance”. Also to make sure it is not vulnerable to changes because changes would always happen in the market.

It is good to think out of box, but basics are important too. The bigger picture is built of smaller things.

There are two aspects of being an entrepreneur, internal and external. The internal aspect is personality. We need to question ourselves whether or not we have the personality to be an entrepreneur, whether we had the risk taking capability, whether we believed that we had the true talent to bring value to their endeavour.

And coming into the external aspect, large corporations are really ready to take us on, and would not let us settle. We have very little time before we are under attack by the big giants, be it any industry. And the only way to survive this attack is to have a unique and commercially viable business concept.

Business plan is necessary to apply for funding from investors, for bank loans and for the buyers and vendors. Investors may want to see our business plan to understand our planning and potential, and decide whether it is a good investment or not. Investors wanted a sustainable, well researched and systematised B-plan. Writing a B-plan also crystallises our thoughts and brings questions such as the need to do it, marketing scope and financial viabilities. With even private sector banks coming forward to finance business plans, a sound business plan is very helpful to get a loan. When you are an entrepreneur your vendor might be larger than you. Initially, to attract buyers and vendors, it is important to have a sound business plan.

Before starting to write the final B-plan, one should write down the important points.

1. Mission statement – how will you make a difference to your customers, employees, shareholders in the long run?

2. Product/Services – what is your product and do you know it very well?

3. Business objectives – what are your business objectives for the future? They need to be accurate and measurable. They could be macro objectives like getting a drug patent, or micro objectives like a sales target.

4. Keys to success – what are the elements that you need to succeed? They could be anything like marketing, operations or finance.

5. Industry analysis – who are the major players in the industry? Do you have a direction? Have you done an economic analysis of the industry perceptive? You need to look at costs of production, pricing related, what will be your profits margin, what kind of cash flows will you have.

6. Market/Competitor analysis – what are your market segments? What kind of competition do you face? Is it direct and/or indirect competition? What is your competitor’s strategy, pricing and promotion strategies, how is your product unique.

7. Strategies and milestones - you need to tell yourself why your customer would buy your product and set yourself goals for revenue and profits.

8. Marketing plan – you must know what your pricing, promotion, distribution strategies are.

9. Management/Organisation structure – you must decide your team and consultants.

10. Operations – you must know about your manufacturing, sourcing strategies.

11. Risk analysis- you must evaluate the risk involved in the financial, market, technical and competition aspects.

12. Forecasting - you must know your revenues, costs and how long it will take you to breakeven.

13. Financial requirements – what are your financial requirements? And will you need them in the short term or long term basis. What is your working capital and how you manage your cash flows?

Once the key ingredients of a b-plan are thought of, you can actually start writing a b-plan. The key components of a business plan as follows:

1. Executive summary – it is the most important part of the B-plan and it must summarize the entire B-plan. It must talk about the company, the product or service being provided and how it is unique, the management and finances required. It is advised to stick to the hard facts and put down only the truth. The executive summary must be concise and be able to generate enthusiasm.

2. Table of contents – it is very important and must be on a single page. The B-plan must be well organised and numbered.

3. Company and promoter description – tell the entire story. Write about how you started, what your current status is and what your future plans are. Write a story that interests the investor and show yourself properly. Be honest about challenges and problems. Give your friends and teachers a few credits.

4. Products and Services – talk about the functions and benefits of your product. Talk about how it’s going to benefit the world, how it’s going to benefit you. Write the purpose and objective as to why you want to go into business. Write about how your product is unique, pricing issues, patents and equipments needed and the benefit to customers.

5. Industry/Market/Competitor analysis – write the overall industry scenario, market segmentation, who your competitors are and what their strategies are, market shares, what market needs are you looking at for the future, how do you expect customer preferences to be then.

6. Marketing plan – branding, promotion, what kind of branding strategies are you going to use. How do you differentiate your product from other products? What is your target market, what is the price you wish to sell at, distribution, sales and what are the market share forecasts.

7. Operation plan – write about how you are going to manufacture, how you are going to source, what kind of labour do you need and what kind of location you need, like in retail business.

8. Management – what kind of team, consultants, advisors, and mentors will you bring? Be honest. Make sure to write about the teams or consultants you bring in. Some amount of credibility comes with the network you might have or the consultants you may use. Usually entrepreneurs have mentors and it’s a good idea to mention the advisors or mentors.

9. Financial plans – you must write about your assumptions, what your forecasts are for the future, what are your projections, P&I statements, balance sheets, how you will manage cash flows, when do you expect to breakeven and what are the business ratios.

10. Exit strategy – this is for the investor. Write about the exit strategies for the investor to use if he intends to.

11. Risk analysis – how will you counter risk?

12. Financial requirement – write about your needs and kind of funds & about the timeline of your financial requirements and how you expect to manage the cash flow issues.

13. Appendices – write everything else here like product material, promotions material, pictures of your product, teams' resume and your resume.

The presentation of B-plan and the uniqueness of product is important. It is advised to use proper formatting, colours and chart; keep it short and simple; pay attention to the strengths of business plan; keep backup data ready; proof read and edit it carefully; have content’s page and a nice covering letter.

Writing a B-plan helps in tangible presentation of the vague ideas, quantifying the approximate numbers, freezing the milestones and deliverables, estimating the funding requirements and sizing up the scale of operators.

Also collection of information, validation of the assumptions, analysis and planning and articulation of the basic value proposition are extremely important.

It is the essence , the way we want to tell which differentiates a Plan ....

~Ak