Chapter 6 Business Plan

GUIDELINES FOR A
FEASIBILITY PLAN
Business plan
EXECUTIVE SUMMARY
 Definition of the Business Venture

- Explain the purpose of the business plan
 Product or Service
- Describe the product or service (patent, trademark, or copyright).
 Market characteristics
- Existing and potential markets must be briefly described.
 The Entrepreneurial Team
- It includes the founding entrepreneur.
 Financial Summary
- Start up estimates, cash-flow requirements and profits or losses.
- Plan will establish only what is being sought from investors and lenders.
BUSINESS DESCRIPTION
 The plan will provide detailed sections on each major topic.

 Executive summary are covered in detail.
 In certain occasions entrepreneurs cannot describe the business
before explaining their products or services.
PRODUCTS OR SERVICES
 Explanation include an adequate description of the product, its
purpose, distinct attributes, and how it is used.
 Technical data on its manufacture, operation and ownership.
 Identify legal protection (patents, trademarks, copyrights)
 Multiple products : explain the nature of the inventory and identify,
primary line of business.
MARKET RESEARCH AND ANALYSIS
 Market research analysis is a credible summary of potential

customers, markets, competitors and assumption about
pricing, promotion, and distribution.
 Potential customers : Customer profile includes age, sex, family
income, occupation and location of potential customers.
 Markets : Market exists only when there are qualified
buyers, forecast of future markets and unusual opportunities for the
new business and identify the market trends.
 Competitors : Identifying existing competitors and to explain their
strengths and weakness.
 Assumption about the new venture : Preparer of the plan needs
to identify the market niche, prices, promotional efforts and
distribution methods to justify market research.
 Market Niche : it defines the positioning of a product or service to
create a distinct marketing focus.
 Pricing systems : normal prices and pricing policies, means of
discounting, credit policies and price strategies. Price system
describe the venture’s market.
 Methods of distribution : the choice of distribution system defines
the market niche, pricing system and promotional activities.
 The sale forecast : A sales forecast to indicate the quantity of sales
and expected gross sales revenue during the planning period. It
well present well-documented information on specific market data.
How sales are expected to occur during the first three to five years
of business.
THE MARKET PLAN
 Market builds on market research, to explain how the venture will

succeed.
 Prices : price policies should be identified. Bulk prices, terms of
sale, wholesale prices, retail prices and methods used to derive
price schedules, such as cost-plus pricing.
 Promotions : promotional tools from advertising, personal selling,
public relations, point of purchase displays, direct mail solicitation
and sampling
 Distribution channel : It include wholesaling, retailing, mail order,
catalog sales, telemarketing, contracting or working through
domestic or foreign brokers.
 Service and Warranty consideration : identify warranties or
guarantees include after-sale service, customer support, hotline
consulting.
 Market leadership : market plan should explain how organizational
members will be marketing effort.
MANUFACTURING OR OPERATIONS PLAN
 Business will have some form of inventory or method of operation.

 Facilities : Business requires physical facilities. Retailers are
usually involved in choosing a location and either securing a lease
or purchasing a properties.
- assuring transportation services, and dealing with legal issues
such as EPA requirements
 Inventory Management : Retailers will describe beginning
inventory required for business and will describe raw materials and
supplies needed in inventory prior to production.
 Human resource Requirement : If business depends on the
number unsually talented personnel, HR should identify the skilled
scientists for the effective result outcome.
 Operational Rationale : Manufactures should describe their quality
control policies, safety requirements and other operations.
Operations include supplier relations, supply requirements and
transport requirements.
 Legal and Insurance issue : business liability insurance when
business relies on a few talented people.
LEADERSHIP- THE ENTREPRENEURIAL TEAM
 Entrepreneurs must take care team members strengths, past
successes and positive characteristics. They should describe role of
board members and investors who may be influential.
MAJOR EVENTS, RISKS, AND PROGRESSIVE CHECKPOINTS
 A set of controls for monitoring the new venture
 Major events : lining up facilities, testing prototypes, hiring

employees, acquiring inventory, staging a grand opening and
marketing strategies.
FINANCIAL DOCUMENTATION
 Financial statements for new venture are projections based on
previously defined operating and marketing assumptions.
 Developmental stages when no income will be produced.
 It should also explain how invested money or loans will be utilized
and accounted for in the financial statements.
 Start-Up Projections :
- Identify the sources and use of funds
- How loan proceeds will be utilized.
 Income statement (profit & lose account)
- IS should be provided for at least three years.
- IS shows revenue, cost of goods sold, operating expenses, and
net income.
 Cash Flow Statement
Cash flow statement reflect information from the profit and loss
statement adjusted properly for credit sales, non cash
expenses(depreciation) and cash obtained and used outside of
operational income ( capital from investors and cash payments on
loan principle).
 Balance Sheet
Balance sheet provide the opening position of the business and
projected results for three to five years.
- annual data (standard)
 Break Even Analysis :
break analysis is a total calculation of when the business will begin
to turn a profit.
- capital equipment, assets, debts, receivables or graphic tables or
charts on sales, income, and profits.

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GUIDELINES FOR A

 Definition of the Business Venture

 The plan will provide detailed sections on each major topic.

 Market research analysis is a credible summary of potential

 Market builds on market research, to explain how the venture will

 Business will have some form of inventory or method of operation.

 Major events : lining up facilities, testing prototypes, hiring

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