What is the Business plan definition?
Business plan is a written document giving detailed description of proposed new venture and
predicted result.
It is aimed at entrepreneur, his/her environment, potential business partners(banks, suppliers, buyers, labor market…) and competitors. Effective business plan verifies feasibility of certain idea.
It is produced whenever a business idea is verified, even though it does not require investments.
When the business plan is being done?
Business plan is being done in the following situations:
1.When entrepreneur launches new startup
2.For investments in new facilities or reconstruction of existing ones
3.When expanding production, introducing new or improving the existing products
- When company looks for external partners
5.When investing in revival of company facing difficulties
6.When company initiates new venture, having no means to finance it on its own
7.When company is undergoing reorganization
8.When a company or part thereof is to be sold
What are the three perspectives of business plan development?
- Entrepreneur’s perspective (has best understanding of concept and idea, processes and technology)
- Market perspective (business should be viewed from buyers and consumers perspective)
- Investors perspective (expect for the business plan to provide realistic and convincible projection of financial values)
What are the main parts of a business plan - Introduction and essential?
Business plan introduction includes:
1. Business plan front page
2. Basic data on investor
3. Basic data on plan authors
4. Analysis and appraisal of
investor’s development capacities
5. Abstract of introduction
What is the Analysis and appraisal of investor’s development capacities?
Analysis and appraisal of investor’s development capacities consists of investor’s previous development analysis and future development analysis.
Unlike The part presenting basic data on the investor, this part is much broader and includes:
1. Market
2. Technical-technological
3. Organizational
4. Financial aspects
What is the abstract of introduction?
Abstract is a short summary of essential parts of the business plan, being focused on venture itself. It has the basic function to raise interest of readers to read the entire business plan. Abstract
is placed at the end of business plan, after writing all of the essential parts.
What are the Business plan elements according to the UNIDO methodology?
Business plan elements according to the UNIDO methodology:
*Introduction - program concept
*Basic data on the investor
*Target market
*Sourcing market
*Location
*Technical-technological analysis
*Organization
*Environment
*Project implementation schedule
*Economic-financial analysis
*Sensitivity analysis
What are the four parts of a business plan?
- Introduction
- Operative plan
- Marketing plan
- Financial plan
What are the four parts of Operative plan and what are their purpose?
- Technical - technological analysis
Abstract of technical - technological analysis usually contains the following parts:
1.Overview of technical-technological solutions options
2.Description of chosen technological solution
3.Description of chosen technical solutions and construction facilities
4.Listing of necessary resources, capacities and production volume
5.Norms for material use
6.Number and structure of workforce related to the technological process
7.Summed investments, duration and investment maintenance - Analysis of organizational and staffing aspects
Main objective of the analysis of organizational and staffing aspects is to convince creditors, investors and other business plan users into capacity of subjective factor to implement the venture planned. This analysis does not have strictly defined structure, yet it usually includes: - Total number of employees, provision method and training planned
- Organizational structure
- Key persons
- Location analysis
Location analysis is the significant part of operative plan. Choice of location where the venture (investment) is to be situated influences it’s success in the vast number of situations. Information in location analysis: coordination of chosen location with urban plans, characteristics of macro- and micro-location, construction, purchase or leasing space, consequences of resettlement and influence on local development. - Analysis of environment protection and work safety
In the part on environment protection and work safety, it is necessary to: - Analyze negative influences of investment towards environment and human
- Design measurements for environment protection and work safety
- Evaluate environmental acceptability
Work safety procedure may be divided to:
1. Identifying potential hazards for workers
2. Projection of work safety measures to minimize hazards
3. Final evaluation of work safety measures
What are the two main parts of Marketing plan and what is their purpose?
Marketing plan contains Sales plan and Procurement plan.
Purpose of marketing plan is to:
1. Determine consumers needs through market research
2. Establish target markets to do business on
3. Determine competitive advantage and define marketing strategy
4. Select optimal combination of marketing mix instrument, in order to respond to buyers wishes
and needs
What is the Sales plan?
Sales plan is the most important part of marketing plan, which establishes input data for total
revenue determination. This elaborates if entrepreneur can sell enough products for the appropriate price to achieve profitable operation. Sales plan usually consists of three interconnected parts:
1. Market analysis
2. Projection of marketing mix elements
3. Projection of investor’s market share
Sales plan may also be considered through the following five parts:
- Product selection and target market segment
Information in common for all companies selling certain type of product or service (info on buyers, product lifecycle, complementary and substitute products). Information specific for investor’s products (competitive advantages and differences in quality). - Analysis and appraisal of demand
Involves definition of demand in previous period, identification of demand factor, projection of changes in factors and demand. Demand factors: purchasing power, demographic, legal, cultural, psychological factors, crediting. Achieved by market research using the following sources: Primary and Secondary. - Analysis and appraisal of offer
Analysis and appraisal of companies to become competition. Defining the factors influencing the offer (Entry barriers, Exit barriers, Horizontal integration, Vertical integration, Globalization level). - Analysis and appraisal of price, distribution and promotion
*Promotion (advertising, sales promotion, public relations)
*Distribution ( channel length- short, medium, long, policy - intensive, selective, exclusive, selection of distribution participants)
*Price (pricing policy establishing - pricing goals, price elasticity of demand, price unification) - Swot analysis
*Internal factors - strengths and weaknesses (buyers, needs, prices, promotion, distribution, marketing activities)
*External factors - threats and opportunities ( purchasing power of population, buyers motives and opinions, competition, changes) - Projection of product placement
Symbiosis and result of previous steps of sales analysis. It is expressed in natural quantities and average net price.
What is Procurement Plan?
Procurement plan
Procurement plan refers to provision of resources necessary for production of a certain product or rendering a certain service.
Procurement plan does not include resources with procurement conditions being generally known and outside the company’s influence, as well a procurement of less significant materials. The main task of procurement function is to provide inputs with necessary quality, appropriate price, on time and in necessary quantities.
Procurement plan refers to provision of the most important variable material inputs.
Material inputs may be classified as:
1. Raw materials
2. Reproduction materials
3. Packaging
It is necessary to identify key suppliers, their locations, business policy.
Procurement plan should also contain the following parts:
* Characteristics of basic resources
* Possibilities to acquire resources and evaluation of substitution
* Analysis and appraisal of purchasing conditions by the investor
* Projection of purchasing conditions by the investor
What is the Financial Plan - contents and purpose?
The financial plan in addition to operating and marketing plan is the most important part of the business plan.
Decision on feasibility of the planned investment is based on quantitative indicators.
The main advantage of the quantitative presentation of facts is easier understandability and comparability.
Comprehensive financial plan should contain following items:
1. Investments
2. Sources of financing
3. Calculation of business results
4. Financial reports
5. Financial analysis
6. Efficiency indicators
7. Analysis in the event of uncertainty
What are the Investments and what are the types of investments?
Investments are the ones holding expectations for effects over the prolonged period of time.
They can be categorized to:
1. Investments in fixed assets
a) Non-material investments (concession, patent, license,…)
b) Investments in material fixed assets (buildings, equipment, land,
vehicles,…)
- Investments in permanent current assets
Difference between the current assets conditioned by business (cash, claims and stock) and sources of current assets (obligations)
What are the types of sources of financing?
Sources of financing are the origin or funds to be used for financing a certain venture.
They include:
1. Own sources– accumulated profit, owner’s funds (cheapest, secure, independence, elasticity)
- External sources– credits (unavailability, existence of obligations independently of the results, non-elasticity)
What are the expenditures of a typical company?
- Costs of raw and/or reproduction materials
- Costs of packaging
- Costs of salaries
- Depreciation
- Costs of fuels
- Costs of investment maintenance
- Costs of insurance
- Costs of marketing
What are the basic synthesis financial reports?
Basic synthesis financial reports are:
1. Income (profit and loss) statement
2. Cash flow report
3. Balance sheet
In this part of business plan, all data are expressed in monetary units. Synthesis financial report should provide credible overview of results achieved, financial position and changes in cash flow.
What is financial analysis?
Financial analysis involves quantification and evaluation of functional relations existing among various balance sheet items.
Depending on the scope, financial analysis can be:
1. Partial, covering one narrow segment
2. Company business performances
3. Complex, covering all significant business performances of a company
What are the Investment efficiency indicators and how they can be divided?
Investment efficiency indicators may be divided into two groups: static and dynamic.
The most important static indicators are: return period, average return period and reciprocal return period.
Dynamic efficiency indicators adhere to the temporal money value concept and include:
1. Net present value
2. Profitability index
3. Internal rate of return
4. Discounted return period
For the evaluation under uncertainty, various methods are being used, classified potentially as: static and dynamic.
The most common static method is breakeven point, and sensitivity analysis for dynamic.
Sensitivity analysis in business plan shows changes of investment efficiency indicators due to changes in input parameters. It can be implemented in two different manners, named: parameter per parameter and scenario analysis.
