Business Plan Writing

Business Plan Writing Guideline, Plan Writing Instruction, & Business Plan Template

What is the first thing seeing which you make a decision where to start the business or not? of course a business plan. A business plan is the heart of a business. It is the map of the business. A business plan is made to explain or determine the future course of actions. It elaborates different paths or steps the business will be going through its life-cycle. It talks about the business goals, reasons to work for those goals, and ways to achieve those goals.

Who Needs a Business Plan?

When you applying for loans to a bank, you need to show your business plan to prove the feasibility of the business. Also, if you want to convince an investor to invest in your business, you need to have an effective business plan. For an owner, if you follow a business plan, you know where to invest and the associated risks, so there is less uncertainty.

So, it is very important for you to write an effective business plan.

This business plan has been written to apply any type of businesses you think preferable. This business plan template will help you to give a precise idea on how to write a business plan. I suggest you start from here. Happy Reading.

We will use a Tea Stall Business as an example in this business plan – guideline.

 

Business Plan Writing Guideline

 

At the first phase of business plan writing, you add few things about the identity of your business and the ownership.

Name and Address : You choose a name for your business. For an example, you want to start a tea stall. What will be the name of your shop? So, you choose a name here. Maybe it is “XYZ’s Tea Stall ”.

Additionally, for a formal business plan, mention the address of you business. Maybe it is located in the Dhaka. Be sure you include the important points like holding a number of your business.

Names and addresses of the principles: in this step, you need to write the name and addresses of all the owners of your business.
if you are the sole owner, you do not need to write anything except your own personal information such as name, address, and phone number. But if you have partners, you need to include their information in this part as well.

So, if “XYZ’s Tea Stall” has more than one owner, he must add their details here.

The nature of the business: in this part, you write the nature of your business. Nature means what? It means what type of business you are going to do. A business organization produces a product, a service , or the both. Are you going to produce? Or you are going to provide a service. Since XYZ Tea Stall does not produce, but it provides services. XYZ prepares tea, provides his customers the sitting place, serves water etc.

Statement of Financial Needs: here, you have to make a statement of future financial needs. It will help you to draw a financial mapping. Additionally, it will help you to gather additional fund in the starting time. So, what do you include in this statement?

  • If your business is an existent one, how do you manage the required funds? How did you borrow fund? Did you sell an asset before starting your business? Did you borrow from your friends or family? Did you make a loan from any bank? Or it came from your long-term deposit?
  • Why do you need additional fund? How will you utilize this fund? How will you make the sales and make a profit? How will you pay off the obligation/borrowed money?
  • In this step, precisely write the benefits that will come from the investment. How much money/profit you will make?

For XYZ Tea stall, maybe he invested his deposits at the initial stage. He grew it to the current position. And, now he is thinking of making a loan from a bank. And maybe his profit will increase by 25% after making additional investment right now.

Statement of confidentiality: in this step, make a statement of confidentiality. Will it be shared with anyone or some specific people? Or it will never be shared with anyone except the owners?

A business plan contains many types of secrets including business process, trade secret, service process, recipes, etc. people do not want to share the strategic information with other people, because it will destroy the competitiveness. So, you can make it confidential. Simply by stating that only few specific people will be able to see and share this plan including business owners, personal from banks, or the lender, for some cases, who will lend you money.

Here, I have attached a confidentiality statement for your better understanding. I have taken it from the net, and as its freely distributable, I shared it with you.

“THIS BUSINESS PLAN INCLUDES TRADE SECRETS AND PROPRIETARY INFORMATION OF [COMPANY NAME]. ACCORDINGLY, THIS BUSINESS PLAN IS CONFIDENTIAL AND IS INTENDED SOLELY FOR THE INFORMATION OF THE INDIVIDUAL OR ENTITY TO WHICH IT IS DELIVERED BY OR ON BEHALF OF [COMPANY NAME]. BY ACCEPTING A COPY OF THIS BUSINESS PLAN, THE RECIPIENT AGREES NOT TO COPY, DISTRIBUTE OR OTHERWISE DISCLOSE THIS BUSINESS PLAN OR ITS CONTENTS OR ANY OTHER RELATED INFORMATION TO ANY OTHER INDIVIDUAL OR ENTITY WITHOUT THE PRIOR WRITTEN CONSENT OF [COMPANY NAME], AND TO RETURN THIS BUSINESS PLAN TO [COMPANY NAME] UPON REQUEST.”

 

Business Model

A business model is the most important part of your business plan. It is the shortest form of your business plan. You can understand the whole business by looking at once to the business model. It shows you the target market of the business, the product it will produce, the service it will provide, and the profit it will generate from its sales revenue. Peter Drucker defined the term “Business Model” as— “assumptions about what a company gets paid for” — that is a part of Drucker’s “theory of the business.”

Business Model CANVAS

Business model canvas is the building block of a business. It is a strategic management tool to develop an existing or new business’s business model. It is a visual chart of the elements of a busiess that describes a company’s ownership structure, key activities, key resources, value proposition, Customer relation, channel, customer segment, cost structure, and revenue structure. See the XYZ Tea Stall’s business model campus in the picture.

Pricing Model

Pricing model tells you about how you price your product. Determining Price is not an absolute thing. You need to research and judge the market as well as keep your profit lucrative. So, you need to build-up a price setting strategy. Below I have discussed about the price setting strategy in more detail.

If you are revising the price of your existing business or if you are a start-up, you must consider these points to set a price for your product or services.

Understand the producing or the service cost and makes a bridge with your profit

What prices are your competitors are charging?

What is the perceived value of your product?

Is there any change of future price hike? What variables will be responsible?

Will customers accept the price happily? Will it make an strategic advantage?

Will you be able to lower the price to defeat competitors in future?

Social Goal

The social goal of any business has a great value on its business reputation and for its sustainability as well. Social goal of a business is to do good for the society and do not do any harm for the society. What do you think about the social goals of XYZ Tea Stall?

Economic Sustainability

Economic sustainability refers to the efficient use of your resource. That is, how you utilize your existing resources most efficiently so that maximum number of output can be achieved in a sustainable profitable manner.

Eco-Friendly

Does your business environment friendly? Does it anyway do any harm to the environment? You have to be cautious about it that your business organization does not do any harm to the environment. An eco-friendly business brings reputation for your business. Besides, you also do have a responsibility for keeping this earth healthy and green.

Ethical

You have to be ethically strong. Ethically strong means you develop and follow some ethical code of conduct, so that your business does well for the society. Sometimes, some business is legal but maybe not ethical. For example, selling cigar is not illegal but it is unethical as smoking cigar is harmful to health.

PESTEL Analysis

PESTEL analysis is a framework by which a business person analyses and monitors the macro-economic factors. These factors have strong impact on any business.

PESTEL stands for,

  • P for Political
  • E for Economic
  • S for Social
  • T for Technological
  • E for Environmental
  • L for Legal

Political – this is about how the government make decision and implement those decisions in the business field. Answer the questions below to have the assessment.

Who is going to be the next government?

What is their view about the individual business industry?

Which changes in business policy it will bring?

How do those policies affect your business organization?

What will be the tax policy? How will it affect your business?

How the government will change the environmental, corporate and customer protection policy?

Economic – economic factor can be divided into two parts. One is macro-economy and another is micro economy.

A macro deals with the big factors such as the government expenditure, interest rate, and tax-policy. A micro deal with the individual’s spending on purchasing products.

Try to find out the answers of the questions below

What is the current position of the economy? Is it growing or declining?

Is the interest rate and exchange rate stable? Or going upwards or downwards?

What is the current unemployment rate? Is it increasing or decreasing? It will tell about the purchasing power of an individual as a whole.

How is the globalization affecting the economy of your country?

How much purchase power the people have?

Is there any other economic factors?

Social – it tells you about the society. Try to find out the answers below.

What is the population growth rate?

Will any shift of attitude bring any affet to your business?

What is the rate of education and level of health? How does it affect to your business?

What is the job market trend?

What type of social attitude can harm or do well for your business?

Does any religious belief affect your business?

Technological – this factor talks about technology and how they bring affect to your business. Try to find out these answers below.

Is there any new technology that may bring benefit to your business?

Is there any technology that may give you strategically advantage?

Is the technology cheap? Can you manage it before your competitors do?

Is there any technology that you don’t have access but your competitors do?

In which are of technology government focusing their research?

Is there any existing technology that you did not accept or implement?

What technology should you implement right now to increase the productivity?

Environmental factors – it considers all of the environmental factors that may affect your business. Considers the points below.

Climate change

Weather

Environment pollution

Waste management

Attitude towards eco-friendliness

Utilizing renewable resources

Legal – this factor show the legislation changes that may bring affect to your bsuienss. Considers the factors below.

Copyright and patent law

Employement law

Labor law

Company law

Consumer protection law

E-commerce

Industry Analysis

Future trend –

Analysis of the competitor –

Market Segmentation –

Industry and market forecast –

Market size

Market growth rate

Market trend

Industry cost structure

Market profitability

Distribution channel

Key success factors

Key success details

Description of the venture

Products – describe the product you are going to manufacture or sell. Include all the features of your product. It will help the potential investor to understand the concept of your product.

Service – will you provide a specific service? Describe the service in detail that you are going to offer to your customers.

Size of the business – What is the size of your business in the term of value?

Office equipment and personnel – what equipment you will need to run all of the business operations? How many employees will you need?

Production plan

Manufacturing process – what process will you follow to manufacture your products or services?

Physical plant – what type of plant you will build? Where will you build it? Will it be convenient for running your business operations?

Name of the suppliers of raw materials – who will be your key suppliers? Will you be building long term relationship? Did you make a list of the suppliers?

Machineries and equipment – what machinery and equipment will you need to manufacture the products or providing services?

Operational plan

Company’s operational plan – what are the major operations of your company?

Technology utilization – how will you utilize the technology you possess?

Operational process – what process will you follow to continue operations?

Market Mix – 7Ps

Price – how your price will be determined?

Product – how will you develop a successful product that creates value?

Promotion – how will you promote your product?

Place – how will the product be distributed?

Packaging – what is the packaging plan?

Positioning – how will the product or service create the value?

People – how the business will build reputation by providing its customer?

Operational plans

Form of ownership

Management team background

Identification of partners

Assessment of risk

Evaluate the weakness of the business

Contingency plan

New technologies

Financial Plan

Assumptions – making assumption on which the sales will be affected.

Pro-forma income statement – showing specific figures of income forecast. See the figure below.

Cash flow projections – Projection of cash flows.

Pro-forma balance sheet – showing specific figures of balance sheet.

Break-even analysis – showing the break-even point in term of sales quantity or time.

Sources and applications of fund – Show how will you collect the investment fund and how you will apply those fund in different sectors.

Break-Even Analysis – Example

Estimated cost price per Unit = 2300

Fixed cost per month = 83333

Estimated Selling price per unit = 3000

Monthly Unit Break-even = 119

Monthly Revenue Break-even = 357141

Based on this break-even analysis, to reach BEP 119 units must be sold within a month, or a sales of 3,57,414 BDT. In order to make profit, more than 119 nits must be sold.

BEP Analysis

Pro-Forma Income Statement – Example

Pro-Forma Income Statement
Items2015-162016-172017-18
Sales500000065000008450000
Sales Returns-500000-650000-845000
Cost of Goods Sold-1500000-1950000-2535000
Gross Profit300000039000005070000
operating expense
Selling500000650000845000
Administrative500000650000845000
Total Operating expenses-1000000-1300000-1690000
Net Operating Income200000026000003380000
Non-Operating Income000
Non-Operating Expenses000
Earning before interest and taxes200000026000003380000
Interest-55000-55000-55000
Earning before Tax194500025450003325000
Tax-500000-650000-845000
Net Profit144500018950002480000

Pro-Forma Balance Sheet – Example

Assets201620172018
Cash1100000100000300000
Inventories500000550000600000
Total Current asset150000011000001500000
Non-current assets
Equipments200000400000600000
Vehicles300000500000700000
Total Non-current asset50000090000013000000
Total asset190000024500003500000
current liabilities
A. Payables200000400000600000
Tax liabilities000
Non current liabilities
long term business loan500000500000500000
total liabilities7000009000001100000
Owners Equities150000020000003000000

Pro-Forma Cash-Flow Statement – Example

                                                                      Statement of Cash Flows
201620172018
Cash flow from operating activities
EBIT200000026000003380000
cash paid for interest-55000-55000-55000
increase in AR-300000-150000-300000
cash paid for tax-500000-650000-845000
Increase in AP200000200000200000
NetCashFlows from Operating activities164500020950002680000
Cash flow from financing activities
Purchase of Equipment-200000-200000-200000
Net cash flow from investing activities-200000-200000-200000
Cash flow from financing activities
Procced from loans 0 0 0
Cash payment for dividends-945000-1395000-1980000
Year End Balance400000500000500000
Net Increase/(Decrease)4000009000001400000

Referencecs

https://en.wikipedia.org/wiki/Business_Model_Canvas

http://www.businessmodelgeneration.com/canvas/bmc