Engr.

M USMAN MUBARIK Chapter - 4

Dept. Of Management Sciences,
UET New Campus.
WRITING A BUSINESS PLAN

This chapter discusses the importance of writing a business plan. Although some new
ventures simply “wing it” and start doing business without the benefit of formal
planning, it is hard to find an expert who doesn’t recom- mend preparing a business
plan.

Business Plan:
A business plan is a written narrative, typically 25 to 35 pages long, that describes
what a new business intends to accomplish and how it intends to accomplish it.

It focuses on 2 aspects, what? And how? What is related to the goals of business. How
is related more to the plans to achieve those goals.

Who Reads the Business Plan—And What Are They Looking For?
1. A Firm’s Employees: A clearly written business plan, which articulates the vision
and future plans of a firm, is important for both the management team and the
employees. It helps them understand overall goal of the organization and how their
particular job is contributing in achieving that goal. It gives a perceived purpose to
their job.

2. Investors and Other External Stakeholders: External stakeholders who are being
recruited to join a firm such as investors, potential business partners, and key
employees are the second audience for a business plan.

Overly optimistic statements or projections undermine a business plan’s credibility,

so it is foolish to include them. At the same time, the plan must clearly demonstrate
that the business idea is viable and offers potential investors financial returns greater
than lower-risk invest- ment alternatives. The same is true for potential business
partners, customers, and key recruits.

As investor, the thing to look for is that if none of the money of founder is invested
in the business, it should be considered as a red flag. If the founders aren’t willing to
put their own money at risk, why should anyone else?

SECTIONS OF A BUSINESS PLAN

Following are the sections of a detailed business plan. Details of each are discussed
on the next pages.
1. Cover Page & Table of Contents 8. Product Design & Dev. Plan
2. Executive Summary 9. Operations Plan
3. Industry Analysis 10. Organizational Structure
4. Company Description 11. Overall Schedule
5. Market Analysis 12. Financial Projections
6. The Economics of the Business 13. Appendix
7. Marketing Plan
 Chapter - 4

1. Cover Page & Table of Contents

The cover page should include the company’s name, address, phone number, the
date, the contact information for the lead entrepreneur, and the company’s Web site
address if it has one. The company’s Facebook page and Twitter name can also be
included.

Because the cover letter and the business plan could get separated, it is wise to
include contact information in both places.

Table of contents on the other hand, will include all of the above 13 points. An
example is given below.

2. Executive Summary:
The executive summary is a short overview of the entire business plan; it provides a
busy reader with everything he/she needs to know about the new venture’s
distinctive nature.

in many instances an investor will first ask for a copy of a firm’s executive summary
and will request a copy of the full business plan only if the executive summary is
sufficiently convincing.

Engr. M USMAN MUBARIK

Dept. Of Management Sciences,
UET New Campus.
 Chapter - 4

This is why the executive summary, then, is arguably the most important section of
the business plan. It is not an introduction or preface to the business plan. Instead, it
is meant to be a summary of the plan itself.

3. Industry Analysis:
The main body of the business plan begins by describing the industry the business
will enter in terms of its size, growth rate, and sales projections. It is important to
focus strictly on the business’s industry and not its industry and target market
simultaneously.

Industry structure refers to how concentrated or fragmented an industry is.

Fragmented industries are more receptive to new entrants than industries that are
dominated by a handful of large firms.

Industry trends should be discussed, which include both environmental and business
trends. The most important environmental trends are economic trends, social trends,
technological advances, and political and regulatory changes.

4. Company Description
This section begins with a general description of the company. The company history
section should be brief, but should explain where the idea for the company came
from and the driving force behind its inception. It also includes tagline which is a
phrase that a business plans to use to reinforce its position in the marketplace.

Moreover, business’s vision, mission and milestones are also made part of this
section. (all three were explained in lecture)

5. Market Analysis
The market analysis is distinctly different than the industry analysis. Whereas the
industry analysis focuses on the industry that a firm will participate in (textile,
petroleum etc) market analysis focuses on customer’s side. Such as market
segmentation and targeting.

A competitor analysis is also undertaken, which is a detailed analysis of a firm’s

competitors. The final section of the market analysis estimates a firm’s annual sales
and market share.

6. The Economics of the Business

This section begins the financial analysis of a business, and end in the form of
financial projections.

It addresses the basic logic of how profits are earned in the business and how many
units of a business’s product or service must be sold for the business to “break even”
and then start earning a profit.

In order to state projected profit, an idea about cost of goods sold and profit margins
is also needed.

Engr. M USMAN MUBARIK

Dept. Of Management Sciences,
UET New Campus.
 Chapter - 4

7. Marketing Plan
While market analysis in section 5 is about overall market including competitors as
well, this section focuses on business’s own plan for marketing. The marketing plan
focuses on how the business will market and sell its product or service. It deals with
the nuts and bolts of marketing in terms of price, promotion, distribution, and sales.

The best way to describe a company’s marketing plan is to start by articu- lating its
marketing strategy, positioning, and points of differentiation, and then talk about
how these overall aspects of the plan will be supported by price, promotional mix
and sales process, and distribution strategy.

8. Product (or Service) Design and Development Plan

If you’re developing a completely new product or service, you need to include a
section in your business plan that focuses on the status of your development efforts.

Most products follow a logical path of development using following steps;

i. Product Conception
ii. Prototyping
iii. Initial Production
iv. Full Production

Conception is the stage which includes thinking of an idea, turning it into an

opportunity, conducting a feasibility analysis and making a final decision about
starting a business.

A product prototype is the first physical manifestation of a new product, often in a

crude or preliminary form.

A service prototype is a representation of what the service will be like and how it
will be experienced by the customer.

9. Operations Plan
The operations plan section of the business plan outlines how your business will be
run and how your product or service will be produced.

Your readers will want an over- all sense of how the business will be run, but they
generally will not be looking for detailed explanations. As a result, it is best to keep
this section short and crisp.

10. Management Team and Company Structure

Many investors and others who read business plans look first at the executive
summary and then go directly to the management team section to assess the strength
of the people starting the firm.

The management team of a new firm typically consists of the founder and a handful
of key management personnel. A brief profile of each member of the management
team should be provided, starting with the founder of the firm. Each profile should
include the following information:
Engr. M USMAN MUBARIK
Dept. Of Management Sciences,
UET New Campus.
 Chapter - 4

• Title of the position

• Duties and responsibilities of the position
• Previous industry and related experience
• Previous successes
• Educational background

Moreover, organizational chart (or structure) can also be made a part of this section.
The triangle diagram.

11. Overall Schedule:

A schedule should be prepared that shows the major events required to launch the
business. The schedule should be in the format of milestones critical to the business’s
success, such as incorporating the venture, completion of prototypes, rental of
facilities, obtaining critical financing, starting the production of operations, obtaining
the first sale, and so forth. An effectively prepared and presented schedule can be
extremely valuable in convincing potential investors that the management team is
aware of what needs to take place to launch the venture and has a plan in place to get
there.

12. Financial Projections

Having completed the previous sections of the plan, it’s easy to see why the financial
projections come last. They take the plans you’ve developed and express them in
financial terms.

At this stage, the focus is more on sources of generating funds and how those funds
will be spent. We do not look for the financial statement at this stage.

Engr. M USMAN
MUBARIK
Dept. Of Management
Sciences,
UET New Campus.