example purpose of preparing business plan and importance of preparing business plan and preparing a business plan template
Preparing A Business Plan
Raed DaoudiThe Business Plan
Whether it’s a start-up company, an expansion of an existing firm, a spin-off
from a parent corporation, or even a project within a company’s marketing or
new products department, every business needs a guide to navigate
successfully through its own unique competitive environment.
Preparing a business plan is:
Part of the process of preparing for a business
An intensely focused activity
Preparing a business plan is an activity
that requires honest thinking about:
Your business concept
The business opportunity
The competitive landscape
The keys to success
The people who will be involvedGetting Started
Define your purpose for constructing the business plan
Define your business plan audience
Who are your readers?
What do they need to know?
What do you want from them?
Determine your information needs
Chamber of Commerce
CompetitorsThe Structure of the Business Plan
Cover page & table of contents
Business environment analysis
Attachments & milestonesThe Executive Summary
As succinctly as possible, the executive summary should describe
The industry & market environment
The special & unique business opportunity
The key strategies for success
The financial potential
The management team
The resources or capital being requested
The formal Executive Summary
The executive Summary is a formal statement presenting the
The mission Statement
It should express the opportunity & business
philosophy in one brief sentence. The Business Description
The purposes of the business description are to:
Express clearly your own understanding of the
Share your enthusiasm for the venture
Meet the expectations of the reader by providing a
realistic picture of the business venture
The Business Description should include
What the history of the concept or the business is
What markets the business will serve
What kind of business it is
What the product of service is
Why people will use it
What the financial status isThe Business Environment Analysis
The purpose of the business environment analysis is to show the
reader what the business opportunity is in this industry & market.
The result of the analysis will:
Provide you with a thorough understanding of the business environment
Guide you in developing an effective marketing plan
Persuade the readers of your business plan of the realistic potential of your business
Venn Diagram for Preparing a Business Plan
Producer Target Market
Distributor End UserThe Business Environment Analysis
The key questions to be considered in
the business environment analysis are
What is the industry? - Characteristics
Who are your competitors within that industry?
What is the market? – geographically or demographically
Who are your customers within that market?The industry Background
The industry background provides your
reader with information to understand
the shape, size, trends, and key features
of the industry, and to understand how
your product or service will fit into the
industry. The important questions that
this section must answer:
What are the products or service
produced by the industry?
What are the size and shape of the
What are the industry trends?
What are the barriers to entry for this
industry?The Competitive Analysis
Readers of your business plan will want to know who the direct & potential competitors
of your business venture are because they represent a threat to the success of your
venture. Understanding who and what your competitors are can reduce the risk of the
failure of your business. Questions your readers may ask are:
Who are the competitors?
- Market share / marketing strategy / key success
What differentiates your product or
service from the competitors products &
How much of a threat are your
competitors to your venture?
- Do they enjoy strong brand recognition of their
- Will they aggressively block entrance of a new rival?The Market Analysis
In this section, focus on your target market, that group of people who
will choose to purchase & continue to purchase your products &
services because you solve a problem or meet a need for them.
Your reader will be interested in
the site of opportunity; therefore,
you should include the following
An indication of how large the market is
& how fast it is growing.
A definition of your target market.
An explanation of why customers in the
target market will purchase your product
or service.The Marketing Plan
The marketing plan describes how you intend to sell your product or service, how you
will motivate the customer to buy. The purpose of developing and including the
marketing plan in the business plan is twofold:
The process of designing a coherent marketing plan that is an integral part of the overall
business plan will help you and your team pretest ideas, explore options, and determine effective
strategies for the company’s success.
The result of a well - conceived & coherent marketing plan will convince your business plan
reader of your own competency
The marketing plan as a road map
A well – conceived & coherent marketing plan is a
road map for introducing your product or service to
your target market & inducing the customers
within that market to purchase and use your
product or service. The plan should reflect the
mission and basic business philosophy of the
company. It should also incorporate and use the
results of your market research.Developing the Marketing Plan
Begin the process of developing your marketing plan by looking at the
key factors that affect the marketing of your product or service.
Concentrate on the opportunity – the customer
problem that your product or service is solving.
Review your marketing objectives – at what level
of sales will you reach breakeven point? When do you
anticipate reaching that point? How long will it take to
reach the next sales milestone?
Focus on the buying behavior of the customer –
when, where, why and how do they buy this product or
service? What needs are being fulfilled for the? What
factors are important to the consumer in choosing this
type of product or service?
Determine the value of each customer to your
business – Weighing the cost to acquire a customer with
the long-term value of that customer helps you decide on
the appropriate marketing strategies to use.Develop your mix of marketing strategies
Your marketing strategies determine the way you position your product in the market
relative to your competitors’ products. The strategies or marketing mix, will be the
most effective combination of the classic four P’s of marketing
Product/service. Make sure that your
product or service is consistent with both your
company philosophy & the target market needs
Price. At what price point will you offer your
product or service? You will have a range of prices
available determined by costs & expected
contribution margins, but within that range, price
adjustments can occur in response to consumer
Place. How the product will be transported
from the plant to the end user. What channels of
distribution will be used? How will the product be
Promotion. Promotion involves creating
consumer awareness of the product.The Operations Plan
The operations plan gives an overview of the flow of the daily activities of the business
and the strategies that support them. The primary purpose of the operations plan
section is to show that you are focused on the critical operating factors that will make
the business a success
Identify the key success factors
for your business
The breakeven point
Advantages in sourcing materials
Technological innovations in the
manufacturing or distribution process
A favorable geographical location
Access to skilled employees or
An effective pricing strategyThe Management Summary
You & your team are the glue that brings the pieces
together into a finely formed, dynamic unit.
Describe each member of the
Where have they worked?
What have they accomplished?
What is their reputation in the business
Are they realistic about the business’s chances for
What knowledge, skills and special abilities do
they bring to the business?
How committed are they to this venture?
What are the motivations of each member of the
team?The Management Summary
Describe the team as a whole unit.
Show how this is the right team to
manage the risks and to capitalize
on the opportunities by
Affirming the team’s strengths.
Acknowledging & addressing the
team’s perceived weaknesses.
Expressing the team’s management
philosophy.The Financial Plan
The financial plan is a critical section of your business plan because
it translates all the other parts of the business into anticipated
Developing the financial plan
The capital requirements of the business. How much
do you need to raise, how much do you expect from them,
and how do you intend to use the money
Financial projections. Highlight & explain the importance
of the significant figures from the pro forma income
statements over a period of 3 to 5 years
Assumptions. State your assumptions about the estimated
industry & market growth rates. Then give your assumptions
about the internal variables of the businessThe Financial Plan
Breakeven analysis for sales. The reader of
the business plan would want to know when & at
what level of sales the breakeven point will occur
Probability of risk/reward. Your readers will
want to know your assessment of the level of risk.
They want to know how you plan to avoid the risk of
failure & how you plan to increase the chances for
Financial returns. The expected financial returns
– whether the return on investment (ROI) or the
internal rate of return (IRR) – is what the investor
wants to seeAttachments & Milestones
Attachments come at the end of the business plan and serve a useful purpose of
providing additional information for the reader without weighing down the body of the
plan. Here you can include details of the financial plan, technological specifications of
the production plan and the formal resumes for each member of the management team.
You can also include a milestones plan that lists the major
events in the business’s development. This serves to give
your reader a perspective o the timeline for creating a
Distribution Ad Open Sell
Reach Open Next
Center Passes Campaign Retail 1000
Breakeven Retail Site
Alpha Test Begins Site Units
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