Chapter 7

Creating the business plan:

Creating and starting the
venture
 Introduction
Planning is a process that never ends
for a business
Extremely important in the early
stages of any new venture.
There are many plans a firm can make,
like- financial plan, HR plan, production
plan, sales plan, etc.
Plans may be short term, long term,
strategic or operational.
 Business Plan is a written document describing
all relevant internal and external elements and
strategies for starting a new venture.

A business Plan is also called an

integrated plan of functional plans such
as marketing, finance, manufacturing,
HR etc.
Abusiness planis a formal
statement of business goals, reasons
they are attainable, and plans for
reaching them
A business plan is prepared for an
established business that is moving in a new
direction.
 Who should write the plan
Entrepreneur
May consult with others (lawyers, HR
experts, friends, marketing consultants, etc)

Skills Assessment
Skills Excellent Good Fair Poor
Accounting
Planning
Sales
Legal issues
 Scope and value of the business plan
Read by employees, investors, bankers,
venture capitals, suppliers, customers,
advisors and consultants.
Each reader has a different purposes.
Three major perspectives
Entrepreneurial perspective
Marketing perspective
Investor perspective
Business plan helps them to realize
The viability of the venture
Guidance
Helps to get financing
 How do potential lenders and
investor evaluate the plan?
Suppliers: quantity of raw materials,
finished products, frequency of
delivery, etc
Suppliers of capital: Pay back period,
Potential risks, etc
Lenders: Four Cs (Character (credit),
Cash flow, Collateral and Equity
Contribution)
Investors: Character (background
checking), entrepreneurs action,
 Information needs
Market Information
 Operational information needs

Location
Manufacturing operations
Raw materials
Equipments
Labor skills
Space
Overhead
Financial information needs
Cash budget
Capital expenditures
Direct operating expenses
cash expenditure for non expense items
(non billed items--- bribe)