Business Plan: To Secure Funding

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(Refer our High Quality Management Encyclopedia “Management Universe” at: http://management-universe.blogspot.com/)

Business Plan’s One Major Objective: To Secure Funding

In majority of the cases, one of the major objectives of the business plan could be to make a good case for seeking the required funds to support the new business venture. The requirements of each type of agency willing to advance the necessary capital may be specific and different from each other and therefore, business plans should be appropriately customized to satisfy these requirements.

Generally we come across following types of fund providers:

1. Bankers: Bankers are primarily interested in the long term financial aspects of the plan. They may not emphasize as much on the other issues like marketing or operations. They will definitely be interested in collateral as security for the loan. They will tend to support less risky ventures. Repayment of the loan will be a top most consideration while advancing the loan.
2. Venture capital fund managers: Their primary interest is capital gain to themselves as well as to the outside investors whose funds they are managing. Therefore, they take interest in new venture’s products and services, markets, credibility of the promoters and their management team and venture’s growth and return on investment potentials.
3. Business angels: In addition to their strong interest in capital gains from their personal money invested by them, business angels also try to size up the entrepreneur's qualities like passion, interest, integrity, creativity, responsibility and accountability for the new venture and how well they themselves will be able to relate with the entrepreneur over a period of time. Thus, they seek an opportunity to personally participate in the venture.

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Even Non-profit Organizations Need Business Plan

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Business Plan for Non-profit Organizations

• Every venture has to have definite goals whether that venture is a profit making organization or a non-profit organization.
• While, business plans for a profit making organizations will obviously focus on financial goals, business plans for non-profit organizations will focus more on organizational mission.
• However, both profit making as well as non-profit organization both will have to necessarily focus on revenue generation.

(Refer our High Quality Management Encyclopedia “Management Universe” at: http://management-universe.blogspot.com/)

Suggested Format or Structure of Business Plan

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Suggested Format or Structure of Business Plan

• Cover page.
• Table of contents.
• Executive summary.
• Business description: industry background, business scenario, business environment, products and services, competition, business goals, marketing, operations, human resources etc.
• Financial plan: resource requirements like land, building, technology, capital equipment, materials, human resources and therefore, the requirement of finance and the possible sources of financing.
• Financial projections: balance sheet, break even analysis, profit and loss statement, cash flow projections, financial ratio analysis etc.
• Supporting appendices and annexures providing detailed data and information.

(Refer our High Quality Management Encyclopedia “Management Universe” at: http://management-universe.blogspot.com/)

Steps in Preparing Business Plan

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Preparing Business Plan

• Internal persons of the organization with appropriate competencies can create the business plan.
• If internal persons of the organization do not possess the appropriate competencies to prepare a business plan, then, it is advisable to appoint a competent consultant to provide market/business information and assistance in preparing business plan after SWOT analysis and working out the market/business projections.
• Work out the scope of the plan.
• Decide who your target audience is.
• Decide what purposes you wish to achieve through your business plan.
• Decide the time line for completion of the business plan.
• Refer the relevant literature from books and World Wide Web.
• Compile your numbers- the required data and information.
• Start writing out your business plan in the form of a draft to be revised several times before finalizing it.
• Develop simulated financial statements: balance sheet, profit and loss statement, break-even analysis etc.
• Write a final draft.
• Get feedback from appropriately chosen people.
• Hone your final presentation of the business plan in the form of a professional document neatly divided into well thought out chapters topped up with executive summary to provide a quick overview.

(Refer our High Quality Management Encyclopedia “Management Universe” at: http://management-universe.blogspot.com/)

Uses of Business Plan

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Business Plan: Uses

• For raising or securing the money necessary to support the new venture and to each the proposed business goals.
• For deciding takeovers or mergers.
• For reorganizing the business.
• For providing a vision of the future for all the concerned including the employees.
• For defining information for internal planning.
• The information for internal planning allows managers to set priorities, assist in goal setting, allocate resources and guide in decision making and performance assessments.

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Introduction to Business Plan

(Refer our High Quality Management Encyclopedia “Management Universe” at: http://management-universe.blogspot.com/)

Introduction

• A business plan is a written formal document primarily about your proposed business. It can be also termed as a project report of your new venture.
• A business plans is also a decision-making tool.
• A business plan sets out
  - business goals
  - assessment of current business scenario vis-à-vis your proposed business (SWOT analysis)
  - examination of feasibility of the business goals
  - strategy and plan for reaching those goals.
  - plan for funding the new venture and repayment of loans
  - information about the team and the organization
• Thus, a good business plan includes:
  - an overview of the business
  - a marketing analysis
  - a financial plan
  - a management plan
• Preparation of a good business plan may not necessarily guarantee success, but it definitely helps in reducing the probability of failure.
• Preparing a good business plan is one of the first steps an entrepreneur has to take. Therefore it is an important step towards entrepreneurship.

For More Guidance, Assistance, Consultation and Training

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