Guidelines For Developing a Business Plan
Business plans are business communications rather than an academic paper. The purpose of such communications is to provide the basis for business decisions. The reward here is for being concise and precise. This is not the place to show all that you have learned in your MBA program. Use what you have learned to choose the most critical information to include. The more clearly the business plan can be written, the more effective they will be.
Business plans are used to acquire capital and to guide the operation. For these reasons, keys to a successful plan are in substantiating the viability of the venture. A business plan includes a clear statement of the nature of a business venture, the business opportunity, the steps to be taken to capitalize on the opportunity, and the financial requirements. Research in this option is primarily in quantifying the opportunity and the competitive situation. When used to acquire capital, the business plan must create a clear, coherent, persuasive argument on behalf of the business. When used to guide the operation, the plan must also be clear and coherent as it provides specific guidance for the business.
The Business Plan format provides an opportunity for students to develop an actual, workable business plan for a new business or existing company.
Guidelines for the Project
A business plan is not a thesis and therefore does not involve a thesis-type literature review. However, a business plan does require research. At a minimum, marketing research is needed in order to quantify the opportunity which will include determining the total demand, the unmet demand, how competitors are or could satisfy this demand, how your offering is to be distinctive in this market, and your reasonable sales projections at your proposed selling prices.
Marketing research for an existing product in a new market involves an analysis of demographics and customer profiles in markets where the product is currently being sold successfully, and the comparison of such demographics and customer profiles to those of the proposed new market. The proposal should cite the specific sources from which such data are obtainable.
One of the most common problems with students’ business plans is the lack of connection between the market demand and the financial statements. There often is little or no foundation for the projected revenue figures cited, including initial sales and sales growth. Make sure this connection is crystal clear since failure to accomplish this task will result in a project that is unsatisfactory.
Content and Organization of the Business Plan Project
The title page is not numbered.
Table of Contents
This table is also numbered with lower case Roman numerals.
The purpose of an Executive Summary is to write a brief description of your plan that allows the reader to gain the essence of the entire plan in less than two pages. It is intended to give a busy executive the key information and lead the reader to the sections that will answer the executive’s primary questions. It is not an introduction to the plan, as you may have written in typical papers. This Executive Summary, although positioned first in the project, should actually be written last. In this way you know what you are summarizing. Writing it earlier will cause it to tend towards a traditional introduction.
This section begins the Arabic numbering of pages, beginning with “1.”
The Business Plan Project
The Business Plan must include the following topics. Various Business Plans organize this information in different orders but this content must be included. Chose an outline that most effectively builds the argument that this project is viable and has an acceptable risk.
Purpose of the plan (attract investors, diversification, etc.)
Introduction to market opportunity
The history of the industry
Size of the Industry
The trend-Where the industry is expected to be in 5 or 10 years
The key players in the industry
Barriers to entering the market
Competition strengths and weaknesses
Product and Industry Life Cycles
How does the position in the Product Life Cycle affect this business plan?
How does the position in the Industry Life Cycle affect this business plan?
What is the unsatisfied need that creates the business opportunity?
Major characteristics of the target market (what does the customer look like?)
What is the demand of this target market?
What are total sales to this market in geographic area?
What are total sales expected in 5 years? In 10 years?
What percentage of this demand does this business expect to capture?
Product or Service Research and Development
Significant factors in the macro environment
Nature of the competition
Clear statement of the opportunities and threats
Company Description (proposed new organization)
Type of Business and Legal Structure, e.g., LLC, sole proprietorship
Mission and Objectives
Distinctive Core Competencies
Management and Ownership
Board of directors and Rationale for Members
Management staff structure
Future Additions to the Current Management Team
Overall Marketing Strategy
Specific marketing mix
Strengths and weaknesses in ability to satisfy target market needs
Products and Services
Detailed Product/Service Description
Product Life Cycle
Copyrights, Patents, and Intellectual Property Rights
Research and Development Activities
Retention of Personnel
Production and Service Delivery Procedures
Funds required and their uses
Current funding requirements
Funding requirements over the next three years
Use of funds
Conclusions and Recommendations
Conclude whether or not it is a viable business venture ( or a viable business/strategic path for the client company
Explain why the student should or should not pursue the business venture at this time (or why or why not the client business should pursue the path under investigation)
This section continues with the Arabic numbering of pages. Only sources of information that have actually been cited in the project are included here.
The appendices continued with the Arabic numbering of pages from the previous section. The actual titling of the appendices receives letter designations, rather than numbers. Therefore, you would have Appendix A, Appendix B, not Appendix 1, or Appendix 2.
This section includes information that is too detailed to be included in its entirety in the body of the project. This would include raw data, sample questionnaires, and detailed computations. This section would also include information that is referred to but is not essential to the project, such as relevant policies, laws, forms, pamphlets, sample letters sent to organizations and subjects, or subject consent forms.