How to design a business plan?

How to design a good business plan in 1 day?

19/1/2017

Entrepreneurs, who start their venture, feel the need of extra funds at some stage to grow and expand their start- up. These extra funds provide them a leverage to capture wider market segment, penetrate deep into the segment, expand their geographical horizons and become a leader in the sector.

India is a growing market where angel investors and venture capitalists are ready to invest if they find that the venture is profitable. A good business plan or the feasibility report increases the chances of funding. It provides a detailed study of the legal, technical, economic and market viability of any project. Therefore, before applying for funding from the investor, Let us first understand the important points that need to be considered for making a good business plan or a feasibility report.

(1) Executive summary

In this section provide the overview of your start up and the reason for expansion and the effect of that in the revenue, market share and the growth of the organization.
Example: XYZ is a growing start-up company in the retail solar industry. It assembles and trades retails solar products like solar lantern, solar mobile charger, solar radio, small solar panels and solar calculators in Delhi/NCR region of India. It is known for its quality and service. The Compound annual growth rate (CAGR) profit in last 5 years is 21%. The company sells the retail solar products through general and electronics stores.

Particulars	2012	2013	2014	2015	2016	CAGR
Sales (Rs.)	10,00,000	15,00,000	23,00,000	28,00,000	35,00,000	37%
Profit (Rs.)	2,90,000	3,75,000	4,60,000	5,60,000	6,30,000	21%

â€‹The company is receiving multiple inquiries for the solar mobile charger, solar radio, small solar panels and solar calculators. The company has decided to increase its capacity to meet the growing demand and capture the market wider market. These products will enable the company to increase its share, growth in revenue and deeper market penetration.

(2) Description of the products and the services

Describe your existing and new products physical, mechanical and chemical properties with their uses and benefits. Include the photographs of the products for easy understanding of their characteristics.
Example: The XYZ Ltd has the following products:

â€‹The solar panel is the main and the common component of the products of the company. The solar panel when placed in sunlight, it converts the solar energy into electrical energy which in turn charges the battery and gadgets start working. Most of them provide 6-8 hours of back up after complete charging. The products are noise free, pollution free energy and have no harmful effects on health. These products are portable light sources with multiple uses like they can be used to study during night, provide light in the Kitchen for cooking food and can be used by farmers to visit their fields in the night. These products can be easily used by shopkeepers and the vegetable vendors to display their products to customers in the night. Solar radio is a portable source of information and entertainment.

(3) Technological feasibility

The project is considered technically feasible if it has the required expertise, infrastructure, and capital to install and operate to its optimum efficiency.

Describe the whole process of making/assembling the products or implementation of new technology through flow charts and diagrams.
Mention the maximum and the minimum capacity of the project with the number of operating days per year. Provide the actual capacity utilization of the project.
List the number of machinery and other equipment that are needed to produce the desired number of products. Mention their individual cost, capacities, specifications, origin (local or imported) and the mode of transportation
Provide the list of raw materials that are needed to make the products. Mention the sources and supplies of these raw materials.
Mention the location of the project with maps and charts. A location has to be chosen where there is the easy accessibility of raw material, continuous supply of water and electricity, easy availability of fuel, availability of skilled and semi-skilled labour with the facility of transportation.
Describe the layout of the location by mentioning different spaces for the manufacturing process, material handling with safety and sanitation facilities.
Mentioned the number of staff (skilled, semi-skilled and unskilled) required to produce the required products with the estimated cost of utilities like electricity, fuel, and water.
A manufacturing process generally results in a by-product and waste. A right disposal method can keep the project environment-friendly.
Highlight the new technological advancement in your industry
Estimate the total project cost highlighting the cost of the major components like fixed cost, raw material cost, operating cost, variable cost, and another cost. Provide the cost to produce one unit of the product.

Example: The XYZ is planning to assemble 200-300 units per month each of solar mobile charger, solar radio and solar calculators. The flow chart is as follows:

Stage-1	Stage-2	Stage-3	Stage-4	Stage-5	Stage-6	Stage-7	Stage-8
Raw material	PCB designing	Assembling	Soldering	Cleaning	Quality checking	Trial running	Final product

The XYZ Ltd already has assembly line as it is assembling the solar lantern, but 2 extra set of the assembly line is required to increase the efficiency and to make the new products in time.
The new assembly lines will be set up in the existing facility of the company, by providing the separate section to them. Most of the major equipment can be procurement locally except one oscilloscope, which needs to be imported. Yes, the new staff is required to manage and run the new assembly lines. The company will provide the in-house training to the new staff from time to time. The average cost per unit of the mentioned products will come in a range of Rs. 900 - Rs. 1500. The following table & pie chart shows the expected cost of making 100 units each of the mentioned products and the Product cost percentage of the total cost respectively.

Particulars	Solar panel	Solar lantern	Solar mobile charger	Solar calculator	Solar radio
Raw material (Rs.)	58,500	45,500	1,30,000	78,000	97,500
Fixed cost (Rs.)	13,500	10,500	30,000	18,000	22,500
Variable cost (Rs.)	9,000	7,000	20,000	12,000	15,000
Utilities (Rs.)	6,300	4,900	14,000	8,400	10,500
Miscellaneous (Rs.)	2,700	2,100	6,000	3,600	4,500
Cost of making 100 units (Rs.)	90,000	70,000	2,00,000	1,20,000	1,50,000
Cost per unit (Rs.)	900.00	700.00	2,000.00	1,200.00	1,500.00

(4) Financial considerations and the Market research

The whole purpose of this section is to provide the information to the angel investor as to what extent is the proposed project is able to provide the economic benefits in terms of revenue, return and profit. Provide all the information related to the characteristics of the industry of your start up, supply and demand curves, pricing of the products, competitors in the market, targeted market and the financial projections of all your products.
Example: The XYZ Ltd is in the retail solar sector, which is at the nascent stage in India. India has around 300 sunny days in a year. So you can say that the energy resource in this sector is almost freely available. By looking at the acute problem of electricity in this country, there is the huge potential of solar retail products in India which can be converted into great demand. There is less information among people about these products; it is all because of lack of marketing efforts by the solar companies. The rural sector can prove to be a great demand in this industry as most of the villages in India do not have the regular and the consistent supply of electricity. While the products like solar panel and the solar mobile charger can prove to be the favourites among rural and the urban population equally. Although, the initial cost of these products is a bit higher but their long life, very low maintenance, pollution free and noise free operations and making the customer energy independent provides the cutting edge compared to their counterparts products.
The financial projections are as follows:

S.no	Particulars	2015	2016	2017	2018	2019	2020
1	Sales Projection (Rs.)	1,00,00,000	1,25,00,000	1,56,25,000	1,95,31,250	2,44,14,063	3,05,17,578
	Costing
2	Raw material (Rs.)	60,00,000	75,00,000	90,00,000	1,08,00,000	1,29,60,000	1,55,52,000
3	Equipments (Rs.)	25,00,000	2,00,000	1,00,000	1,00,000	2,00,000	5,00,000
4	Staff (Rs.)	20,00,000	22,00,000	24,20,000	26,62,000	29,28,200	32,21,020
5	Training (Rs.)	3,00,000	50000	50000	50000	1,00,000	1,00,000
6	Utilities (Rs.)	4,00,000	4,40,000	4,84,000	5,32,400	5,85,640	6,44,204
7	Miscellaneous (Rs.)	2,00,000	2,40,000	2,88,000	3,45,600	4,14,720	4,97,664
8	Profit Projection (Rs.)	14,00,000	18,70,000	32,83,000	50,41,250	72,25,503	1,00,02,690
9	Profit (%)	-14%	15%	21%	26%	30%	33%

(5) Provide the activity implementation time schedule

What are the major activities that you are going to perform with the funds that you are going to receive from the Angel investor?
A proper and clear project implementation schedule can provide a clear picture to him on how his funds are to be channelized into different activities.
A schedule may include the following activities:

Registration and other legal formalities: If the angel investor is funding the project, then you need to draft a legal agreement which includes the important aspects like management of the operations, sharing a percentage of the profit and off-take agreement (if any).
Placement of order
Procurement of raw materials
Electrification and Installation
Recruitment of the staff
Renting an office etc

This will provide him a broader outlook about your initial activities and time duration to complete them for launching the project.
Example: The XYZ Ltd will try to complete the implementation of all the activities in 20 weeks. Immediately after that, it will start assembling and launch the products in the market. The implementation schedule is as follows

S.No	Activity	weeks	Remark
1	Legal drafting	2 - 3 weeks	First activity
2	Procurement of raw material	4 - 5 weeks	After completion of legal formalities
3	Machinery and equipment	4 - 5 weeks	This activity can be started in concurrent to procurement of raw material
4	Electrification and Installation	2 - 3 weeks	After activity no.3
5	Recruitment of staff	4 - 5 weeks	After activity no.4
6	Training	4 - 5 weeks	After activity no.5
Estimated Total time schedule	Around 20 weeks

Competitors

In this section, you will list the major and the relevant competitors of your industry. Here, you need to highlight their products, pricing, market penetration and their marketing strategies. This information will help you in deciding the pricing of your products, their geographical markets, the expected realistic growth rate and you also come to know the marketing strategies your competitors are implementing for the deeper penetration into the market.

Marketing

Highlight the major marketing steps that you are going to take to market your products. The XYZ Ltd is planning to market its products through various channels like:

Starting an online store by displaying the prices and the pictures of the products. The best way to promote your online store is to maintain a blog and write about the products or the developments in your industry on the regular basis. In this way the readers will be informed about your products and will help in building the trust and will eventually buy the products and become yourloyal customers.
Visiting community places like school, colleges and clubs is one of the effective mediums to target large audiences in less time.
Visiting the trade fairs gives you the opportunity to showcase your business to the interested visitors
Offering discounts on the new products or writing an e-book about the products and the services is also an effective method to boost your business.

Initially, it will be a good idea to proportionate the marketing efforts equally:

Conclusion

â€‹Well, these are the basic and important points which should be considered while designing the feasibility report. I have provided the sample of it, you can elaborate any point or can add new points, charts, diagrams and flowcharts to make the things more transparent and clear.
Remember, a well designed realistic feasibility report can facilitate your funding process and can make your dream of expanding your start-up a reality.