Entrepreneurship for Engineers

Target Group: Leather Engineering Student (Batch-5)

By: Abriham A.
 Chapter one
1. Introduction to Entrepreneurship
 The word an entrepreneur is a person who was commissioned to undertake a
particular commercial project.
 Entrepreneurship is then what the entrepreneur does.

 Entrepreneurial is an adjective describing how the entrepreneur undertakes

what he/she does.
 The Entrepreneurial process which the entrepreneur engages is the means
through which new value is created as a result of the project, the
entrepreneurial venture.
 1.1 Meaning of entrepreneur
• Originated from French word, where an individual commissioned to
undertake a particular project.
• An entrepreneur is a person who has already started or is in the process of
starting an enterprise.
• Webster’s dictionary -“ one who organizes, manages and assumes the risk of
a business or Enterprise”.
• What do you think about the man or woman who started the local clothing
drive, food bank, local barber, accountant, piano teacher, mechanic or math
tutor ???
 Cont. …
• Is an individual who:
 Has the ability to identify and pursue the business opportunities
 Undertake the business venture (project)
 Raise the capital to finance it
 Gathers the necessary physical, financial and human resources
needed to operate the business venture.
OR
 Is a person who:
 Creates the job not a job seeker.
 Has a dream Willing to take the risk and makes something out of
nothing.
 Has a vision
 Different Perceptions of an Entrepreneur
 To an economist, an entrepreneur is one who brings resources, labor,
materials, and other assets into combinations that make their value greater
than before, and also one who introduces changes, innovations, and a new
order.
 To one businessman, an entrepreneur appears as a threat, an aggressive
competitor, whereas to another businessman the same entrepreneur may be
an ally, a source of supply, a customer, or someone who creates wealth.
 For others, the one who finds better ways to utilize resources, reduce waste,
and produce jobs others are glad to get.
Role of Entrepreneurs in economic development
i. Improvement in per capital income/ wealth generation- (the share of national
product to the whole people in the nation)
ii. Generation of employment opportunity
iii. Inspire others toward entrepreneurship
iv. Balanced regional development. Because of computation, they have a chance
to distribute throughout the whole region in the country.
v. Concern for High Quality Work and Output – Increased Productivity.
vi. Enhance the number of enterprise
vii. Provide diversity in firms- (opportunity of variety business sectors in one
area)
viii.Ensures economic independent- (independent of imports, technology,
becomes exporter and compotator).
 Types of Entrepreneur
 Innovative entrepreneur
 Introduce new products, new methods to produce
 Are mostly in developed Nations because sufficient opportunities of research and inventions remain
available in these Nations,
 Imitative entrepreneur
 Copy suitable innovations made by innovative entrepreneurs
 They themselves do not carry or spend money on research, inventions
 Take relatively lower risks.
 Fabian entrepreneur
 Imitate the successful innovations, but with required caution.
 As far as possible they like to work with old methods only
 Shy, lazy and Non risk takers
 Drone Entrepreneurs
 does not want to accept any type of innovation or change.
 In the long run, such entrepreneurs face business failures
 Entrepreneurs-types of business
Depending on size, nature and type of business:-
 Business entrepreneur

 Develop business idea for new products or service

 Establish enterprise to materialise idea in reality

 Trading entrepreneur

 Undertake trading activities

 Have to identify potential market to stimulate demand

 Push many ideas ahead of others in the form of demonstration to promote

their business
 Cont.
 Industrial entrepreneur
 Essentially manufacture product and offer service

 Convert economic resources and technology into a profitable venture

 Corporate entrepreneur
 Innovative ideas and skill able to organise, manage and control a corporate
undertaking efficiently
 Usually they are promoters

 Agricultural entrepreneur
 Agriculture and allied activities

 Engage in raising crops marketing of crops, fertilisers and other inputs of

agriculture through employment of modern techniques, machines and irrigation.
 1.2 Meaning ofCont.
entrepreneurship
 What is Entrepreneurship?
 Entrepreneurship is the process of creating something new of value by devoting
(giving) the necessary time and effort.
 It is the process of:

• Identifying opportunities arranging the resources required to pursue

those opportunities investing the resources to exploit the
opportunities for long term gains. OR
• It is the process through which an individuals become aware of business
ownership then develop ideas for and initiate a business.
 Cont. …

Entrepreneurship also can be defined as the process of creating

something different and better with value by:
Devoting (giving) the necessary time and effort.

Accepting and acknowledging the necessary financial,

psychological, and social risks, and
Finally receiving the resulting monetary rewards and personal
satisfaction and freedom to do what you want.
 Cont. …

• In general, the process of an entrepreneurship includes five critical

elements. These are;

1. The ability to perceive an opportunity

2. The ability to commercialize the perceived opportunities

3. The ability to pursue it on a suitable basis.

4. The ability to pursue it through systematic means

5. The acceptance of risk or failure.

 Advantages of Entrepreneurship
 They are their own boss
 They can choose a business that interest them
 They can make lots of money

 Generation of Employment.  Promoting Self reliance.

 Increasing per Capital Income.  Helps in raising living standards.

 Balanced Regional development.  Dispersal of economic wealth.

 Optimum Utilization of Resources.  Economic independence.

 Current Importance of Entrepreneurship
Three areas of importance
1. Innovation
• Process of creating, changing, experimenting and
transforming
2. Number of New Start-ups
• Important because new firms contribute to economic
development through benefits such as product-process
innovation
3. Job Creation
• Vital to the overall long-term economic health of
communities, regions, and nations
 Disadvantages of Entrepreneurship
 Entrepreneurship is risky
 Entrepreneurs face uncertain, an irregular incomes
 Entrepreneurs work long hours
 Entrepreneurs must make all decisions by themselves

 Lack of Viable concept.  Legal constraints and regulations.

 Lack of market Knowledge.  Monopoly and protectionism.
 Lack of technical skill.  Inhibitions due to patents.
 Lack of seed Capital.  Low Level of Commitment.
 Lack of Business Knowledge.  Shortage of Resources.
 Discussion Questions

1. Define entrepreneurship and explain its main characteristics.

2. Innovation is the hallmark of entrepreneurship. Discuss

3. An entrepreneur has an important role to play in the economic

development. Comment.

4. Not everyone can be an entrepreneur. Born or taught ???

 Chapter Two: New venture
Introduction:
 A venture is a project or activity which is new, exciting, and difficult
because it involves the risk of failure.
 New venture (entrepreneurial venture), is defined as a business or activity
which is in its early stages of business development and growth.
 Entrepreneurs are important to market economies because they can act as the
wheels of the economic growth of the country. By creating new products and
services, they stimulate new employment, which ultimately results in the
acceleration of economic development..
 Setting-up of new venture

• Before go to setting up of new venture, an entrepreneur should

aware the concept and role of new venture. Also he/she should take
actions to establish the unit.

• In the absence of proper planning, all the business activities of the

organization becomes meaningless. Therefore an entrepreneur must
have creativity, independent thought and planning skill.
 Steps in planning of setting-up a new venture:
Step1: Identifying & Generating the idea or opportunity
 It is the first and most important step.
 Here various techniques can be adopted for idea generation.

Brainstorming- a problem-solving method that involves the spontaneous

contribution of creative ideas and solutions.
Such as: Group discussion- a group of individuals, typically who share a similar
interest, who gather either formally or informally to discuss ideas, solve problems, or
make comments.
Data collection - the process of accumulating information and analysing
variables of interest.
Market research - any set of techniques used to gather information and
better understand a company's target market. Marketers can interview a person in
their home, on the street, in the office or in a market research facility.
Step2: Environmental scanning

 It refers to the understanding of:

 Economic
 Political
Because directly they can influence the
 Technological
function of the business.
 Demography
 Socio-cultural
Step3: Feasibility study:
• It refers the way of converting of plan/ idea into reality.
• It means the detail study of the business. Such activity helps to found the
solution for each problem arise (it may be material cost or other resources).
• It can identify the logistical, financial, and market challenges of a proposed
business by evaluating: What the estimate would be to fund the project.
When the potential business will offer a return on investment. The market
for the proposed product or service.
• After feasibility study, an entrepreneur have to know about the entire project
of new venture is either feasible or not.
Step4: Selecting the type of business:
• An entrepreneur should select the business type for which there is
more demand.
• Example: an industry and commercial market

Step5: scale/ size of the selected business:

• During selection, the business size may either large scale or

small scale business.
• Way of scaling is depending on the capital and the demand.
Step6: Selection of product

• Since product is the heart of an organization, selection of a product should be

takes place carefully. Because;
 The selected product should be acceptable everywhere.
 Profitable product
 Product market should be wide
 Knowledge of technical process for manufacturing a product
 Some especial gain can be obtain if manufacturing is in industrial zone. i.e.
special economic zone and agro export zone.
step7: preliminary project report

 It is a simple data sheet that allows to provide the following information;

a. Requirement of money, material and manpower for setting-up the project.
b. Type of technology and machinery/ equipment are required for the project.
c. Capital- how much economic gain (profit) from the project.

 Additional information includes:

1. Entrepreneur’s profile; (name, address, education level, work experience,
name& location of the project etc.)
2. Detail of fixed and working capital requirement
3. Total cost of the project.
4. Source of capital ( share, loan ….)
Step8: Selection of form of the ownership

• The selection is depend on the amount of capital, liability, personal

touch and legal formality.
• The form of the business ownership may be;
 Sole proprietorship
 Partnership
 Joint company

Step9: Location of business unit

An entrepreneur should take location decision of a venture very
carefully.
 Cont. …
• During location decision, an entrepreneur has to take into
consideration the following factors:
 Availability of the raw material, power, labours, banking, facilities,
transportation and communication facilities.
 Nearness to market
 Modern information facility

Step10: Requirement of finance & made capital structure:

• It includes fixed and working capital which may be loan, share or
debenture .
Step11: Acquisition of intellectual property (IP)

• The intellectual property refers creativity and invention. Or it is a

type of property consisting of intangible creations of the human
intellect, and typically includes copyrights, patents, trademarks, and
trade secrets. Examples of intellectual property include books, music,
movies, artwork, computer software, and other creative works.
• The employer owns the intellectual property created by the employee
because the employer pays the employee in the form of a salary to do
that work unless there is a specific agreement between the parties to
the contrary
Step12: physical facilities
• Refers the type of machinery and equipment how to manufacture.
Step13: Registering small scale industries (SSI) unit Cont. …
• Small Scale Industries (SSI) are industries that manufacture, produce and render services on
a small or micro scale level.
• Registration is done with the state direction of industries. This helps to get many types of
assistance from the government agencies. Few examples of small-scale industries are paper,
& local chocolate etc. are mostly settled in an urban area as a separate unit.
• Step14: Statutory obligation- An obligation is the responsibility of a party to meet the terms
of a contract or agreement.
• The statutory obligations applicable to
the design, construction and operation of buildings are extensive and complicated. It
includes:
 Municipal licence - A business licence is an official permit that must be obtained to carry
out certain types of business activity
 Power connection
 SI(standard institute) certificate- It is valid only for one year and founded to establish
standards for the orderly growth of industries.
 Entrepreneurship and its feasibility analysis

 What is feasibility analysis?

 It is the process of determining weather a business idea is viable /workable.
 It is the preliminary evaluation of a business idea, conducted for the purpose of
determining weather idea is worth pursuing (tracking of capital & other resources).

 What is a feasibility analysis for entrepreneurship?

 A feasibility study allows a business to address where and how it will operate, its
competition, possible obstacles, and the funding needed to begin. The business
plan then provides a framework that sets out a map for following through and
executing on the entrepreneurial vision.
 What are the 4 types of feasibility analysis in entrepreneurship?
 There are four main elements that go into a feasibility study: technical feasibility,
financial feasibility, market feasibility (or market fit), and operational
feasibility.
 Cont.
 Technical Feasibility- it checks for accessibility of technical resources in the
organization. The main technological resources are time, knowledge, the internet and
software, which help businesses in a major way, like marketing and staying
connected. In case technological resources exist, the study team will conduct
assessments to check whether the technical team can customize or update the existing
technology to suit the new method of workings for the project by properly checking
the health of the hardware and software.

 Financial Feasibility- it allows an organization to determine cost-benefit analysis. It

gives details about the investment that has to go in to get the desired level of benefit
(profit). Factors such as total cost and expenses are considered to arrive
simultaneously. entrepreneurs can largely benefit from the economic analysis done.
Assessing the return on investment of a particular asset or acquisition can be a
financial feasibility study example.
 Cont.

Market Feasibility- It assesses the industry type, the existing

marketing characteristics and improvements to make it better,
the growth evident and needed, competitive environment of the
company’s products and services. Preparations of sales
projections can thus be a good market feasibility study
example.

Organization Feasibility- it focuses on the organization’s

structure, including the legal system, management team’s
competency, etc. It checks whether the existing conditions will
suffice to implement the business idea.
When to conduct feasibility analysis?

Timing of feasibility analysis:

 The proper time to conduct feasibility analysis is early in thinking through
the prospects for a new business
 Before screening idea a lot of resources are spent on them.
 Generally, a feasibility study of a business can help choose the best available
alternative by assessing the opportunity cost.
 It evaluates whether the project is likely to succeed or not. It highlights the key
objectives of the project and lists out the benefits, risks, and roadblocks. It also
offers alternative solutions and the means to achieve them.
 Exercise

1. How to asses/evaluate a feasibility study of an entrepreneurial

opportunities?

2. Why is a feasibility study important for entrepreneurship?

Growing The New Venture
 Introduction
• When ventures are able to generate sufficient cash flows to survive
then the venture moves into the growth phase.

• Different functional skills, technical skills and more reliable

information are needed.

• The activities of the entrepreneur have to change, from innovation

to delegation, communication, and organization. This is a very
basic change that many entrepreneurs never make.
 Cont.
• New entrepreneurial ventures, once successfully pass the formation
stage, often encounter problems caused by their very rapid growth.

Problems of rapid growth

It can cover up poor management or resource wastage

It might lead the venture away from its goals and objectives

Little attention to training and employment development

Can lead to stress

Can lead to improper delegation and control

 Growth of Entrepreneurship
• A successful venture is define in terms of growth.

• The entrepreneurial objective of a venture is to grow and

exceed the vision that initially fired up the founders.
– To achieve this, their must be understanding of product life cycle.

• There is a life cycle to the initial concept that is associated with

the demand for the product or service on which the company is
founded.
 Product Life Cycle Stages
 Each stage has its costs,
opportunities, and risks,
and individual products
differ in duration.
 The sales volume and
profit level also changes
from stage to stage as
shown in Fig.
1. Introduction Stage
• This is the launch period for the venture.
• As the product is not known to all consumers and they take time to shift from
the existing products,
– Sales volume and profit margins are low
Costs are relatively high
– Distribution is limited
– Competition is very low and price is relatively high

• Heavy expenditure is incurred on advertising to gain quick acceptance.

• Often a product incurs loss during this stage due to high startup costs and
low sales turnover.
 Cont. …
The following strategies may be adopted to introduce a product successfully

i. ‘Money-back’ guarantee may be offered to encourage the people

to try the product.

ii. Attractive gift as an ‘introductory offer’ may be offered to

customers or dealers.

iii. Attractive discount to dealers.

iv. Some unique features built into the product

2. Growth Stage
• As the product gains acceptance, demand and sales grow rapidly, due
to these production and distribution are widened.
• The promotional expenditure remains high because of increasing
competition.
• Competition increases and selling prices fall.

• Profits are high on account of large scale production and

rapid sales turnover.
 Cont. …
During the growth stage, following strategies may be adopted:
i. Distribution channels are strengthened to make the product easily
available wherever required.

ii. Customer service is enhanced.

iii. Brand image of the product is created through advertising and

publicity.

iv. New versions of the product may be introduced to satisfy the

requirements of different types of customers.
3. Maturity Stage

• During this stage prices and profits fall due to high competitive
pressures.

• Growth rate becomes stable and weak firms are forced to leave the
industry.

• Heavy expenditure is incurred on promotion to create brand loyalty.

• Firms try to modify and improve the product, to develop new uses of
the product and to attract new customers in order to increase sales.
 Cont. …
In order to prolong the maturity stage, a firm may adopt the following
strategies:

i. Brand image of the product may be emphasised.

ii. Lifetime or longer period warranty is offered.

iii. New markets may be developed.

iv. New uses of the product are developed.

v. Reusable packaging is introduced.

4. Decline Stage
• Few new customers buy the product and repeat orders disappear.

• Prices decline further due to stiff competition and firms fight for
recalling market share.
• Sales and profits certainly fall, unless substantial improvements in
the product or reduction in costs are made.
• Promotion expenditure is radically reduced.

• The decline may be rapid or slow.

 Cont. …
In order to avoid sharp decline in sales, a firm may adopt the
following strategies:

i. New features may be added in the product and the product is

repositioned.

ii. The packaging may be made more attractive.

iii. Economy packs or models may be introduced to recover

demand.
iv. Selective distribution may be adopted to reduce costs.
Advantages of Product Life Cycles
• Firstly, the concept indicates that products have a limited life and
management must develop new products or improve existing ones to replace
them to maintain sales and profits.

• Secondly, the concept serves as a framework for taking sound marketing

decisions at each stage of the product life-cycle.

• Thirdly, the product life-cycle points out the need for significant and

periodic adjustments in the marketing strategy

Alternative Approaches to Starting a New Business Venture

Four Alternatives to Starting New Business Venture

1. Starting a new business

2. Opening a franchised business

3. Entering a family business

4. Buying an existing business

 Starting a New Business
 Advantages of start-ups

– Begin with a clean schedule

– Use the most up-to-date technologies

– Provide new, unique products or services

– Can be kept small deliberately to limit the magnitude of possible losses.

 Disadvantages of start-ups

– No initial name recognition

– Require significant time

– Very difficult to finance

– May not have experienced managers and workers

  Franchising A Business

• Franchise is a legal agreement that allows a business to be operated using the

name and business procedures of another firm.
• According to the Franchise Council of Australia, there are 2 main franchise types:

1. A business format franchise in which the whole business concept is licensed and
standardized, including the name, appearance and method of carrying on the
business (e.g. fast food outlet)
2. A product and trade name franchise in which the franchisee is:
– Licensed to sell products manufactured by the franchisor (e.g. new car dealership)

– Licensed to manufacture and sell the franchisor's products (e.g. soft drink bottling).
 Cont. …

Advantages of buying a franchise

• You don't necessarily need business experience to run a franchise.

• Franchisors usually provide the training you need to operate their business

model.

• Franchises have a higher rate of success than start-up businesses.

• It may cost less to buy a franchise than start your own business of the same

type.
 Cont. …
Disadvantages of buying a franchise
• Franchise agreements pushed how you run the business, so there may
be little room for creativity.
• There are usually restrictions on where you operate, the products you
sell and the suppliers you use.
• Buying a franchise means ongoing sharing of profit with the
franchisor.
• No guarantee of success.
 Buying an Existing Business

 Advantages of purchasing an existing business

– Established customers
– Business processes are already in place
– Often requires less cash outlay
 Disadvantages of purchasing an existing business

– Finding a successful business for sale that is appropriate for you

– Existing employees may resist change
– Facilities and equipment may be obsolete
 Family businesses
 Advantages of family businesses
• Common values - you and your family are likely to share the same ethos and
beliefs on how things should be done.
• Strong commitment - you're more likely to put in the extra hours and effort
needed to make it a success.

• Loyalty - strong personal bonds mean you and family members are likely to
stick together in hard times.

• Stability- knowing you're building for future generations encourages the long-
term thinking needed for growth and success.
 Cont. /
 Disadvantages of family businesses

• Lack of skills or experience – some family businesses will appoint family

members into roles that they do not have the skills or training for.

• Family conflict –disputes within a family business can become personal as the
staff are working with the people closest to them.

• Favouritism - only promote the best person for the job whether they are a relative
or not? .This can sometimes be difficult if family members are involved.

• Succession planning – many family business owners may find it difficult to

decide who will be in charge of the business if they were to step down.
 Project Work

THE BUSINESS PLAN

 What is a Business Plan?

• It is a written document prepared by the entrepreneur that

describes all the relevant internal and external elements and
strategies for starting a new venture.

• It is an integration of functional plans such as marketing, finance,

manufacturing, sales and human resources.
 Who should write the business plan?
• The business plan should be prepared by the entrepreneur.

• The entrepreneur may consult with many other sources in its preparation, such as
lawyers, accountants, marketing consultants, and engineers.
• What do you think about hiring an outside professional to prepare the business
plan??
 Provide the structure and confidence that they need to make decisions about funding
and supporting your company.
 Helps you identify potential pitfalls in your idea.

 Identify experts and professionals who are in a position to give you invaluable advice
 Who Reads The Plans?

• The business plan may be read by employees, investors, bankers,

venture capitalists, suppliers, customers and consultants.

• There are three perspectives that should be considered in

preparing the plan :-
– Perspective of the entrepreneur
– Marketing perspective
– Investor’s perspective
 Why they write a Business Plan?
• The business plan is valuable to the entrepreneur, potential investors,
or even new personnel, who are trying to familiarize themselves with
the venture.
• A plan does the following:
 It helps to determine the capability of the venture in a designated market

 It provides guidance to the entrepreneur in organizing his or her planning activities

 It serves as an important tool in helping to obtain financing.

 It will provide a roadmap for accountability around company performance

 Preparing the business plan

An elements of business plan

• A detailed business plan usually includes anywhere from 8 to 12
sections (depending on the idea, the industry and the technical
details).
• When developing any business, business plan is necessary to be
convinced that planning is a key aspect in the business
development process.
• Business plan increases the probabilities of business success.
Lay out of a Business Plan
1. Cover page
2. Table of contents
3. Executive summary
4. The industry and its products/services
5. Market Research and Analysis
6. The Economics of the business
7. Marketing Plan
8. Design and Development Plan
9. Manufacturing and Operations Plan
10. Management Team
11. Overall Schedule
12. Critical Risks, Problems and Assumptions
13. Appendices
 Cont...
1. Cover page:- used to give an overview of all the key information of your business. This includes your
company name, logo, address, and any other information that may define your business.

2. Table of contents:- Includes a list of Sections, Subsections, Appendixes and any other
information and the pages on which they can be found.
3. Executive Summary:-
– The first section in the body of the business plan is usually an executive summary.
– The summary is usually short and concise (one or two pages).
• It usually contains each of the following paragraph:-

A. Description of business concept and the business:-

• Explain how your product or service will fundamentally change the way customers
currently do certain things.
 Cont...
B. The opportunity and strategy:-
– Summarize what the opportunity is, why it is compelling, and the
entry strategy planned to exploit it.

C. The target market and projections:-

– Identify and briefly explain the industry and market.

D. The competitive advantages:-

– Indicate the significant competitive edges you enjoy.
– Competitors weaknesses and vulnerabilities; and other Industry conditions
 Cont..
3. The industry and its products/services
– A major area of consideration is the company, its concept for its
products/services and its interface with the industry in which it
will be competing.
A. The industry:-
• Present the current status and prospects for the industry in
which the proposed business will operate
• Discuss briefly market size, growth trends, and competitors.
 Cont..

B. The company and the concept:-

– Describe generally the concept of business, what business your company is
in or intends to enter, what product(s) or service(s) it will offer.
C. The products/Services:-
– Describe in some details each product and services and its application , its
delivery system.
– Emphasize any unique features of the product or service

D. Entry and growth strategy:-

– Indicate key success variables in your marketing plan
 Cont..
4. Market Research and Analysis:-
Information in this section needs to support the declaration that the venture
can capture a substantial market in a Growing industry and stand up to
competition.
A. Customers:-
• Discuss who are or will be the customers for the products or services.
B. Market size and trends:-
• Show for five years the size and treads of the current total market and the
share you will have.
 Cont..
C. Competition and competitive edges:-
• Make a realistic assessment of the strengths and weaknesses of
competitors.
D. Estimated market share and sales:-
• Summarize what will make it your products saleable in the face of
current and potential competition.
E. Ongoing market evaluation:-
• Explain how you will continue to evaluate your target markets; assess
customer needs and service.
 Cont..
5. The Economics of the business:-

The economic and financial characteristics of the business.

A. Gross and operating margins:-
• Describe the magnitude of the gross margins (i.e. Selling price less variable
costs) and the operating margins for each of the product(s) and/or service(s)
you are selling in the market.

B. Profit potential and durability:-

• Describe the magnitude and expected durability of profit stream the
business will generate.
 Cont..
C. Fixed, variable, and semi variable costs:-
– Provide a detailed summary of fixed, variable, and semi variable costs.

D. Months to breakeven:-
– The break-even point helps a business see how much sales are needed to
cover costs and expenses in order to start making a profit.

E. Months to reach positive cash flow:-

– Given the above strategy and assumptions, show when the venture will
attain a positive cash flow.
 Cont..
6. Marketing Plan:-
 The marketing plan descries how the sales plans will be attained.
 The marketing plan needs to describe what is to be done, how it will be done,
when it will be done, and who will do it.
A. Overall marketing strategy:-
• Describe the specific marketing philosophy and strategy of the company.
B. Pricing:-
• Discuss pricing strategy and compare your pricing policy with those of your major
competitors
C. Sales tactics:-
• Describe the methods that will be used to make sales.
 Cont..
D. Service and warranty policies:-
– If your company will offer a product that will require service, warranties
or training, indicate the importance of these to the customers

E. Advertising and promotion:-

– Describe the approaches the company will use to promote the
products.

F. Distribution:-
– Describe the methods and channels of distribution you will employ.
 Cont..
7. Design and Development Plan:-

The nature and range of any design, development work ,the time and money
required before a product or service is marketable need to be considered in detail.

A. Development status and tasks:-

– Describe the current status of each product and explain what remains to be done
to make it marketable.

B. Difficulties and risks:-

– Identify and major anticipated design and development problems and define
approaches to their solution.
 Cont..

D. Product improvement and new products:-

– In addition to describing the development of the initial product, discuss any
ongoing design.

E. Costs:-
– Present and discuss the design and development budget, including costs of
labor, materials, consulting fees, and so on.

F. Proprietary issues:-
– Describe any patent, trademark, copyright or intellectual property rights you
own or are seeking.
 Cont..

8. Manufacturing and Operations Plan:-

Describe the location of the new venture in terms of Labor availability, wage rate,
proximity to suppliers and customers and community support.
A. Strategy and plans:-
• Describe the manufacturing processes.

B. Operating cycle:-
• Describe the lead/lag times that characterize the fundamental operating
cycle in your business.
 Cont..
C. Geographical location:-
• Describe the planned geographical location of the business.

D. Facilities and improvements:-

• Describe the facilities and explain future equipment need.

E. Regulatory and legal issues:-

• Discuss any relevant state, federal, or foreign regulatory
requirements.
 Cont..
9. Management Team:-
This section of the business plan includes a description of the key
management personnel and their primary duties.
A. Organization:-
– Present the key management roles in the company and the individuals who
will fill each position.
B. Key management personnel:-
– For each key person, describe in detail career high-light, skills.
C. Management compensation and ownership:-
– State the salary to be paid, the stock ownership planned.
 Cont..

D. Other investors:-
– Describe here any other investors in your venture.

E. Employment and other agreements and stock option and bonus plans.
F. Board of directors:-
– Discuss the company’s philosophy about the size and composition of the board.

G. Other shareholders, rights and restrictions.

H. Supporting professional advisors and services.
 Cont..

10. Overall Schedule:-

A schedule that shows the timing and interrelationship of the major

events necessary to launch the venture.

• Create your schedule as follows:-

Step 1:- Lay out for cash conversion cycle in the business.
Step 2:- Prepare a month-by-month schedule that shows the timing of
activities product development, market planning, sales programs,
production etc.
 Cont..

Step 3:- Show on the schedule the deadlines or miles-stone critical

to the venture.

Step 4:- Show on the schedule the “ramp up” of the number of

management personnel, the number of production and operations

personnel.

Step 5:- Discuss the schedule activities most likely to cause a

schedule slippage.
 Cont..

11.Critical Risks, Problems and Assumptions:-

Description of the risks and problems and assumptions

for sales projections.

A. Discuss assumptions and risks implicit in your plan.

B. Identify and discuss any major problems and other risks

 Cont..

12. The Financial Plan:-

It is basic to the evaluation of an investment opportunity and need to
represent your best estimates of financial requirements.
A. Actual income statements and balance sheet.
B. Pro forma income statements.
C. Pro forma balance sheets.
D. Pro forma cash flow analysis.
E. Break-even chart.
F. Cost control.
G. Highlights.
 Cont..
Appendixes:-
Include relevant information here that is too extensive for the body of the
business plan but which is necessary.
A. Product spec or photos
B. List of references
C. Suppliers of critical components
D. Special location factors
E. Reports form consultants
F. Copies of any critical regulatory approval and licenses etc.
“ Success in your future life”