Reference no: EM131300611

Introduction:

A business plan is a road map that provides directions to a business, which help to plan its future and helps it avoid bumps on the road. The time spent making a thorough accurate business plan, and keeping It up-to-date, is an investment that pays big dividends in the long term. A business plan should conform to generally accepted guidelines regarding form and content. Each section should include specific elements and address relevant questions that the people who read the plan will most likely ask.

Case problem: Product Hunt Company

Aspiring entrepreneur Krystle Jacusalem transformed an email list experiment into a venture-funded start-up community with three thousand active members. It all started with a small team and product enthusiasts who self-aggregated into an online community. With positive feedback from her peers, Krystle decided to transform her email list into a website. In September 2016, right after launching her email list experiment, she built Product Hunt's first website mock up with her team. In order to succeed, a marketing strategy must be set out.

The team needs 5000 OMR infusion to use in research and development of the project. The team decided to make a loan from Small Medium Enterprise Development Fund (SMEDF) that supports Omani aspiring entrepreneurs. The SMEDF required them to submit a
business plan to support their loan application.

Your tasks: Writing a Business Plan

- Create a business name, logo, and location appropriate to the case scenario.

- Prepare a business plan that includes the following sections:

A business plan should be presented in a binder with a cover listing the name of the business, logo, address, phone number, e-mail and website addresses, date, and the name of the student. Remember, provide a plan that looks professional, is easy to read and is well-put-together. A table of contents follows mission and vision and the executive summary of statement of purpose, so that readers can quickly find the information or financial data they need.

Mission/Vision

The vision statement is at the heart of every successful business. This statement clearly and concisely communicates your business's overall goals, and can serve as a tool for strategic decision-making across the company.

A company's mission statement is your opportunity to define the company's goals, ethics, culture, and norms for decision-making. A mission statement answers the question, "Why does a business exist?" while a vision statement answers the question, "Where does a business going?"

Executive Summary

An executive summary, or management summary, is a short document or a section of a document, produced for business purposes, that summarises a longer report or proposal or a group of related reports in such a way that readers can rapidly become acquainted with a large body of material without having to read it all. It tells the reader what you want and why, right up front. For example, are you looking for a loan to remodel your company facility or to expand your product line or buy new equipment?

How will you repay your loan, and over what term? The questions that pertain to your situation should be addressed here clearly.

The summary or statement should be no more than half a page in length and should touch on the following key elements:

- The business concept describes the business, its product, the market it serves and the business' competitive advantage.
- Financial features include financial highlights, such as sales and profits.
- Financial requirements state how much capital is needed for start-up or expansion, how it will be used and what collateral is available.
- The current business position furnishes relevant information about the company, its legal form of operation, when it was founded, the principal owners and key personnel.

Description of the Business

The business description usually begins with a short explanation of the industry. When describing the industry, discuss what is going on now as well as the outlook for the future. Do the necessary research so you can provide information on all the various markets within the industry, including references to new products or developments that could benefit or hinder your business. Base your observations on reliable data and be sure to cite your sources of information when necessary. Remember that bankers and investors want to know hard facts--they would not risk money on assumptions.

When describing your business, mention the following that falls into (if applicable):
- wholesale/retail
- food service, manufacturing, hospitality and so on, am
whether the business is new or established.

- whether the business is a sole proprietorship, partnership, private or public limited company.

Next, list the business' principals and state what they bring to the business.

Continue with information on who the business' customers are, how big the market is, and how the product or service is distributed and marketed.

Description of the Product or Service

The business description can be a few paragraphs to a few pages in length, depending on the complexity of your plan. If your plan is not too complicated, keep your business descriptions short, describing the industry in one paragraph, the product in another, and the business and its success factors in two or three more paragraphs.

When you describe your product or service, make sure your reader has a clear idea of what you are talking about. Explain how people use your product or service and talk about what makes your product or service different from others available in the market.

Be specific about what sets your business apart from those of your competitors. Then explain how your business will gain a competitive edge and why your business will be profitable. Describe the factors you think will make it successful.

Market Analysis

A thorough market analysis will help you define your prospects as well as help you establish pricing, distribution, and promotional strategies that will allow your company to be successful vis-a-vis your competition, both in the short and long term. Prepare your market analysis by defining the market in terms of size, demographics, structure, growth prospects, trends, and sales potential. Next, determine how often your product or service will be purchased by your target market. Then figure out the potential annual purchase. Then figure out what percentage of this annual sum you either have or can attain. Keep in mind that no one gets 100 percent market share and that something as small as 25 percent is considered a dominant share. Your market share will be a benchmark that tells you how well you are doing in light of your market-planning projections.

You will also have to describe your positioning strategy. How you differentiate your product or service from that of your competitors and then determine which market niche to fill is called "positioning." Positioning helps establish your product or service's identity within the eyes of the purchaser. A positioning statement for a business plan doesn't have to be long or elaborate, but it does need to point out who your target market is, how you will reach them, what they are really buying from you, who your competitors are, and what your USP (unique selling proposition) is. How you price your product or service is perhaps your most important marketing decision.

- Competitive Analysis
Write here the purpose of the competitive analysis. This is to determine:
- the strengths and weaknesses of the competitors within your market.
- strategies that will provide you with a distinct advantage.
- barriers that can be developed to prevent competition from entering your market.
- any weaknesses that can be exploited in the product development cycle.

Competitor analysis is conducted to identify both direct and indirect competition for your business, both now and in the future. Once you have grouped your competitors, start analysing their marketing strategies and identifying their vulnerable areas by examining their strengths and weaknesses. This will help you determine your distinct competitive advantage.

Whoever reads your business plan should be very clear on who your target market is, what your market niche is, exactly how you will stand apart from your competitors, and why you will be successful doing so.

> Operations and Management

Describe the operations and management component of your plan to how the business functions on a continuing basis. The operations plan highlights the logistics of the organization, such as the responsibilities of the management team, the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business.

:- Financial components of your business plan. (Use MS Excel Application as one of the financial tools used by many businesses. Prepare an income statement in Sheet 1, Balance Sheet in Sheet 2, and Cash Flow in Sheet 3.)

After defining the product, market and operations, the next area to turn your attention to are the three financial statements that form the backbone of your business plan: the income statement, cash flow statement, and balance sheet.

The income statement is a simple and straightforward report on the business' cash-generating ability. It is a scorecard on the financial performance of your business that reflects when sales are made and when expenses are incurred. It draws information from the various financial models developed earlier such as revenue, expenses, capital (in the form of depreciation), and cost of goods. By combining these elements, the income statement illustrates just how much your company makes or loses during the year by subtracting cost of goods and expenses from revenue to arrive at a net result, which is either a profit or loss. You are required to prepare a projected income statement for one year of operation. In addition to the income statement, include a note analysing the results. The analysis should be very short, emphasising the key points of the Income statement.

The cash flow statement is one of the most critical Information tools for your business, since it shows how much cash you will need to meet obligations, when you will require It and where it will come from. The result is the profit or loss at the end of each month and year. The cash flow statement carries both profits and losses over to the next month to show the cumulative amount. The cash flow statement should be prepared on a monthly basis during the first year, on a quarterly basis for the second year, and annually for the third year. As with the income statement, you will prepare a cash flow statement and analyse it in a short summary in the business plan. Once again, the analysis does not have to be long and should cover highlights only.

The last financial statement you will need is a balance sheet. Unlike the previous financial statements, the balance sheet is generated annually for the business plan and is, more or less, a summary of all the preceding financial information broken down into three areas: assets, liabilities and equity. Balance sheets are used to calculate the net worth of a business or individual by measuring assets against liabilities. Again, in the business plan, you will prepare a balance sheet statement and an analysis of the balance sheet just as you need to do for the income and cash flow statements. The analysis of the balance sheet should be kept short and cover the key points. (Print the Excel Sheets directly from the MS Excel Application. The excel sheets will serve as appendices. This will be discussed and you will be guided in the class.)

Conclusion (Reflection)

A business plan would not automatically make you a success, but it will help you avoid some common causes of business failure, such as under-capitalisation or lack of an adequate market. As you research and prepare your business plan, you will find weak spots in your business idea that you will be able to repair. You will also discover areas with potential you may not have thought about before and ways to profit from them. Discuss those findings briefly.

References. Sources of information should be properly cited using Oxford Referencing style.