Business Plan 

: The business plan looks forward in time, projecting future financial

performance and financial position.

BUSINESS PLAN

A business plan is a comprehensive, written description of the business of an enterprise. It is a

detailed report on a company's products or services, production techniques, markets and clients,
marketing strategy, human resources, organization, requirements in respect of infrastructure and
supplies, financing requirements, and sources and uses of funds.

The business plan describes the past and present status of a business, but its main purpose is to
present the future of an enterprise. It is normally updated annually and looks ahead for a period
of usually three to five years, depending on the type of business and the kind of entity.

PREPERATION OF BUSINESS PLAN

What goes in a business plan? The body of the business plan can be divided into four distinct
sections: 1) the description of the business, 2) the marketing plan, 3) the operations plan and 4)
the financial plan.

1). DESCRIPTION OF THE BUSINESS

In this section, provide a detailed description of your business. An excellent question to ask
yourself is: “What business am I in?” In answering this question include your products, market
and services as well as a thorough description of what makes your business unique. Remember,
however, that as you develop your business plan, you may have to modify or revise your initial
questions. The business description section is divided into three primary sections.

Section 1 actually describes your business,

Section 2 the product or service you will be offering and

Section 3 the location of your business, and why this location is desirable (if you have a
franchise, some franchisors assist in site selection).

1. Business Description When describing your business, generally you should explain:

1. Legalities - business form: proprietorship, partnership, corporation. The licenses or permits

you will need.

2. Business type: merchandizing, manufacturing or service.

3. What your product or service is.

4. Is it a new independent business, a takeover, an expansion, a franchise?

5. Why your business will be profitable. What are the growth opportunities? Will franchising
impact on growth opportunities?

6. When your business will be open (days, hours)?

7. What you have learned about your kind of business from outside sources (trade suppliers,
bankers, other franchise owners, franchisor, publications). A cover sheet goes before the
description. It includes the name, address and telephone number of the business and the names of
all principals. In the description of your business, describe the unique aspects and how or why
they will appeal to consumers. Emphasize any special features that you feel will appeal to
customers and explain how and why these features are appealing. The description of your
business should clearly identify goals and objectives and it should clarify why you are, or why
you want to be, in business.

2. Product/Service

Try to describe the benefits of your goods and services from your customers' perspective.
Successful business owners know or at least have an idea of what their customers want or expect
from them. This type of anticipation can be helpful in building customer satisfaction and loyalty.
And, it certainly is a good strategy for beating the competition or retaining your competitiveness.
Describe: 1. What you are selling. 2. How your product or service will benefit the customer. 3.
Which products/services are in demand; if there will be a steady flow of cash. 4. What is
different about the product or service your business is offering.

3. The Location

The location of your business can play a decisive role in its success or failure. Your location
should be built around your customers, it should be accessible and it should provide a sense of
security. Consider these questions when addressing this section of your business plan: 1. What
are your location needs? 2. What kind of space will you need? 3. Why is the area desirable? the
building desirable? 4. Is it easily accessible? Is public transportation available? Is street lighting
adequate? 5. Are market shifts or demographic shifts occurring? It may be a good idea to make a
checklist of questions you identify when developing your business plan. Categorize your
questions and, as you answer each question, remove it from your list.

4. THE MARKETING PLAN

Marketing plays a vital role in successful business ventures. The key element of a successful
marketing plan is to know your customers -- their likes, dislikes, expectations. Your marketing
plan should be included in your business plan and contain answers to the questions outlined
below.

1. Who are your customers? Define your target market(s).

2. Are your markets growing? steady? declining?

3. Is your market share growing? steady? declining?

4. Are your markets large enough to expand?

5. How will you attract, hold, increase your market share?

5. THE MANAGEMENT PLAN

Managing a business requires more than just the desire to be your own boss. It demands
dedication, persistence, the ability to make decisions and the ability to manage both employees
and finances. Your management plan, along with your marketing and financial management
plans, sets the foundation for and facilitates the success of your business. Like plants and
equipment, people are resources-they are the most valuable asset a business has. You will soon
discover that employees and staff will play an important role in the total operation of your
business. Consequently, it's imperative that you know what skills you possess and those you lack
since you will have to hire personnel to supply the skills that you lack.

6) THE FINANCIAL MANAGEMENT PLAN

Sound financial management is one of the best ways for your business to remain profitable and solvent.
How well you manage the finances of your business is the cornerstone of every successful business
venture. Each year thousands of potentially successful businesses fail because of poor financial
management. As a business owner, you will need to identify and implement policies that will lead to and
ensure that you will meet your financial obligations. To effectively manage your finances, plan a sound,
realistic budget by determining the actual amount of money needed to open your business (start-up costs)
and the amount needed to keep it open (operating costs). The first step to building a sound financial plan
is to devise a start-up budget. Your start-up budget will usually include such one-time-only costs as major
equipment, utility deposits, down payments, etc.

Sources for Finance

Financing Your Startup is probably the biggest challenge faced by most entrepreneurs. In fact, almost
50% new business fails to cross the five-year mark. There could be many reasons for it but the most
important one is lack of funds. The biggest question on every entrepreneur’s mind is where to find
the funds to run your operations smoothly.

Even if you have somehow managed to get the initial money to set the ball rolling, finding funds for
running your startup and help it to compete against big players in the market requires substantial
amount of money. Here are top 10 sources you must explore to give your startup a financial injection
it needs.

1.Bank Loans: Whether you are looking for short, mid or long term financing for your
new startup, banks are the best place to get it. Make sure you generate enough revenue to repay the
bank loan and its interest. Reason why I have ranked bank loans on the top of this list is flexibility.
Banks offers you flexible loan payment options, which makes the loan repayment journey easier
for young entrepreneurs. Unlike other financial funding options, banks will give you a contract to suit
your needs.

2.Venture Capitalists: If you are lucky enough to live in country with many
venture capitalists, then you should focus on pitching your business model in front of them and get
your startup funded. These venture capitalists invest institutional money into startups, which has a
growth oriented business model. A venture capitalist will only invest in your startup, if he or she sees
huge growth potential.

3.Crowd Funding: Crowd funding has emerged as a new medium to acquire money
for your business. The growing popularity of crowd-funding sites such as Kickstarter has made it a
viable option to get you startup off the ground. If you are young, passionate and energetic, you have a
much better chance to secure funds for you business through crowd-funding campaigns. Here are
some of the amazing statistics on crowd funding to get you started.

4.Smart Lease: Entrepreneurs can also lease their fixed assets to get some cash for their
startup. Never put a lot of money down that you have to spend the same amount of cash, as you

would have done if you have bought the asset with a down payment. As compared to bank loans, you

might have to pay a little extra for leasing but this higher cost is more than justified because you do

not have to worry about the down payment.

5.Angel Investors: Your local angel investor group or network can prove to be a
great source for getting your startup up and running. That is where your networking skills come into
play. To secure funding from angel investors, it is important that you find angels that not only knows
your industry well but also share the same interests.

6.Startup Incubators: Another trend that has gained momentum in recent years is
of startup incubators and accelerators. Companies such as Y Combinator have made great strides,
joining hands with big companies, top universities and community development organizations to help
startups hit the ground running. These startup incubators provide you with the infrastructure to run
your business at an affordable price. Some of these companies even provide you with seed funding.

7.Boot strapping: The biggest downside of external funding is that the investors play
a major role in decision-making and you have to share a big chunk of what you earn with them,
which kills the main purpose you starting your own business. If you keep your finances in order from
day one, you can easily fund your own startup and will not have to depend on external sources for
help.

8.Local Economic Development Organizations: If you

need a lot of money, then you might have to use multiple sources mentioned on this list in
conjunction. For those entrepreneurs, who are taking loan from a bank, local economic development
organization offers great benefits. These organizations offer you loans at a fixed or very low interest
rate, especially if you have taken a loan from a bank. Additionally, they want ask for repayment
warranties and guarantees. Some loans charges you interest for couple of years while others offer you
the facility to accrue interest payment for a certain period.

9.Friends and Family: Have you ever considered pitching your business model in
front of your friends and family? I am sure you have not done that. If I am correct, then you need to
do it now. The best thing about getting friends and family members to fund your business is that they
are less demanding. They will ask you a small compensation in return for their investment. You can
also consider making your friend or family member your business partner

10.Customers: You might be thinking what does customer had to do with financing
your business. It is all about perspective. You have only seen customers as a revenue stream instead
of a funding source. Did you know that customers funds more than 40% of entrepreneurs. In his
famous book “Bootstrap to Billions”, Dileep Rao emphasized on the same point.

Conclusion

Whether you choose a traditional method such as a bank loan or an unconventional financing source
such as customers, entrepreneurs should always be on the lookout for funding options and seek
funding from any source they can think of. After reading this article, you might have realized that
getting your startup funded is not as difficult as many young entrepreneurs think.

All you have to do is to pitch your business model in an effective manner in front of the right people,
convince them that your startup has the potential to make it big and secure your funding. If you have
any other business financing option in mind, feel free to share it with us in comments section below.

INSTITUTIONAL SUPPORT TO
ENTREPRENEURS
The term institutional support refers to the part of economic environment of industry and
business. It consisting of authorities and institutions whose decisions and active support in form
of laws, regulation, financial and non-financial help brings a lot of changes in the functioning of
any business.

The institutions could be government owned, statutory, semi autonomous or autonomous. It is

the government or government supported institutions authorized to take up certain activities -
financing, marketing, project preparation, training the to promote industrial activities in the state.
There are three stages of promotion - inception stage, operational stage and expansion or
diversification stage. The Government through its plans and policies assisted the business houses
in facilitating in the above stages through various specialised institutions set up as per the law.
An entrepreneur who needs to set up a business unit of his own or with his friends and relatives
is supposed to know the various institutions or organizations working as per the law for the
purpose. Dissemination of information in this regard can only help them in achieving the very
dream of becoming a successful entrepreneur.

Promotional schemes of NABARD

1. Rural Entrepreneurship Development Programmes (REDPs)

REDPs are programmes that support capacity building of rural unemployed persons to enable
them to set up their own enterprises REDPs are conducted for a particular skill and unemployed
rural youth are trained in these programmes. Training period may vary from a minimum period
of 4 weeks to a max. period of 8 weeks. The trainee to be within the age limit of 18 and 50 years
Each programme to have about 25-30 participants. Programme to be conducted with the support
of NGOs NGOs should be a registered and having an experience of minimum 3 years.
Programme may be residential or non residential. NGO should have necessary infrastructure,
faculty support of their own or invite guest faculty. Grant covered for preliminary expenses, rent
for hall, Trg material, Boarding charges, stationery, honorarium to faculty/guest faculty and other
expenses. Incentive is available for handholding after training and settlement of trainees.

2. Skill Development Programme

Skill Upgradation (SDPs) Skill Development / Upgradation programmes aim to develop new
skill and / or upgrade / diversify the existing skills of Trainees. Useful for persons in rural areas
looking for wage employment or livelihood opportunities either through group or individual
activities.

3. Scheme for strengthening of Rural Haats -

Financing through Panchayat Raj Institutions (PRIs)

• Envisages financial assistance to PRIs like Grama or Taluk panchayats to develop a new rural
haat or improve an existing rural haat in their jurisdiction on pieces of land clearly owned or
being transferred to them for the said development.

• Assistance of a maximum of `5 lakh in the form of a grant is towards meeting of cost towards
infrastructure / amenities in the haat like open retail platforms, open shelter against sun and rain
over these platforms, power, drinking water and sanitation facilities and fencing of the premises.

• Assistance is to cover 90% of the total estimated expenses, balance being met by the concerned
PR institution.
4. Setting up of Marketing outlets -

Venture Capital Support for Local Marketing (Rural Mart) Envisages grant assistance to a group
of rural entrepreneurs like SHG members, artisans etc, to bridge initial viability gap in income
and expenses when they set up an outlet for marketing their produce locally in village centres,
nearby towns etc. for the purpose of covering initial losses Covers costs under monthly rent for
the premises, salary of one salesperson, a small sum for initial publicity for the venture and
miscellaneous expenses.

Presently, for a retail venture at a District Head quarters, assistance will be maximum of
`1,45,000/- (`75,000 for rental expenses for 15 months, `45,000 for sales persons remuneration
for 15 months and `25,000 for miscellaneous and publicity expenses) released in installments at
an interval of 5 months.

For Rural Marts at non-district Head quarters, maximum assistance will be `90,000/- (`45,000 for
rent expenses for 15 months, `30,000 for sales persons’ remuneration and `15,000 towards
publicity and miscellaneous expenses).

5. NABARD’s support for setting up Clusters

Cluster is a geographical concentration of rural artisans engaged in similar productive activity

with shared infrastructure, markets and services. The artisans of the same cluster are faced with
common opportunities and threats. The objective of cluster development is holistic development
through planned interventions to achieve the aim of raising the income level and thereby living
standards of artisans. NABARD supports two types of clusters - Participatory and Intensive In
the participatory cluster, NABARD’s intervention budget could be upto ` 15 lakh covering a
period of three years and in the intensive cluster, the budget could be upto `1 crore, covering a
period of 5 years.

6.Credit Linked Capital Subsidy Scheme

(CLCSS) for technological upgradation of Medium and Small Enterprises – GoI Scheme
Objective Technology upgradation of SSIs to enable them to compete in the market. Support to
public sector banks, RRBs, Coop banks, Pvt sector banks Credit linked investment in Plant and
Machinery of SSIs under approved sectors/ products

Loan ceiling – `100 lakh Rate of subsidy – 15% of investment in Plant and Machinery, subject
to a maximum of `15 lakh.
Schemes of Small Industries Development Bank of India (SIDBI)

SIDBI has devised a range of flexible and innovative credit products for the various sub-
segments of the MSE sector and also extends equity support to growth oriented SME units.
SIDBI extends direct financial assistance through its six zonal offices and over 75 branch offices.
Refinance assistance is canalized through Banks (Public sector, Private sector, Foreign and
Regional Rural Banks) and State Financial Corporations and State Industrial Development
Corporations. SIDBI’s financial assistance is categorized into the following broad groups:

1. Direct Finance

2. Bills finance

3. Refinance 4. International Finance

5. Micro Finance

6. Risk Capital

1. Direct Finance -

a) Direct Credit Scheme Eligible Borrowers under the scheme are:

I] New or existing SSI units.

ii] SSI units graduating to medium scale and

iii] Service sector units with an overall project cost not exceeding Rs. 25 crore

In the medium scale sector the eligible borrowers are:

i] New or existing medium sector enterprises, and

ii] Service sector units with an overall project cost above Rs. 25 crore and upto Rs. 250 crore
with Bank's assistance not exceeding Rs. 50 crore

Term loans are given in rupee or foreign currency for setting up of new units and expansion,
modernization, diversification and technology up gradation of existing units.

b) Marketing Assistance Scheme

Term loans are granted to MSEs for marketing of their products. The loan amount is normally
not below Rs.10 lakh if obtained directly from SIDBI. The Debt : Equity ratio is normally not
more than 2:1

c) Vendor Development Scheme

The scheme is for assistance to vendors of OEMs and other large corporates. The vendors could
be SMEs in the manufacturing or service sector. Assistance is extended through term loans for
expansion/modernization of SMEs and through invoice/bill discounting facility for working
capital requirements. SIDBI enters into MoU with large corporates, PSUs and MNCs having a
good SME vendor base for this scheme.

d) SME IT Loans

SIDBI and Intel have come together with a first-of-its kind initiative to help SMEs set-up or step-
up IT in their business.. Called SMEITLOANS, it provides an easy access for SMEs to get both
the finance and the technology to adopt IT, especially since the loan is available for hardware,
software, installations and service. Finance is available from Rs. 5.0 lakh to Rs. 25 lakh. Interest
charged is 11.5% p.a. on a diminishing balance basis. Visit www.smeitloans.com for more
details.

2. Bills Discounting Scheme.

Under the bills discounting scheme, medium and short term finance is given to purchasers/sellers
of equipment, machinery, components and parts, one of which should be in the SSI/SME sector
or an eligible service sector unit including those in the construction and transportation sector.
Bills discounting scheme ensures timely payment to units

3. Refinance through Banks and SFCs

Refinance is given through banks, State Finance Corporations (SFCs) and (SIDCs) for setting up
new small scale units or expansion, modernization, diversification etc. of existing units and for
all other activities eligible for assistance under the service sector. Service sector activities include
professional practice/consultancy ventures, tourism related activities / hospitals / nursing homes /
polyclinics / hotels / restaurants / marketing and industrial infrastructural projects. SIDBI
provides long term credit (Refinance) to banks, State Level Financial Institutions and State Level
Industrial Development Institutions for loans given by them to MSMEs. Cost of project under
Refinance Assistance in respect of service sector units should not exceed Rs.20 cr. for banks.
The project cost limit for SFCs/SIDCs is lower

4. International Finance

The schemes covered under this head are Pre-shipment Credit, Post-shipment Credit, Foreign
Currency Term Loans, Opening of Foreign Letters of Credit and Booking of Forward Contracts

Pre-shipment credit is given to SMEs in USD or Euro or in rupees. The period of credit is
maximum 180 days. Margin is minimum 10% and maximum 25%. Rate of interest is not more
than 0.75% over 6 month LIBOR.
Post-shipment credit is given in foreign currency to SME units/Export/Trading House for
sourcing their requirements from SMEs. Finance is given for sourcing requirements up to Rs. 1.0
cr. Rate of interest for export bills financing is same as pre-shipment credit. For post-shipment
credit it is as per RBI guidelines.

Foreign currency Term Loans are also given for setting up new projects as well as expansion,
diversification and technology up gradation. Repayment is maximum within five years. The
interest rate is 3.5 to 4 % above 6 month LIBOR.

5. Marketing Fund for Women

The assistance under the Fund is available to women entrepreneurs and organizations involved in
marketing of products manufactured by women entrepreneurs to increase their reach, both in
domestic and international markets. Finance from the Fund is given to marketing related service
providers either organizations or units in the corporate / co-operative / NGO sectors which are
providing support services like internet, trade related information, advertising, marketing
research, warehousing, common testing centres, etc. to enterprises owned and managed by
women.

6. Risk Capital to MSMEs

SIDBI has set up the ‘SIDBI Foundation for Risk Capital for MSMEs’ under which it has
evolved new products and mechanisms for providing risk capital to MSMEs in different size
groups and different industry segments. Some of the products introduced are equity and equity
like instruments and mezzanine instruments like optionally convertible debt and subordinate debt
for MSMEs. Apart from direct funding by SIDBI, various delivery channels like Banks, VC
funds, etc. would be used for providing risk capital to MSMEs.
 MANAGEMENT OF BUSINESS

Management refers to a set of functions designed to get things done through and with people
through efficiency in resources utilization to effectively attain predetermined goals.

Functions of Management:
Management functions represent the activities that managers should perform to achieve
organisational goals. In simple words, management functions are prescriptive in nature.

Basically, management comprises five functions, viz., Planning, Organising, Staffing, Directing,
and Controlling. 

1. Planning:
It refers to deciding goals and activities today to achieve them tomorrow. It is the first function
of management, because all other functions depend on planning. Planning involves determining
Vision (what the organisation wants to be in future), Mission (a statement of values, principles,
activities and Stakeholders), Objectives (qualitative and long-term), Goals (quantitative and
short-term), Strategies (Growth/ Stability/ Retrenchment at the corporate level and cost
leadership/differentiation or focus at the strategic business units’ level), Tactics (a smaller-scale
plan developed to implement a strategy), Operational plans like policies, programmes,
procedures, budgets, etc.

For planning to be effective, it also requires analysing environment, forecasting, decision making
and formulation of plans.

2. Organizing:
It involves identifying (what tasks are to be done) and grouping of activities (how the tasks are to
be grouped), dividing grouped activities into small jobs and tasks (who is to do them),
determining authority-responsibility relationship (who reports to whom, determining degree of
centralisation (where decisions are to be made) and creating organisational structure to
accomplish organisational attainments efficiently (doing this rightly with minimum of cost) and
effectively (doing the right thing). Organising also involves deciding about delegation of
authority, span of management, centralisation and decentralisation of authority
3. Staffing:
To man the organisation and to bring it into action, the staffing function undertakes manpower
planning, recruitment, selection, training, promotion, demotion, transfer, wage and salary
administration and industrial relations. However, now a day as there is a separate division of
human resources, many scholars do not include staffing in the list of functions of management.

4. Directing:
Like a film director, a manager too has to direct the efforts of his subordinates. Directing
includes the functions of leadership to influence the subordinates to work towards a common
goal; motivation – to voluntarily bring out the best out of subordinates in the best interests of an
organisation; communication – by way of issuing orders and instructions, guiding, counselling
and telling subordinates the right way to work and opening up of interactions and feedbacks; and
supervising the work on a regular basis.

5. Controlling:
It continuously involves setting the standards with which to measure the actual performance,
measurement of ongoing performance, matching it with the standards, finding variations (causes
of variations), and taking corrective action, if any. Control function is circular in nature, because
these must be repeated until goals are achieved.

Management Specialisation:
As organisation grows, it adds new areas to its existing management. With the pace of time many
specialized areas have been added to management.

1. Financial Management:
Financial management and financial managers are basically concerned with the financial
resources. Important decisions are taken with regard to financial planning, investments, and
dividends. Since finance is the life-blood of organizations, many CEOs and top managers come
from finance departments.

2. Marketing Management:
Marketing management is concerned with customers and hence involves market and marketing
research, product/service management, market communications, sales, and logistics and
distribution. Since marketing plays an important role as a profit centre, many people reach top
positions.

3. Operations Management:
Operations management is basically responsible for converting resources into goods/services. In
different companies the nature of operations may be different. A typical manufacturing company
involves production planning and control, plant layout, site selection, et al.

4. Human Resource Management:

Human Resource Management is responsible to get right people, at right time, in right number,
to orient them towards their duty through training, retain them and evaluate performance.

5. Administrative Management:
A general manager is part of administrative management. He belongs to none of the functional
areas. He knows a little about every function-jack of all and master of none. He basically
coordinates the activities of specialists.

6. Others:
Organisations do have other management positions, not part of the above functional area. Such
areas include public relations, innovation management (R&D), etc.