Business Planning and the Business Plan
What this domain tests
The structure and purpose of a business plan, and whether you can write objectives and figures that a bank or a school examiner would accept.
Core concepts
- A business plan is a written document describing the venture, its market, operations, people and finances; used as an internal roadmap and as a funding tool for banks, MUDRA, PMEGP or investors.
- Standard sections: executive summary, business description, product or service, market and competitor analysis, marketing and sales strategy, operations plan, management and organisation, financial projections, risk analysis, appendix.
- The executive summary is written last but placed first; it must stand alone in two minutes of reading.
- SMART objectives: Specific, Measurable, Achievable, Relevant, Time-bound. "Increase sales" fails; "sell 2,000 units per month by March next year" passes.
- Financial projections: projected income statement, cash-flow statement, balance sheet, break-even point, funding requirement and use of funds.
- Elevator pitch: 30–60 seconds covering problem, solution, customer, and ask.
Worked example
A bakery plan states fixed costs of ₹40,000 a month (rent ₹15,000, salaries ₹20,000, utilities ₹5,000) and a contribution of ₹20 per cake (selling price ₹120 minus variable cost ₹100). Break-even = fixed cost ÷ contribution = 40,000 ÷ 20 = 2,000 cakes a month, about 67 a day. Reasoning: if the market survey shows only 50 cakes a day of demand, the plan is not viable at that price or cost and must be revised - this is exactly how a bank reads the plan.
Traps that cost marks
- Writing an executive summary first, before the numbers exist.
- Showing only a profit projection and omitting the cash-flow statement; profitable firms still fail on cash.
- Objectives without a number and a date, which are not measurable.