Developing a Robust Business Plan
Production Plan Essentials
Production process types include:
- Project Production: Unique, one-time projects.
- Batch Production: Producing a limited number of identical items in batches.
- Flow Production: Continuous production of standardized items.
Key Production Steps
Follow these five crucial steps:
- Match Demand with Required Capacity: Align production capabilities with market needs.
- Define Production Steps: Clearly outline each stage of your production process.
- Production Planning and Scheduling: Consider all factors including customers, processes, facilities, equipment, raw materials, personnel, costs, and expenses.
- Monitor and Control: Track key performance indicators such as downtime, waste, production rate, equipment effectiveness, setup time, rejection rate, and on-time orders.
- Manage Production Staff: Ensure your team is well-organized and efficient.
- Adjust Accordingly: Be flexible and adapt your plan based on monitoring results and unforeseen circumstances.
Common Production Mistakes to Avoid
- Failing to anticipate setbacks.
- Maintaining distance from operations; instead, foster close involvement.
- Neglecting equipment maintenance.
Organizational Plan: Structure & Hierarchy
This plan helps you understand your team’s structure and hierarchy, and typically consists of two main parts:
- It covers the overall organization of your company.
- It focuses specifically on your management team.
Purposes of the Organizational Plan
The organizational plan serves several vital purposes:
- To define the company’s structure.
- To outline roles and responsibilities.
- To detail team profiles and qualifications.
- To list ownership details, such as shares.
- To provide information on the Board of Directors.
- To demonstrate preparation for future growth.
Corporate Structure
This section details how functional departments and teams are organized and how they interact with each other. Include an organizational chart that clearly illustrates the hierarchy. Be prepared to explain:
- Functional departments.
- Hierarchy.
- Roles and contributions of each team member.
Ownership Details
This section is crucial for potential investors to understand who holds ownership in the company. Include:
- Names of owners.
- Percentage of ownership.
- Level of involvement with the company.
- Forms of ownership (e.g., common or preferred stock, general partner, limited partner).
- Outstanding equity equivalents (e.g., options, warrants, convertible debt).
- Common stock details (e.g., authorized or issued shares).
Executive Team Profiles
Introduce your key leaders, providing the following information for each:
- Name
- Position description
- Primary responsibility
- Education
- Special skills
- Prior employment
- Industry recognition
- Years with the company
- Compensation basis
Board of Directors
Provide details on your board members and their backgrounds:
- Names
- Board positions
- Level of involvement
- Background information
- Past contributions
- Industry recognition
- Years with the company
- Compensation basis
Financial Plan for Investors
The financial plan is essential for gaining investor confidence. It includes:
Sales Forecast
List every product and service your company offers, along with projected sales volumes.
Cost Assumptions
Estimate both variable (per unit) costs and fixed costs. Project total cost using the formula: Total Cost = Sales Volume × Unit Variable Cost + Fixed Cost.
Expense Assumptions
Estimate expenses for various departments, including sales, production, human resources, and accounting.
Main Transactions
Detail both one-time and recurring financial transactions.
Trial Balance and Balance Ledger
Include your trial balance and balance ledger for a clear financial overview.
Income Statement (Profit & Loss)
Present your projected income statement, showing profitability.
Balance Sheet
Provide a balance sheet outlining your assets, liabilities, and equity.
Cash Flow Statement
Detail your projected cash inflows and outflows.
Financial Ratios
Include key financial ratios to demonstrate your company’s financial health.
Break-Even Point Analysis
Calculate your break-even point to show the sales volume needed to cover all costs.
Financial Assumptions & Verification
Clearly state your business assumptions. Ensure all calculations are accurate and numbers are backed up. Remember that as company income increases, so does income tax.
Financial Channels in Mexico
Explore various financing options available in Mexico:
- Bank Credit: Research specific characteristics and requirements of bank loans.
- Government Financing: Look into government programs and subsidies for businesses.
- Business Angels: Connect with private investors who often provide capital and significant industry knowledge.
- Partners with Capital: Seek partnerships with individuals or entities willing to invest capital.
- Venture Capital: Consider venture capital firms, similar to models seen on shows like “Shark Tank.”
Crafting Your Executive Summary
The Executive Summary is a concise version of your full business plan, typically condensing 10-50 pages into 1-2 pages.
Key Components of an Executive Summary
Ensure your summary includes these essential elements:
- Introduce your business purpose.
- Provide a company description.
- Outline the problem your business solves and your proposed solution.
- Present your market analysis.
- Describe your business model.
- Detail your marketing and sales strategies.
- Introduce your team (both hired and those to be hired).
- Provide a financial summary.
- State your required funding.
Tips for a Powerful Executive Summary
- Understand Your Audience: Tailor your summary to who will be reading it.
- Develop an Elevator Pitch: Create a concise, impactful summary that can be delivered quickly.
- Keep it Short and Sweet: Be brief and to the point.
- Write it Last: Complete your full business plan before writing the summary to ensure accuracy and completeness.
- Structured Format: Use a clear, organized format with main points highlighted.
- Check for Mistakes and Inconsistencies: Thoroughly proofread to eliminate errors and ensure coherence.