Business Plan Make Your Ideas Become Reality
Business Plan
Make Your Ideas Become Reality
1. Why a business plan?
2. A made to measure tool
3. A goal-orientated procedure
4. Content
5. Presentation
6. The interview
Checklists (red section)
Our addresses 62
1. Why a business plan?
The basis for a new company or for the expansion of an existing
one is a good business idea. But this is of no use unless it is
actually implemented. Successful implementation means convincing your investors, business partners and staff. The proper
tool for this is the business plan.
The business plan shows methodically and comprehensibly
how the business idea is to be put into effect, what resources
are necessary for this and what results are expected.
Typical real-life situations that require a business plan are, for
example, the initial setting up of a company, an expansion
phase, a change of ownership, a restructuring or turnaround,
and follow-up planning. But, in general, it is also advisable to
stand aside periodically from the hurly-burly of day-to-day business in order to engage in fundamental reflections about the
future direction of the company. These are best drawn up in the
form of a business plan.
The purpose of this booklet is to provide practical guidance to
people running small and medium-sized companies on how
to draw up their own business plan. In every case, experience
shows that without a business plan it is impossible to obtain
the financial resources to expand your company!
2. A made to measure tool
Just as each company or project is unique, the business plan
must also be unique. There is no such thing as an off-the-shelf
plan. The business plan has to be designed precisely to match
the information needs of the potential investor or lender and
the specific situation of the company. It is equally important
to present all the relevant information in an easily assimilable
Potential addressees
As a rule, a business plan is primarily intended for potential lenders or investors. What is crucial to them is a credible presentation of the expected risks and returns. Above all, a company
will be judged by its backers on whether it is in a position to
generate consistently positive cash-flows. Additional addressees may be the administrative board (board of directors), top
management, the workforce and other stakeholders (e.g. in
Switzerland, the cantonal economic development office).
Equity investors
Equity capital is risk capital. In order to cover his risk, the equity
investor expects an appropriate return, which is chiefly seen in
an increase in the value of the company. As a rule, the equity
investor is prepared to identify himself with the company and
make a commitment to it.
In a business plan, the factors of greatest interest to the equity
investor are the expected rate of return, the opportunities for
increasing value, the investment and financial policy and the
quality of the management.
Capital lenders
Capital lenders expect the most extensive assurance possible
that interest payments on their loans will be maintained and
the principal repaid. Their commitment is usually restricted to
making capital funds available.
In a business plan, capital lenders focus mainly on covering
the credit risk – that means collateral in the balance sheet, and
in the form of feasible, continuous growth in the cash-flow, as
well as the nature and extent of the personal commitment of
the owners.
These days, most banks apply rating systems (e.g. Basel II) in
their assessment and/or to fix the risk premium on the interest
rate for new and existing loans. These systems generally require
exactly the kind of information that a well thought-out business
plan contains. Here too, it is increasingly the quality of the
management that is at the top of the list. The business plan is
a tool with which this quality can be demonstrated.
Administrative Board (board of directors) and senior
For the senior executives of the company, the business plan has
an additional purpose. It needs to be a management tool and
should set binding targets for the future.
The business plan serves as a guideline for operational deci­
sions, for drawing up the budget for each period, for comparing
of actual with budgeted figures and for calculating expected
results. For the Administrative Board, there is the further aspect
of liability: regularly updated business plans are therefore an
indispensable tool for financial management for which, by law,
the Administrative Board is held accountable.
Employees and other stakeholders
All employees – but particularly those in managerial positions
– want to be able to identify with the company and its objectives. To do this, they need to know where they are heading.
The business plan represents a good foundation for targeted
information, produced at the appropriate moment.
Possible applications
Correct decision making depends on having the correct information. This is particularly important in the following situations,
where the long-term development or even the very survival of a
company may be at stake:
Setting up a new business
This is an extremely demanding situation, since, at the outset,
very little reliable information is available. The entrepreneurial
orientation, the analysis of the market, the evaluation of risks
and opportunities and above all the quality of management are
crucial here.
Expansion: a step-change in growth,
major investment
This includes, for example, the opening up of new product
groups or markets, the step into foreign markets, dealing with
a new customer segment or a major expansion of capacity,
which, as regards the scale and the risks, is almost equivalent
to setting up a new business. Experience shows that the higher
the number of new factors involved, the higher are the risks.
The demands made on the business plan are correspondingly
Change of ownership
A change of ownership may take place in the context of a
purchase of the company by a third party or of a management
buy-out (MBO). The factors of most interest to the buyer are
the same as those for an equity investor. If the buyer needs
external finance, the factor of the capital lender is added to
the situation.
From the seller’s standpoint, the future prospects of the company must be presented convincingly, and here a solidly based
business plan represents the best sales documentation.
If a company is in difficulties, the need arises for restructuring
with due attention being paid to the existing situation. Usually
new backers and new management have to be found. Both
groups need to be able to make the best possible assessment
of the risks and opportunities; this is best done on the basis of
a business plan.
Change of management/succession
A departure at top management level nearly always represents
a change of direction as well, since new executives naturally
bring with them new ideas and new impulses. The change gives
an opportunity for a thorough reappraisal. Here, the focus is on
a possible new strategic orientation, on management and organisation, while questions of financing often come up as well.
But even without an external cause every company should
regularly subject its own position to critical scrutiny – and in
view of ever faster changes in the business environment this
needs to be more and more frequent – and to ask itself where
the opportunities will lie in three, five, or at most ten years.
Key criteria for equity investors or
lenders of capital
Equity investors –
venture capitalists (VC)/private equity
The business model of a VC entails the firm taking an equity
stake in promising businesses and giving additional impetus to
the growth of a company through an injection of funds as well
as the VC’s own knowledge of, and contacts in, the relevant
business sector.
From this it is clear, that for the VC the potential for increasing
the value of the investment takes priority. For this reason, great
significance is attached to the company’s products and services as well as its market potential and strategy for exploiting
the market. Based on information from the business plan and
the forecast cash flows, the VC evaluates the company and
determines the required level of equity participation for a given
capital input sought by the company. In addition to the equity
shareholding, which the VC receives in return for its investment, the determining factors in its investment decision are its
degree of know-how in this market segment and its rights of
participation in the company’s management (e.g. a seat on the
Administrative Board (Board of Directors)).
Sources of loan capital – banks
Lending institutions make capital available for a fixed period of
time and are compensated for this with an interest rate that is
commensurate with the risk. The borrower makes periodic interest payments (or possibly a one-off payment) and is obliged
to repay the capital at the end of the term.
It is clear that in this form of transaction all the flows of money
back to the lender can be determined in advance. However,
uncertainty arises about whether the borrower is able to meet
these payments. Key factors are therefore any possible sureties
granted, the cover for the loan capital by assets and a continuous flow of cash into the company, which will enable it to
pay the interest.
Thus the lender of capital is looking for an income situation that
is as stable as possible, with money coming in during the whole
period of the loan that is to be advanced. This entails evaluating the structure of the financing and various different revenue
scenarios. Ultimately, the lender of capital tries to safeguard
his position by imposing additional obligations on the borrower
(known as covenants).
The first steps
As the previous sections show, a business plan must be carefully adapted to the actual addressees and the actual purpose for
which it is to be used. For this reason the following procedure
is recommended:
Establish who the potential recipients are.
Define the ideal information profile according to the recipients.
evelop reality-based content for a business plan tailored to
your own requirements.
etermine what basic data is available and/or what needs
to be obtained: figures, projections, analyses of trends and
markets, data on competitors, competence profile, evidence
of achievements by the management, etc.
Bring in professional advisors with experience in drafting business plans, firstly to achieve optimum presentation and comprehensibility, secondly as a critical coach who will ask awkward questions before these are posed by the addressees.
The following table is a useful aid to orientation in developing a
tailor-made business plan. Even if real-life individual cases may
give rise to other weightings, they adhere to the generally valid
proposition, according to which every business plan shows the
same basic informational structure, though the actual content
and details may differ depending on the case.
Change of ownership
Mission, vision and strategy
Products and services
Market and customers
Procurement and production
Management and organisation
Opportunities and risks
Financial section
Implementation plan
For my actual situation
Change of management/
New incorporation
Especially important for this situation
As a rule, less important for this situation, or of varying significance
­depending on the individual case.
The checklists contained in the red section of this booklet are
intended as a guide for drawing up an actual business plan.
They are divided into the individual sections of the business
plan and contain questions, which ought to be answered in the
business plan.
3. A goal-orientated procedure
A business plan (BP) is drawn up in four key sequential steps:
Business idea
Possible task
for outside
Strategy development
Company and team,
with outside help if
Developing BP
– define target-group
– determine customised content
– procedure
– target-group
– content
– presentation
Company and team,
with outside help if
Developing BP
– obtain basic data
– develop BP
Neutral critical
Release, revisions
Company and team,
with outside help if
– procure resources
– put plans into effect
Crucial factors for the success of the plan:
he business plan is a matter for the chief executive and so
cannot be delegated.
All key managers are involved.
Brevity is of the essence.
The procedure is structured and systematic.
he business plan has a clear objective and is directed
­consistently to the addressees.
In the individual sections of the business plan the figures are
absolutely consistent with the text.
The assumptions made are realistic.
he significant background data are documented in a robust
and watertight manner.
The supporting documents are carefully prepared.
Important statements are underpinned by expert assessments and/or the views of independent third parties.
dequate evidence is provided of entrepreneurial
The presentation is easily comprehensible and convincing.
4. Content
In practice the following arrangement of the content of a business plan has proved successful:
3.Mission, vision and strategy
4.Products and services
5.Market and customers
8.Procurement and production
9.Management and organisation
10.Opportunities and risks
11.Financial section
12.Implementation plan
Depending on the emphasis, individual sections can be combined with each other or new sections added. For example,
when a company is being set up, a business plan will contain
little information about the company itself since, in certain circumstances, it may not even have been incorporated yet.
Below, we give an overview of the individual content points of
the business plan. We refer you again to the checklists contained in the red section of this booklet which are intended to
serve as a guide to drawing up a real business plan.
The summary must arouse the reader’s interest right at the start
and thus ensure that he becomes completely engaged with
the company or project. The summary must therefore also be
strictly oriented towards the information needs and decision
criteria of the person(s) targeted.
The essential points include a brief description of the company/­
project, the products, the management and the market. In addition, the most important strengths and opportunities of the
company/project should be briefly outlined. Selected financial
figures should give an initial overview of the company’s development to date and its future prospects. The amount of
financing that is sought should also be quantified and justified.
The summary should take up three to four pages at the most.
This section sets out how the company defines itself and what
has been achieved so far. It explains the business model, legal
structure, ownership, organisation and milestones (successes
and failures). In the case of a new incorporation the previous
achievements of the founders are listed. Also to be mentioned
in this are “soft” factors, such as the company’s relationship
with the environment and its employees and customers.
Information about its activities and the key factors for success
(e.g. customer needs, structure of the sector, market growth
and trends) will show the potential investor or lender why the
company is going to succeed.
Mission, vision and strategy
The starting-point for every business should be an unsolved
problem in the market and consequently an existing market
need. The problem being addressed and the approach to solving it are described in the mission of the company. This is true
both for newly founded companies, as well as for existing ones
that are taking a new direction.
Parallel to the mission is the company’s vision, i.e. a comprehensively formulated objective which expresses where the
business sees itself in the future.
Finally, the strategy describes how the mission will be tackled
and how the vision is to be achieved.
Internal factors
Strengths and weaknesses
of the company
Products and services
Market and customers
Procurement and production
Management and organisation
External factors
Opportunities and risks
The proposition on which the business plan is based is explained here in broad outline. However, even here attention
must be paid to clear presentation, so that the reader is aware
that the vision is not merely an idea, but is based on realistic,
future-orientated assumptions and on an understanding of entrepreneurial cause and effect.
This section should also include reasons why you intend to go in
a new direction, how you intend to do this and what objectives
you are aiming for.
Products and services
Here the products and services should be described in terms a
layman can understand. Particular emphasis should be placed
on the reason why the product or service in question is unique
(quality, price, know-how, added components). Where the
product is of a technical nature, the description should not be
overburdened with specific detail. It is more helpful to add the
technical data in an appendix.
The readers require information on the development stage of
the products. They are also interested in knowing whether and
at what cost the product portfolio can be expanded. At this
point the situation regarding patent and trademark protection
should be outlined.
The section is completed with information on research and development of new and existing products, as well as planned
responses to possible changes in trends and technologies.
Market and customers
Here it is necessary to show evidence that an attractive market does indeed exist for the company’s products; this implies
intimate knowledge of the relevant market segments. In the
framework of a market study information should be provided
about market potential and volumes, market cycles and anticipated growth-rates.
The reader wants to know how large a market-share is to be
achieved and how this will be done: on the basis of general
growth in the market or primarily by squeezing out competitors? You should also demonstrate possible customer reaction
to changes in the product or its price. How vulnerable is the
business to changes in fashion and other trends? How is the
customer structure made up, and are there particular opportunities and risks?
By comparing your company with its competitors you will be
able to define, to a certain degree, the significance of your own
strengths and weaknesses. It is therefore important to know
your competitors, even if in reality, you may not be able to do
much about them. Whatever the situation: the competition
never sleeps.
A business plan therefore contains a description of the most
important competitors: how do they do business? Where do
their strengths and weaknesses lie in comparison with each
other and with your own company? Where do all the competitors have the same problems and opportunities? What are the
critical factors? What approaches to solving the problems seem
A product is not successful unless and until it is accepted by
the market. For this reason, you need to follow with a detailed
exposition of the marketing concept. The reader must be able
to understand how the future market entry is envisaged and
how new markets are to be opened up – from pricing policy,
through sales and distribution channels, up to advertising, sales
promotion and public relations.
Finally, you must demonstrate that the company is right at the
beating heart of the market, recognises customer needs and
can convert these into high-margin products.
Procurement and production
The start of the value-creation chain also attracts the interest
of the reader of the business plan, since it is here that vital
deci­sions will be made about the future cost-structure and
­ultimately about the profitability of the whole business. What
resources will be used in the output? What business partners
do you work with? To what extent do you manufacture, and to
what extent do you buy-in? What are the prospects regarding
rationalisation, quality assurance, technology and innovation in
the manufacturing process?
At this point you must give details of production capacity together with any possible bottlenecks as well as strengths and
weaknesses in production output. A potential backer will also
want information about past and impending investments as
well as the extent and control of costs. This section should end
with a look at the future.
Management and organisation
Behind the visions, strategies and ideas, there are people. That
is why the investor wants to know with whom he is dealing.
What is the mindset of the senior decision-makers in the business? What knowledge do they bring with them? Can they
show evidence of past success? How do they work with other
people? How and on what basis are decisions made?
Questions like these can be answered by, among other things,
a introduction of the organisation, and the instruments of management and financial control. It should be clear from this that
all the staff work hand in hand and thus make their contribution
to the achievement of company objectives. Only in this way can
a vision become reality.
Opportunities and risks
In addition, the reader of the business plan expects a frank and
self-critical assessment of the opportunities and risks faced by
the company or project. This should, of course, also be made
clear in the individual sections of the business plan.
As regards opportunities, you should show how these are to
be transformed into successful situations. The risks must be
ruthlessly exposed, at the same time showing the practical
measures with which you propose to minimise them and what
solutions and alternatives are envisaged in the event of an unfavourable development.
Financial section
The financial section of the business plan summarises the foregoing statements in figures. This will show the potential investor
or lender whether the author of the plan is in a position to assess
correctly the financial consequences of his actions. For this
purpose you must provide historical figures on the one hand,
and forecast financial statements of future operations on the
other. Clearly, the future cannot be precisely calculated down
to the last cent since so many external factors beyond your influence come into play. However, the trends in these should be
estimated. That is to say, credible assumptions should be made
and presented in a comprehensible way. The view of the future
should extend for three to five years and be played through in a
range of scenarios – including the best case and worst case.
As a rule, past financial performance can be evaluated from the
balance sheets and profit-and-loss accounts of the last three
to five years, together with the corresponding cash-flow statements. As to future financial growth, it is best to work with projected balance sheets and projected P&L accounts, break-even
analyses and key cash-flow data. The results of these analyses
should be commented on in the main text, whereas the actual
calculations and the basis of the data should be relegated to
an appendix.
This presentation will reveal the amount of financing required
from the investor or lender, and the flow of dividends or interest
will be clearly shown.
Implementation plan
Here the objectives and steps to achieve them are summarised
and presented in a sequential time-frame.
The appendices contain all the underlying information and calculations to which the individual sections of the business plan
refer. These should only include information of interest to the
investor or lender. Examples: organisation chart, product descriptions, CVs of the management, financial evaluations.
5. Presentation
Success factors/advantages
The business plan is the company’s visiting card and will give
you access to important business partners. Since, to outside
observers, it reflects the image of the company attention must
be given to points of style.
Professional design and a careful choice of words are therefore
important factors in the success of the document. Other points
include such supposedly trivial technical matters as the layout of the covering sheet and the quality of binding and paper.
­These are what give the reader his first impression.
As a rule the recipient of the business plan is unfamiliar with the
company. Therefore you should concentrate on the key points
and arguments in a comprehensible way. In technology-intensive sectors in particular, it is difficult for an outsider to follow
the explanations of the products. Where the use of specialised
technical terms is unavoidable these should be explained in an
appendix, so as not to overburden the running text.
The business plan will benefit from simple and clear language.
Words from foreign languages should be avoided whenever
Exaggerations or the excessively positive presentation of a set
of facts are out of place. A comprehensive and balanced argument, which points out possible risks and dangers will have a
far more credible impact. Needless to say it must be made clear
to the reader that the author of the business plan is convinced
about the project.
Furthermore, a clear distinction must always be made between
facts and figures that have been ascertained and those that
have merely been calculated for planning purposes. In the latter
case, the underlying assumptions must be clearly set out.
With a clear structuring of the business plan, which is already
evident from the list of contents, the author proves his ability to
survey the project and/or the company from beginning to end.
Graphs and tables
Even complicated sets of facts can nearly always be represented in the form of a graph and so are easier to understand. This
also serves to break up the text. Illustrations showing market
trends or representations of the product portfolio demonstrate
that the author has undertaken external research. Tables can
be used to summarise essential points succinctly.
Following on from the submission of the business plan, and if
there is interest on the part of the recipient, there is usually an
invitation to a meeting or presentation at a more detailed level.
For this you should, without fail, prepare thoroughly with the aid
of an agenda. You can be sure that probing questions will come
up regarding specific points. It is therefore advisable to prepare
supplementary information in order to avoid surprises. As far
as possible, you should make sure that the relevant decisionmakers take part in the discussion on the other side of the
Timing/project management
Drawing up a business plan is complex and time-consuming.
Even getting hold of the necessary documents takes time. Depending on the nature of the project, for example setting up a
new business or financing growth, it is often necessary first of
all to draw up certain basic documents. It is therefore necessary
at the outset to establish a precise timetable which, along with
the assignment of responsibilities and checkpoints, sets out the
individual phases of the project.
The shorter a business plan is, the more likely it is to be read in
detail. One way of keeping the document brief is to draw up appendices. Items suitable for inclusion are financial projections,
market trends, organisational structure etc. The actual running
text should be restricted to core statements; as a rule of thumb,
it should not run to more than 20 or 30 pages.
6. The interview
Interview with the banker Marc Money (name changed for this
booklet) on the subject of business plans.
“Mr Money, what do you look out for first of all when you are sent
a business plan in connection with a loan application?”
“The first thing I do is leaf briefly through the papers to get an
initial impression, in order to establish whether it actually fulfils
its purpose, is reasonably complete and appears convincing
overall. If it gets through this test satisfactorily, I begin to study
it properly. If not, I pass the document straight to my assistant
so that he can determine what is missing and fill in the gaps
with the help of the customer.”
“Let’s assume that the first impression is convincing. Within all
the various sections, what are the most important points?”
“It depends on how well known the customer is to us already.
With customers we know little or nothing about I look first at the
personality of the applicant and the people who may be associated with him. Because a project stands or falls by the quality
of these people, I always say, with slight exaggeration: ‘a good
entrepreneur and good management are not everything, but
without a good entrepreneur, and without good management,
you’ve got nothing’. Sadly, our experience with problematic
loans confirms this time and again.”
“What do you rate as the next most important thing?”
“What is important in a specific deal also depends on the nature of the proposal. A management buy-out does not have the
same profile as the financing of a new branch operation abroad
or a big investment in a production facility. But, in every case,
what is decisive is the assessment of the market opportunities
for the product or the entrepreneurial idea. That is, as it were,
the external counterpart to the entrepreneur. If both are sound,
then the thing works. We often also bring in specialists, either
internal or external, to assess the market opportunities.”
“Careful study is, of course, also given to the section on ‘Opportunities and risks’. To us this is interesting not only from
the point of view of content, but also because it says a great
deal about the personality of the entrepreneur and his closest
“Then comes the way in which the plans are to be implemented
in practice, i.e. questions such as organisation, marketing, infrastructure, etc., including the implementation plan itself. Here
too it is true to say that convincing solutions reveal the quality
of the people behind them.”
“It is surprising that so far you haven’t mentioned the financing…”
“Of course the co-financing of the project is the fundamental
concern of the potential customer. Up to now we have only
talked about different factors in assessing creditworthiness.
Naturally the next step is to examine closely the financial side
of the deal. For this, we use the customer’s figures, which have
to be contained in the business plan in the form of projected
balance sheets, projected P & L accounts and funds-flow calculations.
“Here we regard it a is particularly important that the ‘conversion’ into figures of the information supplied with respect to the
market, competition, organisation or infrastructure – such as
sales, margins and fixed costs – is realistic. The forward-thrusting optimism of the innovative entrepreneur must be combined
with the critical, risk-conscious circumspection of the finance
director. This combination, though not always easy, offers the
best chances of survival in the longer term.
For the conclusive evaluation of the loan request, we refer to
our internal systems which, with certain summaries, likewise
cover all the points of a good business plan. Needless to say,
these include the target values for the provision of equity capital
and the cash-flow margins, as well as the assessment of any
special sureties that may be offered for the loan. A systematic
risk-assessment then leads to approval or refusal, or at best
counter-proposals and, more recently, even to the imposing of
conditions on the loan.”
“The demands you place on a business plan in support of a
major loan application are obviously very high. How should a
customer proceed if he wants to put together a convincing dossier?”
“Right from the start he should work in a team and not think
it best to do everything himself. It is particularly on important
questions of assessment and estimation, such as market opportunities or the strategy to be selected, that the customer
should seek the advice of a reliable partner, so as to be aware
of the reverse side of the coin as well. Then there is the indispensable know-how in all matters involving figures, which
is necessary for the ‘conversion’ of ideas and intentions into
pounds and pence (dollars and cents) and which can often only
be obtained from outside.”
“Incidentally, in a business plan, we can usually see immediately whether or not a professional has had a hand in it. To look
‘professional’ means being complete, easy for outsiders to understand, convincing in its content, argument and presentation,
well thought-out in terms of cause and effect, and realistic in its
evaluation of the opportunities and risks. In fact, a good business plan is rather like the entrepreneur’s visiting-card, an initial
demonstration of the quality of himself and his team.”
“Mr Money, thank you for this informative discussion.”
The checklists serve as a guide to drawing up a business
They are divided into the following sections:
1 Summary of the business plan
2 The company: its development to date
3 Mission, vision and strategy: the future
4 Products and services: what is offered to the market
5 Market and customers: the target area
6 Competitors
7 Marketing: the route to the market
8 Procurement and production: the company’s output
9 Management and organisation: the people behind the business
10 Opportunities and risks: an honest assessment
11 Financial section: the raw figures
12 Implementation plan: turning the ideas into reality
13 Appendices
To each checklist are added references to sources which can
serve as background information.
Section 1
Summary of the business plan
No longer than three or four pages
Do not write it until the business plan as a whole has been drawn up
Key elements
1 Intention
Why have we drawn up this business plan?
What do we want to achieve with it?
2 Company and products
Who/what is the company/project?
What has been the course of development of the company to date?
What have its successes been so far?
What are our products/services?
3 Market and customers
Why is the market of interest?
What is the company’s present position in the market?
Who are our customers – today and in the future?
Who are our competitors?
Why are our products/services more successful than those of our
4 Key personnel
Who is behind the company (management, owners)?
Who are the senior managers?
What experience and knowledge do we bring to the company?
What is the ownership structure?
5 Financial development
What has been the trend in our key financial ratios/indicators over
the last three years?
What are the projected figures for sales revenue, cash flow, profit
and return on capital in the next three to five years?
What are the decisive factors affecting success, what are the risks?
6 Total amount, form and uses of the financing applied for
How much do we need?
Do we want loan capital or equity?
For what purposes will the money be used?
What are the repayment arrangements?
What are the opportunities and risks for the lender or investor?
Section 2
The company: development to date
Key elements
This section gives a brief description of the company, its products and its business sector. It should show the potential
backer why the company/project has been set up, what has
already been achieved and where developments are leading.
1 Business model
Brief description of the company’s products/services
How does the company make a profit from these products/services?
What have been the greatest successes so far? How have failures
been overcome?
2 Brief outline of the development of the company to date
When was the company set up?
Where are its premises located?
Brief outline of the firm’s development (business activities, strategy,
personnel, products)
What do the most important financial indicators look like for the
last three years (sales revenue, cash-flow, profits, investments and
returns, distributions to shareholders)?
For a newly incorporated business: what are the previous achievements of the founders?
3 Structure of the business sector
How great is the market volume of the sector?
Who are the principal players (competitors, market leaders,
What are the most important market developments and trends in
the sector?
What is the trend in customer needs?
What factors are important for the success of this sector?
What do market studies tell us about anticipated developments in
our sector?
What developments, legislation or external circumstances influence
our sector?
What is our position in the market, and who are our customers?
What advantages do our products or services have over those of
our competitors?
4 Strengths and weaknesses
Where do we see our greatest strengths and weaknesses in relation to:
Background information and documents
Business reports, press articles
Articles of association, partnership contracts
Extracts from the Company Register, shareholders, directors,
business relationships
Organisation chart, list of premises and locations
Minutes of board meetings
Annual accounts for previous years
Cost-accounting analyses
Sector analyses
Section 3
Mission, vision and strategy: the future
are should be taken to ensure that the presentation in the following
sections reflects and supports the implementation of the vision and
of the chosen strategy
Key elements
1 Mission
What gave the impetus to go in a new direction?
2 Vision
How is the vision expressed?
What does the company want to achieve?
3 Strategy
What strategic objectives are we pursuing?
Why do we want to achieve these objectives?
How should our company develop over time with regard to the
market, products, and the practices of the company and its staff
What fundamental changes are necessary?
What will the changes contribute to the achievement of our
Background information and documents
Business model
Overview of the strategy-forming process
Plans for the future
Market and competition analyses
Annual accounts
Analyses of financial data
Section 4
Products and services:
what we offer the market
he description of the products should be comprehensible to a
general reader
Technical details should be put in an appendix
Key elements
1 Description of products and services
A complete description of our products and services
What customer benefits do we provide?
Do our products and services meet a genuine customer need?
What features of our products make them unique?
How does our product range stand with regard to product
What ancillary services do we provide?
How are our products positioned with regard to price and quality?
How is our quality management guaranteed?
Are the products/services marketed in conjunction with business
2 Research and development
What stage of development have our products reached (prototype,
in production, being used by customers, in an expansion phase)?
What faults or weaknesses in the product need to be remedied?
What have been the milestones in development up to now, and
when will the products come on the market?
Do opportunities exist to expand or supplement the product line?
Are our products protected by patents or in other ways?
How are market trends and customer needs incorporated in the
development process?
Do we have any protected brand names or trademarks?
What future development projects are we going to tackle and
What influence do new technologies have on existing products, or
on products in development?
What are the technical risks?
What are the prospects for the next generation of products and the
one after that?
What costs are going to be incurred annually for research and
­development in the next three to five years?
Background information and documents
Product descriptions
Customer enquiries
Requests for tenders
Market studies
Referees, sales contracts
R & D information, pilot studies, test-results from prototypes
Company brochures
Attendance at trade fairs
Patent registrations, licensing agreements
Trademark registrations
Section 5
Market and customers: the target area
he statements about market potential and market volumes should,
where possible, be backed up by external sources of information
The estimate of demand for our own products should be plausible
Key elements
1 Market survey
How large is the overall market (market potential, market volumes)?
How is it segmented?
Who are the players (competitors, market leaders)?
What are the principal factors for success in the market
(e.g. advice to customers, quality, price, service)?
What particular opportunities and risks are there in our market?
What is the pattern of demand (cyclical, seasonal)?
Are there special characteristics (such as barriers to market entry)?
2 Our own position in the market
Which products and services are sold to which target customers,
through which distribution channels and to which geographical
Which special market segments do we address?
What is our current market share, and what influence do we have
on the market?
What are our plans regarding the export market?
How big a share of our sales and/or profit is attributable to each
individual product-market offering?
What are the special features of each product or market segment?
3 Market trends
What growth is anticipated in the overall market and in the
­segments we sell to?
How will the market develop in the future, and how will we react to it?
What opportunities and risks exist for our company in connection
with this development?
4 Customers
Who are our customers
(producers, consumers, government, institutions)?
What has been the geographical distribution of our customers to date?
Who has already registered interest in our products?
How important to our customers are the image and appearance of
the product?
Does our customer portfolio contain particular opportunities
and risks?
Who makes the purchasing decisions in our customer businesses?
Background information and documents
Market studies
Sales volume statistics
Enquiries about tenders
Trade fairs
Industry sector newspapers
Meetings with customers
Firm requests for tenders
Section 6
comprehensive analysis of the competition should also contain
potential competitors from abroad and manufacturers of possible
substitute products
Key elements
1 Competing companies
Who are our most important competitors in the sector?
Is there any foreign competition?
What key figures do we know about our competitors?
How does the competition operate (distribution channels/advertising
and PR)?
How do our competitors present themselves?
Who would be in a position to plan the same market entry as us,
or to launch the same products as us?
Do market agreements exist?
How sensitively does the market react to price changes?
How strong/weak is customer loyalty?
How do competing companies react to price changes by us?
2 Competing products
How do competing products compare with ours in quality and
Why do customers buy our competitors’ products?
What are the price strategies for these products?
Is it customary to pay commissions or to give price rebates?
In which phase of their life-cycle are the most important competing
3 Our own positioning
If relevant: why do we have no competitors in our field (or the one
we are targeting)?
In what respects are we superior to our competitors?
Why are we superior to our competitors?
In what respects are we lagging behind our competitors?
Why are we lagging behind our competitors?
What conclusions and lessons do we draw from our position
­relative to our competitors?
4 Future development of the competitive situation
Are mergers between competitors to be expected?
Are foreign competitors active in the market?
What alternative products from other industry sectors may gain an
What steps are we planning in order to hold or expand our position?
Background information and documents
Market studies
Sales volume statistics
Enquiries about tenders
Trade fairs
Industry association newspapers
Meetings with customers
Firm requests for tenders
Section 7
Marketing: the route to the market
he more precisely the customer groups and products or services
are defined, the more effectively the markets can be attacked
Key elements
1 Positioning in the market
Which customer groups and target markets are we going after?
What selection criteria are important in a customer’s
­purchasing-decision (quality, price, service, image, location at
which the service or product is delivered, advertising)?
2 Pricing policy
On what do we base the setting of our price-points?
What price-differentials do we use?
Do we offer rebates or extended warranty periods?
How do our customers and competitors react to price changes?
3 Distribution
What is our distribution concept?
What personnel resources do we employ in sales?
What alliances have we made with middlemen and sales
How do we train and motivate our sales personnel?
How do we support our wholesalers/retailers?
4 Advertising/PR
How good is our presentation in the market and our image?
What efforts do we make in PR and advertising?
How high is our advertising budget, and how is it spread between
different media?
How are potential customers identified?
Which customer groups are prioritised in our marketing activities?
How important to our success is advertising activity?
What experience have we already gained in dealing with this market
and this product?
Are the primary objectives of our marketing strategy being realised
through our marketing initiatives?
Does the focus of our marketing initiatives correspond to our
Are our marketing objectives clearly defined?
Have the marketing costs been budgeted for realistically?
How is the impact of our marketing initiatives monitored?
5 Sales targets
How high are the sales volumes, revenue targets and forecast
­margins for each sub-market for the next three to five years?
Background information and documents
Marketing concepts
Consumer studies
Section 8
Procurement and production: output
The presentation should be comprehensible even to non-specialists
Key elements
1 Production resources
Where are our production facilities?
Are we planning new production facilities?
What installations and machinery do we have at our disposal today?
How much do we currently have invested in production resources,
and what is our estimate for further investment over the next three
to five years?
How many staff are employed in production, and what training have
they received?
How does our personnel requirement planning look for the next
three to five years?
2 Production process
What production processes do we currently use, and what changes
will there be in future?
How are critical factors (capacity bottlenecks, quality, deliveries)
To what extent are we dependent on key factors (suppliers,
­materials, qualified personnel)?
What decisions are involved between in-house or sub-contracted
What are our relationships with our suppliers?
What production capacity do we have, and is it sufficient for the
What certifications/permits are required for the production
­process? Have these been obtained?
What opportunities are there for outsourcing?
What are the opportunities and risks associated with the
production process?
Which collaborating partners are we reliant on?
What costs are incurred in the production process and
how are they monitored?
How do we distinguish ourselves from our competitors?
Background information and documents
List of suppliers
Survey of the production processes
Description of plant and machinery, capacity figures
Photos of production facilities
Breakdown of the number of employees in production
Investment budgets
Plans for new business premises
Cost-accounting analyses
Section 9
Management and organisation:
the people behind the company
he core competences and evidence of success of the management
should be clearly presented
Key elements
1 Management
Who are the members of the management team?
What experience and knowledge do we bring to the company?
What have been the greatest successes of the team members
so far?
What sector-specific experience and customer contacts do we
bring with us?
Where do we need support?
What is the distribution of abilities and knowledge within the
What makes us a team, and where do we perform particularly well?
What contractual obligations exist between the team members?
What financial ties do we have to the company?
Why do we have the ability to turn the vision into reality?
Is there a dependency on key personnel?
2 Consultants
What non-executive directors does the company have, and what
expertise do these bring with them?
With which consultants do we work, and what is their entre­
preneurial contribution?
3 Personnel
How do we recruit our personnel?
What measures are provided for staff development and further
How many staff are currently employed in each organisational unit?
What growth is planned in the numbers employed in each
­organisational unit?
4 Organisation
How are we organised (make-up/operational organisation)?
What company culture do we foster?
What management principles do we adhere to?
What management and organisational tools do we make use of?
How are we advancing our own development?
5 Premises
Where is our head office, where do we have subsidiary premises?
How well do our premises meet our present and future needs?
What future investments are necessary?
How long do any current leases still have to run? Will it be possible
to renew them?
What are the advantages and disadvantages of our locations?
6 Administration
What is our administrative structure?
How many staff are engaged in administration (per department)?
How is the accounting function organised?
What EDP resources do we have at our disposal?
What investments in EDP are planned?
Background information and documents
CVs, job-applications
Education and training, personal and professional references and
achievements of individuals
Successes achieved jointly, crises survived
Job-descriptions, contracts of employment, staff rules
Personnel recruitment guidelines, qualifications guidelines
Communication and information guidelines
Decision-making mechanisms
Management systems and behaviour
Planning tools used and their application
Tools applied in project management
Mechanisms for developing strategy and organisation
Rules on training and further development
Non-financial controls
Chain-of-responsibility diagrams
Location analyses
Personnel requirement planning
Section 10
Opportunities and risks:
an honest assessment
he presentation of the specific opportunities and risks refers in
particular to:
management and staff
production technology and EDP
location and organisation
macro-economic conditions
government restrictions
ecological concerns
changes in fashion
succession planning
guarantees and litigation
ere, not only should facts be listed. The outcomes should be placed
in a causal relationship and the strengths of the countervailing influences should be analysed.
Key elements
1 Opportunities – and converting them into successful outcomes
Which opportunities do we intend to exploit?
How do we convert opportunities into successful outcomes?
How will our competitors react to our strategy?
2 Risks – and how they are minimised
What risks are present?
What risks are insured against?
How do we minimise the risks?
3 Emergency strategy
What happens if the planned development does not take place, or a
factor is added or drops out?
Background information and documents
Product analyses
Market analyses
Strengths and weaknesses of management
Competitor analyses
Analyses of customer structure
Financial evaluations
Insurance policies
Risk policy
Section 11
Financial section: the raw figures
he financial section expresses in figures the statements made in
the business plan. Both parts should be consistent with each other.
The capital requirement must be clearly shown
Key elements
1Figures for the past three to five years
with hidden reserves stripped out
Balance sheets
Profit & loss accounts
Notes on accounts
Funds-flow calculations
Key ratios
Return on equity and total capital
Financing conditions
Turnover of debtors
Sales revenue and/or net profit per employee
2 Current forecasts of financial growth
Draw up projected P&L accounts, projected balance sheets and
­capital-flow calculations for the next three to five years. The figures
should be presented month-by-month for the first year and then
­annually after that.
Further information
On what assumptions are the figures based?
What is the influence of investment, research and development,
and fixed costs on the cash-flow?
Present a break-even analysis, which gives information about the
distinction between fixed and variable costs
Presentation of variants (“best-case/worst-case” scenarios)
3 Financing concept
What is our financing requirement for the next three to five years,
and when does it have to be covered?
How do we intend to cover this requirement for funds?
What are our own internal financing possibilities?
What securities can we offer?
How will we repay the loan capital needed?
What alternatives are there to our financing concept (what happens
if ...)?
Background information and documents
Balance sheets and P&L accounts for previous years
Projected balance sheets and P&L accounts
Capital-flow calculations
Cost-accounting analyses
Sales volume statistics
Financing concepts and guidelines
Key ratios
Contracts with investors and lenders
Section 12
Implementation plan:
putting the ideas into practice
he implementation plan should contain realistic deadlines which are
binding on the management
Key elements
1The implementation plan must be consistent with the financial
forecasts and with the planned requirement for funds. It
should include a schedule covering the following factors:
Procurement of funds
Investment programme
Recruitment of new employees
Product tests and introduction of new products on to the market
Receipt of orders
Other relevant information
2The schedule should contain the expected final deadlines and
3The implementation plan should contain a statement about
planned additional steps in growth, which in turn will lead to
new financing requirements.
Section 13
The appendices contain the documentation on which the expositions in the individual sections of the business plan are based.
Profiles of senior managers
Market research studies
Photographs or drawings of the products
Detailed technical specifications of the products
Organisation charts
Current order book
Current plan of the locations
Articles about the company and its environment
in trade journals and newspapers
Annual accounts
Competitor analyses
Business model
As % of sales revenue
As % of sales revenue
As % of sales revenue
Financial income, interest received
(1) Earnings before depreciation, interest and tax: EBDIT
(2) Earnings before interest and tax EBIT
Annual profit/loss
./. Tax
Annual profit/loss before tax
+/- Exceptional expense/income
+/- Non-operating expense/income
./. Financial costs, interest paid
EBIT (2)
./. Depreciation
./. Sales expenses
./. Administrative expenses
./. Operating expenses
./. Personnel expenses
Gross profit
./. Cost of goods and raw materials
Revenue from sale of goods and services
Profit and Loss Account
200xB: budget figures, 200xF: forecast figures
Total liabilities
Retained earnings
Equity capital
Long-term liabilities
Accounts payable for goods and services
Short-term bank borrowings
Other short-term liabilities
Prepaid income
Current liabilities
Total assets
Tangible fixed assets
Financial assets
Intangible fixed assets
Fixed assets
Liquid funds
Accounts receivable for goods and services
Other accounts receivable
Stocks, work in progress
Prepaid expenses
Current assets
Disposals of financial assets
Changes to liquid funds/banks
Cash-flow from financing
./. Distribution of dividends
+/- Increase (decrease) in loan capital
+/- Capital increases / repayments
Free cash-flow
Cash-flow from investments
Disposals of tangible fixed assets
./. Investments in financial assets
./. Investments in tangible fixed assets
Cash-flow from operations
+/- Other short-term liabilities, TP
+/- Accounts payable for goods and services
-/+ Stocks, work in progress
-/+ Other accounts receivable, prepayments and accruals
-/+ Accounts receivable for goods and services
Changes to net current assets
+/- Changes to long-term reserves
Profit/loss for the year
Free cash-flow
Our addresses
Hans Peter Kläui
Partner, Tax & Legal Services
Birchstrasse 160
8050 Zurich
Tel. +41 58 792 70 26
[email protected]
René Hubschmid
Director, Tax & Legal Services
Bahnhofplatz 10
3001 Berne
Tel. +41 58 792 75 24
[email protected]
Franco Monti
Partner, Advisory
Birchstrasse 160
8050 Zurich
Tel. +41 58 792 16 21
[email protected]
Sebastian di Paola
Partner, Advisory
Avenue Giuseppe-Motta 50
1211 Geneva
Tel. +41 58 792 96 03
[email protected]
Bleichemattstrasse 43, 5000 Aarau
Tel. 058 792 61 00, fax 058 792 61 10
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Tel. 058 792 67 00, fax 058 792 67 10
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Neumarkt 4/Kornhausstrasse 26,
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Tel. 058 792 72 00, fax 058 792 72 10
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Tel. 058 792 44 00, fax 058 792 44 10
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Business Plan
Make Your Ideas Become Reality