What is a business plan (a business proposal)? THE BUSINESS PLAN What is a business plan (a business proposal)?

A business plan : A description of the business, A road map that will help you get to your desired destination. It gives you an idea of the obstacles that lie ahead and can point out possible alternate routes. It helps you to thoroughly know your industry and market. A well prepared business plan will not only assist in plotting a course for the company, it can also serve as a vital sales tool.

Business plan cont’… A document which outlines in detail what the entrepreneur intends to do about his/her business idea. It serves the following purposes:  It clearly defines the purpose of the business It describes the business in relation to how it will be structured. Its products/services and how it intends to do business and to visualize the future of the business

Business plan cont’… It assists the entrepreneur to identify customers and clearly define the market Helps the entrepreneur to identify competitors and determine competitive condition Enables the entrepreneur to carry out the SWOT analysis, so as to identify opportunities and threats and deal with them accordingly. It helps the entrepreneur in decision making procedure

Business plan cont’… It helps to establish the amount of finance required in business It is used as a bases of seeking finance from various sources e.g. banks, It provides a basis for analyzing and measuring progress i.e. after implementation one can review against the plan to determine the direction of the business it is an indication/signal of the entire intention to run the business professionally It lays the foundation for the development of a culture of planning

Business plan cont’… A good plan defines exactly what you want to achieve and how you plan to achieve it. Your plan will serve as a guide as you start up, growing, and expanding your business. The plan will also be a necessity to provide to others if you are going to seek financial assistance, either in the form of loans or investments. Potential partners and employees also need to read your business plan, to form a clearer idea of your goals and potential. Write as much of the business plan yourself as you can and seek help in preparing the financial data .

COMPONENTS/ ELEMENTS OF A BUSINESS PLAN

Business plan Introduction This page will often include the name of the company, physical address and contact details Table of Contents It highlights Section title and page number for easy reference Table of Illustrations and appendices and the appendices number e.g. organograms, graphs

Executive Summary Most important part of your business plan Is the first section of the business plan which provides a complete history and overview of your company to catch people's attention hence it must be clear, concise and compelling. Elaborate on your vision and why you think your business will be successful. The summary is often the main section of your business plan for other interested parties, such as financial investors and potential partners.

Executive Summary cont’… It should point out the key points of your business plan, such as the type of business you have, your financial standing and projections, and your marketing goals and strategies. The summary does not repeat all the details; rather it summarizes the main ideas so readers will be able to get a better understanding of your overall business plan.

Executive Summary cont’… Must be clear, concise and compelling so that people will read further Should be written after you have completed the other sections of your business plan Try to keep this section to around one page

Executive summary cont’… Key elements that should be included are: Business concept. Describes the business, its product(s) and the market it will serve. It points out just exactly what will be sold, to whom and why the business will hold a competitive advantage. Financial features. Highlights the important financial points of the business including sales, profits, cash flows and return on investment.

Executive summary cont’… Financial requirements. Clearly state the capital needed to start or to expand the business. It should detail how the capital will be used, and the equity, if any, that will be provided for funding. If the loan for initial capital will be based on security instead of equity, you should also specify the source of collateral. Current business position. Furnishes relevant information about the company, its legal form of operation, when it was formed, the principal owners and key personnel.

Executive summary cont’… Major achievements. Details any developments within the company that are essential to the success of the business. Major achievements include issues such as patents, prototypes, location of a facility, any crucial contracts that need to be in place for product development, or results from any test marketing that has been conducted.

Description of Company State company name, legal status and ownership structure Mission statement – should provide focus for your company and define your business for at least the next few years Outline where your company has been and where you are at right now. If you are a startup company describe what your company intends to do. Only include information that is relevant to the product or service you are describing.

Description of Company cont’… Highlight any achievements by the organization, if any. Include any challenges faced and how they were overcome How will this new activity add to or enhance your existing business

Product(s) or Service(s) Describe your product or service – what is unique about it and why will you be a success Indicate any regulations that will effect you and show that you have or can meet the requirements

Market Outline the industry you are in, how you fit in and what will be your market share. Who is your primary customer? What are the demographics of this customer base? It is very important to know your customers as success depends on you being able to meet customer needs. Why have you chosen this customer base and how large is it?

Market You need to understand market you are entering and make sure is not already saturated. What are the trends that are influencing and affecting your market (customer base)? How are you addressing these trends? Establish the competition in this market. How will you be able to compete? Knowing and understanding your competition will enable you to better position your product or service in the market place.

Market If your business is seasonal (i.e. u- pick operation), explain how you will handle this challenge What is the price of your product or service? How does this compare to similar products in the market? How will you distribute your product?

Marketing Plan The marketing plan is very important - you can have the best product in the world but if you have no sales, you have no business. Marketing mix (4 or7 Ps) How will you make customers aware of your product or service? Where will you sell your product (i.e. farmers’ market, farm gate sales, retail, etc)? When will you launch your marketing plan?

Marketing Plan This outlines what the business wishes to do in relations to market. It will cover: Marketing strategies and approaches Advertising and promotion Pricing strategies Marketing services policies

Operations Where will your business be located? What facilities and equipment do you have and what do you need? How will you run the business? How will you keep track of inventory? How will you keep costs down to remain competitive?

Operations What is your plan for growth? How does this business mesh with your existing business? It is important that you keep separate records for each different business you have. This way you will know what is making you money and what is not. Highlight how you will be selling your goods /services (i.e. cash, credit or hire purchase)

Operations Research & Development This relates to the improvement of products/services Risk Assessment This focuses on business and marketing risk together with the financial risk of operating that business. It focuses on the likely reactions of competitors, legal issues that bind the type of industry coming up with critical external development that may impact the business and the strategic choices affecting the business.

Management Team Investors pay particular attention to this section. They want to know whether you have the right people for your business or not. The quality of your people will determine the success of the business.

Management Indicate who is on your team, their qualifications and responsibilities (i.e. production, marketing, accounting etc). If you do not have people in these positions right know because of the size of your business, provide a time frame to put your team together. How will you overcome any labor shortages?

Financials Financial statements show where your business is at right now and provides you with the information you need to make decisions. It is important to keep your statements current and to refer to them on a monthly basis. You should include the following financial statements with projections for three to five years: Income statement Cash-flow projections Balance sheet

Financials When making financial projections, it is important to explain any assumptions - how you determined the figures you used. If you are looking for financial assistance, lenders will want to know where you will get financing for your business and how you will spend the money. They will also want to see historical records for the past three to five years.

The Appendix A business plan also includes an appendix. This section contains all the legal and operational facts about the business such as federal identification number, my bank account and credit card information, business license and sales tax certificate. It seems like you have to reference that type of information frequently so it’s handy to have it all in one place.