BUSINESS PLAN

Learning Outcome At the end of the module, students should be able to: understand what is a business plan and reasons for preparing it understand the format of a business plan prepare a business plan and present a business plan

What Is a Business Plan? A business plan is a written document which described the proposed business or project to be undertaken in a comprehensive manner. It is also known as a working paper, business proposal, project paper or prospectus.

Reasons For Preparing a Business Plan Opportunity for entrepreneur to assess the business venture objectively, critically and practically. To study and evaluate the feasibility of the business. To convince venture capitalists, investors and bankers in order to raise capital and obtain support for the venture. 4. As a guideline for day-to-day management of the business. 5. To be able to distribute business resources more effectively.

Readers of the Business Plan: 1. Entrepreneurs 2. Investors 3. Bankers 4. Financial Assistance Providers 5. Suppliers 6. Customers 7. Employees

Format Overview Cover Letter Cover Page Table of Contents Introduction Purpose of business plan Company background Owner(s) background Business location Marketing plan Operations plan Organizational plan Financial plan Conclusion or summary Cover Letter Cover Page Table of Contents Executive Summary Main Body Appendices

Main Body of Business Plan Introduction Should clearly state name of company, nature of business, location, operational date and prospects of business Purpose State the key purpose of preparing plan (e.g. for financing, business viability assessment, operational blueprint etc.)

Main Body of Business Plan Company Background details regarding the company legal structure (registered name, form address and when registered), main activity & date operations start. Owner Background Details of each individual/s that is a registered owner of the business State relevant qualifications, skills, experience, role in business and stake or share in business Location Specify physical location of business premise, operations premise (if different), advantage of location in helping business achieve objectives (e.g. proximity to suppliers, target market or usability of space)

Main Body of Business Plan Marketing plan Need to highlight target customers, key products and services & sales forecast Operations plan Use sales forecast to plan capacity, material, equipment and manpower needs Organizational plan Indicate company structure and key talents Financial plan Amalgamate budget considerations for marketing, operations and organizational needs into project cost and sources planning as well as projections of cash, profit and asset & liability position of planned business

Writing up the Business Plan The first step is to have a Business Plan typed and edited. The second step is to edit the Business Plan. As a checklist for a complete business plan, entrepreneur may refer to Table 4.12

Typing Format Major Headings The Second Heading Level Font type Arial size 12 or Times New Roman size 14, bold Left justified, mixed case with major words capitalized and bold with one line above and one line below the heading to separate it from the text. The Second Heading Level Italicized with the major words capitalized. The paragraph is indented five spaces, or half inch on the left. The Third Heading Level Indented, italicized and major words capitalized. Text in Sections Font type Arial size 11 or Times New Roman size 12 The first paragraph is not indented. Do not space between paragraphs within a section.

Typing Format Tables and figures Printing Binding Professional in appearance and should not be hand drawn. Auto fit to the Windows/contents from the Table menu of MSWord®. Should not split into two pages. Printing A laser quality printer. Wide margin, at least one and half inch on the left, one inch on the top, bottom and right. Double spacing. Binding A simple comb or spiral binding A plastic cover on the front and a thick dark colored paper at the back.

Table 4.12 Business Plan Checklist Introduction What is the name of the company? To whom the business plan is prepared? Who are the owners or partners of the company? What is the correspondence address? Purpose Why the business plan is prepared? Is the purpose to get financing? Who asked for the financing? How much financing is needed? How the financing is going to be utilized? What help this financing will give to the company? How are we going to pay back the financing? Is there any other alternative source of financing to ensure the proposed project is successful?

Company Background The Industry What is the main product; good or services, the company is planning to offer? What are the main characteristics of the product? Is it a new company or an existing company planning for expansion? What form the business is? Why the form is preferable? What are the company’s strengths and weaknesses? How to overcome these weaknesses? How the proposed project is profitable? The Industry Is the industry expanding or contracting? What is the outlook of the industry relative to the others in the economy? Will the company able to get support from the suppliers? What are the credit terms the suppliers offer?

Marketing Plan Products Market What products the company is planning to offer? What is the product concept? What are the unique or special characteristics of the products? Are these products potentially to generate more sales? Market Who are the customers of the company? What market segment are these customers in? Where is the target market? Will customer repurchase the products? What is the size of the target market?

Competitors Who are the competitors? Where are the competitors? Who are the major competitors? What are the strengths and weakness of the major competitors? What differences and similarities between our products and products of the main competitors? What strategy is planned to overcome competitors? Will it be new competitors in the market? How to monitor competitors? What is the targeted market share? How to penetrate and maintain the targeted market share? What strategy to increase the market share? What strategy to increase the sales?

Price Promotion What price to charge for the products? Does company has a price range for the products? How company set the price? Is the price competitive? Why customers willing to pay for the price? Promotion What promotional strategy to be adopted? Why the company plans to adopt the strategy? Do we have budget for these promotional activities. How much is the promotion budged? Is the strategy appropriate for our products? How are we going to monitor the effectiveness of these promotional activities?

How are we going to market our products? Place How are we going to market our products? What is the most appropriate distribution channel to be adopted? How are we going to deliver the products? Does company has any policy regarding on returned goods? How to maintain good customer relations?

Organizational Plan Does company has any policy regarding on recruiting and selecting new staff? Who are the key members of the management team? Do owners or partners have relevant experiences to the proposed project? What experiences do owners or partners of the company have? Who make decisions in the company? Who plans for the company? What jobs to be done? What skills and experiences needed to do these jobs effectively? Who will do these jobs? Who are the key staff needed? Are these staffs work full-time or part-time basis? How much remuneration for the administrative staff? Do staffs need training? What training do they need? How much the training will cost? How long the training will take?

Operations Plan What are the operations processes involve in the manufacturing or producing of our products? Does company needs any customized infrastructure to facilitate the operations processes? What types and number of machineries and equipments needed? How much is the inventory for raw materials, semi-finished and finished goods are? How much is the inventory cost?

Financial Plan How much is the project cost? How much capital invested by each member or partner? How much is the total equity compared to the total project cost? What is the source of financing? How we plan to pay back the financing? How the forecasted cash flow look? Is the proposed project profitable? What are the uses and sources of funds of the proposed projects? How the forecasted financial performances look? What do financial performances tell us?

Appendix Conclusion Is the proposed project is viable to proceed? Have you justified the claims? Appendix Have you attached every supporting facts or documents in the appendix?