Small business management and Entrepreneurship David Stokes Nicholas Wilson Small Business Management and Entrepreneurship Fifth Edition

Lecture outline Business planning The purpose of a business plan When to plan? Who can benefit? Why produce a plan? The format of a business plan

Business plan It is a document that is produced for the bank manager, investor, or venture capital fund manager, in order to raise money. Small businesses that do not have an external funding requirement, therefore, tend not to write formal business plans. What do you think the reasons for the above mentioned stance?

Lack of understanding or benefits of business planning Pressure on doing, rather than thinking or gathering information in the small business environment The belief that strategic planning is usually for larger organizations

When to plan? Can you give some examples of situations in which it might be beneficial for a small enterprise to draw up a business plan?

Start-up Business purchase Ongoing review Major decisions Online developments

Who can benefit? Who might be involved In producing a business plans; and In making decisions based on it?

Managers Owners Lenders/investers

Why are plans beneficial? In which areas can a business plan benefit each one of these groups?

Owners Assessing the feasibility and validity of a business plan Setting objectives and budgets Calculating how much money is needed

Managers Clarifying ideas and concepts Finding out the unknown Building a team Practice in using analysis and presentation To assist in raising money

Investors/ lenders To appraise the quality of management To assess the overall competence of the entrepreneurial team

The format of a business plan The three questions should be answered in the format Where are we now? – current situation Where do we intend going? – direction and targets How do we get there? – implementation and detailed functional plans

Where are we now? Identity of the business The key people Introduction Names Legal identity Location Professional advisors The key people Existing management Future requirements

The nature of business Products/services Market and customers Industry and competition

Where do we intend going? Strategic influences Opportunities and threats Strengths and weaknesses Strategic direction Objectives Policies Activities

How do we get there? Management of resources Marketing plan Operations and people Marketing plan Competitive edge, marketing objectives, methods and research Money financial analysis Funding requirements Profit and loss Cash flow Balance sheet Summary