PRINCIPLES OF ENTREPRENEURSHIP

(ENT530)

WRITTEN REPORT ON BUSINESS PLAN (30%)

OVERVIEW

A business plan is a written document prepared by the entrepreneur that describes all the
relevant external and internal elements involved in starting a new venture. In developing the
business plan the entrepreneur can determine how much money will be needed from new and
existing sources.

INSTRUCTIONS

1. This is a group project and the students are required to form groups comprising of 3
MEMBERS ONLY.

2. Each group needs to choose and write one viable business opportunities (product or
service).

3. The group needs to write and present final report business plan using the given format.

4. Use Times New Roman 12 or Arial 11 with 1.5 spacing for written business plan report.
5. The report must be submitted on or before ______________. Failure to do so will
jeopardize the student’s grade for this subject.
 BUSINESS PLAN GUIDELINES & TEMPLATE

1. COVER PAGE

<<COMPANY LOGO>>

<<COMPANY NAME>>

BUSINESS PLAN

Faculty :
Program :
Program Code :
Course :
Course Code :
Semester :
Group Name :
Group Members :

Submitted to
Lecturer’s Name

Submission Date
30 December 2017
 Table of Contents

Page

EXECUTIVE SUMMARY 1

ENVIRONMENTAL AND INDUSTRY ANALYSIS 2

DESCRIPTION OF VENTURE 3

PRODUCTION PLAN 4

OPERATIONS PLAN 5

MARKETING PLAN 6

ORGANIZATION PLAN 7

ASSESSMENT OF RISK 8

FINANCIAL PLAN 9

APPENDICES 10
BUSINESS PLAN CONTENT GUIDELINES
Before you begin writing within this section make sure that you have done some research. Business
Plan research helps you make informed decisions and create a successful direction for your
business plan.
 Gather information sources
 Record relevant information
 Analyze the information you have gathered and note the associated opportunities and risks
 If you are going to submit the business plan to investors, research what types of investment
opportunities are available to you, why you need investment (banks, government, private equity
investors, etc.)

1. EXECUTIVE SUMMARY

 This section is prepared after the total plan is written.

 It should be two to three pages in length.
 The summary should concisely highlight the key points in the business plan.
 Questions that should be addressed include:
a. What is the business concept or model?
b. How is this business concept or model unique?
c. Who are the individuals starting this business?
d. How will they make money and how much?
 Any supportive evidence that might strengthen the case should be included.
 Remember that this section is only meant to highlight key factors and provide a strong
motivation to the potential investor to read it in its entirety.

2. ENVIRONMENTAL AND INDUSTRY ANALYSIS

 The entrepreneur should first conduct an environmental analysis to identify trends and
changes occurring on a national and international level that may impact the new venture.
 Examples of environmental factors are:
a. Economy
b. Culture
c. Technology
d. Legal concerns
e. All of the above external factors are generally uncontrollable.
 Next the entrepreneur should conduct an industry analysis that focuses on specific
industry trends such as:
a. Industry demand
b. Competition
 c. There are numerous sources that the entrepreneur can consult to attain
general industry and competitive data.
 The last part of this section should focus on the specific market.
a. This would include such information as who the customer is and what the
business environment is like.
b. This information is significant to the preparation of the marketing plan section.
c. There are also numerous sources of data for this information as well.

3. DESCRIPTION OF THE VENTURE

o Opportunity:
 Briefly describe the general nature of your company. From this section the
investor must be convinced of the potential success of the business.
 What problem will your company’s product or service solve?
 What is the Value Proposition? (economic benefit of solving the problem)
 Why will your company be successful?
 Demonstrable customer demand

o Outlook / Benchmarks / Timelines:

 Describe the major events that will take place in the short and long-term future
(i.e. product launch, acquisition of first customer, milestones for customer
base growth or sales growth).

 Milestones:
 Complete management team
 Product development stages (proto-type, etc.)
 Production capability
 Customer acquisition
 Breakeven
 Cash flow positive
 Funding

4. OPERATIONS AND PRODUCTION PLAN

 If a new venture is a manufacturing operation, a production plan is necessary.
 This plan should describe the complete manufacturing process, including whether or not the
process is to be subcontracted.
 If the manufacturing is carried out by the entrepreneur, the plan should describe the physical
plant layout and machinery and equipment needed.
 If the new venture does not include any manufacturing functions, this section would be
eliminated.
 All businesses—manufacturing or non-manufacturing—should include an operations plan as
part of the business plan.
  This section describes the flow of goods and services from production to the customer.
 This would be a convenient place to discuss the role of technology in the business
transaction process.
 If the venture is not manufacturing, this section would be titled operational plan.
 The entrepreneur would need to describe the chronological steps in completing a business
transaction.
 Operations and Production area can be highlighted:
 Facilities and improvements:
 Location(s)
 Plant(s)
 Office space(s)
 Timing
o Machinery and other capital equipment:
 Special tooling
o Future capital needs:
 Timing
 Cost
o Operating cycle:
 Manufacturing processes
 Quality control, production control, inventory control
o Strategy and plans:
 Make-or-buy policy
 Subcontractors and/or suppliers
o Regulatory and legal issues

6. MARKETING PLAN
 The marketing plan describes how the products will be distributed, priced, and promoted.
 Marketing research evidence to support critical marketing decision strategies and forecasting
sales should be described in this section.
 Potential investors regard the marketing plan as critical to the venture’s success.
 Marketing planning will be an annual requirement and should be regarded as the road map
for short-term decision making.
o Customers
 Discuss who the customers for the product or service are or will be. Potential
customers need to be classified by relatively homogeneous groups having
common, identifiable characteristics (e.g., by major market segment).
 Show who and where the major purchasers for the product or service are in the
market segment. Include national regions and foreign countries, as appropriate.
 Indicate whether customers are easily reached and receptive, how customers buy
(wholesale, through manufacturers’ representative, etc.).
o Market Size and Trends
 Show for three years the size of the current total market and the share you will have,
by market segment, and/or region, and/or country for the product or service you will
offer, in units, ringgit, and potential profitability.
 Describe also the potential annual growth for at least three years of total market for
your product or service for each major customer group, region or country, as
appropriate.
 Discuss the major factors affecting the market growth (e.g. industry trends, socio-
economic trends, government policy, and population shifts).

o Competition and Competitive Edges

 Make a realistic assessment of the strengths and weaknesses of competitors.

Competitors Strengths Weaknesses

 Compare competing and substitute products or services on the basis of market

share, quality, price, performance, delivery, timing, service warranties, and other
pertinent features.

 Compare the fundamental value that is added or created by your product or

service, in terms of economic benefits to the customer and to your
competitors.

 Discuss the current advantages and disadvantages of these products or services

and say why they are not meeting customers’ needs.
o Estimated Market Share and Sales
 Based on your assessment of the advantages of your product or service, the market
size and trends, customers, competitors and their products, estimate the share of the
market and the sales in units and ringgit that you will acquire in each of the next
three years. Remember to show assumptions used.

Product/service Market Share and Sales

Year

Market share (%)

Total sales in units

 Total sales in RM
o Marketing Strategy
 Overall marketing strategy. Describe the specific marketing philosophy and strategy
of the company, given the value chain and channel of distribution in the target
market. Include, for example, a discussion of the types of customer groups that you
are targeting for initial intensive selling effort those that you are targeting for later
selling efforts.
 Pricing. Discuss the pricing strategy, including the prices to be charged for your
product and service, and compare your pricing policy with those of your major
competitors.
 Sales tactics. Describe the method (e.g., own sales force, sales representatives,
direct mail, or distributors) that will be used to make sales and distribute the product
or service.
 Service and warranty policy. If your company will offer product that will require
service, warranties, or training, indicate the importance of these to customers’
purchasing decisions and discuss your method of handling service problems; also,
highlight the kind and term of any warranties to be offered, whether service will be
handled by company service people, agencies, dealers and distributors, or return to
the factory.
 Advertising and promotion. Describe the approaches the company will use to bring
its product or service to the attention of prospective buyers.
 Distribution. Describe the methods and channels of distribution you will
employ.

7. ORGANIZATIONAL PLAN
The organizational plan section is the part of the business plan that describes the venture’s
form of ownership.
If the venture is a partnership, the terms of the partnership should be included.
It is helpful to provide an organization chart indicating the lines of authority.
This chart shows the investor who controls the organization and how members interact.
 This section includes a description of the function that will need to be filled, a description of the
key management personnel and their primary duties, an outline of the organisational structure
for the venture, a description of the board of directors, a description of the ownership position of
any other investors, and so forth. You need to present indications of commitment, such as the
willingness of team members to initially accept modest salaries, and of the existence of the
proper balance of technical, managerial, and business skills and experience in doing what is
proposed.
o Organization
 Present the key management roles in the company and the individuals who will fill
each position.

Key Management Roles Name

 If it is not possible to fill each executive role with a full-time person without adding
excessive overhead, indicate how these functions will be performed (e.g., using part-
time specialists or consultants to perform some functions), who will perform them,
and when they will be replaced by a full-time staff members.

o Key Management Personnel

 For each key person, describe in detail career highlights, particularly relevant know-
how, skills, and track record of accomplishments that demonstrate his/her ability to
perform the assigned role.

Names & Positions Career Highlights

 Describe the exact duties and responsibilities of each of the key members of the
management team.

Names & Positions Duties & Responsibilities

o Management Compensation and Ownership

 State the salary to be paid, the share ownership planned, and the amount of equity
investment (if any) of each key member of the management team.

Share of Amount of Equity

Names & Positions Monthly salary ownership Invested
 o Supporting Professional Advisors And Services
 Indicate the supporting services that will be required.
 Indicate the names and affiliations of the legal, accounting, advertising, consulting,
and banking advisors selected for your venture and the services each will provide.

Name of Professional Advisors Services Provided

8. ASSESSMENT OF RISK
It is important that the entrepreneur make an assessment of risk in the following manner:
i. The entrepreneur should indicate the potential risks to the new venture.
ii. Next should be a discussion of what might happen if these risks become reality.
iii. Finally the entrepreneur should discuss the strategy to prevent, minimize, or respond
to these risks.
iv. Risk can be highlighted in these area: development/technical, competitive, production
supply and financial.

9. FINANCIAL PLAN
The financial plan determines the investment needed for the new venture and indicates
whether the business plan is economically feasible.
 To effectively manage your venture finances, plan a sound, realistic budget by determining the
actual amount of money needed to start your venture (start-up costs) and the amount needed to
keep it open (working capital or operating costs).
 Three financial areas are discussed:

a. The entrepreneur should summarize the forecasted sales and expenses for the first
three years.
b. Cash flow figures for three years are needed, with the first year’s projections provided
monthly.
c. The projected balance sheet shows the financial condition of the business at a
specific time.
a. Start-up Cost

 Estimate the costs incurred in conjunction with one-time activities that the venture
undertakes when it opens a new facility, introduces a new product or service, conducts
business in a new territory or with a new class of customer or beneficiary, initiates a new
process in an existing facility or commences some new operation after considerable
research and discussion.

b. Working Capital

 Working capital represents the amount of initial expenditure required to finance the daily
operation until the business gets its first sale. The amount of working capital is therefore
dependent upon the period until the firm can generate enough sales to cover its short-term
expenditure.
c. Start-up Capital and Financing

 Total start-up capital incorporates both start-up cost and working capital needed to start a
project. The most common source of finance for new venture is the entrepreneur’s own
equity contribution. The equity contribution can be in the form of cash or assets. The next
most common source of finance is term loan. This is a form of long term financing offered
by most commercial banks. The term loan can be used to finance fixed assets as well as
working capital requirements. The interest rate and the loan period depend on the current
interest rate and the amount of loan required respectively.
d. Cash Flow Statement

A cash flow pro-forma statement refers to the projected statement of cash inflow and
outflow throughout the planned period. Under normal circumstances, the pro forma
cash flow statement is prepared between three to five consecutive years. However,
longer periods are sometimes needed depending upon the projects undertaken. The
pro forma cash flow statement must be able to show the following information:
 Cash inflows – the projected amount of cash flowing into the company.
 Cash outflows – the projected amount of cash flowing out of the company.
 Cash deficit or surplus – the difference between cash inflows and cash outflows.
 Cash position – the beginning and ending cash balances for a particular period.
e. Income Statement

The next step in developing a financial plan is to prepare the pro forma income
statement which shows the expected profit or loss for the planned period, usually for
three to five consecutive years. Generally, the pro forma income statement consists of
the following elements:
 Cost of good manufactured (production cost)
 Gross profit
 Net profit

Cost of goods manufactured (also known as production costs) refers to the total
production cost involved in producing the finished goods. It includes all costs such as
direct materials, direct labour, manufacturing overheads and the differential value
between the beginning and ending balances of the work-in-progress (if any). Gross
profit is the gross margin realised after deducting the cost of goods sold from sales. It
represents the amount of profit before deducting other operating expenditure. Net profit
(or net loss) is defined as the difference between gross profit and operating expenses
for the planned period.
f. Balance Sheet

While the pro forma income statement shows the financial performance of the
company for the planned period, the pro forma balance sheet shows the financial
position of the company at a specific point in time in terms of assets owned and how
those assets are financed. The pro forma balance sheet is prepared for a period
between three to five years.
10. APPENDIX
 The appendix contains any backup material not included in the text of the document.
 Reference to any of the documents in the appendix should be made in the plan itself.
 Possible documents:
a. Letters from customers, distributors, or subcontractors.
b. Secondary or primary research data.
c. Leases, contracts, and other agreements.
d. Price lists from suppliers and competitors.