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.