BUSINESS PLAN DEVELOPMENT NOTES

Planning for the Business Venture

Planning is a predetermine cause of action. It is a statement outlining
an organizational mission and future direction, short and long term
performance, targets and strategies. Planning as a formal document
contain a mission statement description of the firm’s goods and
services, a market analysis, financial projections
and description of management strategies together with policies for
attain the goals. Planning is a process of determining the goals and
objectives of the enterprises for a future period of time developing the
strategies guiding the firms operational and utilizing the available
resources towards achieving the set goals and objectives.

Planning involves;

Predicting into the future by defining the enterprise mission statement
Determining the organizational goals and objectives
Formulating strategies towards achieving and objectives.
Assigning of responsibilities and functions
Allocating resources
Monitoring and evaluation
Taking corrective action or re-designing the original.

Need for Planning
Planning is the cornerstone and backbone of management. It covers all
the functional levels and activities of the entrepreneurs/ enterprise.
It involves predicting and projecting the future and making adequate
arrangements on how to reach there. Planning helps entrepreneurs in the
following ways.

To develop the most effective way of achieving maximum growth.
To properly informed about the competitors and the able to predict
their next cause of action
To meet up with the consumers needs and income
To meet up with the frequent changes in the market
To be acquitted with the market forces of fluctuations.
To have adequate knowledge of the financial requirements of the
business.

The Planning function

The planning function covers all activities of the business i.e finance,
sales, marketing, personnel management, research and development.
Planning functions involve formulation of the enterprise goals,
objectives, strategies, policies standards, budgets, procedures and
programmes to be embarked upon towards fulfilling the business mission
statement.

The components of planning function

Objective – is the measurable, verifiable, specific and attainable –
The objective gives focus and direction to a business mission
statement.
Strategies – are a scheme & methods which an entrepreneur hopes
todeploy in order to move the enterprises from it’s present
position to arrive at its targeted goals
Policies – are overall guides to action which must be followed
consistently for the achievement of organization goals – they act as
rules & regulations which an entrepreneur imposes on the enterprise
in order to achieve the major objectives.
Standards – are a planning function that permit an entrepreneur to
use values as forms (acceptable standards) when certain things have
been adopted as norms in the entrepreneur, they acts as control
measures for evaluation of performance.
Budgets – are quantitative expressions of future cause of action.
They usually show cash flow of an organization and act as a guide
especially for the entrepreneurial spending i.e
sales budgets
purchases
experiences
cash
Procedures – help and entrepreneur to chart the sequence or related
tasks to be performed for the accomplishment of the
enterprises objectives – it enables the entrepreneurship determine
how a particular task will performed and when it should be done.
Methods reveal the manner of performing specific tasks. It mainly
Prescribes how one step of a procedure should be carried out.
Programme – are a set of activities undertaken to accomplish
objectives e.g a Production programme may specify a production
objective Production standard or even production policies.

6.2 Business Plan
Definition: a business plan is a document that convincingly demonstrate
that your business idea can sell enough of its products and services so
as to make products and services so as to make satisfactory profit and
attractable to potential financiers. In other words a business plan in a
road map you can follow to start and manage a successful business. It
shows step by step on how to start, fund, manage, monitor, and evaluate
a successful business.

Business Plan as a Tool

Objective and goal creating tool
management tool
training tool
promotion tool
fund raising tool/capital
staffing tool
monitoring and evaluating tool
business creation tool
weakness/ omissions identifying tool
measuring performance
for motivation

Why Prepare a Business Plan

To avoid silly mistakes
It defines and focus business objectives and goals
As a tool for fundraising, marketing monitoring, evaluation, staffing
To be realistic on our intentions
To clearly communicate your vision/ ideas to other within and outside.

Who should writes a Business Plan?

should be written by entrepreneur since he/ she is the owner of the
business idea and is the custodian of the vision
Can be written by consultants and employees.

What is a “good” Plan?

a good plan should be dynamic document which should be available for
reference for decision making evaluation and future plans
it should clearly communicate visions and ideas
should show the evidence of understanding of target customers
Appealing to the potential financier.

Benefits

It forces would be entrepreneur to establish written goals and
objectives for their proposed businesses.
it enables potential entrepreneur to assess the viability of their
business opportunity on paper
it assist in identifying the potential customers, marketing
opportunities, pricing strategy, promotional activities, distribution
strategy and a competitive conditions needed for business success.
it identifies the number of employees needed, the skills they should
possess, the task they will perform and the methods of remuneration to
be adopted.
it establishes the financial needs of a business and suggests the
possible sources of financing
it helps to identify critical factors for successful entry and growth
of a businesses in a given market place.

Components of a Business plan

Business plans include details under the following main sections;

Executive summary
Business description
Marketing plan
Competitor analysis
Management plan
Business operation (production/ service, delivery plan)
Financial plan
8 Appendices

Executive Summary
N/B. This should be done last
It includes the;

type of venture
products/ service to be offered ‘
how unique
it there a major opportunity for products/ services
the business status/ stage
legal form of business
location of business
target market
% share of market
competitor strength and weakness
strategy of entering the market
managing staff and their qualifications and experiences
Time frame for accomplishing your goals.
how mach money needed for starting and running the business
what type of financing are seeking

loan
grand

the strength of the business that will make it succeed
future plans of the business

Business Description
For a new startup business it will include

objectives, vision, mission statement and goals
specific objectives (SMART)

service objective (qualify of service)
profit objective ( actual % and amount targeted)
growth objective
social objectives ( corporate responsibility)

type/form of business venture
date of commencement
physical location
advantages of the location
postal address, physical address/ street/buildings/ road
telephone contact/ email/ fax/website
brief history of the business (company)
experiences of the owners

Marketing Plan

description of the target market ( customer segment)
description of products/ services
prices of products/ services
distribution of products /services
promotion of productions/ services

Competitor Analysis

internal analysis both strength and weakness
external analysis ( opportunities and threats)
environmental analysis ( political, social, economic, regulatory
factors that can impact on your business)

Management and Organization

key management staff

their positions/ designations and responsibilities
qualification and experience

other staff

their positions/ designation and responsibilities
qualification and experience
Their number.

Human resources practices

Staff recruitment
Motivation ‘
Training and development
Reward and recognition
Staff appraisal

Business Operation

Product/service development design and facilities.
Description of premises
ownership status
renovations/ facelifts/medications
products and services to be offered
machinery, tools, equipment and other facilities required
implementation

procurement
repair and maintenance
repair and maintenance
future expansions

legal requirements: business name, tax compliance, labour laws,
by-laws e.t.c
monthly overhead expenses
professional and support services

Financial Plan

pre-operational costs ( costs before start-up
working capital
projected monthly cash flow statement
projected annual cash flow statement
projected profoma income statement
projected balance sheet

Appendix

brochures and advertisement materials
maps and photos of location
copies of lease and contracts
company certificates of registration
list of assets available as collateral for a loan
copies of licences
research and marketing results
any other materials needed to support your business plan
list of equipment owned or to be purchased

How does Potential Lenders and Investors Evaluate the Plan
Potential readers or evaluators should reflect on the strengths of
management and personnel, the product or service and the available
resources. Suppliers who may want to see a business plan before signing
a contract together with customers who may want to see the business plan
before buying the product or service and the available resources.
Suppliers who may want to see a business plan before signing a contract
together with customers who may want to see the business plan before
buying the products pay more attention to the experience of the
entrepreneur, Market projections. Lenders will primarily be interest in
the ability of the new venture to pay back the debt of together with the
interest within a designated period of time. Banks want facts with an
objective analysis of the business opportunity and all the potential
risks associated with a business. Lenders forcus on the 4cs of credit i.e

Cash flow
Collateral
Character
Contribution of equity

The business plan must therefore reflect the entrepreneurs credit
history, the ability of the entrepreneur to meet the debt and the
interest payable ( cash flow) the collateral or tangible assets being
secured for the loan and the amount of personal equity the entrepreneur
has invested in the business. Investors on the other hand place more
emphasis on the enterprenuers character then lenders. Investors want to
make sure that the entrepreneur is complaint and willing to accept this
involvement. They also demand a high rate of returns and will therefore
focus on the market and financial projections. In preparing a business
plan it is important for the entrepreneurs to consider the needs of
external sources and not merely provide their own perspective.

Presenting the Business Plan
It is often necessary for an entrepreneur to orally present the business
plan before and audience of potential investors – in this case the
entrepreneur is expected to provide a short presentation of the business
plan. The entrepreneurs are expected to sell their business concept in
this short period – try and persuade potential investors that his is a
good investment. The focus of such presentation is why this is a good
opportunity – an overview of the marketing program. Concluding remarks
might reflect the recognized risks and how the entrepreneur plans to
address them.

Unlike oral presentation –written presentation requires the entrepreneur
to consult where necessary the services of lawyers accountants
marketing consults and engineers in preparation of the business plan. The plan must give a detailed account of the needs of the expected readers.

BUSINESS PLAN DEVELOPMENT NOTES

Information Needs
Before committing time and energy to preparing a business plan, the
entrepreneur should do quick feasibility study of the business concept
to see whether there are possible barriers to success. The information
obtainable from the many sources should focus on

marketing
goals and objectives
finance
production

Goals and Objectives
Before beginning the feasibility study the entrepreneur should clearly
define the goals and objectives and also provide frame work for the
business plan, marketing plan and financial plan. Goals and objects that
are too general or that are not feasible make the business
plan difficult to control and implement.

Market Information Needs
One of the initial and important elements of information needed by the
entrepreneur is the market potential for the product or service. In
order to ascertain the size of the market it is important for the
entrepreneur to define the market e.g the consumer group men, women,
youths e.tc. The consumers income – high or low- are they rural or urban
deadlier. The education level is another important aspect of
consideration. A well defined target market will make it easier to
project the market size and subsequent market goals. In order to build a
strong marketing plan with reasonable and measurable market goals and
objectives the entrepreneur will need to gather information on the
industry and market. Most entrepreneurs have difficulty with this stage
and do not of tern known where
to begin. The best way to start is to first visualize the following
process of gathering market information.

This means that we start with very broad –based data and information and
work down until we develop a positioning strategy and quantifiable goals
and objectives. We begin the process by evaluating the general
environments trends – this would include household income trends.

Population shifts
Food consumption habits and trends
Travel trends and
Employment trends
The next step is to assess the trends in the national food service
industry- here the points of interest would be;
Total food sales
The commercial restaurant sales e.t.c.
This first two stages focuses on the national market and the located
This consists of the general local economic trends and as assessment
of the local food industry
The final step is an analysis of the local competitive environment
by analyzing each competitors strengths and weaknesses.
Once this analysis is completed, the entrepreneur is ready to
clarify the product of service he/she would offer, the actual market
positioning in the competitive environment and the market objectives
– in order to form the marketing plan.

Writing of a Business Plan
The time of writing a business plan depends on the experience and
knowledge of the writer (entrepreneur) as well as the purpose it intends
to serve. It should be comprehensive enough to give any potential
investor a complete picture and understanding of the new venture. The
following is a simple outline of a business plan.

Outline of a Business Plan

Introducing page;

Name and address of the business
Names and addresses of the principal owners
The nature of the business
Statement of financing needs
Statement of confidentiality of the report

executive summary
description of the venture ( business )

the product/services offered
the size of the business
the background of the entrepreneurs

the production plan

the manufacturing process
the physical plant and machinery
the suppliers

the marketing plan

the pricing
the distribution
the promoters

competitors analysis
Management plan
Financial plan
Appendices

Introductory page
This is the title of cover page that provides a brief summary of the
business plan’s content. The introductory page should contain the following

The name and address
The names of entrepreneurs ( Tel, Fax , Email , Box e.t.c)
A description of the company and the business nature
The amount of finance needed
A statement of the confidentiality of the report.

Executive Summary
This section of the business plan is prepared after the total plan is
written – normally to maximum of two pages. It should stimulate the
interest of the potential investor and therefore should not be taken
lightly. The executive summary should be concise and convincing,
addressing issues such as

The business concept or model
The unique aspects of concept
The individual starting the business
How the money will be made and how much

Any supportive evidence that may give it strength are included

The section is only meant to highlight factors and provide a strong
motivation to the person reading the plan.
Description of the Business. The description of the venture should be
detailed so as to enable the investor to ascertain the size and scope of
the business. This sect ion should begin with the mission statement and
vision of the business venture. The statement basically describes the
nature of the business and what the entrepreneur hopes to accomplish.
The definition will guide the firm through long –term decision making.
After the mission statement a number of important factors that provide a
clear description and understanding of the business venture should be
discussed. Key elements are the Products or services. The location and
size of the business. The history of the venture.

Production Plan

The plan should describe the complete product. If some or all of
manufacturing process is to be subcontracted
The plan should describe the sub-contractors, including location,
reasons for selection, costs and any contracts competed.
Others include – manufacturing operations and layout the raw
materials the suppliers, costs capital equipment e.t.c.

Operation Plan

This section goes beyond the manufacturing process and describes the
flow of goods and services from production to the customer
It includes storage, shipping, control procedures, customer support
services
Others include renovations, product service, machinery and tools et.c

Marketing Plan

The marketing plan- is an important part of the business plan since
it describes how the product or service will be distributed, priced
and promoted.
Marketing plan – is an important part of the business plan since it
describes how the product or service will be distributed, priced and
promoted
Marketing research evidence to support any critical marketing
decisions as well as forecasting sales should be described in this
section.

Organization Plan

The organizational plan in part of the business plan that describes
the ventures form of ownership
That is, proprietorship, partnership or corporation
The details the shares of stock authorized, share options as well as
names and resume of directors
It details the organizational structure.

Financial Plan
Is an important part of business plan since it determines the potential
investment commitment needed for the new business venture and indicate
its economic feasibility

Appendix
The appendix of a business plan generally contains any back-up materials
that are necessary in the text of the document. Reference to any
documents in the appendix should be made in the plan itself.