Business Plan Notes

BUSINESS PLAN
UNIT OUTLINE AND DEFINITION
1. INTRODUCTION TO BUSINESS PLAN
● Meaning of business plan

● Purpose of business plan
● Features of a business plan
● Guidelines for developing an effective business plan
2. BUSINESS DESCRIPTION
● Business name
● Business location
● Forms of business ownership
● Products/ Services
● Justification of the opportunity
● The industry
● Business goals and objectives
● Entry and growth strategy
● SWOT analysis
3. MARKETING PLAN
● Customer Identification
● Competitor analysis
● Market share
● Promotion
● Pricing strategy
● Sales targets
● Sales tactics
COMPOSED BY MR MOHAMED SALIM K.

● Distribution strategy
● Customer service
4. ORGANISATION AND MANAGEMENT PLAN
● Organization structure
● Management team /Business personnel
● Recruitment, training and promotion
● Remuneration and incentives
● Legal and statutory requirements
● Supporting services
5. OPERATIONAL / PRODUCTION PLAN
● Production facilities and capacity utilization

● Production and operations strategy
● Production process
● Regulations affecting operations
● Operational timetable/ Production schedule
6. FINANCIAL PLAN
● Pre-operations cost
● Working capital
● Cash flow projections
● Pro-forma income statements
● Pro-forma balance sheets
● Profitability ratios
● Proposed capitalization
● Potential risks

7. BUSINESS PLAN WRITING
DEFINITION
A business plan is a written document describing the nature of the business, the sales and
marketing strategy, and the financial background, and containing a projected profit and loss
statement
A business plan is also a road map that provides directions so a business can plan its future and
helps it avoid bumps in the road. The time you spend making your business plan thorough and
accurate, and keeping it up-to-date, is an investment that pays big dividends in the long term.
A business plan is a document setting out a business's future objectives and strategies for
achieving them.
It is a roadmap for your business that outlines goals and details how you plan to achieve those
goals.
At its heart, a business plan is just a plan for how your business is going to work, and how you’re
going to make it succeed. Good businesses always keep their Lean Plan up to date.
PURPOSE OF A BUSINESS PLAN
A business plan serves as your blueprint for how you will operate your business. While you need
to have a business plan to seek investors or get a loan for your company, the plan is actually for
your benefit. It provides a step-by-step guide as you start a new business or grow your current
company, and it directs every decision you make going forward.
1. GET ORGANIZED
Writing down your business plan helps you clarify your thoughts and organize the steps you
need to take to be successful in your business. There are a number of pieces that all have to come
together to make your business profitable. A business plan ensures that you won’t skip any
important steps that could derail your efforts down the line. Be specific (even if the plan is for
your eyes only); Use measurable milestones, accountable responsibilities and track able
performance expectations, for starters. When your plan is clearly spelled out in writing, it helps
you see the big picture and identify potential problems before you make blunders.
2. STAY ON TRACK
After your business plan is developed, referring to it periodically helps you maintain a long-
range view as you make daily decisions. The plan makes it easier to follow each business

development step in order so you don’t miss any important elements along the way. A well-
written plan provides you with a starting point and outlines a timetable that drives your activities,
keeping you grounded, focused on your target market, strategically aligned with your main
business tactics and on track as you progress.
3. CLARIFY GOALS
A business plan is an effective means of defining your goals and the steps needed to reach them.
It spells out your purpose, vision and means of operation. It also serves as your company’s
resume, explaining your objectives to investors, partners, employees and vendors. A good
business plan clearly states the amount of capital you need to make the company work and where
the investment is coming from. It clarifies the means by which you will pay back borrowed
money, your sales forecast, spending budget, cash flow and how you will invest profits.
4. PREPARE FOR THE FUTURE
By outlining your goals and how you will reach them, your business plan helps you prepare for
the future. Market research in the business plan should include projections based on consumer
needs and your ability to fulfill those needs. A well-developed business plan also documents
actions the company will follow in case the projections turn out to be too optimistic. Scenarios
should be developed to identify potential obstacles, including possible changes in the market, so
that the company will be prepared to make operational decisions that remain in line with the
overall business strategy.
ASSIGNMENT:
1 WHAT IS A BUSINESS PLAN? WHAT IS THE PURPOSE OF A BUSINESS PLAN?

WHAT IS A GOAL?
2 WHAT IS THE PURPOSE OF A BUSINESS PLAN
THIS MAKES THE END OF OUR LESSON TODAY HAVE A NICE TIME.
LESSION TWO
LESSON OBJECTIVES
By the end of the lesson the learner should be able to;
1. i. Describe the guidelines for developing an effective business plan

2. ii. Identify the users of the business plans

Guidelines for developing an effective business plan
However, getting started may be difficult to do. So, here are some steps for writing a perfect
business plan.
1. Research, research, research.
“Research and analyze your product, your market and your objective expertise,” William
Pirraglia, a now-retired senior financial and management executive, has written. “Consider
spending twice as much time researching, evaluating and thinking as you spend actually writing
the business plan.
“To write the perfect plan, you must know your company, your product, your competition and
the market intimately.”
In other words, it’s your responsibility to know everything you can about your business and the
industry that you’re entering. Read everything you can about your industry and talk to your
audience.
2. Determine the purpose of your plan.
A business plan, as defined by Entrepreneur, is a “written document describing the nature of the
business, the sales and marketing strategy, and the financial background, and containing a
projected profit and loss statement.” However, your business plan can serve several different
purposes.
As Entrepreneur notes, it’s “also a road map that provides directions so a business can plan its
future and helps it avoid bumps in the road.” That’s important to keep in mind if you’re self-
funding or bootstrapping your business. But, if you want to attract investors, your plan will have
a different purpose and you’ll have to write a plan that targets them so it will have to be as clear
and concise as possible. When you define your plan, make sure you have defined these goals
personally as well.
3. Create a company profile.
Your company profile includes the history of your organization, what products or services you
offer, your target market and audience, your resources, how you’re going to solve a problem and
what makes your business unique. When I crafted my company profile, I put this on our About
page.
Company profiles are often found on the company’s official website and are used to attract
possible customers and talent. However, your profile can be used to describe your company in
your business plan. It’s not only an essential component of your business plan; it’s also one of
the first written parts of the plan.
Having your profile in place makes this step a whole lot easier to compose.

4. Document all aspects of your business.
Investors want to make sure that your business is going to make them money. Because of this
expectation, investors want to know everything about your business. To help with this process,
document everything from your expenses, cash flow and industry projections. Also, don’t forget
seemingly minor details like your location strategy and licensing agreements.
5. Have a strategic marketing plan in place.
A great business plan will always include a strategic and aggressive marketing plan. This
typically includes achieving marketing objectives such as:
● Introducing new products

● Extending or regaining market for existing products
● Entering new territories for the company
● Boosting sales in a particular product, market or price range. Where will this business
come from? Be specific.
● Cross-selling (or bundling) one product with another
● Entering into long-term contracts with desirable clients

● Raising prices without cutting into sales figures
● Refining a product
● Having a content marketing strategy
● Enhancing manufacturing/product delivery
“Each marketing objective should have several goals (subsets of objectives) and tactics for
achieving those goals,” states Entrepreneur.
“In the objectives section of your marketing plan, you focus on the ‘what’ and the ‘why’ of the
marketing tasks for the year ahead. In the implementation section, you focus on the practical,
sweat-and-calluses areas of who, where, when and how. This is life in the marketing trenches.”
Of course, achieving marketing objectives will have costs. “Your marketing plan needs to have a
section in which you allocate budgets for each activity planned," Entrepreneur says. It would be
beneficial for you to create separate budgets for for internal hours (staff time) and external costs
(out-of-pocket expenses).
6. Make it adaptable based on your audience.
“The potential readers of a business plan are a varied bunch, ranging from bankers and venture
capitalists to employees,” states Entrepreneur. “Although this is a diverse group, it is a finite

one. And each type of reader does have certain typical interests. If you know these interests up-
front, you can be sure to take them into account when preparing a plan for that particular
audience.”
For example, bankers will be more interested in balance sheets and cash-flow statements, while
venture capitalists will be looking at the basic business concept and your management team. The
manager on your team, however, will be using the plan to “remind themselves of objectives.”
Because of this, make sure that your plan can be modified depending on the audience reading
your plan. However, keep these alterations limited from one plan to another. This means that
when sharing financial projections, you should keep that data the same across the board.
7. Explain why you care.
Whether you’re sharing your plan with an investor, customer or team member, your plan needs
to show that you’re passionate and dedicated, and you actually care about your business and the
plan. You could discuss the mistakes that you've learned, list the problems that you’re hoping to
solve, describe your values, and establish what makes you stand out from the competition.
When I started my payments company, I set out to conquer the world. I wanted to change the
way payments were made and make it easier for anyone, anywhere in the world to pay anyone
with few to no fees. I explained why I wanted to build this. My passion shows through
everything I do.
By explaining why you care about your business you create an emotional connection with others
so that they’ll support your organization going forward.
Who needs a business plan

1. Startup businesses
The most classic business planning scenario is for a startup, for which the plan helps the
founders break uncertainty down into meaningful pieces, like the sales projection, expense
budget, milestones, and tasks.
The need becomes obvious as soon as you recognize that you don’t know how much money you
need, and when you need it, without laying out projected sales, costs, expenses, and timing of
payments. And that’s for all startups, whether or not they need to convince investors, banks, or
friends and family to part with their money and fund the new venture.
In this case, the business plan is focused on explaining what the new company is going to do,
how it is going to accomplish its goals, and—most importantly—why the founders are the right
people to do the job. A startup business plan also details the amount of money needed to get the
business off the ground, and through the initial growth phases that will lead (hopefully!) to
profitability.

2. Existing businesses
Not all business plans are for startups that are launching the next big thing. Existing
businesses use business plans to strategically manage and steer the business, not just to address
changes in their markets and to take advantage of new opportunities. They use a plan to
reinforce strategy, establish metrics, manage responsibilities and goals, track results, and
manage and plan resources including critical cash flow. And of course they use a plan to set the
schedule for regular review and revision.
Business plans can be a critical driver of growth for existing businesses.
For existing businesses, a robust business planning process can be a competitive advantage that
drives faster growth and greater innovation. Instead of a static document, business plans in
existing businesses become dynamic tools that are used to track growth and spot potential
problems before they derail the business
REVISION QUESTIONS
1. i. What is a business plan?

2. ii. Discuss the purpose of a business plan
3. iii. Outline the features of a business plan
LESSON 3: BUSINESS DESCRIPTION

We are talking about the name of your business in this section, not your trademarks, service
marks, logos, or slogans. Trademark law protects product names, logos, trade names, even some
slogans as trademarks or service marks. Copyright law protects works or art, fiction, movies, art,
sculpture, and other creative works.
Business law, however, does not fully guarantee you the exclusive use of your business name. To
get close to exclusivity, you have to be first, you have to be national, and you have to be alert.
Owning and establishing a business name

The most common misunderstanding about business names is in terms of registering, protecting,
and reserving your business names.
You can’t reserve a business name completely—that is to say, you can’t have exclusive use.
Different ways of establishing your business name:

1. Using your own name
The first and simplest business name is your own name, which might be enough for John Smith
using Smith Consulting or hosting Smith’s Restaurant. This kind of business name normally
requires no additional paperwork, although most business owners end up registering a name
anyhow to establish their legal claim to it.
2. Registering a DBA
The second normal common level of business names is called DBA (for “Doing Business As”)
or fictitious business name, which gives an individual the right to operate under a business name
with signs, bank accounts, checks, and so on.
These are generally registered and legalized by county governments within states. There might
be a McDonald’s Hardware Store as a DBA in many counties within a given state, and across
many different states.
To register a business with a fictitious business name, call your county government for details.
You can expect that you’ll have to visit an office in the county government, pay a fee of less than
$100, and do some legal advertising, also less than $100, probably using forms you can fill out in
the same office. Somebody will probably look up the registry to make sure that yours is the first
business in the county with that name. Details will actually vary depending on which county
you’re in.
3. Registering your corporate structure

The third level is the corporation, regardless of its various corporate entities. Whether they are S
corporations, C corporations, LLCs, or whatever, a corporation is registered at the state level and
no two can have the exact same name in each state.
However, there is no guarantee that there won’t be many businesses registered as McDonald’s
Hardware Store in several counties in a state, and a corporation registered as McDonald’s
Hardware Corporation. This kind of duplication happens.
To establish a corporation, you can use national services such as The Company Corporation, or a
local attorney. The corporate forms will go to the state, and details will depend on which state
you’re in.
What if someone copies your business name?

Even though duplicate business names are very possible—and quite common—you do still have
the right to protect and defend you own business name, once you’ve built the business around it.

The key to this is confusion and confusing identity. As we said above, one John Smith can sue
another John Smith for purposely confusing their identities. So too, McDonald’s Hamburgers can
and should sue anybody who starts a new restaurant named McDonald’s serving fast foods.
On this point, when one business is confused with another, being first matters. When somebody
tries to establish a second McDonald’s Hardware where it would confuse people with the first,
then the first McDonald’s has a legal right to prevent it.
If the second store puts up a sign, then the first store should take quick legal action to stop it. The
longer the first store ignores the second, the better the case of the second store. When the whole
mess goes to court, the first one to use the name is likely to win, but if the first one sat quietly
while the other one built the name, then there is more doubt.
An existing business should always watch out for people using the same or confusingly similar
names, because the sooner it complains, the better for its legal arguments.
END OF LESSON
LESSON 4 : BUSINESS DESCRIPTION
WELCOME TO OUR CLASS TODAY I HOPE YOU ARE DOING WELL
OBJECTIVES
1. Determine how to provide a business name

2. Explain factors to consider when choosing a business location
1. BUSINESS NAME
When choosing a name for your new company, you’re going to be concerned with finding the
name that best suits your business, and making sure you pick a name you can legally use and
protect.
The two main concerns for startup business names are the legal requirements, and the
commercial use.
Now, in terms of legal requirements, full disclosure: We are not attorneys. We do not give legal
advice, so be sure to check with an attorney early on as you build your business.
We are talking about the name of your business in this section, not your trademarks, service
marks, logos, or slogans. Trademark law protects product names, logos, trade names, even some
slogans as trademarks or service marks. Copyright law protects works or art, fiction, movies, art,
sculpture, and other creative works.

Business law, however, does not fully guarantee you the exclusive use of your business name. To
get close to exclusivity, you have to be first, you have to be national, and you have to be alert.
Owning and establishing a business name
The most common misunderstanding about business names is in terms of registering, protecting,
and reserving your business names.
You can’t reserve a business name completely—that is to say, you can’t have exclusive use.
DIFFERENT WAYS OF ESTABLISHING YOUR BUSINESS NAME:
1. Using your own name
The first and simplest business name is your own name, which might be enough for John Smith
using Smith Consulting or hosting Smith’s Restaurant. This kind of business name normally
requires no additional paperwork, although most business owners end up registering a name
anyhow to establish their legal claim to it.
2. Registering a DBA
The second normal common level of business names is called DBA (for “Doing Business As”)
or fictitious business name, which gives an individual the right to operate under a business name
with signs, bank accounts, checks, and so on.
These are generally registered and legalized by county governments within states. There might
be a McDonald’s Hardware Store as a DBA in many counties within a given state, and across
many different states.
To register a business with a fictitious business name, call your county government for details.
You can expect that you’ll have to visit an office in the county government, pay a fee of less than
$100, and do some legal advertising, also less than $100, probably using forms you can fill out in
the same office. Somebody will probably look up the registry to make sure that yours is the first
business in the county with that name. Details will actually vary depending on which county
you’re in.
3. Registering your corporate structure

The third level is the corporation, regardless of its various corporate entities. Whether they are S
corporations, C corporations, LLCs, or whatever, a corporation is registered at the state level and
no two can have the exact same name in each state.
However, there is no guarantee that there won’t be many businesses registered as McDonald’s
Hardware Store in several counties in a state, and a corporation registered as McDonald’s
Hardware Corporation. This kind of duplication happens.
To establish a corporation, you can use national services such as The Company Corporation, or a
local attorney. The corporate forms will go to the state, and details will depend on which state
you’re in.
What if someone copies your business name?
Even though duplicate business names are very possible—and quite common—you do still have
the right to protect and defend you own business name, once you’ve built the business around it.
The key to this is confusion and confusing identity. As we said above, one John Smith can sue
another John Smith for purposely confusing their identities. So too, McDonald’s Hamburgers can
and should sue anybody who starts a new restaurant named McDonald’s serving fast foods.
On this point, when one business is confused with another, being first matters. When somebody
tries to establish a second McDonald’s Hardware where it would confuse people with the first,
then the first McDonald’s has a legal right to prevent it.
If the second store puts up a sign, then the first store should take quick legal action to stop it. The
longer the first store ignores the second, the better the case of the second store. When the whole
mess goes to court, the first one to use the name is likely to win, but if the first one sat quietly
while the other one built the name, then there is more doubt.
An existing business should always watch out for people using the same or confusingly similar
names, because the sooner it complains, the better for its legal arguments.
RESEARCHING A NAME’S AVAILABILITY
So you see you can’t absolutely guarantee that nobody has the name you want, but you can at
least try. The fastest and simplest way to start researching a name is to do an internet search.
Run some Google searches, and see whether or not the name you’re considering is already taken.
You don’t want to name a business with a name that can cause problems later, because it
confuses you with other businesses.

Okay, so choosing a name that isn’t already taken may seem obvious, but how do you research a
name to make sure there won’t be a conflict? There is no single sure way, but here are some
suggestions:
1. Run several different online searches
Do a few searches, and see whether anything turns up on the company name you’re considering.
You can also go to the Office website, as well as using KnowX.com or similar searcher sites.
2. Check out the domain names that are available
There are several searchers that offer access to the “whose” database of internet sites; the most
traditional site for this is the one at VeriSign, Inc.
Checking the domain names associated with your potential business name is important; not only
because you’ll want to avoid a confusing and duplicate name, but also because you’ll likely want
to pick a name that you can use for your business website.
As such, if your chosen business name already has a blog attached to it, for example, you might
want to go in a different direction.
3. Talk with an a lawyer
Since you probably want to talk to an attorney about the correct business entities and other start-
up matters, you may also ask your attorney about checking on business names.
CHOICE OF BUSINESS LOCATION
There are many things to consider when choosing a location for your business venture, whether
setting up an office or a shop for the first time, or looking to expand into new areas.
1. Accessibility
Does your business rely on frequent deliveries? If so, it’s important to consider local transport
links, particularly main roads and motorways. Property rental and purchase prices are often
steeper in higher density, more commercialized areas, so there are certainly cost benefits to
seeking a more out of town location, providing your daily business operations won’t be
hampered by poor transport links. Equally, if you rely on high customer footfall, then ensuring
your location is accessible by car, bus and even train will all be important considerations. Don’t
forget your employees too, as a good location is often a critical factor in recruiting the right

people into your business, particularly if they have been offered several jobs and need to evaluate
the pros and cons of each.
2. Security
Believe it or not, your location can increase your odds of being affected by crime, which in turn
can influence your insurance premiums, as well as the additional security measures you made
need to take to keep your premises safe. It’s fair to say that in business, we all make decisions
based on information, intuition and probability mixed in with a little luck. But knowing the
chances of crime in the areas you are considering is an important part of the decision making
process.
3. Competition
Your proximity to other competing businesses could be crucial to your success. Could they
provide a benefit to your business or cause a hindrance? Establishing which competitors are in
your area and their offering could help guarantee you choose the right location for your business.
If there is too much competition then it may be a warning sign to expand your horizons to a new
location. There are exceptions to this such as car dealerships who want to be near each other as
customers compare and choose the best car deal, hence their close proximity. Likewise, if you
have an element of your offering that is unique or offers some kind of new innovation, then
choosing an area that already has a ripe market could be the ideal way to pick up customers very
quickly and establish a presence in a new area in a relatively short time frame.
4. Business Rates
Cash is king! Cash flow is critical as it determines the viable ability for a business to survive and
pay its bills. Therefore, it is important to research the average Business Rates including rent,
utility bills and taxes in the area to ensure you can afford the premises. Simple hidden costs such
as deposits and whether you need to pay to park need to be snuffed out before committing to a
location. Estimating the living cost of the location will prevent a commitment outside your
means.
5. Skill base in the area
Find out the skill base in the area - can it fulfill your needs? Take into account employment rates
as well. If you rely on skilled workers it is best to go to where there is a healthy bank of talent.
Employees are often a business’s biggest asset thus choosing a location that’s lacking in required

talent may be the start of your business’s downfall. Some recruitment agencies will happily send
you CVs on spec to gauge the market, only charging if you subsequently decide to interview and
hire someone. Alternatively, posting a free job via an online jobsite will quickly show you the
caliber of employees in a particular area.
6. Potential for growth
Will the premises be able to accommodate business growth or a spike in demand? Moving
premises is a big upheaval and can be time consuming and costly. A decision needs to be made
as to whether the premise you are choosing is a short-term location or if you would like to stay
there for the long haul. Consequently, a location’s flexibility could be a very important factor
regarding the premises’ suitability for your business needs.
Whilst a perfect business location is different for every business, covering these crucial areas
will certainly give you the best chance of beating the odds and keeping your business on track
for future success.
REVIEW QUESTIONS
1. Outline different ways of coming up with a viable business name

2. Explain the measures you would take in any case someone copies your business name
3. Discuss the factors majorly considered when coming up with a business name
THIS BRINGS US TO THE END OF THE LESSON ODAY HAVE A NICE TIME
LESSON 5 : BUSINESS DESCRIPTION
TOPIC TWO: BUSINESS DESCRIPTION
OBJECTIVES
1. Explain various forms of business ownership
FORMS OF BUSINESS ORGANIZATION
One of the first decisions that you will have to make as a business owner is how the business
should be structured. All businesses must adopt some legal configuration that defines the rights
and liabilities of participants in the business’s ownership, control, personal liability, life span,
and financial structure. This decision will have long-term implications, so you may want to

consult with an accountant and attorney to help you select the form of ownership that is right for
you. In making a choice, you will want to take into account the following:
•Your vision regarding the size and nature of your business.

•The level of control you wish to have.
•The level of “structure” you are willing to deal with.
•The business’s vulnerability to lawsuits.
•Tax implications of the different organizational structures.
•Expected profit (or loss) of the business.
•Whether or not you need to re-invest earnings into the business.
•Your need for access to cash out of the business for yourself.
An overview of the four basic legal forms of organization: Sole Proprietorship; Partnerships;
Corporations and Limited Liability Company follows.
1. Sole Proprietorship
The vast majority of small businesses start out as sole proprietorships. These firms are owned by
one person, usually the individual who has day-to-day responsibility for running the business.
Sole proprietorships own all the assets of the business and the profits generated by it. They also
assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the
public, you are one in the same with the business.
Advantages of a Sole Proprietorship
• Easiest and least expensive form of ownership to organize.

• Sole proprietors are in complete control, and within the parameters of the law, may make
decisions as they see fit.
• Profits from the business flow-through directly to the owner’s personal tax return.
• The business is easy to dissolve, if desired.
Disadvantages of a Sole Proprietorship
• Sole proprietors have unlimited liability and are legally responsible for all debts against the
business. Their business and personal assets are at risk.
• May be at a disadvantage in raising funds and are often limited to using funds from personal
savings or consumer loans.
• May have a hard time attracting high-caliber employees, or those that are motivated by the
opportunity to own a part of the business.
• Some employee benefits such as owner’s medical insurance premiums are not directly
deductible from business income (only partially as an adjustment to income).
2. Partnerships

In a Partnership, two or more people share ownership of a single business. Like proprietorships,
the law does not distinguish between the business and its owners. The Partners should have a
legal agreement that sets forth how decisions will be made, profits will be shared, disputes will
be resolved, how future partners will be admitted to the partnership, how partners can be bought
out, or what steps will be taken to dissolve the partnership when needed; Yes, its hard to think
about a “break-up” when the business is just getting started, but many partnerships split up at
crisis times and unless there is a defined process, there will be even greater problems. They also
must decide up front how much time and capital each will contribute, etc.
Advantages of a Partnership
• Partnerships are relatively easy to establish; however time should be invested in developing the
partnership agreement.
• With more than one owner, the ability to raise funds may be increased.
• The profits from the business flow directly through to the partners’ personal tax return.
• Prospective employees may be attracted to the business if given the incentive to become a
partner.
• The business usually will benefit from partners who have complementary skills.
Disadvantages of a Partnership
• Partners are jointly and individually liable for the actions of the other partners.
• Profits must be shared with others.
• Since decisions are shared, disagreements can occur.
• Some employee benefits are not deductible from business income on tax returns.
• The partnership may have a limited life; it may end upon the withdrawal or death of a partner.
Types of Partnerships that should be considered:
i. General Partnership
Partners divide responsibility for management and liability, as well as the shares of profit or loss
according to their internal agreement. Equal shares are assumed unless there is a written
agreement that states differently.
ii. Limited Partnership and Partnership with limited liability

“Limited” means that most of the partners have limited liability (to the extent of their
investment) as well as limited input regarding management decision, which generally encourages
investors for short term projects, or for investing in capital assets. This form of ownership is not
often used for operating retail or service businesses. Forming a limited partnership is more
complex and formal than that of a general partnership.

3. Joint Venture
Acts like a general partnership, but is clearly for a limited period of time or a single project. If
the partners in a joint venture repeat the activity, they will be recognized as an ongoing
partnership and will have to file as such, and distribute accumulated partnership assets upon
dissolution of the entity.
3. Corporations
A Corporation, chartered by the state in which it is headquartered, is considered by law to be a

unique entity, separate and apart from those who own it. A Corporation can be taxed; it can be
sued; it can enter into contractual agreements. The owners of a corporation are its shareholders.
The shareholders elect a board of directors to oversee the major policies and decisions. The
corporation has a life of its own and does not dissolve when ownership changes.
Advantages of a Corporation
• Shareholders have limited liability for the corporation’s debts or judgments against the
corporation.
• Generally, shareholders can only be held accountable for their investment in stock of the
company. (Note however, that officers can be held personally liable for their actions, such as the
failure to withhold and pay employment taxes.
• Corporations can raise additional funds through the sale of stock.
• A Corporation may deduct the cost of benefits it provides to officers and employees.
• Can elect S Corporation status if certain requirements are met. This election enables company
to be taxed similar to a partnership.
Disadvantages of a Corporation
• The process of incorporation requires more time and money than other forms of organization.
• Corporations are monitored by federal, state and some local agencies, and as a result may have
more paperwork to comply with regulations.
• Incorporating may result in higher overall taxes. Dividends paid to shareholders are not
deductible from business income; thus this income can be taxed twice.
Subchapter S Corporation
A tax election only; this election enables the shareholder to treat the earnings and profits as
distributions, and have them pass through directly to their personal tax return. The catch here is
that the shareholder, if working for the company, and if there is a profit, must pay his/herself
wages, and it must meet standards of “reasonable compensation”. This can vary by geographical
region as well as occupation, but the basic rule is to pay yourself what you would have to pay
someone to do your job, as long as there is enough profit. If you do not do this, the IRS can

reclassify all of the earnings and profit as wages, and you will be liable for all of the payroll
taxes on the total amount.
4. Limited Liability Company (LLC)
The LLC is a relatively new type of hybrid business structure that is now permissible in most
states. It is designed to provide limited liability features of a corporation and the tax efficiencies
and operational flexibility of a partnership. Formation is more complex and formal than that of a
general partnership.
The owners are members, and the duration of the LLC is usually determined when the
organization papers are filed. The time limit can be continued if desired by a vote of the
members at the time of expiration. LLC’s must not have more than two of the four
characteristics that define corporations: Limited liability to the extent of assets; continuity of
life; centralization of management; and free transferability of ownership interests.
WHAT'S INCLUDED IN THE PRODUCT AND SERVICES SECTION OF A BUSINESS

PLAN
The product and services section of your business plan format discusses your product or
service, why they're needed by your market, and how they compete with other businesses selling
the same or similar products and services. Your product and services section should include:
● A description of the products or services you are offering or plan to offer

● How your products and services will be priced
● A comparison of the products or services your competitors offer in relation to yours
● Sales literature you plan to use, including information about your marketing collateral
materials and the role your website will play in your sales efforts
● A paragraph or so on how orders from your customers will be processed or fulfilled
● Any needs you have to create or deliver your products, such as up-to-date computer
equipment
● Any intellectual property (i.e., patent) or legal issues you need to address.
● Future products or service you plan to offer
This section of your business plan should excite those you're hoping will fund your business or
work with you. To that end, here are a few tips to create a product and services section that
appeals to the reader:

● Indicate why your product or services are needed. Especially if you're venturing into a
new concept or invention, or a place where there is no current market, you need to
explain the need for your product or service.
● Highlight your features. A crucial part of success in business is the ability able to set
yourself apart from businesses that sell the same or similar products and services. What
features, such as price point or level of service, do you offer that is unique to you?
● Focus on benefits. Unique features are important, but even more so is how those features
provide value to consumers. Translate your features (i.e., faster or cheaper) into benefits
(i.e., get it now or save money). The goal is to highlight how your product or service will
fix a problem or improve a client or customers life.
● Be clear and concise. Don't let your business plan get bogged down in too much
description and information. You can even use bullets or numbered lists.
● Show off your expertise, experience, and accolades. You not only want to describe
your products and services but also share why you're the best to provide them. Include
anything in your education or experience that makes you the expert in this business. If
you have testimonials, awards or endorsements, share those. Finally, if you've applied for
a patent, copyright or trademark, include that as well.
● Be the expert but talk in layman terms. You should know your product/service and
industry well, but don't expect your potential funders and partners to have the same level
of knowledge. Assume the reader doesn't know as much as you when you explain what
you're offering. Avoid acronyms and jargon when outlining your products and services.
● Indicate anything extra special about what or how you'll provide your product or
services. Will you be offering a special guarantee or refund policy? Do you have a
quicker or more unique way of delivering your product or service?
● Write as if you're talking to your customer. While you don't want to write an
advertorial, you do want to be customer-oriented when you write your product and
services section.
REVIEW QUESTIONS
1. Identify the four major business organizations

2. Differentiate a limited liability corporation from a partnership
3. Elaborate on the features of a sole proprietorship
THIS MAKES THE END OF OUR LESSON TODAY HAVEA NICE TIME

UNIT: BUSINESS PLAN
LESSON 6: BUSINESS DESCRIPTION
Lesson Objectives:
By the end of the lesson, the learner should be able to:
i. Explain various entry and growth strategies of a business
ii. Perform the SWOT analysis of a business
Entry and growth strategy of a business

The business can use any of the following ways to grow its portfolio
Market Penetration Strategy

One growth strategy in business is market penetration. A small company uses a market
penetration strategy when it decides to market existing products within the same market it has
been using. The only way to grow using existing products and markets is to increase market
share, according to small business experts. Market share is the percent of unit and dollar sales a
company holds within a certain market vs. all other competitors.
One way to increase market share is by lowering prices. For example, in markets where there is
little differentiation among products, a lower price may help a company increase its share of the
market.
Market Expansion or Development

A market expansion growth strategy, often called market development, entails selling current
products in a new market. There several reasons why a company may consider a market
expansion strategy. First, the competition may be such that there is no room for growth within
the current market. If a business does not find new markets for its products, it cannot increase
sales or profits.
A small company may also use a market expansion strategy if it finds new uses for its product.
For example, a small soap distributor that sells to retail stores may discover that factory workers
also use its product.

Product Expansion Strategy
A small company may also expand its product line or add new features to increase its sales and
profits. When small companies employ a product expansion strategy, also known as product
development, they continue selling within the existing market. A product expansion growth
strategy often works well when technology starts to change. A small company may also be
forced to add new products as older ones become outmoded.
Growth Through Diversification

Growth strategies in business also include diversification, where a small company will sell new
products to new markets. This type of strategy can be very risky. A small company will need to
plan carefully when using a diversification growth strategy. Marketing research is essential
because a company will need to determine if consumers in the new market will potentially like
the new products.
Acquisition of Other Companies

Growth strategies in business can also includes an acquisition. In acquisition, a company
purchases another company to expand its operations. A small company may use this type of
strategy to expand its product line and enter new markets. An acquisition growth strategy can be
risky, but not as risky as a diversification strategy.
One reason is that the products and market are already established. A company must know
exactly what it wants to achieve when using an acquisition strategy, mainly because of the
significant investment required to implement it.
SWOT analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT Analysis
is a technique for assessing these four aspects of your business.
You can use SWOT Analysis to make the most of what you've got, to your organization's best
advantage. And you can reduce the chances of failure, by understanding what you're lacking, and
eliminating hazards that would otherwise catch you unawares.
How to Do a SWOT Analysis

First, draw up a SWOT Analysis matrix. This is a 2x2 grid, with one square for each of the four
aspects of SWOT.

Strengths
Strengths are things that your organization does particularly well, or in a way that distinguishes
you from your competitors. Think about the advantages your organization has over other
organizations. These might be the motivation of your staff, access to certain materials, or a
strong set of manufacturing processes.
Your strengths are an integral part of your organization, so think about what makes it "tick."
What do you do better than anyone else? What values drive your business? What unique or
lowest-cost resources can you draw upon that others can't? Identify and analyze your
organization's Unique Selling Proposition.
Then turn your perspective around and ask yourself what your competitors might see as your
strengths. What factors mean that you get the sale ahead of them?
Remember, any aspect of your organization is only strength if it brings you a clear advantage.
For example, if all of your competitors provide high-quality products, then a high-quality
production process is not strength in your market: it's a necessity.
Weaknesses
Be honest! A SWOT Analysis will only be valuable if you gather all the information you need.
So, it's best to be realistic now, and face any unpleasant truths as soon as possible.
Weaknesses, like strengths, are inherent features of your organization, so focus on your people,
resources, systems, and procedures. Think about what you could improve, and the sorts of
practices you should avoid.
Once again, imagine (or find out) how other people in your market see you. Do they notice
weaknesses that you tend to be blind to? Take time to examine how and why your competitors
are doing better than you. What are you lacking?
Opportunities
Opportunities are openings or chances for something positive to happen, but you'll need to claim
them for yourself!
They usually arise from situations outside your organization, and require an eye to what might
happen in the future. They might arise as developments in the market you serve, or in the
technology you use. Being able to spot and exploit opportunities can make a huge difference to
your organization's ability to compete and take the lead in your market.

Think about good opportunities you can spot immediately. These don't need to be game-
changers: even small advantages can increase your organization's competitiveness. What
interesting market trends are you aware of, large or small, which could have an impact?
You should also watch out for changes in government policy related to your field. And changes
in social patterns, population profiles, and lifestyles can all throw up interesting opportunities.
Threats
Threats include anything that can negatively affect your business from the outside, such as
supply chain problems, shifts in market requirements, or a shortage of recruits. It's vital to
anticipate threats and to take action against them before you become a victim of them and your
growth stalls.
Think about the obstacles you face in getting your product to market and selling. You may notice
that quality standards or specifications for your products are changing, and that you'll need to
change those products if you're to stay in the lead. Evolving technology is an ever-present threat,
as well as an opportunity!
Always consider what your competitors are doing, and whether you should be changing your
organization's emphasis to meet the challenge. But remember that what they're doing might not
be the right thing for you to do, and avoid copying them without knowing how it will improve
your position.
Be sure to explore whether your organization is especially exposed to external challenges. Do
you have bad debt or cash-flow problems, for example, that could make you vulnerable to even
small changes in your market? This is the kind of threat that can seriously damage your business,
so be alert.
REVISION QUESTIONS
i. Highlight five factors to consider when choosing a business location
ii. A part from sole proprietorship, explain other various forms of business ownership
iii. Explain various entry and growth strategies of a business
iv. Discuss various pricing strategies that a business entity can use
UNIT: BUSINESS PLAN
LESSON 7: MARKETING PLAN

Lesson Objectives:
By the end of this lesson, the learner should be able to:
I. Explain customer identification by a business
II. Do the competitor analysis of the business

III. Determine the market share of the business
Customer identification
The customer identification process is globally known as KYC, which stands for Know Your
Customer or know your clients. It is the process of identification and authorization of the
customer considering risk factors related to the business.
KYC is generally practiced by banking and financial institutions as part of the regulation of
general banking and anti-money laundering activities. However, some enterprises are also
practicing KYC to control the risk factors and ensure the anti-bribery compliant assessment with
their clients

A critical part of a successful business plan is identifying your customers and the competition.
Solid business plans incorporate research on potential customers and competitors. Begin by
asking the following questions, and then apply the tips on how to become a winning business:
Three Customer Questions
Who is buying?
What do they buy?
Why do they buy?
Three Competitor Questions
How big are they?

Which customers are they after?
What is their strategy?
Three Ways to Win
Cut costs to the bone

Offer something unique
Focus on one customer group

Competitors Analysis
Competitor analysis in marketing and strategic management is an assessment of the strengths and
weaknesses of current and potential competitors. This analysis provides both an offensive and
defensive strategic context to identify opportunities and threats.
The following are steps to do competitor analysis:
1: List Your Competitors

Start by listing at least three of your main competitors. These are the businesses or people who
provide a similar product or service to yours. They also tend to serve the same market.
It’s also best to look for those businesses that are of a similar size as yours. For example, if
you’re a solo entrepreneur selling handmade potholders online, big chain grocery stores usually
aren’t your direct competitors, even if they might carry handmade potholders in their inventory.
Instead, look for other small to medium scale producers of handmade potholders and similar
kitchen accessories.
2: Write a Brief Overview

Write a brief description of the competitor’s business and why you think they’re a competitor.
Also, how much do you know about each competitor in the first place? Do you know the
business well enough to fill up most of the worksheet without research or do you have to dig
deeper?

Note if you've made contact with each competitor, whether as a customer or by meeting them at
industry events. Having that information near the top of your competitive analysis will help you
quickly see how much you do know about your competitive climate.
3: Know Their Target Customers

Next, identify the customers that your competitors tend to attract. You can do this by going
through their marketing materials, social media pages, website, blog, seeing where they
advertise, etc. This material will help you figure out who they are trying to reach.
Here are some questions you can work to answer as you attempt to identify your competitor’s
target market:
Based on your competitor’s marketing message, what kind of customer does the viewer have to
be for these messages to appeal to him or her? What is their age range? Where do they have to be
located? What's their profession, if any? What other customer demographics can you infer?
You're essentially trying to come up with a "buyer persona", a character who best represents the
person your competition is trying to reach.
Do their marketing materials appear gendered? This just means: do the marketing materials
specifically refer to men or women? This could be in the form of the language they use, the
images, and illustrations in their ads and other marketing content. Or do they appeal to a broader
audience?
Are they targeting low, middle, or high income customers? Look at their pricing information,
including how they phrase it. If they use words like discounts, sale, affordable, or cheap, then
they aren’t targeting the high income crowd. Also look at the marketing materials themselves,
whether it’s a brochure or online banner. Are they attention-grabbing or elegant?
What is the main messaging of their marketing materials? What common customer problems or
goals do they often refer to? Let’s say you’re a pet sitter going through a rival business’
brochure. There is a huge difference between a brochure emphasizing frequent real-time online
updates, and another brochure emphasizing pet pampering and grooming. The group of clients
who are attracted by frequent real-time online updates are often focused on the safety and
welfare of their pets, while those looking for more pampering and grooming services are focused
on comfort and appearance.
Do they have separate marketing messages for different segments? Sometimes, you might see a
stark difference between how your competitor markets their business for one type of customer
versus how they present themselves to another type of customer. For example, if you're trying to

sell services as a math tutor to high school students who are struggling to pass their math
subjects, you'll be making a completely different pitch than you would to those students who
need additional help with their SAT math so that they could get into prestigious universities.
Your message to the struggling students might be closer to "I'll help you finally pass your math
tests!" While your message to the other market will be similar to "I'll help you get into the school
of your dreams!" Also, be sure to note if your competitor does something similar with their own
customer segments.
4: List Their Pricing
Don’t forget to list how your competitors price their products and services. Include other
information such as pricing for installment plans, pricing for product and service packages, as
well as shipping fees. Note in your worksheet how their prices compare with yours—if you’ve
already set rates for your products and services.
5: Itemize Their Marketing Strategy

Though you and your competitors will be running your businesses independently, marketing is
one of the areas where you’ll be going head to head.
Most small businesses might not have the resources or the opportunities to execute detailed and
expansive marketing plans, but your marketing is essentially the message that your customers’
see. The more they are familiar with your message and find an affinity with it, the more likely
they are to choose you.
This is why it’s important to have an understanding not just of your own marketing messages,
but your competitors as well. Deconstruct how their marketing works. Analyze the following:
Print marketing methods such as brochures, posters, billboards, etc. Make note not just of the
content but also the materials. Do they use high quality ink and paper? Are they glossy and in
color or were they just photocopied?
Social Media. Note the social media channels where each of your competitors have a presence.
How many fans or followers do they have? How many comments or shares do their posts get?
Website. What’s the first thing visitors see in your competitor’s website? Is there much text on
the website, and if there is, what does it emphasize about your competitor’s business? Do they
have customer reviews and testimonials? Make note of the design as well. Is their website static
and minimalist, or does it have animation and other interactive features? Apart from judging the

copy, design, and features of the site itself, does the site rank well for relevant search terms that
you think your potential customers could use? If you’re selling handmade leather wallets, try
doing a Google search for “handmade leather tool wallets” and see if any of your competitors are
in the first few pages.
Blog. Do they have a company blog? If they do, how often is it updated? Are there comments or
social media shares on the blog posts?
Advertising. Have you seen any of their ads online, in local newspapers, or in the yellow pages?
What is the call-to-action on their ads, is it to call a number, visit a store, or check out a website?
Are there coupons attached to the ads? What product features are they promoting?
Promotions, Sales, or Events. Do your competitors hold any recurring sales, promos, or events
meant to attract new customers? Do they attend trade shows or sponsor third-party events?
Partnerships. Do they partner with other businesses or individuals? What types of partners do
they choose and what do they typically cross-promote with these partners?
6: Identify Their Competitive Advantage
Next, find out what makes each competitor unique. This is their “competitive advantage,” the
aspect of their business that could help them outperform you and the other businesses on the list.
What do they offer that the other businesses on the list don’t? Why would some customers pick
them over you or your other competitors?
Here are some other criteria you should be looking at:
targeting an underserved market (these are the people whom most of your competitors don't
address or explicitly sell to)
targeting a highly specific market
lower prices
frequent discounts and promos
location
a long company history
a famous or high-profile founder
an interesting company story (interesting founding stories tend to be profiled by the media)
compelling marketing (such as memorable imagery, taglines, or jingles)

large online audience via their website, blog, or social media accounts
broader range of products and services
As you’re filling up this section, you’ll start thinking about what your own competitive
advantage will be. Go through the list above and try to spot areas where you can do much better
than the competitors you’ve researched.
7: Find Their Strengths and Weaknesses

This section serves as a summary and analysis for all of the research you've done so far. You'll
review all the aspects of your competition's business and determine whether they are strengths or
weaknesses. List their strengths and advantages under: “Strengths" in the worksheet. Note down
how equipped you are to deal with these strengths. Can you do better than them or would it serve
you better to outdo them elsewhere?
The same goes for their weaknesses. Do their weaknesses present an opportunity for you? Will
they be able to overcome these weaknesses easily? If so, how will it affect your business if a
competitor turns their weaknesses into strengths?
If you need additional information for this portion, look for any reviews of each competitor’s
product or service. Search for their business name or products on social media and see what
people are saying. This can help you see a business’ weakness and strengths based on what their
customers see.
Market share
Market share is the portion of a market controlled by a particular company or product.
Market share is the percent of total sales in an industry generated by a particular company.
Market share is calculated by taking the company's sales over the period and dividing it by the
total sales of the industry over the same period. This metric is used to give a general idea of the
size of a company in relation to its market and its competitors.

Promotion
The Product Promotion is the disseminating the information about the product, product line,
brand and company to the prospective buyers with the intent to generate sales and develop a
brand loyalty
The Promotion is the fourth element of the marketing mix (Viz. Product, price, place, promotion)
which is considered as a mode of communication that business adopts for achieving the specific
set of objectives such as:
To provide information about the availability of features and uses of the product to the
prospective buyers.
To stimulate demand for a product by creating awareness and interest among the customers.
To differentiate the product from the competitor’s product by creating the brand loyalty.
To stabilize sales by highlighting the importance and features of the product.
Basically, there are four Kinds of Promotion that companies adopt:
Informative promotion
Persuasive promotion
Reminder promotion
Buyer Behavior Modifications
The basic purpose of promotion is to persuade customers to buy and primarily includes three
types of sales activity:

-Advertising,
-Personal Selling, and
-Sales Promotion.
The importance of product promotion lies in the fact that no firm can survive in the market
without reaching the customers effectively and could not compete with other market players if no
unique benefits are offered to the customers.
There are several types of promotions such as above line promotions (Advertising, press
releases, schemes, discounts, etc.) and below the line promotions (trade discounts, freebies,
awards, etc.)
Lesson Revision Questions:
Discuss on consumer identification of a business

Explain why it is important to perform a competitor’s analysis before venturing into business
Describe the reasons promotion is key to a business
UNIT: BUSINESS PLAN
LESSON 8: MARKETING PLAN
Lesson Objectives:

By the end of this lesson, the learner should be able to:
I.Explain various pricing strategies that a business enterprise can use
MARKETING PLAN
1. Market conditions
2. Actions that competitors take
3. Account segments
4. Trade margins
5. Input costs
6. Consumers’ ability to pay
7. Production and distribution costs
8. Variable costs
9. Sales tactics
10. Distribution strategy
11. Customer service
Pricing strategy
Pricing strategy refers to all of the various methods that small businesses use to price their goods
or services. It’s an all-encompassing term that can account for things like:
Pricing strategies are useful for numerous reasons, though those reasons can vary from company
to company. Choosing the right price for a product will allow you to maximize profit margins if
that’s what you want to do. Contrary to popular belief, pricing strategies aren’t always about
profit margins. For instance, you may opt to set the cost of a good or service at a low price to
maintain your hold on market share and prevent competitors from encroaching on your territory.
In these cases, you may be willing to sacrifice profit margins in order to focus on competitive
pricing. But you must be careful when engaging in an action like this. Although it could be
useful for your business, it also could end up crippling your company. A good rule of thumb to
remember when pricing products is that your customers won’t purchase your product if you price
it too high, but your business won’t be able to cover expenses if you price it too low.

Examples of pricing strategies
1. Pricing for market penetration
As a small business owner, you’re likely looking for ways to enter the market so that your
product becomes more well-known. Penetration strategies aim to attract buyers by offering lower
prices on goods and services than competitors.
For instance, imagine a competitor sells a product for $100. You decide to sell the product for
$97, even if it means you’re going to take a loss on the sale. Penetration pricing strategies draw
attention away from other businesses and can help increase brand awareness and loyalty, which
can then lead to long-term contracts.
Penetration pricing can also be risky because it can result in an initial loss of income for the
business. Over time, however, the increase in awareness can drive profits and help small
businesses stand out from the crowd. In the long run, after penetrating a market, business owners
can increase prices to better reflect the state of the product’s position within the market.
2. Economy pricing
This pricing strategy is a “no-frills” approach that involves minimizing marketing and production
expenses as much as possible. Used by a wide range of businesses, including generic food
suppliers and discount retailers, economy pricing aims to attract the most price-conscious
consumers. Because of the lower cost of expenses, companies can set a lower sales price and still
turn a slight profit.
While economy pricing is incredibly useful for large companies like Walmart and Target, the
technique can be dangerous for small businesses. Because small businesses lack the sales volume
of larger companies, they may find it challenging to cut production costs. Additionally, as a
young company, they may not have enough brand awareness to forgo custom branding.
3. Pricing at a premium
With premium pricing, businesses set costs higher because they have a unique product or brand
that no one can compete with. You should consider using this strategy if you have a considerable
competitive advantage and know that you can charge a higher price without being undercut by a
product of similar quality.

Because customers need to perceive products as being worth the higher price tag, a business has
to work hard to create a perception of value. Along with creating a high-quality product, owners
should ensure that the product’s packaging, the store’s decor, and the marketing strategy
associated with the product all combine to support the premium price.
An example of premium pricing is seen in the luxury car industry. Companies like Tesla can get
away with higher prices because they’re offering products, like autonomous cars, that are more
unique than anything else on the market.
4. Price skimming
Designed to help businesses maximize sales on new products and services, price
skimming involves setting rates high during the initial phase of a product. The company then
lowers prices gradually as competitor goods appear on the market. An example of this is seen
with the introduction of new technology, like an 8K TV, when currently only 4K TVs and
HDTVs exist on the market.
One of the benefits of price skimming is that it allows businesses to maximize profits on early
adopters before dropping prices to attract more price-sensitive consumers. Not only does price
skimming help a small business recoup its development costs, it also creates an illusion of
quality and exclusivity when you first introduce your product to the marketplace.
5. Psychological pricing
Psychological pricing refers to techniques that marketers use to encourage customers to respond
based on emotional impulses, rather than logical ones.
For example, setting the price of a watch at $199 is proven to attract more consumers than setting
it at $200, even though the actual difference here is quite small. One explanation for this trend is
that consumers tend to put more attention on the first number on a price tag than the last. The
goal of psychology pricing is to increase demand by creating an illusion of enhanced value for
the consumer.
6.Bundle pricing

With bundle pricing, small businesses sell multiple products for a lower rate than consumers
would face if they purchased each item individually. A useful example of this occurs at your
local fast food restaurant where it’s cheaper to buy a meal than it is to buy each item
individually.
Not only is bundling goods an effective way to reduce inventory, it can also increase the value
perception in the eyes of your customers. Customers feel as though they’re receiving more bang
for their buck. Many small businesses choose to implement this strategy at the end of a product’s
life cycle, especially if the product is slow selling.
Small business owners should keep in mind that the profits they earn on the higher-value items
must make up for the losses they take on the lower-value product. They should also consider
how much they’ll save in overhead and storage space by pushing out older products.
7. Geographical pricing
Geographical pricing involves setting a price point based on the location where it’s sold. Factors
for the changes in prices include things like taxes, tariffs, shipping costs, and location-specific
rent.
Another factor in geographical pricing could be basic supply and demand. For instance, imagine
you sell sports performance clothing. You may choose to set a higher price point for winter
clothes in your cold-climate retail stores than you do in your warm-climate stores. You know
people are more likely to buy the clothes in the winter environments, so you set a higher price to
take advantage of demand.
8. Promotional pricing
Promotional pricing involves offering discounts on a particular product. For instance, you can
provide your customers with vouchers or coupons that entitle them to a certain percentage off the
good or service. You could also entertain a “Buy One Get One” campaign, tacking on an
additional product as an add-on.
Promotional pricing campaigns can be short-term efforts. For instance, you may run a
promotional pricing strategy over an extended holiday, like Memorial Day Weekend. By offering
these deals as short-term offers, business owners can generate buzz and excitement about a
product. Promotional pricing also incentivizes customers to act now before it’s too late. This
pricing strategy plays to a consumer’s fear of missing out.

9. Value pricing
Value pricing occurs when external factors, like a sharp increase in competition or a recession,
force the small business to provide value to its customers to maintain sales.
This pricing strategy works because customers feel as though they are receiving an excellent
“value” for the good or service. The approach recognizes that customers don’t care how much a
product costs a company to make, so long as the consumer feels they’re getting an excellent
value by purchasing it.
This pricing strategy could cut into the bottom line, but businesses may find it beneficial to
receive “some” profit rather than no profit. An example of value pricing is seen in the fashion
industry. A company may produce a product line of high-end dresses that they sell for $1,000.
They then make umbrellas that they sell for $100.
The umbrellas may cost more than the dresses to make. However, the dresses are set at a higher
price point because customers feel as though they are receiving much better value for the
product.
10. Captive pricing
If you have a product that customers will continually renew or update, you’ll want to consider a
captive pricing strategy. A perfect example of a captive pricing strategy is seen with a company
like Dollar Shave Club. With Dollar Shave Club, customers make a one-time purchase for a
razor. Then, every month, they purchase new razor blades to replace the existing one on the head
of the razor.
Because the customer purchased a DSC razor handle, he or she has no choice but to buy blades
from the company as well. Thus, the company holds customers “captive” until they decide to
break away and buy a razor handle from another company. Businesses can increase prices so
long as the cost of the secondary product does not exceed the cost.
END OF LESSON
UNIT: BUSINESS PLAN

LESSON 9: ORGANISATIONAL AND MANAGEMENT PLAN

Lesson Objectives:
i.Describe an organization structure of a business
ii.Describe the management team and other business personnel
ORGANISATIONAL AND MANAGEMENT PLAN
1. The organization, or how your business is structured and the people involved
2. The management team, or details about what your team brings to the business
3. Name
4. Percentage of ownership (LLC, corporation, etc.)
5. Extent of involvement (active or silent partner)
6. Type of ownership (stock options, general partner, etc.)
7. Position in the business (CEO, CFO, etc.)
8. Duties and responsibilities
9. Educational background
10. Experience or skills that are relevant to the business and the duties
11. Past employment
12. Skills will benefit the business
13. Awards and recognition
14. Compensation (how paid)
15. How each persons' skills and experience will complement you and each other
16. Name
17. Expertise
18. Position (if there are positions)
19. Involvement with the company
20. Name
21. Title
22. Background information such as education or certificates
23. Services provided to your business
24. Relationship information (i.e. retainer, as-needed, regular)
25. Skills and experience making them ideal for the work you need
26. Anything else that makes them stand out as quality professionals to have helping you
in your business such as awards
● Education credentials, including college and major, and any relevant

certifications. Employment highlights. Pick the last or last two titles and company
affiliations unless there is something truly stellar in someone's past worth

mentioning.Skills or specialties, meaning those things that someone truly excels at or
is known for.* Notable accomplishments,which can serve as a subliminal message
that they can be repeated at your small business.
● Personal insights, which may include anything from community involvement to

someone's rationale for joining your company. You have a lot of latitude here, so try to
think in terms of what conveys the mark of a can-do, energetic person. If you're
impressed by it, chances are someone reading your business plan will be too.
● Recruitment request form: When the decision to recruit for the post has been made, a
recruitment request form will be completed by the service co-coordinator, finance
officer and signed by the manager before the recruitment process is commenced.
● The job description and person specification: Job descriptions and person
specifications will be reviewed and prepared for each post to ensure that they
accurately and adequately reflect the skills, qualities, experience and attributes required
for the post. As roles, duties and responsibilities change over time, where an
advertisement, job description andâ€…/â€…or person specification are already in
existence; they must be checked and updated to ensure they clearly reflect the current
requirements of the job. Job descriptions and personnel specifications and
advertisements must be approved by the manager and or [responsible] coordinator.
● Advertisement: Vacancies will be advertised as openly and as widely as possible. The

advertisement will state the overall purpose of the job and give clear guidance on the
required method of application.
● Shortlisting: Shortlisting will be undertaken by a minimum of two people and

referenced against the person specification.
● Interview and selection: Interviews will be undertaken by a minimum of two people

and referenced against the person specification.
● Reference checks: References will be taken up.
● Vetting: If applicable, posts are subject to vetting prior to commencement.

1. How does the business do remuneration of its employees
2. Legal and statutory requirements of a business operation in Kenya
3. Supporting services to a business
An organizational structure is a system that outlines how certain activities are directed in
order to achieve the goals of an organization. These activities can include rules, roles, and
responsibilities. The organizational structure also determines how information flows between
levels within the company.
What to Put in the Organization and Management Section
This section of your business plan covers two main areas:
Within these sections, you have specific areas to cover about how your business is structured
and who's involved.
In the opening of the section, you want to give a brief summary of your management team,
including size, composition, and years experience (i.e., Our management team of five has
more than 20 years of experience in the widget industry.)
Organizational Structure
The organization section sets up the hierarchy of the people involved in your business. It's
often set up in a chart form. If you have a partnership or multi-member LLC, this is where you
indicate who is president or CEO, the CFO, director of marketing, and any other roles you
have in your business.
If you're a single-person home business, this becomes easy as you're the only one on the chart.
While technically, this part of the plan is about owner members, if you plan to outsource work
or hire a virtual assistant, you can include them as well. For example, you might have a
freelance webmaster, marketing assistant, and copywriter. You might even have a virtual
assistant whose job it is to work with your other freelancers. These people aren't owners but
have significant duties in your business.
The Management Team

This section highlights what you and the others involved in the running of your business
brings to the table. This not only includes owners and managers but also your board of
directors (if you have one) and support professionals. Start by indicating your business
structure (i.e. partnership or LLC), and then list the team members.
Owner/Manager/Members
Provide the following information on each owner/manager/member:
Board of Directors
A board of directors is another part of your management team. If you don't have a board of
directors, you don't need this information. But even a one-person business could benefit from
a small group of other business owners who might be willing to provide you with the
feedback, support, and accountability that comes from an advisory board.
This section provides much of the same information as in the ownership and management
team sub-section.
Support Professionals
Especially if you're seeking funding, let potential investors know you're on the ball with a
lawyer, accountant, and other professionals that are involved in your business. This is the
place to list any freelancers or contractors you're using. Like the other sections, you'll want to
include:
Helpful Tips
Writing a business plan seems like an overwhelming activity, especially if you're starting a
small, one-person business. But writing a business plan can be fairly simple and
straightforward.
The point of this section is to be clear to yourself, and those who work with you or for you, or
will be funding you, who's involved and in charge of what, as well as the background and
skills that will be contributing to the success of the business.
Like other parts of the business plan, this is a section you'll want to update if you have team
member changes, or if you and your team members receive any additional training, awards or
other accolades that benefit the business.

Because it highlights the skills and experience you and your team offer, it can be a great
resource to refer to when seeking publicity and marketing opportunities.
Management team/ business personnel

Structure the management team section to include an organizational chart of your small
business, including departments, department managers and employees. Biographical
information about you, the owner, and any other owners. Specify your ownership percentage
and exactly what your day-to-day responsibilities will be. Biographical information on your
management team.* The credentials of any advisers who will be at your side providing expert
advice, such as an accountant and a lawyer.
You should devote only about one paragraph to each person you profile in the management
section. But in the end, that should be one substantive paragraph, and it will require some
finesse to pull it off.
Name and title, Education and professional credentials and some personal information
and Primary responsibilities at your small business
Providing names and titles should be the easy part. The most robust part of your paragraph
should proceed with ease if you include:
Recruitment, training and promotion of personnel in a business

To enhance transparency, processes and criteria for appointments and promotions should be
documented and shared in a guideline or policy document. Recruitment guidelines could
describe the recruitment process as follows:
Review of vacancy: When a post becomes vacant it will be reviewed by the manager.
END OF LESSON
UNIT: BUSINESS PLAN
Lesson Objectives:
i.Describe an organization structure of a business

ii.Describe the management team and other business personnel
1. The organization, or how your business is structured and the people involved
2. The management team, or details about what your team brings to the business
3. Name
4. Percentage of ownership (LLC, corporation, etc.)
5. Extent of involvement (active or silent partner)
6. Type of ownership (stock options, general partner, etc.)
7. Position in the business (CEO, CFO, etc.)
8. Duties and responsibilities
9. Educational background
10. Experience or skills that are relevant to the business and the duties
11. Past employment
12. Skills will benefit the business
13. Awards and recognition
14. Compensation (how paid)
15. How each persons' skills and experience will complement you and each other
16. Name
17. Expertise
18. Position (if there are positions)
19. Involvement with the company
20. Name
21. Title
22. Background information such as education or certificates
23. Services provided to your business
24. Relationship information (i.e. retainer, as-needed, regular)
25. Skills and experience making them ideal for the work you need
26. Anything else that makes them stand out as quality professionals to have helping you
in your business such as awards
● Education credentials, including college and major, and any relevant

certifications. Employment highlights. Pick the last or last two titles and company
affiliations unless there is something truly stellar in someone's past worth
mentioning.Skills or specialties, meaning those things that someone truly excels at or
is known for.* Notable accomplishments,which can serve as a subliminal message
that they can be repeated at your small business.

● Personal insights, which may include anything from community involvement to
someone's rationale for joining your company. You have a lot of latitude here, so try to
think in terms of what conveys the mark of a can-do, energetic person. If you're
impressed by it, chances are someone reading your business plan will be too.
● Recruitment request form: When the decision to recruit for the post has been made, a
recruitment request form will be completed by the service co-coordinator, finance
officer and signed by the manager before the recruitment process is commenced.
● The job description and person specification: Job descriptions and person
specifications will be reviewed and prepared for each post to ensure that they
accurately and adequately reflect the skills, qualities, experience and attributes required
for the post. As roles, duties and responsibilities change over time, where an
advertisement, job description andâ€…/â€…or person specification are already in
existence; they must be checked and updated to ensure they clearly reflect the current
requirements of the job. Job descriptions and personnel specifications and
advertisements must be approved by the manager and or [responsible] coordinator.
● Advertisement: Vacancies will be advertised as openly and as widely as possible. The

advertisement will state the overall purpose of the job and give clear guidance on the
required method of application.
● Shortlisting: Shortlisting will be undertaken by a minimum of two people and

referenced against the person specification.
● Interview and selection: Interviews will be undertaken by a minimum of two people

and referenced against the person specification.
● Reference checks: References will be taken up.
● Vetting: If applicable, posts are subject to vetting prior to commencement.
1. How does the business do remuneration of its employees

2. Legal and statutory requirements of a business operation in Kenya
3. Supporting services to a business

An organizational structure is a system that outlines how certain activities are directed in
order to achieve the goals of an organization. These activities can include rules, roles, and
responsibilities. The organizational structure also determines how information flows between
levels within the company.
What to Put in the Organization and Management Section
This section of your business plan covers two main areas:
Within these sections, you have specific areas to cover about how your business is structured
and who's involved.
In the opening of the section, you want to give a brief summary of your management team,
including size, composition, and years experience (i.e., Our management team of five has
more than 20 years of experience in the widget industry.)
Organizational Structure
The organization section sets up the hierarchy of the people involved in your business. It's
often set up in a chart form. If you have a partnership or multi-member LLC, this is where you
indicate who is president or CEO, the CFO, director of marketing, and any other roles you
have in your business.
If you're a single-person home business, this becomes easy as you're the only one on the chart.
While technically, this part of the plan is about owner members, if you plan to outsource work
or hire a virtual assistant, you can include them as well. For example, you might have a
freelance webmaster, marketing assistant, and copywriter. You might even have a virtual
assistant whose job it is to work with your other freelancers. These people aren't owners but
have significant duties in your business.
The Management Team

This section highlights what you and the others involved in the running of your business
brings to the table. This not only includes owners and managers but also your board of
directors (if you have one) and support professionals. Start by indicating your business
structure (i.e. partnership or LLC), and then list the team members.

Owner/Manager/Members
Provide the following information on each owner/manager/member:
Board of Directors
A board of directors is another part of your management team. If you don't have a board of
directors, you don't need this information. But even a one-person business could benefit from
a small group of other business owners who might be willing to provide you with the
feedback, support, and accountability that comes from an advisory board.
This section provides much of the same information as in the ownership and management
team sub-section.
Support Professionals
Especially if you're seeking funding, let potential investors know you're on the ball with a
lawyer, accountant, and other professionals that are involved in your business. This is the
place to list any freelancers or contractors you're using. Like the other sections, you'll want to
include:
Helpful Tips
Writing a business plan seems like an overwhelming activity, especially if you're starting a
small, one-person business. But writing a business plan can be fairly simple and
straightforward.
The point of this section is to be clear to yourself, and those who work with you or for you, or
will be funding you, who's involved and in charge of what, as well as the background and
skills that will be contributing to the success of the business.
Like other parts of the business plan, this is a section you'll want to update if you have team
member changes, or if you and your team members receive any additional training, awards or
other accolades that benefit the business.
Because it highlights the skills and experience you and your team offer, it can be a great
resource to refer to when seeking publicity and marketing opportunities.

Management team/ business personnel
Structure the management team section to include an organizational chart of your small
business, including departments, department managers and employees. Biographical
information about you, the owner, and any other owners. Specify your ownership percentage
and exactly what your day-to-day responsibilities will be. Biographical information on your
management team.* The credentials of any advisers who will be at your side providing expert
advice, such as an accountant and a lawyer.
You should devote only about one paragraph to each person you profile in the management
section. But in the end, that should be one substantive paragraph, and it will require some
finesse to pull it off.
Name and title, Education and professional credentials and some personal information
and Primary responsibilities at your small business
Providing names and titles should be the easy part. The most robust part of your paragraph
should proceed with ease if you include:
Recruitment, training and promotion of personnel in a business

To enhance transparency, processes and criteria for appointments and promotions should be
documented and shared in a guideline or policy document. Recruitment guidelines could
describe the recruitment process as follows:
Review of vacancy: When a post becomes vacant it will be reviewed by the manager.
END OF LESSON
UNIT: BUSINESS PLAN
Lesson Objectives:
i. Describe the remuneration and incentives for personnel

ii. Highlight the support services of a business entity
1. Hourly Wage Compensation

2. Annual Salary Compensation
3. Retirement Savings Plans
4. Raises, Bonuses and Incentives
5. Group Health Benefits
6. Types of Services
MANAGEMENT PLANNING
● Word processing
● Tape transcription
● Phone-in dictation
● Desktop publishing
● Spreadsheet design
● College papers and reports
● Telephone answering
● Mail receiving and forwarding
● Packing and shipping
● Database/mailing list management
● Bookkeeping, check preparation and billing
● Resume preparation
● Proofreading
● Print brokering
● Fax sending and receiving

● Photocopying
● Notary
● Internet research
● Web page design and maintenance
● Event planning
● Consulting
● Training
Target Market
● General Public. By "general public," we mean individual clients who are not businesses.
The two largest segments of this market are people needing resume preparation and
college students.
● Small Businesses. Chances are, the majority of your clients will fall under this category.
These are companies that require secretarial and administrative support but do not have
the money, space or need for a full-time employee. Or they may prefer to outsource
specific tasks rather than invest in the talent and equipment necessary to get the job done
right. And hiring temporary employees can be more costly than small businesses' needs
demand.
● Large Corporations. Even fairly large operations with full-time secretaries and
administrative assistants may be candidates for your services. If a company has a
temporary situation where they have more work than they can handle in-house, they may
turn to you to pick up the overload. Or, like the small businesses mentioned earlier, they
may prefer to outsource special projects rather than hiring temporary workers. This is a
smart move, because hiring temporary employees means training them and providing
them with an adequately equipped workstation. Sending the work to you eliminates that
hassle and cost.
Finding a Niche

● Other business support services. Let existing business owners know you're available
for overflow or to work on a contract basis. Expect to have to sign confidentiality and
noncompete agreements, but be sure any such contract limits you to only being prevented
from marketing directly to the service's clients whose work you actually do. You might
have to discount your rates to allow them to make a profit, but your marketing and sales
costs will be minimal, which offsets the discount; however, be sure you are compensated
for rush jobs.
● Specific professions or industries. If you have expertise in a specific field, you may
target your service to that field. Two of the most common are the legal and medical
fields, particularly transcribing for these groups, because you'll need to be familiar with a
long list of special terms and formatting requirements. Or you may want to target
professional salespeople, such as manufacturers' reps, who work from their homes and
need occasional administrative support. Chicago's Joann V. focuses on the insurance
industry, and Cindy P. in Irvine, California, targets the legal field.
● Geographic areas. If you are in a densely populated area, perhaps an office center or a
light industrial park, you may want to choose your market by geography. Determine your
parameters, and then market to the companies within your service area, emphasizing the
convenience of using your service.
● Academic. If you are near a college or university, you can serve a number of academic-
related niches, including students, instructors and even administrators.
Startup Costs
Operations
Location
Income & Billing
Multiple Hourly Rates
● Level 1 (lowest hourly rate): Basic word processing, routine clerical services, simple
proofreading
● Level 2: Enhanced word processing, copyediting, proofreading, basic spreadsheet design,

internet research
● Level 3: Desktop publishing, spreadsheet design, simple web page design, simple web
page maintenance

● Level 4: Graphic design, writing (academic, business, resume, technical), web page
design, web page maintenance
● Level 5 (highest hourly rate): Consulting, training
Hour Power
● Basic word processing - $7-40
● Enhanced word processing - $7-50
● Copyediting - $7-75
● Database entry - $18-50
● Transcription, general - $15-45
● Consulting/training - $7-90
● Spreadsheet design - $15-75
● Desktop publishing - $7-75
● Graphic design - $14-100
● Web site design - $20-150
● Internet research - $7-75
Estimating the Job

Marketing
Referrals Are Essential
Advertising
1. What are business support services?

1. Outline some of the services you would embrace within your business to ensure you are
making some profits
1. Explain the reasons for strategizing on remuneration scheme to employees
REMUNERATION AND INCENTIVES FOR PERSONNEL
The term “compensation” refers to the combination of wages, salaries and benefits an employee
receives in exchange for work. Compensation may include hourly wages or an annual salary,
plus bonus payments, incentives and benefits, such as group health care coverage, short-term
disability insurance and contributions to a retirement savings account. A total compensation
package can have several components. An “employee compensation plan” collectively refers to
all the components in addition to the manner in which the compensation is paid and for what
purpose employees receive case bonuses, salary increases and incentives.
Employees classified as non-exempt receive what employers usually call wages, which are
calculated on an hourly basis and require overtime payment for work in excess of 40 hours per
week. Overtime is one and a half times the hourly rate. Employees who have a collective
bargaining agreement with management – often called a labor union contract – have wages set
by contract terms for a certain period.
For example, a sample labor union contract may require employers to pay master plumbers,
licensed plumbers and apprentice plumbers hourly wages of $19.75, $17.95 and $15.50,
respectively, pursuant to the terms of a collective bargaining agreement.
Although there are salaried employees who are classified as non-exempt and, therefore, entitled
to overtime pay, the term “salary” generally refers to an annual salary the employee receives or a
method of employee compensation that does not require overtime pay. For instance, the
reference to a “salaried employee” is generally used to describe a worker who does not receive
overtime pay.
An example of an employee compensation plan for salary levels is one based on a salary scale
that considers education, years of professional experience, credentials and qualifications such as
job competency and functional expertise. Salary levels such as the wage tables published
annually by the U.S. Office of Personnel Management contain annual wages, as well as increases

based on step and grade promotions for federal government employees paid according the
General Services and Senior Executive Service wage scales.
A sample compensation scenario gives employees the opportunity to participate in the employer-
sponsored 401k plan. Employees designate pre-tax contributions to be deducted from each
paycheck. For employees who contribute 5 percent of their gross salary or wages, the company
matches 50 percent of the employee’s contribution. In other words, the employer’s matching
contributions equal 2.5 percent of the employee’s gross salary.
Vesting refers to the amount of time before which the employer’s contribution is fully available
to the employee. Vesting periods range anywhere from one to five years. A five-year vesting
period means that for the first year after the employer makes its contribution to the employee’s
401k plan, 20 percent of the money actually belongs to the employee.
In the second year, 40 percent belongs to the employee, and in subsequent years, 60, 80 and 100
percent of the employer’s contributions become vested and available to the employee. If the
employee leaves his job before completing five years, he forfeits the appropriate portion of the
non-vested employer’s contributions.
The employer's performance management system is usually what drives a compensation plan's
salary increases. Employees receive annual raises based on performance ranking and ratings. For
example, an outstanding performance appraisal could result in a 5 percent salary increase.
Sample employee bonus and incentive plans include cash incentives based on a percentage of the
employee's gross salary or an employee's share based on a discretionary pool of funds designated
for distribution to employees whose performance contributed to business success. Many
executive bonuses and incentives are tied to improvement of the bottom line or even increases in
the value of shares for publicly held companies.
A total compensation plan may include group health-care benefits. Many employers pay a
sizeable portion of the total monthly premium, leaving a portion of the premium to be deducted
from the employee’s pay. Premiums for employer-sponsored health care plans are deducted from
pre-tax income, which are gross earnings.
Group health coverage may include supplemental coverage for dental and vision care as well.
Some employers pay the total cost for short-term disability insurance and offer coverage for
long-term disability insurance as part of an employee’s total compensation.
BUSINESS SUPPORT SERVICES
The secretary of yesteryear needed to know how to take shorthand, type and answer the phone.
Today's secretary deals with dictation using a tape recorder and transcription equipment; instead

of simply typing, she inputs data into a computer; and the office telephone she uses is actually a
complex communications center.
What we now call the business support services industry has experienced a similar and perhaps
even more remarkable evolution. It began as secretarial services or typing services, and typing
was pretty much all they did. But those operations have gone the way of the horse and buggy,
replaced by modern, techno-savvy entrepreneurs who want to take advantage of a virtually
limitless market.
Though the term "secretarial service" has a strong degree of consumer recognition, it's no longer
an appropriate description of the industry. While typing and transcription (historically typical
secretarial services) are still a mainstay, consumers often don't think of a secretarial service as
providing desktop publishing, spreadsheet design, Internet-related services, and other
sophisticated product and service packages. The phrase "business support services" does a much
better job of conveying what the industry is all about today and still leaves flexibility for the
changes that are likely to occur in the future. You'll also hear terms such as "administrative
support services" and "office support services" applied to this industry.
In 1998, the National Association of Secretarial Services changed its name to the Association of
Business Support Services International. Executive Director Lynette M. Smith says, "We felt that
'business support services' did a better job than 'secretarial services' of covering the scope of our
members' services and bringing more respectability to the profession."
To understand the future potential, take a look at how the industry has evolved. Over the span of
the 20th century, the administrative demands of doing business have grown tremendously,
creating a need for secretarial and clerical support. With the advent of desktop computers and
increasingly sophisticated office equipment, the skill and knowledge requirements of secretaries
have also increased.
At the same time, the general business landscape has changed dramatically. Big businesses are
looking for ways to streamline their operations, and one popular option is outsourcing, where
they retain another company to provide a service that may have traditionally been done by
employees. Small companies want to stay lean and profitable, so they, too, are turning to
outsourcing, rather than fattening up their payroll.
Combine the obvious need with the new way of operating in the business world, and you have a
dynamic young industry wide open with opportunity: business support services. In fact, there is
so much opportunity that if you don't have a clear plan, specific services and a target market,
your chances of success are slim. But with a lot of thought and preparation, and a minimal
amount of cash, you can quickly be on the road to profitability.

You can offer a wide range of services. The following list encompasses what we found on the
market, but it is by no means exhaustive. Some of these services could be businesses in and of
themselves; others are ancillary to a primary service. Listen to your clients; they'll let you know
what they need, and then you can decide if you can provide it.
You have three broad markets for your business support services business: the general public;
small commercial and homebased businesses; and large corporations.
A job hunter creating or updating a resume may actually write the document and bring it to you
for layout and printing; he or she may need you to assist in writing the content as well. Even
when the unemployment rate is low, the resume market is significant because people don't have
to be unemployed to need a resume.
There are thousands of higher-learning institutions in the United States with a collective
enrollment of millions of students. Although many students prepare reports and papers
themselves, enough of them will turn to a professional word-processing firm to make this market
substantial.
Students working on particularly long papers, such as graduate theses or dissertations, are strong
candidates for your service. And, of course, once they graduate, they may come back to you for
assistance with their resumes.
In addition to students, the academic community may also be a source of business (think
professors who need word processing, editing and proofreading services for their books and
articles).
As the number of small businesses continues to grow, so does your potential market. And the list
of services they use is limited only by your imagination and personal preferences. As you
develop relationships with small businesses, you'll be in a position to make suggestions that will
increase the volume--or even expand the scope--of the work you do for them.
Typically, small businesses turn to business support services firms for word processing, faxing,
photocopying, shipping, desktop publishing, mailing list management, dictation and
transcription.
Large companies also use business support services when their own staff members are
unavailable due to vacations or illness. They may not actually need a "temp," that is, someone to
come in and be present in the office, but they may need someone who can handle all or part of
the work of the absent staffer.
It's a good idea to select one or more key market groups to target. There are a number of very
valid reasons for choosing a well-defined market niche. By targeting a very specific market

segment, you can tailor your service menu, marketing efforts and customer service system to
meet that segment's needs. You can refine your marketing efforts and gain a reputation within the
industry for expertise in certain areas--which means you can charge more. Think about it: In the
medical field, who earns more--a family practitioner or a neurosurgeon? The neurosurgeon,
naturally, because he's a specialist, and what he does requires greater skill. Some market niches
you might consider include:
One of the most appealing aspects of the business support services industry is its relatively low
startup costs. If you have a decent credit rating, you can be ready to start serving clients with
virtually no cash out of pocket--although you'll certainly be on firmer ground if you have some
startup capital.
Most of the business support services entrepreneurs we talked with used their own personal
savings and equipment they already owned to start their businesses. Because the startup costs are
relatively low, you'll find traditional financing difficult to obtain--banks and other lenders would
much rather lend amounts much larger than you'll need and are likely to be able to qualify for.
Many operators start their businesses on the side while working full-time jobs, so their personal
living expenses are covered. But if you plan to plunge into your new business full time from the
start, be sure you have enough cash on hand to cover your expenses until the revenue starts
coming in. At a minimum, you should have the equivalent of three months' expenses in a savings
account to tap if you need it; you'll probably sleep better if you have six to 12 months of
expenses socked away.
Charlene D. in Winter Park, Florida, decided to invest in a new computer and printer and says
she spent about $3,500 on equipment and supplies to get started. Perrysburg, Ohio's Rachelle Y.
used her old 486 PC to develop her business plan and brochure but decided to purchase a new
system before she actually began her operation. "I wanted to be able to offer everything I could,"
she says. "In this field, your computer is your best friend. So I bought a new computer and
printer, paper, and some other odds and ends. I probably spent between $3,000 and $4,000 on
startup."
Irvine, California's Cindy P. paid $10,000 to buy an existing business; that fee included the client
list and the lease on the office, but no furniture or equipment. She spent another $4,000 on initial
equipment purchases and has added more over the years.
Joann V. in Chicago started her business before the days of PCs. "Originally, all I needed was a
typewriter," she says. "I bought an electronic typewriter for $500 and some paper, and someone
loaned me a transcription unit. That was it--that was all I needed to start." In Edmond,
Oklahoma, Janet S. says that because she already owned a computer, printer and answering
machine, her startup costs were "virtually zero."

As you consider your own situation, don't pull a startup number out of the air; use your business
plan to calculate how much you need to start your ideal operation, and then figure out how much
you have. If you have all the cash you need, you're very fortunate. If you don't, you need to start
playing with the numbers and deciding what you can do without.
As a solo operator, expect to spend at least one-fourth of your time on general business
management and administration, marketing, purchasing and billing. The bigger your business
and the more people you have, the more time you'll spend managing them rather than actually
doing the work yourself. With four employees, Irvine, California's Cindy P. spends very little of
her time working on projects for clients. And Chicago entrepreneur Joann V. hasn't actually
transcribed anything herself in years--she has a team of five full-time employees in the office and
nearly 50 part-time transcribers who work from their homes.
No matter how small or large your company is, it's critical that you not neglect the administrative
side. It won't do you much good if you do the work but never get around to sending out the
invoices so you can get paid. Poorly maintained records can get you into trouble with the IRS
and other government agencies. And if you aren't marketing on a regular basis, your business
will eventually dry up.
Running a business support service takes a lot of energy. It helps if you enjoy people but are also
able to work alone or in small groups. You'll need to be able to juggle several projects at the
same time, and always make each client feel as though he or she is the most important person to
you.
When it comes to the actual site of your business, you have two choices: homebased or a
commercial location. A business support services company can be extremely successful in either
venue; your decision will depend on your individual resources and goals.
As you consider the issue of location, keep a few things in mind. Depending on the specific
services you offer and market you target, you'll possibly be dealing both with the general public,
who will need access to your office, along with small-business owners and managers in larger
corporations who may also want to visit your facility or have their employees or a messenger
pick up and deliver work.
In any business, but especially in this one, a professional image is a critical element of success.
Homebased operations are very accepted in today's business world (in fact, many customers
prefer dealing with homebased suppliers because they have lower overhead and can therefore
charge less), but you still need to present the appearance of being a serious business, even though
you choose to work from your house. And if you opt for a commercial location, be sure it's one
that is compatible with your goals.

In the mid-1990s, about half the members of the Association of Business Support Services
International (ABSSI) were homebased; by the turn of the century, an estimated 70 percent were
homebased, one-person operations. "Many of our previously office-based members are
simplifying their lives by moving back to a residential location," says Lynette M. Smith, ABSSI's
executive director. "They acknowledge that a homebased business is no longer the exception but
the norm. In the perception of clients, there no longer is a stigma associated with being
homebased."
While conceding that operating from home can make growth challenging, Smith says, "At home,
one cannot expand through the traditional means of hiring employees. However, it's becoming
more realistic to subcontract out work--especially transcription--to others, so there is still
significant profit potential to be expected by replicating one's efforts in this way."
You have a number of options when it comes to deciding on your approach to pricing. Some
operators simply call around, find out what other companies are charging and set their prices in
that range. Others decide what they want to earn and set their prices based on that without regard
to how it relates to the competition. Then there's the issue of pricing by the project, the page or
the hour.
The best approach is a multifaceted one that considers the skill level of the work, your profit
goals and the market. You need to set up a system that gives you a structure to work within so
you can quote consistent, reasonable and fair rates.
If you're going to charge by the hour, consider that different rates should apply depending on the
complexity of the service and skill level required. For example, Cindy P.'s hourly rate ranges
from $28 for straight word processing up to $40 for complex desktop publishing. The
Association of Business Support Services International suggests a structure similar to the
following:
Note that the same basic task might fall into more than one pricing level, and you'll need to make
a judgment call based on the particular project as to which rate to apply.
When the Association of Business Support Services International surveyed its members, it found
that the hourly rate ranges for the most popular services offered by respondents were:
Many new business owners find estimating one of the most challenging things they do, but if you
approach the process systematically, it's simple. You just need to determine an appropriate
hourly rate, calculate the length of time the project should take, and do the math.
Regardless of the format you use to provide the quote (in writing or verbal), it's a good idea to
make notes for yourself so you know what you quoted and how you arrived at that figure. This
will be necessary if the actual project turns out to be different than what the client described, or if

the client questions the invoice later, even though they agreed to the quote. You may even want
to create an estimate form that you can provide to the client and keep a copy in your own files.
Marketing is an area where your creative side can shine. It's something many people don't like to
do, but it's essential if you're going to build a successful, profitable business.
Don't be discouraged if your marketing efforts don't produce an immediate response. It's rare that
someone will have a need for your services at precisely the moment you contact them, but if you
put together a professional, attractive information package, they'll keep the information on file
and call you when they need you--or they'll refer you to a colleague who may have the need. It's
not unusual for a sales contact not to generate a response for months--or even a year.
You can find out how to create a basic marketing plan here, but there are issues and ideas
specific to business support services that you need to know as you develop your plan. For
example, check with your local phone company to find out its advertising deadline and directory
distribution date and, if possible, plan to launch your business in time to be included. Your
Yellow Pages listing will be an important source of new business, especially in the early days, so
don't get so distracted by other startup tasks that you miss this opportunity.
Another important point is to be sure all your marketing materials are professional and letter-
perfect. Many business support services that do a great job in this area for their clients often
forget to do the same for themselves. Consider hiring a graphic designer and/or professional
writer to help you with your marketing package; you may be able to negotiate a trade-out that
will benefit you both.
Referrals will likely be a primary way you get new clients, so it's a good idea to have a
systematic approach to the process. You should be able to identify who is making referrals that
ultimately turn into business so you can cultivate and reward those referral sources.
Complementary businesses are great sources of referrals. For example, print and copy shops
often have customers who need word processing or desktop publishing but don't have the
equipment, skills or staff to handle these services.
Your referral arrangements can be set up to provide cash compensation for new business, or you
may simply have an agreement where you and other cooperating businesses refer clients to each
other as the need arises.
According to Lynette M. Smith, executive director of the Association of Business Support

Services International, typical referral fees are 10 percent of the first six to 12 months of business
from a new client; 15 percent of the first three months; or 25 percent of the first transaction only.

Of course, many referrals involve no compensation at all--satisfied clients will be happy to refer
others to you simply because you do a good job. And you'll probably also get referrals from
friends and associates. Charlene D. says a major portion of her Winter Park, Florida, company's
business came through referrals from people at her church. "Most of my clients over the years
have been either church members or people who heard about me from church members or
through the church office," she says.
Advertising is a great way to bring in new business, but choosing effective media may take some
experimentation. Probably the single best place to advertise is in your local Yellow Pages,
because that's where people look when they need a service and don't know who to call. Many
communities have more than one telephone directory publisher, so you may need to do some
research to determine which directory (or directories) should carry your listing and ad.
Don't limit yourself to the telephone directory. Bill H. in Iowa City, Iowa, does some radio ads
on a local news and talk station, and although he can't credit much specific new business to them,
he says his current customers do hear and mention the spots. "It's only $100 to $150 per month,
and I figure it's worth it to keep my name alive with current customers," he says. He also places
ads in the university newspaper classified section and gets a good response from that.
END OF LESSON
UNIT: BUSINESS PLAN
LESSON 12: OPERATIONAL PLAN
Lesson Objectives:
a. Outline production facilities and capacity

b. Explain how to develop production and operation strategy
Production facilities and capacity utilization in a business
Capacity utilization or capacity utilisation is the extent to which an enterprise or a nation uses
its installed productive capacity. It is the relationship between output that is produced with the

installed equipment, and the potential output which could be produced with it, if capacity was
fully used.
The capacity utilization rate measures the proportion of potential economic output that is actually
realized. Displayed as a percentage, the capacity utilization level provides insight into the overall
slack that is in an economy or a firm at a given point in time. The formula for finding the rate is:
(Actual Output / Potential Output ) x 100 = Capacity Utilization Rate
This part of business plan should also enlist all the production facilities that will be used in a
business.
Regulations affecting operations
All government regulations on business require companies to comply with federal, state, and
local statues and regulations administered by legislative bodies and carried out by regulatory
agencies. Some regulations impact the ways in which businesses report income and pay taxes;
others regulate how they dispose of their excess materials or waste. For just about any kind of
industry and transaction, there are government regulations on business.
Major Government Regulations on Business
Federal business laws and government regulations fall into eleven basic categories. Note that
each might not impact your business the same way—entire categories might not be a huge
concern for your business, depending on your industry.
But you’ll want to make sure your company is in compliance with all of them with the same
level of importance and attention. Your business lawyer can help you out to figure out what,
exactly, applies to you.
Here’s a rundown of the different types of government regulations on business:
1. Tax Code
For most small business owners, government regulation questions almost always begin with
taxes. But there’s more to taxes than merely paying them—knowing which business taxes to pay,
when to pay them, and how to set up your business to account for future tax payments can spare
you a ton of headaches when it comes time to write the government a check.
Every company registered within the United States has to pay federal taxes. Most companies will
also have to pay state taxes, depending on the state in which the company is registered. These are

unavoidable. Avoiding taxes—or deciding not to pay them outright—comes with hefty penalties
and potential jail time.
But the kinds of taxes you’ll pay depends on how you formed your business. In this regard, not
all businesses are treated the same. Sole proprietorships pay taxes differently than, say, S-
corporations. Here’s a full rundown of the different taxes for business structures to help you
determine what your business needs to file. Despite the differences between each kind of
business, there are a few general terms you should know:
● Income tax: Most businesses file an annual income tax return. Businesses must pay
income tax as they earn and receive income, and then file a tax return at the end of the
year.
● Estimated tax: Estimated tax payments offer an alternative to paying income tax
throughout the year as your company earns money. Sole proprietors, partners, and S-
corporation shareholders must usually make estimated tax payments if they expect to owe
$1,000 or more once they file their return. Note that corporations are usually required to
make estimated tax payments if expect to make more than $500 or more in income.
● Employment tax: Companies that have employees are expected to pay taxes related to
having staff on their payroll. These include Social Security and Medicare taxes, federal
income tax withholding, and federal unemployment tax. For more information, see the
IRS page on Employment Taxes for Small Businesses.
● Excise taxes: Excise taxes are paid when your business makes purchases on specific
goods, and are often included in the price of the product. One common example of excise
tax is the purchase of gasoline, where applicable taxes are baked into the price per gallon
rather than as a tally at the end of the transaction. You may be under certain excise tax
law if you manufacture or sell certain goods, use various kinds of equipment, receive
payment for certain kinds of services, and much more. For additional information, refer
to the IRS guide on Excise Taxes.
Some businesses also have to collect sales tax, which we’ll cover more in a bit.
2. Employment and Labor Law
There are also many government regulations on businesses that employ workers and independent
contractors, in the form of federal and state labor laws.
Here are the most common labor laws:

● Wages and hours: According to the Department of Labor, the Fair Labor Standards
Act (FLSA) prescribes standards for wages and overtime pay. This act affects most
private and public employment, and requires employers to pay covered employees at
least the federal minimum wage and overtime pay of one-and-one-half-times the regular
rate of pay (unless they are exempt employees).
● Workplace safety and health: The Occupational Safety and Health Administration
(OSHA) requires that employers, under the OSH Act, “provide their employees with
work and a workplace free from recognized, serious hazards.” The OSH Act is enforced
through workplace inspections and investigations.
● Equal opportunity: Most employers with at least 15 employees must comply with equal
opportunity laws enforced by theEqual Employment Opportunity Commission (EEOC).
The EEOC mandates that certain hiring practices, such as gender, race, religion, age,
disability, and other elements are not allowed to influence hiring practices.
● Non-US citizen workers: The federal government mandates that employers must verify
that their employees have permission to work legally in the United States. There are
several employment categories, each with different requirements, conditions, and
authorized periods of stay (for employees who are not legal residents or citizens).
● Employee benefit security: If your company offers pension or welfare benefit plans, you
may be subject to a wide range of fiduciary, disclosure, and reporting requirements under
the Employee Retirement Income Security Act.
● Unions: If your business has union employees, you may need to file certain reports and
handle relations with union members in specific ways. See the Office of Labor
Management Standards’ website for more information.
● Family and medical leave: The Family and Medical Leave Act (FMLA) requires
employers with 50 or more employees to provide 12 weeks of unpaid, job-protected leave
to eligible employees for the birth or adoption of a child, or for the serious illness of the
employee or a spouse, child, or parent.
● Posters: Some Department of Labor states require notices to be shared or posted in the
workplace for employees’ view (for example, alcohol warnings and hand-washing
reminders). Fortunately, the elaws Poster Advisor is an easy way to determine which
posters you need, and you can use it to get free electronic and printed copies in multiple
languages.
3. Antitrust Laws
Any time a company conspires with its competitors, third-party vendors, or other relevant
parties, it may run afoul of antitrust laws. These are the issues antitrust laws strive to address,
such as the following:

● Conspiring to fix market prices: Discussing prices with competitors—even if it affects
a small marketplace.
● Price discrimination: Securing favorable product prices from buyers when other
companies can’t.
● Conspiring to boycott: Conversations with other businesses regarding the potential
boycott of another competitor or supplier.
● Conspiring to allocate markets or customers: Agreements between competitors to
divide up customers, territories, or markets are illegal. This provision applies even when
the competitors do not dominate the particular market or industry.
● Monopolization: Preserving a monopoly position through the acquisition of competitors,
the exclusion of competitors to the given market, or the control of market prices.
If your company runs afoul of any of these regulations, the federal trade commission might
contact you.
4. Advertising
A good advertising strategy can do wonders for your business. But before you dive in, you’ll
need to make sure that you’re playing by the rules and government regulations. For example, you
have to make sure the claims in your ads are not untruthful or purposely deceptive.
Using testimonials in your ads comes with additional regulations. Violating these rules can result
in fines, which defeats the purpose of your advertising in the first place.
Here’s how you can avoid misleading customers:
● Comply with labeling laws for consumer products, meaning that you list out ingredients
and chemicals within your products.
● Know the specific rules for advertising and selling products over the internet.
● Understand the rules for advertising specific products—whether it be alcoholic beverages

or 900 numbers. This’ll be specific to your industry, and where working with a lawyer
who knows the rules around your business will really benefit you.
● Understand the rules for marketing and advertising over the phone or via email.

● Learn the rules for making environmentally friendly or “green” claims in advertising.
More on that below.
5. Email Marketing
Closely related to advertising is email marketing. If your business engages in email marketing,
there are separate regulations you’ll need to comply with under the CAN-SPAM Act.
There are several things that this Act regulates, but some of the main components are as follows:
● Don’t use false or misleading headers

● Don’t use deceptive headlines
● Indicate that the message is an advertisement
● Include your business’s name and address
● Show the customer how to opt out of emails, and honor the opt-out requests promptly
Each separate email violation is subject to hefty fines, so make sure you know the ins and outs of
this law before you set up your email marketing strategy.
6. Environmental Regulations
You might need to acquaint yourself with various environmental protection laws, depending on
your industry or business. This is especially pertinent if you’re marketing, say, cleaning
products, food, or anything with claims to be natural, organic, or eco-friendly. You’ll find dozens
of environmental rules and regulations that might affect your small business, both at the federal
and state level.
The EPA Small Business Gateway is a great resource to make sure your business is in
compliance with environmental law. Note that you may also need to consult your state
environmental protection agency to make sure you meet their requirements as well.
7. Privacy
Businesses with staff and employees wind up amassing a ton of sensitive personal information
about their employees. As a result, there are a variety of rules and regulations about how
employers must save and secure this data.
If your business discloses an employee’s private information, including Social Security number,
address, name, health conditions, credit card, bank numbers, or personal history, not only do

various laws exist to keep businesses from spreading this information, but employees can sue for
disclosing sensitive information. For instance, the Health Insurance Portability and
Accountability Act (HIPAA) prohibits the release of health data without a patient’s permission.
Although employees have clear and specific rights to privacy in the workplace, the rights are
balanced against the employers’ privileges to monitor their business operations. It’s important to
understand what rights you have as a business to monitor employees, and to be clear and
transparent about that monitoring to your employees.
8. Licensing and Permits
We’ve focused on federal laws and government regulations on business so far, but that doesn’t
meant that there aren’t ample state regulations to consider for your small business. Many state
and local governments have their own requirements for businesses, and they’re just as important
to understand as their federal counterparts.
You might be wondering, “do I need a business license?” Indeed, in many states and localities,
you do need a business license to operate. This can be particularly important for businesses in
heavily regulated industries, such as childcare or health. Without the proper licenses, states can
fine your business or even revoke your authority to operate.
9. Insurance
As soon as you hire your first employee, you’re legally obligated to purchase workers
compensation insurance. All states, with the exception of Texas, require businesses with
employees to purchase workers comp insurance.
Workers comp insurance protects both you and your employee in the case of an accident on the
job. The employee will receive medical care and compensation for some of the income they lose
while injured, while the insurance company will defray the costs of any lawsuit filed by
the injured worker.
Other types of insurance generally aren’t required, but it depends on the circumstances. For
example, if your business contracts with the government or gets a government-guaranteed loan,
then you’ll need to show proof of certain types of business insurance.
10. Reporting Pay Data
If you employ more than 100 people (or more than 50 if you’re a federal contractor), you’re
required to report how much you pay each of them, broken down by race/ethnicity, job category,
and gender, to the Equal Employment Opportunity Commission each year.

This is to ensure that you’re complying with federal nondiscrimination laws (i.e., that you’re not
paying a woman significantly less than a man with exactly the same job title and
responsibilities). The report, which is known as the EEO-1 form, has to be submitted by the end
of each May.
11. Collecting Sales Tax
Most businesses that sell physical goods must collect sales tax from customers and submit the
tax to their state’s revenue department. A few states do not collect sales tax.
In general, the law specifies that a business must collect sales tax in any state with which it has a
physical connection (known, in legal terms, as a “nexus”). That nexus might mean a physical
retail shop, or hiring employees in the state. Even online sellers might have to collect sales tax in
any state that they sell to.
If your business has a nexus, you need to collect sales tax. If you live in Alaska, Delaware,
Montana, New Hampshire, or Oregon, you don’t need to collect sales tax anyway—those states
don’t have sales tax. Depending on what you’re selling, you might be exempt to begin with.
REVISION QUESTIONS
1. What is a production facilities and capacity

2. Explain how to develop production and operation strategy
3. Explain the production process of the products
4. Discuss the various regulations affecting operations of a business
UNIT: BUSINESS PLAN
LESSON 13: PLANNING PROCESS
Lesson Objectives:
1. Discuss steps in the planning process.

What are the steps in the planning process?
A business plan should not be something you prepare once, then put on a shelf and forget.
Dynamic planning should be an integral part of managing your business. Most successful
ventures prepare a three-to-five year business plan every year. This involves updating last year’s
business plan by comparing the planned figures and goals with results achieved and taking into
account changes,
UNCTAD, How to Prepare Your Business Plan 9
new information, experiences and new ideas. The steps involved in the business planning process
are the following:
1. Assessing the situation

2. Developing a mission
3. Getting ready
4. Setting goals
5. Working out the business plan
6. Setting employee objectives
7. Monitoring the process
a. Assessing the situation

This should be an assessment of how your customers, partners, competitors and suppliers view
your business. It should answer the question “where are we now?” It should also be a honest and
self-critical exercise trying to answer the important questions any businesspersons should be
asking themselves regularly: “What are our important strengths and main weaknesses?” “What
can we do well and what should we not be doing at all?” “What are the major mistakes we have
made in the past and what can we learn from them?” “Do we make a reasonable number of
mistakes?”
b. Developing a mission
Before proceeding further you should formulate a clear mission statement for your enterprise.
Developing your mission is often the most valuable part of the dynamic planning process since it
can change or reconfirm the direction of your business. Missions are intended to provide a sense
of purpose and act as a tool for communicating where the business is heading. Shareholders,

employees and business partners can be better motivated and support the mission if they know
what it is.
Your vision says how you see yourself in the far future. It expresses what you want your
company to become. A vision shared by all the people concerned with the business is an
important factor for its successful development.
Your mission defines what you want to achieve. It states the benefits your business will bring to
clients, employees, shareholders and the community as a whole.
Your philosophy expresses the values and beliefs of your organization's culture.
Your strategy indicates how to get there.
A business is often founded on the vision of an individual. As the entity grows, the organization
may lose its original raison d’être and its mission may change. The mission should be reviewed
regularly and if necessary adapted. This should be providing an updated picture of what you are
trying to achieve and answering questions such as:
1. What business are you in?

2. What do you do best?
3. Whose needs do you meet?
4. What needs do you meet?
5. What benefits do you generate?
Philosophies or values should be included in the written business plan. They are an important
foundation that should be communicated to all levels within your organization and to your
outside business partners. A consistent corporate culture and a good understanding of the entity's
direction and values can improve decision-making and staff productivity. Staff may feel better
about what they do. People are motivated by more than just getting a salary.
The vision, mission, philosophy and strategy of a firm are usually developed by the top
management, sometimes at an off -site location has many benefits (getting away from the day-to-
day distractions for the purpose of this process).
c. Getting ready
After the mission and the philosophical basis have been defined, you need to start the actual
work of preparing the business plan. Some important matters you need to address when getting
ready are:
Appointing a coordinator. Appoint the staff member who will be responsible for coordinating
the business planning process and for delivering the final document (business planning project
manager) in time.
Hiring a facilitator. Consider the value of an experienced facilitator. Hire one if you do not have

a staff member who is available and has the relevant experience and talent in guiding complex
business planning processes. Very often an external person - neutral and independent - can be of
value in moderating complex consensus-seeking sessions. This person should be knowledgeable
about the requirements of the readers of the business plan.
d. Defining tasks.
Define the different tasks and steps involved in the process, the timing of these and the overall
schedule for the work.
Identifying team members. Identify the people who will be involved in the process and define
their roles, competencies, responsibilities and expected contributions/deliverables.
Gathering information. Gather and organize all the basic information that will be required from
internal and external sources (market surveys, reports on competition, new technological
developments, etc.). In addition to information available in-house, there are valuable sources and
tools such as industry associations, databases and specialized consultants to be considered.
e. Setting goals.
Setting goals for the future development of the business is a prerequisite for the preparation of
the business plan. Although these goals will have to be adjusted in the iterative planning process,
they can still be of great value in setting the “tune” and “spirit” for further work. The goals
should be time-bound, realistic and measurable. Examples of such goals can be:
Over the next three years increase sales volume by an average of 20 per cent per year by
intensifying marketing and sales effort in the neighbouring countries (export);
In the coming year reduce production costs by 10 per cent through greater automation of
production lines;
By the end of the second planning year launch three new products on the local market.
f. Working out the business plan

Working out the business plan basically involves synthesizing and harmonizing your marketing,
sales, development, manufacturing, operations and financing targets in such a way as to enable
the enterprise to meet its overall objectives. This “matching work” is usually conducted in an
iterative process until full consistency of all elements of the business is achieved.
g. Setting employee objectives.

One of the most important actions after your business plan has been completed is to use it as a
basis for setting the objectives of units and individuals in your firm. The objective of your sales
manager is to achieve the sales volumes set in the plan. The production manager has to meet the

quality standards and production rates anticipated. The development staff have, among other
things, to meet the schedules planned for bringing into production the new product. These
individual objectives should be fixed in writing and the results of the work should be monitored
and assessed periodically. These should form the basis for the financial compensation of the
employee.
h. Monitoring the process.

Systematic monitoring of the implementation of your plan is a very important factor for the
success of your business. Action plans, monitoring systems and constant feedback should be
integrated to ensure successful implementation of the plan and achievement of its objectives.
Participation in this process can have a profound effect on the way your team members view
their role in the enterprise, and can have an immediate impact on their performance. If the
business plan is completed and then locked up in a cupboard and forgotten for a year, your
employees will never take business planning seriously again.
If key assumptions change, the plan must be adjusted. Accordingly, mid-term corrections are
recommended. The key to maximizing the benefits of dynamic planning lies in implementation,
action and keeping the plan up to date.
Lesson Question
1. What are the steps in the planning process?
UNIT: BUSINESS PLAN
LESSON 14: PLANNING PROCESS
Lesson Objectives:
a. Discuss the regulations affecting operations of a business

b. Determine how to prepare operation timetable/ production schedule

Content and structure of a business plan
After you have considered the purpose of your business plan and have done the necessary
background preparation, it is time to consider the actual elements that you will include in the
written document. This should contain five types of information as follows:
The mission of your business and the objectives you want to achieve;
Your targeted markets and clients, the products and/or services you will provide and the
position of your competitors;
The qualitative and quantitative results you expect to achieve;
The human resources, infrastructure, equipment, raw material and financial resources you
need in order achieve your goal in business;
The technical, organizational and administrative processes you will apply.
The above information can be conveniently structured in your business plan in to eight chapters,
as follows:

1. Executive summary
This is arguably the most important single part of your

document. It provides a high-level overview of the purpose
of the business plan, the main highlights and the financial
resources required.
25
2. Background
This is the section that provides summarized entity-specific information, describing the business
organization, location and premises, principal products and customers, key data,
constitution/ownership and management, history, and business strategy and vision. It gives the
reader an initial overview of the business before specific details are provided later on.
3. Products and services
Product description and history, product attributes, research and development, costing and
pricing, production process, quality assurance and control, sourcing and intellectual property.
4. Markets and clients

Market characteristics, clients, competition, positioning, marketing strategy and projected sales.
5. Business operations and organization
Location and premises, marketing and selling methodology, manufacturing, distribution, order
processing/inventory control, company structure/organization, project management and
management information systems/reporting.
6. Human resources
Management (shareholders, board of directors, executive/operations management, middle

management, external support services) and personnel.
7. Legal framework, and environmental and social factors
Approvals and licensing requirements, environmental risks, social compliance, development and
social benefits.
8. Financial planning
Financial history (financial statements), projected income statements, cash flow, balance sheet
and important ratios, funding requirements and other supporting information.
Appendices
Product literature;

Asset valuations;
Historical financial statements and auditor’s reports;
Legal documents (for example, company registration);
Curriculum vitae of key management persons;
Market research;
Other relevant and important information.
The above chapters are presented in the order in which they usually appear in a typical business
plan. But do not feel constrained to follow this format exactly if another way makes more sense
because of the specifics of your business.
The following chapters in this manual discuss criteria and considerations that may be of use to
you when preparing the above-mentioned chapters of your business plan.
Lesson Question
1. Discuss the regulations affecting operations of a business

2. Determine how to prepare operation timetable/ production schedule
UNIT: BUSINESS PLAN
LESSON 15: STRUCTURE OF A BUSINESS PLAN
Lesson Objectives:

By the end of the lesson, the learner should understand and be able to give a clear outline of a
business structure and its components as illustrated therein.
Introduction
Content
COMPONENTS OF A BUSINESS PLAN
● Name of the business and its contact
● Vision and mission of the business.
● Location.
● Form of ownership.
● Major activity of the business.
● Major customers.
● Justification statements/viability
● The goals of the business
● Research and Analysis: describes the target market i.e. who the customers are, the size
and its trends, the existing and possible competition.
● Marketing strategy: This part describes the methods that will be used to market the
product, price the product, make sales, advertise and promote the product and also the
distribution channels that will be used.

A business plan is an important document for an entrepreneur because it acts as a guide and
reference point in regard to overall business management.
This sub-module unit outlines the major components of a business plan and how to write it.
By the end of this sub-module unit the trainee should be able to
a) Define the term business plan
b) Describe components of a business plan
c) Explain the uses of a business plan
d) Prepare a business plan
This is a written document justifying the business and gives a step-by-step explanation of how
the business will achieve its goals. It summarises the operational and financial objectives of a
business and contains the details, plans and budgets showing how the objectives will be
achieved.
A business plan shows a clear picture of what the business is, where it is going and how the
entrepreneur proposes to get there.
A business plan should be comprehensive enough to give any potential user a complete picture
and understanding of the venture and will help the entrepreneur clarify his or her thinking about
the business.
Although there is no generally accepted format of a business plan. A typical format would
possess the following:
i) Cover page:
It contains the name of the business, its owner(s), nature of the business, and the organization to
which the business plan is to be presented.
ii) Executive summary:

Contains a brief summary of the main contents of the business plan. It is prepared after the entire
plan is written. It summarizes every chapter of the page.
iii) Business description:
Contains a comprehensive description of the business and what it intends to accomplish
Example of information contained includes:-
iv) Marketing plan:
The marketing plan outlines the specific action the entrepreneur intends to carry out to attract
potential customers. The marketing segment is divided into two major parts:
iv) Organization/ management plan.
This is the section that describes the key management personnel required, their qualifications,
duties, salaries and incentives. The organization structure is also defined
- It also identifies other employees needed, their duties, pay, training needs.
- Other support services required are highlighted in this section e.g. banking services, legal
services, management consultancy Etc.
- Any licenses, permits or regulations affecting the business are discussed here.
v) Operational plan/Production plan.
This section describes the processes, activities, and requirements involved in realizing the
operational goals of the business and required raw materials.

vi) Financial plan
This section outlines the financial needs of the business and sources of raising the finances and
also gives the projections of income and expenditure through such key statements as:
- Cash flow statement
- Income statements (trading, profit and loss account statements) among others.
A business plan is important for a business because it can be used to:
i) Obtain finances
ii) Hire staff
iii) Attract partners -
iv) To expand the business
v) Guide the business in its operations
Lesson Question:
a) Define the term business plan
b) Describe components of a business plan
c) Explain the uses of a business plan
d) Prepare a business plan
UNIT: BUSINESS PLAN

Lesson Objectives:
i. Describe the remuneration and incentives for personnel
ii. Highlight the support services of a business entity
1. Hourly Wage Compensation

2. Annual Salary Compensation
3. Retirement Savings Plans
4. Raises, Bonuses and Incentives
5. Group Health Benefits
6. Types of Services
MANAGEMENT PLANNING
● Word processing
● Tape transcription
● Phone-in dictation
● Desktop publishing
● Spreadsheet design
● College papers and reports
● Telephone answering
● Mail receiving and forwarding
● Packing and shipping

● Database/mailing list management
● Bookkeeping, check preparation and billing
● Resume preparation
● Proofreading
● Print brokering
● Fax sending and receiving
● Photocopying
● Notary
● Internet research
● Web page design and maintenance
● Event planning
● Consulting
● Training
Target Market
● General Public. By "general public," we mean individual clients who are not businesses.
The two largest segments of this market are people needing resume preparation and
college students.
● Small Businesses. Chances are, the majority of your clients will fall under this category.
These are companies that require secretarial and administrative support but do not have
the money, space or need for a full-time employee. Or they may prefer to outsource
specific tasks rather than invest in the talent and equipment necessary to get the job done
right. And hiring temporary employees can be more costly than small businesses' needs
demand.
● Large Corporations. Even fairly large operations with full-time secretaries and
administrative assistants may be candidates for your services. If a company has a
temporary situation where they have more work than they can handle in-house, they may
turn to you to pick up the overload. Or, like the small businesses mentioned earlier, they

may prefer to outsource special projects rather than hiring temporary workers. This is a
smart move, because hiring temporary employees means training them and providing
them with an adequately equipped workstation. Sending the work to you eliminates that
hassle and cost.
Finding a Niche
● Other business support services. Let existing business owners know you're available
for overflow or to work on a contract basis. Expect to have to sign confidentiality and
noncompete agreements, but be sure any such contract limits you to only being prevented
from marketing directly to the service's clients whose work you actually do. You might
have to discount your rates to allow them to make a profit, but your marketing and sales
costs will be minimal, which offsets the discount; however, be sure you are compensated
for rush jobs.
● Specific professions or industries. If you have expertise in a specific field, you may
target your service to that field. Two of the most common are the legal and medical
fields, particularly transcribing for these groups, because you'll need to be familiar with a
long list of special terms and formatting requirements. Or you may want to target
professional salespeople, such as manufacturers' reps, who work from their homes and
need occasional administrative support. Chicago's Joann V. focuses on the insurance
industry, and Cindy P. in Irvine, California, targets the legal field.
● Geographic areas. If you are in a densely populated area, perhaps an office center or a
light industrial park, you may want to choose your market by geography. Determine your
parameters, and then market to the companies within your service area, emphasizing the
convenience of using your service.
● Academic. If you are near a college or university, you can serve a number of academic-
related niches, including students, instructors and even administrators.
Startup Costs
Operations
Location
Income & Billing
Multiple Hourly Rates
● Level 1 (lowest hourly rate): Basic word processing, routine clerical services, simple
proofreading

● Level 2: Enhanced word processing, copyediting, proofreading, basic spreadsheet design,
internet research
● Level 3: Desktop publishing, spreadsheet design, simple web page design, simple web
page maintenance
● Level 4: Graphic design, writing (academic, business, resume, technical), web page
design, web page maintenance
● Level 5 (highest hourly rate): Consulting, training
Hour Power
● Basic word processing - $7-40
● Enhanced word processing - $7-50
● Copyediting - $7-75
● Database entry - $18-50
● Transcription, general - $15-45
● Consulting/training - $7-90
● Spreadsheet design - $15-75
● Desktop publishing - $7-75
● Graphic design - $14-100
● Web site design - $20-150
● Internet research - $7-75

Estimating the Job
Marketing
Referrals Are Essential
Advertising
1. What are business support services?
1. Outline some of the services you would embrace within your business to ensure you are
making some profits
1. Explain the reasons for strategizing on remuneration scheme to employees
REMUNERATION AND INCENTIVES FOR PERSONNEL
The term “compensation” refers to the combination of wages, salaries and benefits an employee
receives in exchange for work. Compensation may include hourly wages or an annual salary,
plus bonus payments, incentives and benefits, such as group health care coverage, short-term
disability insurance and contributions to a retirement savings account. A total compensation
package can have several components. An “employee compensation plan” collectively refers to
all the components in addition to the manner in which the compensation is paid and for what
purpose employees receive case bonuses, salary increases and incentives.
Employees classified as non-exempt receive what employers usually call wages, which are
calculated on an hourly basis and require overtime payment for work in excess of 40 hours per
week. Overtime is one and a half times the hourly rate. Employees who have a collective
bargaining agreement with management – often called a labor union contract – have wages set
by contract terms for a certain period.
For example, a sample labor union contract may require employers to pay master plumbers,
licensed plumbers and apprentice plumbers hourly wages of $19.75, $17.95 and $15.50,
respectively, pursuant to the terms of a collective bargaining agreement.
Although there are salaried employees who are classified as non-exempt and, therefore, entitled
to overtime pay, the term “salary” generally refers to an annual salary the employee receives or a
method of employee compensation that does not require overtime pay. For instance, the

reference to a “salaried employee” is generally used to describe a worker who does not receive
overtime pay.
An example of an employee compensation plan for salary levels is one based on a salary scale
that considers education, years of professional experience, credentials and qualifications such as
job competency and functional expertise. Salary levels such as the wage tables published
annually by the U.S. Office of Personnel Management contain annual wages, as well as increases
based on step and grade promotions for federal government employees paid according the
General Services and Senior Executive Service wage scales.
A sample compensation scenario gives employees the opportunity to participate in the employer-
sponsored 401k plan. Employees designate pre-tax contributions to be deducted from each
paycheck. For employees who contribute 5 percent of their gross salary or wages, the company
matches 50 percent of the employee’s contribution. In other words, the employer’s matching
contributions equal 2.5 percent of the employee’s gross salary.
Vesting refers to the amount of time before which the employer’s contribution is fully available
to the employee. Vesting periods range anywhere from one to five years. A five-year vesting
period means that for the first year after the employer makes its contribution to the employee’s
401k plan, 20 percent of the money actually belongs to the employee.
In the second year, 40 percent belongs to the employee, and in subsequent years, 60, 80 and 100
percent of the employer’s contributions become vested and available to the employee. If the
employee leaves his job before completing five years, he forfeits the appropriate portion of the
non-vested employer’s contributions.
The employer's performance management system is usually what drives a compensation plan's
salary increases. Employees receive annual raises based on performance ranking and ratings. For
example, an outstanding performance appraisal could result in a 5 percent salary increase.
Sample employee bonus and incentive plans include cash incentives based on a percentage of the
employee's gross salary or an employee's share based on a discretionary pool of funds designated
for distribution to employees whose performance contributed to business success. Many
executive bonuses and incentives are tied to improvement of the bottom line or even increases in
the value of shares for publicly held companies.
A total compensation plan may include group health-care benefits. Many employers pay a
sizeable portion of the total monthly premium, leaving a portion of the premium to be deducted
from the employee’s pay. Premiums for employer-sponsored health care plans are deducted from
pre-tax income, which are gross earnings.

Group health coverage may include supplemental coverage for dental and vision care as well.
Some employers pay the total cost for short-term disability insurance and offer coverage for
long-term disability insurance as part of an employee’s total compensation.
BUSINESS SUPPORT SERVICES
The secretary of yesteryear needed to know how to take shorthand, type and answer the phone.
Today's secretary deals with dictation using a tape recorder and transcription equipment; instead
of simply typing, she inputs data into a computer; and the office telephone she uses is actually a
complex communications center.
What we now call the business support services industry has experienced a similar and perhaps
even more remarkable evolution. It began as secretarial services or typing services, and typing
was pretty much all they did. But those operations have gone the way of the horse and buggy,
replaced by modern, techno-savvy entrepreneurs who want to take advantage of a virtually
limitless market.
Though the term "secretarial service" has a strong degree of consumer recognition, it's no longer
an appropriate description of the industry. While typing and transcription (historically typical
secretarial services) are still a mainstay, consumers often don't think of a secretarial service as
providing desktop publishing, spreadsheet design, Internet-related services, and other
sophisticated product and service packages. The phrase "business support services" does a much
better job of conveying what the industry is all about today and still leaves flexibility for the
changes that are likely to occur in the future. You'll also hear terms such as "administrative
support services" and "office support services" applied to this industry.
In 1998, the National Association of Secretarial Services changed its name to the Association of
Business Support Services International. Executive Director Lynette M. Smith says, "We felt that
'business support services' did a better job than 'secretarial services' of covering the scope of our
members' services and bringing more respectability to the profession."
To understand the future potential, take a look at how the industry has evolved. Over the span of
the 20th century, the administrative demands of doing business have grown tremendously,
creating a need for secretarial and clerical support. With the advent of desktop computers and
increasingly sophisticated office equipment, the skill and knowledge requirements of secretaries
have also increased.
At the same time, the general business landscape has changed dramatically. Big businesses are
looking for ways to streamline their operations, and one popular option is outsourcing, where
they retain another company to provide a service that may have traditionally been done by
employees. Small companies want to stay lean and profitable, so they, too, are turning to
outsourcing, rather than fattening up their payroll.

Combine the obvious need with the new way of operating in the business world, and you have a
dynamic young industry wide open with opportunity: business support services. In fact, there is
so much opportunity that if you don't have a clear plan, specific services and a target market,
your chances of success are slim. But with a lot of thought and preparation, and a minimal
amount of cash, you can quickly be on the road to profitability.
You can offer a wide range of services. The following list encompasses what we found on the
market, but it is by no means exhaustive. Some of these services could be businesses in and of
themselves; others are ancillary to a primary service. Listen to your clients; they'll let you know
what they need, and then you can decide if you can provide it.
You have three broad markets for your business support services business: the general public;
small commercial and homebased businesses; and large corporations.
A job hunter creating or updating a resume may actually write the document and bring it to you
for layout and printing; he or she may need you to assist in writing the content as well. Even
when the unemployment rate is low, the resume market is significant because people don't have
to be unemployed to need a resume.
There are thousands of higher-learning institutions in the United States with a collective
enrollment of millions of students. Although many students prepare reports and papers
themselves, enough of them will turn to a professional word-processing firm to make this market
substantial.
Students working on particularly long papers, such as graduate theses or dissertations, are strong
candidates for your service. And, of course, once they graduate, they may come back to you for
assistance with their resumes.
In addition to students, the academic community may also be a source of business (think
professors who need word processing, editing and proofreading services for their books and
articles).
As the number of small businesses continues to grow, so does your potential market. And the list
of services they use is limited only by your imagination and personal preferences. As you
develop relationships with small businesses, you'll be in a position to make suggestions that will
increase the volume--or even expand the scope--of the work you do for them.
Typically, small businesses turn to business support services firms for word processing, faxing,
photocopying, shipping, desktop publishing, mailing list management, dictation and
transcription.

Large companies also use business support services when their own staff members are
unavailable due to vacations or illness. They may not actually need a "temp," that is, someone to
come in and be present in the office, but they may need someone who can handle all or part of
the work of the absent staffer.
It's a good idea to select one or more key market groups to target. There are a number of very
valid reasons for choosing a well-defined market niche. By targeting a very specific market
segment, you can tailor your service menu, marketing efforts and customer service system to
meet that segment's needs. You can refine your marketing efforts and gain a reputation within the
industry for expertise in certain areas--which means you can charge more. Think about it: In the
medical field, who earns more--a family practitioner or a neurosurgeon? The neurosurgeon,
naturally, because he's a specialist, and what he does requires greater skill. Some market niches
you might consider include:
One of the most appealing aspects of the business support services industry is its relatively low
startup costs. If you have a decent credit rating, you can be ready to start serving clients with
virtually no cash out of pocket--although you'll certainly be on firmer ground if you have some
startup capital.
Most of the business support services entrepreneurs we talked with used their own personal
savings and equipment they already owned to start their businesses. Because the startup costs are
relatively low, you'll find traditional financing difficult to obtain--banks and other lenders would
much rather lend amounts much larger than you'll need and are likely to be able to qualify for.
Many operators start their businesses on the side while working full-time jobs, so their personal
living expenses are covered. But if you plan to plunge into your new business full time from the
start, be sure you have enough cash on hand to cover your expenses until the revenue starts
coming in. At a minimum, you should have the equivalent of three months' expenses in a savings
account to tap if you need it; you'll probably sleep better if you have six to 12 months of
expenses socked away.
Charlene D. in Winter Park, Florida, decided to invest in a new computer and printer and says
she spent about $3,500 on equipment and supplies to get started. Perrysburg, Ohio's Rachelle Y.
used her old 486 PC to develop her business plan and brochure but decided to purchase a new
system before she actually began her operation. "I wanted to be able to offer everything I could,"
she says. "In this field, your computer is your best friend. So I bought a new computer and
printer, paper, and some other odds and ends. I probably spent between $3,000 and $4,000 on
startup."
Irvine, California's Cindy P. paid $10,000 to buy an existing business; that fee included the client
list and the lease on the office, but no furniture or equipment. She spent another $4,000 on initial
equipment purchases and has added more over the years.

Joann V. in Chicago started her business before the days of PCs. "Originally, all I needed was a
typewriter," she says. "I bought an electronic typewriter for $500 and some paper, and someone
loaned me a transcription unit. That was it--that was all I needed to start." In Edmond,
Oklahoma, Janet S. says that because she already owned a computer, printer and answering
machine, her startup costs were "virtually zero."
As you consider your own situation, don't pull a startup number out of the air; use your business
plan to calculate how much you need to start your ideal operation, and then figure out how much
you have. If you have all the cash you need, you're very fortunate. If you don't, you need to start
playing with the numbers and deciding what you can do without.
As a solo operator, expect to spend at least one-fourth of your time on general business
management and administration, marketing, purchasing and billing. The bigger your business
and the more people you have, the more time you'll spend managing them rather than actually
doing the work yourself. With four employees, Irvine, California's Cindy P. spends very little of
her time working on projects for clients. And Chicago entrepreneur Joann V. hasn't actually
transcribed anything herself in years--she has a team of five full-time employees in the office and
nearly 50 part-time transcribers who work from their homes.
No matter how small or large your company is, it's critical that you not neglect the administrative
side. It won't do you much good if you do the work but never get around to sending out the
invoices so you can get paid. Poorly maintained records can get you into trouble with the IRS
and other government agencies. And if you aren't marketing on a regular basis, your business
will eventually dry up.
Running a business support service takes a lot of energy. It helps if you enjoy people but are also
able to work alone or in small groups. You'll need to be able to juggle several projects at the
same time, and always make each client feel as though he or she is the most important person to
you.
When it comes to the actual site of your business, you have two choices: homebased or a
commercial location. A business support services company can be extremely successful in either
venue; your decision will depend on your individual resources and goals.
As you consider the issue of location, keep a few things in mind. Depending on the specific
services you offer and market you target, you'll possibly be dealing both with the general public,
who will need access to your office, along with small-business owners and managers in larger
corporations who may also want to visit your facility or have their employees or a messenger
pick up and deliver work.
In any business, but especially in this one, a professional image is a critical element of success.
Homebased operations are very accepted in today's business world (in fact, many customers

prefer dealing with homebased suppliers because they have lower overhead and can therefore
charge less), but you still need to present the appearance of being a serious business, even though
you choose to work from your house. And if you opt for a commercial location, be sure it's one
that is compatible with your goals.
In the mid-1990s, about half the members of the Association of Business Support Services
International (ABSSI) were homebased; by the turn of the century, an estimated 70 percent were
homebased, one-person operations. "Many of our previously office-based members are
simplifying their lives by moving back to a residential location," says Lynette M. Smith, ABSSI's
executive director. "They acknowledge that a homebased business is no longer the exception but
the norm. In the perception of clients, there no longer is a stigma associated with being
homebased."
While conceding that operating from home can make growth challenging, Smith says, "At home,
one cannot expand through the traditional means of hiring employees. However, it's becoming
more realistic to subcontract out work--especially transcription--to others, so there is still
significant profit potential to be expected by replicating one's efforts in this way."
You have a number of options when it comes to deciding on your approach to pricing. Some
operators simply call around, find out what other companies are charging and set their prices in
that range. Others decide what they want to earn and set their prices based on that without regard
to how it relates to the competition. Then there's the issue of pricing by the project, the page or
the hour.
The best approach is a multifaceted one that considers the skill level of the work, your profit
goals and the market. You need to set up a system that gives you a structure to work within so
you can quote consistent, reasonable and fair rates.
If you're going to charge by the hour, consider that different rates should apply depending on the
complexity of the service and skill level required. For example, Cindy P.'s hourly rate ranges
from $28 for straight word processing up to $40 for complex desktop publishing. The
Association of Business Support Services International suggests a structure similar to the
following:
Note that the same basic task might fall into more than one pricing level, and you'll need to make
a judgment call based on the particular project as to which rate to apply.
When the Association of Business Support Services International surveyed its members, it found
that the hourly rate ranges for the most popular services offered by respondents were:

Many new business owners find estimating one of the most challenging things they do, but if you
approach the process systematically, it's simple. You just need to determine an appropriate
hourly rate, calculate the length of time the project should take, and do the math.
Regardless of the format you use to provide the quote (in writing or verbal), it's a good idea to
make notes for yourself so you know what you quoted and how you arrived at that figure. This
will be necessary if the actual project turns out to be different than what the client described, or if
the client questions the invoice later, even though they agreed to the quote. You may even want
to create an estimate form that you can provide to the client and keep a copy in your own files.
Marketing is an area where your creative side can shine. It's something many people don't like to
do, but it's essential if you're going to build a successful, profitable business.
Don't be discouraged if your marketing efforts don't produce an immediate response. It's rare that
someone will have a need for your services at precisely the moment you contact them, but if you
put together a professional, attractive information package, they'll keep the information on file
and call you when they need you--or they'll refer you to a colleague who may have the need. It's
not unusual for a sales contact not to generate a response for months--or even a year.
You can find out how to create a basic marketing plan here, but there are issues and ideas
specific to business support services that you need to know as you develop your plan. For
example, check with your local phone company to find out its advertising deadline and directory
distribution date and, if possible, plan to launch your business in time to be included. Your
Yellow Pages listing will be an important source of new business, especially in the early days, so
don't get so distracted by other startup tasks that you miss this opportunity.
Another important point is to be sure all your marketing materials are professional and letter-
perfect. Many business support services that do a great job in this area for their clients often
forget to do the same for themselves. Consider hiring a graphic designer and/or professional
writer to help you with your marketing package; you may be able to negotiate a trade-out that
will benefit you both.
Referrals will likely be a primary way you get new clients, so it's a good idea to have a
systematic approach to the process. You should be able to identify who is making referrals that
ultimately turn into business so you can cultivate and reward those referral sources.
Complementary businesses are great sources of referrals. For example, print and copy shops
often have customers who need word processing or desktop publishing but don't have the
equipment, skills or staff to handle these services.

Your referral arrangements can be set up to provide cash compensation for new business, or you
may simply have an agreement where you and other cooperating businesses refer clients to each
other as the need arises.
According to Lynette M. Smith, executive director of the Association of Business Support

Services International, typical referral fees are 10 percent of the first six to 12 months of business
from a new client; 15 percent of the first three months; or 25 percent of the first transaction only.
Of course, many referrals involve no compensation at all--satisfied clients will be happy to refer
others to you simply because you do a good job. And you'll probably also get referrals from
friends and associates. Charlene D. says a major portion of her Winter Park, Florida, company's
business came through referrals from people at her church. "Most of my clients over the years
have been either church members or people who heard about me from church members or
through the church office," she says.
Advertising is a great way to bring in new business, but choosing effective media may take some
experimentation. Probably the single best place to advertise is in your local Yellow Pages,
because that's where people look when they need a service and don't know who to call. Many
communities have more than one telephone directory publisher, so you may need to do some
research to determine which directory (or directories) should carry your listing and ad.
Don't limit yourself to the telephone directory. Bill H. in Iowa City, Iowa, does some radio ads
on a local news and talk station, and although he can't credit much specific new business to them,
he says his current customers do hear and mention the spots. "It's only $100 to $150 per month,
and I figure it's worth it to keep my name alive with current customers," he says. He also places
ads in the university newspaper classified section and gets a good response from that.
END OF LESSON
UNIT: BUSINESS PLAN
LESSON 17: REVISION QUESTIONS
Business plans -revision questionsA
1
What is usually the first section of a business plan?
Business aims and objectives

Revenue forecast
Business idea
2
Which of the following is not an element that is included in a business plan?
Marketing mix
Stock market price
Sources of finance
3
Which of these stakeholders might be interested in seeing a business plan?
Bank
Local community
Pressure groups
4
What acronym is used when creating business objectives?
SWOT
SMART

PESTLE
5
How can a business plan be used to minimise risk for a business?
It tells an entrepreneur exactly how much profit they will make
It shows an entrepreneur how many products they will definitely sell
It allows an entrepreneur to make informed decisions about their business

6
What are the four elements of the marketing mix?
Product, price, place and promotion
Product, profit, place and promotion
Product, price, payments and promotion

7
Why would a bank primarily be interested in seeing a business plan?
To determine whether a business would be able to pay back a grant or mortgage
To determine whether a business would be able to pay back a loan or mortgage
To check a business’ aims and objectives

8
Other than a bank, who else would want to see a business plan?
A potential investor
A customer
A supplier
9
Which of these business elements is not a major part of a business plan?
Revenue forecast
Location
Product portfolio
10
What two main categories of research might a business undertake in order to complete a
business plan?
Primary and secondary research
Secondary and tertiary research
Primary research and surveys


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BUSINESS PLAN

UNIT OUTLINE AND DEFINITION

1. INTRODUCTION TO BUSINESS PLAN

● Meaning of business plan

COMPOSED BY MR MOHAMED SALIM K.

4. ORGANISATION AND MANAGEMENT PLAN

5. OPERATIONAL / PRODUCTION PLAN

● Production facilities and capacity utilization

COMPOSED BY MR MOHAMED SALIM K.

PURPOSE OF A BUSINESS PLAN

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4. PREPARE FOR THE FUTURE

1 WHAT IS A BUSINESS PLAN? WHAT IS THE PURPOSE OF A BUSINESS PLAN?

2 WHAT IS THE PURPOSE OF A BUSINESS PLAN

1. i. Describe the guidelines for developing an effective business plan

COMPOSED BY MR MOHAMED SALIM K.

COMPOSED BY MR MOHAMED SALIM K.

● Introducing new products

● Entering into long-term contracts with desirable clients

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Who needs a business plan

COMPOSED BY MR MOHAMED SALIM K.

1. i. What is a business plan?

LESSON 3: BUSINESS DESCRIPTION

Owning and establishing a business name

Different ways of establishing your business name:

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3. Registering your corporate structure

What if someone copies your business name?

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WELCOME TO OUR CLASS TODAY I HOPE YOU ARE DOING WELL

1. Determine how to provide a business name

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Owning and establishing a business name

DIFFERENT WAYS OF ESTABLISHING YOUR BUSINESS NAME:

1. Using your own name

3. Registering your corporate structure

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What if someone copies your business name?

RESEARCHING A NAME’S AVAILABILITY

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1. Run several different online searches

2. Check out the domain names that are available

3. Talk with an a lawyer

CHOICE OF BUSINESS LOCATION

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5. Skill base in the area

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6. Potential for growth

1. Outline different ways of coming up with a viable business name

LESSON 5 : BUSINESS DESCRIPTION

TOPIC TWO: BUSINESS DESCRIPTION

1. Explain various forms of business ownership

FORMS OF BUSINESS ORGANIZATION

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•Your vision regarding the size and nature of your business.

Advantages of a Sole Proprietorship

• Easiest and least expensive form of ownership to organize.

Disadvantages of a Sole Proprietorship