Entrepreneurship

BM019-3-3

Developing a Business Plan

Anita.Apiit.
 LEARNING OUTCOMES

• To review the purpose and contents of a

business plan for practical application.

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 Why create a business plan

• Communicates strategic direction

• Communicates objectives
• Provides for common agreement and buy-
in
• Benchmark to measure performance
• Shares budget requirements

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 Before you begin writing

• Define target audience

• Determine content and level of detail
• Map out the plan’s structure
• Identify main issues to be addressed

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 Key elements to a business
plan
• Executive Summary (write this section last)
• Vision/Mission statement
• Goals and objectives
• Description of products and or services
• Market analysis
• Operational plan (organizational structure)
• Financial plan
• Business Risk

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 Executive Summary

• Clear definition of the “business”

• Assessment of markets
• State competitive advantages
• Introduce leadership team and roles
• Financial strengths and use of funds
• Make it enthusiastic, professional,
complete, and concise

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 Executive Summary

• Brief overview of plan

• Highlight key elements
• Less than 2 pages
• Tailor to readert

Do this part
last!

7
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 Mission Statement

• Clearly state your long-term mission

– Try to use words that will help direct growth
but be as concise as possible.
– Explain your reason for being and your
guiding principles.

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 Goals and Objectives

• Goals are destinations – where you want to

be
• Objectives are progress markers on the way
to goal achievement
• List 3-5 year goals
• State specific, measurable objectives for
achieving your goals
– List market-share objectives
– List revenue/profitability objectives
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 Products and or Services

• Describe in depth your products or

services (technical specifications,
drawings, photos, brochures, and other
bulky items belong in Appendices)
• State factors that will give you competitive
advantages or disadvantages
– Examples include level of quality or unique or
proprietary features.

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 Product Description

• Identify the need or want

• Features, benefits & value
• Durability of product appeal
• Patents, copyrights & trademarks
• Product research & development
• Compare competing products
Identify need
• Is yours better? Does it matter? carefully!

• Suppliers, terms & alternates

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 Resource Requirements

• List requirements for the following

resources:
– Personnel
– Technology
– Finances
– Promotion
– Products
– Services
– Facilities
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 Internal and External
Stakeholder
• Type of stakeholders are specific to the
business.

• Identify and explain each stakeholders

roles and expectations

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 Human Resources

• Jobs, skill, management structure

• Job descriptions or speciffications
• Wage & salary ranges
• Benefits & incentives
• Performance reviews & training
• Entrepreneurial self-assessment
Use government
• Business advisers and consultants help!

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 Market Analysis

• Trends: Political.Economic.S .T . ocial echnological

• Demographics & psychographics

• Segment into primary/secondary
• Competitors: Poor? Few? Cheap?
– Strengths. Weaknesses. Opportunities. T . hreats

• Test, survey & repeat as required

• Estimate market share & growth Use various
sources!

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 Marketing Strategy

• Unique selling proposition

• Develop messages and branding
• Define ‘the deal’, customer service &
quality, pricing & terms of sale
• Sales activities & events
• Promotions & advertising
• Compare & contrast strategies
• Integrate export & e-business

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 Marketing Analysis

• Do your market research

• Summarize your primary target market
– Include geographic location, demographics,
target market needs and how these needs
are currently being meet.
• Highlight trends
– Emphasize growth trends, trends in
consumer preferences, and trends in product
development.
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 Marketing Analysis

• Growth potential and opportunities

• Barriers to entry and how you will
overcome any barriers
– Examples include high capital cost, high
production cost, high marketing cost
• Marketing strategies and sales plans
– The 4P’s – product, price, place and
promotion

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 Operational Plan

• List key management by name

– Use a simple organizational chart to illustrate
the structure.
• Organisation structures
• Decision making and control systems
• Communication systems

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 Operating & Product Costs

• Include all start-up expenditures

• Obtain estimates to validate
• Itemize all overhead costs
• Product costing per unit
• Expected profit margins
• Compare with industry averages
Ensure a profit
• Other expenditures (draw, loans) exists!

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 Financial Plan
• Outline a high-level financial plan that
defines your financial model and key
assumptions.
– The plan should include expected annual revenues
and profits for the next three years.
– All detailed schedules such as P&L projections, cash
flow projections, balance sheet and ratio analysis
should be included appendix.
– Comment on expected direct and indirect return on
investment.

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 Projections & Financial Details

• Projected cash flow & f/s

• Break even calculation
• Create ‘What if’ scenarios
• Summarize all assumptions
• Calculate key ratios & benchmarks
• Compare with industry averages
A spreadsheet
• Owner’s personal equity statement is easiest!

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 Risks and Rewards

• Summarize the risks of the proposed

project and how they will be addressed.
• Estimate expected rewards, particularly if
you are seeking funding.

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 Appendices

• Resumes & references

• Product testimonials
• Sample promotional materials
• Market studies & research
• Contracts & agreements
• Pictures of site & equipment
Anything that
• Published data & articles explains!

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 Key Issues
• Near term
– Identify key decisions and issues that need
immediate or near-term resolution.
– State consequences of decision postponement.

• Long term
– Identify issues needing long-term resolution.
– State consequences of decision postponement.
• If you are seeking funding, be specific about any issues that
require financial resources for resolution.

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 Final Tips
• Avoid unnecessary jargon
• Economize on words
• Use short crisp sentences and bullet points
• Concentrate on relevant and significant issues
• Relegate detail to appendices
• Write executive summary last
• When in doubt, write a business plan… it will
usually distinguish your program/project in
academia

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 EXERCISE

• Draft the contents of your business plan.

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