Business Plan PDF

When starting a new business, it is important for the entrepreneur to produce a detailed business plan. 1. Why do you think it is necessary to do so? 2. Who might be interested in reading the business plan? 3. What do you think should be included in the business plan? 4. How could customer...

When starting a new business, it is important for the entrepreneur to produce a detailed business plan. 1. Why do you think it is necessary to do so? 2. Who might be interested in reading the business plan? 3. What do you think should be included in the business plan? 4. How could customers be drawn to the product(s) or service(s) offered by the new business?  CONCEPT OF A BUSINESS PLAN What is it? A formal, written plan that gives a detailed description of how the business is going to achieve its goals (includes information about the finances of the business and shows projections of how much money the business aims to make) Projections: estimates of what is likely to happen based on the status quo (the current situation) COMPONENTS OF A BUSINESS PLAN Information about the business: ✓ What it does ✓ Who owns it ✓ What its goals are Production plan Marketing plan Management plan Financial plan FORMAT OF A BUSINESS PLAN Front cover Table of contents Description of the goods or services offered by the business Goals of the business Who owns the business Production plan Marketing plan Management plan SWOT analysis and conclusion Financial plan  FORMAT OF A BUSINESS PLAN FRONT COVER Logo (gives a professional look and shows thought has been given to how the business is branded – it should be simple, memorable and have a purpose) Name of business Your name and title or position in business Date on which business plan was prepared Slogan of business Front Cover Logo of the business Name of the business Your name and title/position in the business Date on which the business plan was prepared From your textbook “Study & Master Economic and Slogan of the business Management Sciences Grade 9”  Table of contents: example A table of contents provides a list of what is contained in the business plan From your textbook “Study & Master Economic and Management Sciences Grade 9”  DESCRIPTION OF GOODS OR SERVICES Explains nature of business Business idea: Name the goods and/or services the business offers Say what demand for the goods/services is or will be Include description of location of business Describe briefly what makes the goods/services unique Luxury or budget goods?  GOALS OF BUSINESS Give vision statement (statement of what business aims to achieve in medium- term or long-term and helps managers to choose best actions to take to reach business’s goals) Describe business’s short-term and long-term goals and explain how to meet them  BUSINESS OWNERSHIP Business name Form of ownership of business Where business will do trading or where business is based Names of all owners (if more than one) Brief description of business experience owners have (provide CVs of all owners in business plan)  PRODUCTION PLAN Contains information about kind of production process that business uses Needs to show that production operations are efficient, cost-effective, organised and reliable Three types of production system: (1) Batch production – make batch of goods of one kind then move on to making batch of goods of another kind (2) Mass production – one continuous system to make high number of goods of same kind (3) Job production – used when producing once-off goods that are all different Specify where business gets its raw materials from What equipment and machinery it needs to manufacture its goods What equipment and machinery business already has and what it still needs to get for manufacturing to be possible Importance (1) Preparing it helps to make sure that production process is properly planned (2) Production equipment is a large part of business’s start up costs  MARKETING PLAN Explains how business is going to market its goods and services Needs to convey what is unique about business’s goods or services Needs to describe unique selling points (USPs) – quality of good or service that makes consumers buy that good or service instead of others Should include ✓What marketing aims business wants to achieve ✓Explanation of how goods and services will benefit consumers ✓Details about market research done ✓Details about target market ✓Information about competitors and plans to stay ahead of them ✓Details about advertising, branding and advertising budget ✓Information about monthly and yearly sales targets set out for business ✓Information about how you plan to price goods and what payment methods business will accept  The 4 Ps of Marketing What is being sold? Price refers to the The best distribution The target market Includes the design, amount of money channel must be must be made features, quality, customers are selected. aware of the packaging and willing to pay for the Includes retail product. Includes branding of the product or service. locations, online advertising, sales product. Setting the right platforms and promotions, public price is crucial. transport. relations, social media marketing, The AIDA model for marketing identifies the stages that an individual goes through during the process of purchasing a product or service.  MANAGEMENT PLAN Gives potential investors information on whether managers of business have enough skills and experience to make business succeed Contain following information: ✓Names of all business management staff ✓Details about work experience in managerial position ✓Information about other businesses they have managed ✓Who will run business ✓CVs of all management staff in business  SWOT ANALYSIS AND CONCLUSION SWOT Analysis: An ordered list that points you to the potential success or failure of your business idea. Maps out the factors that could affect success of the business. Conclusion: Show that you have come up with strategies to overcome threats and weaknesses that could have a negative effect on your business and that there are more opportunities and strengths than threats and weaknesses.  STRENGTHS WEAKNESSES These are positive factors that occur in the internal business These are negative factors that occur in internal business environment. The business has control over these factors, e.g. environment. The business has control over these factors, e.g. 1. Your financial position (sufficient money) 1. Your financial position (lack of money) 2. Skills that you have, which make you suited to the business you 2. Skills that you don’t have, which make you unsuited to the intend starting. business you intend starting. INTERNAL BUSINESS ENVIRONMENT SWOT ANALYSIS EXTERNAL BUSINESS ENVIRONMENT OPPORTUNITIES THREATS These are positive factors that occur in external business These are negative factors that occur in the external environment. The business has no / little control over these factors, business environment. The business has no / little control e.g. over these factors, e.g. 1. There is a need in the market for your product 1. Competition (lots of competitors) 2. Very little competition (maybe no other competitor) 2. A scarcity of skills 3. Take course to gain skills that you don’t have 3. Drought / Famine 4. War / Civil Unrest  FINANCIAL PLAN States whether the venture will be financially viable and what the financial goals are Owner’s opportunity to show that business’s finances have been planned thoroughly Gives information about how much financing business needs to start up or expand Includes information about how much money owners have to invest in business and states the sources of the capital that the owners are investing Includes information about potential investors and how they will be vetted (background check, reviewing available financial records, etc)  Some terminology in a financial plan FIXED COSTS: Costs that do not change when number of goods that produced changes (eg. rent, salaries, equipment) VARIABLE COSTS: Costs that change according to quantity of goods produced (eg. electricity, water, wages, materials) BREAK-EVEN POINT: Point at which business makes enough money to cover its production costs MARK-UP ON SALES: Amount added to cost of goods in order to make a profit PROFIT PERCENTAGE: Profit = total income – total cost