BUSINESS PLAN
It is a written record that describes how the business can achieve its objectives.
Objectives are short-term and states what the business is trying to achieve over a specific period of
time usually one year. Objectives are precise targets or means to attain the business goals. Objectives
are precise targets or means to attain the business goals. Business objectives include profit
maximisation, increasing market share, growth, survival and increasing the returns for shareholders
among others
Goals are outcome statements that defines what the organisation is trying to accomplish in the
medium to long-term, for instance, in 3-5 years’ time.
Importance of a business plan
i. To secure funding from banks or other investors
ii. To determine whether the business is profitable or not.
iii. It helps entrepreneurs to understand their business much better before starting it
iv. It helps managers to identify opportunities, threats, weaknesses and strengths
v. It helps to educate and motivate staff
vi. Can be used to solicit opinions and advise from other people
vii. It can be used to measure performance of the business, departments and managers
viii. It helps to measure the businesses’ progress towards set goals or objectives and take action where
necessary
Components of a business plan
A good business plan should include the following;
a. Executive summary
b. Organisational background
c. Products
d. Market analysis
e. Strategy and implementation
f. Management
g. Financial plan
It should also have a cover page, table of contents and a list of references.
Cover page introduces your company and business idea and includes the following;
1. Legal name of your business
2. Business plan title eg. Business plan for Ms Abigail Crest
3. Date your plan was prepared
4. Contact details of the person who prepared the business plan
5. Any necessary notice eg. Its confidential
6. Your business official trademark or logo
7. Website address
Table of contents – helps the reader to find what they want easily and provide an overview of what is
in your plan
1
a. Executive summary
It shows a brief description of your business and is a summary of the whole business plan. It should
be short and brief in order to draw the attention of the reader. It is written last. You introduce your
business, what it is, who owns it, the managers, where it is located, target market and competition
and its product and services. Justify why your products are needed by the market. You may also
include potential problems that can affect your business idea and how you will overcome such
challenges. What is your businesses’ competitive edge?
The executive summary also includes the businesses mission and vision statement which shows your
goals and objectives. There is also need to show how the money will be invested and when can the
business will start making profits. The expected growth rate of the business and its return should be
shown justifying the ability of the business to repay borrowed funds. You may also briefly outline you
marketing and operational plan.
b. The business enterprise
This provides an overview of your business idea and hence the need to re-introduce your company in
detail, that is, what it is, who owns it, the managers, where it is located, target market and competition
and its product and services. You need to include;
• The business idea
• Your products (goods or services)
• Your facilities and productive assets
• The history of why and how your business came to be if it is already operating
• Your strengths and your market size
• The projected sales of your business or existing
• Any innovative products or processes
c. Products (goods and services)
You need to clearly outline your products range describing their quality, branding, packaging and
location of your business. Justify why consumers will prefer your products over that of your
competitors. You should also explain how you are going to price your products and you should take
into account costs of production and distribution. Price should be set considering what your
competitors are charging and your customer’s ability to pay. The price should therefore be
competitive and also profitable depending on the uniqueness of your product and your advantages
over your competitors.
Also include how you are going to sell or distribute the product, where it will be bought and how you
are going to promote it.
d. The market and competition
You need to do a detailed research about your market. The market is the geographical place in which
your business is going to sell its goods and services.
• You need to describe the size of your current market and also potential market clearly
indicating whether it is increasing, steady or declining.
• You also need to identify you major competitors both direct and indirect competitors clearly
showing who they are, where they are located and their market share. Indicate whether their
sales are increasing or decreasing and indicate the reasons
2
• Compare you company to major competitors in terms of size, reputation, location and
distribution channels
• Explain how you are going to compete highlighting any competitive advantages and how your
products satisfy the needs of your customers better than your competitors
• Show your forecast of sales
• Explain briefly the state of the economy and market conditions that affect your business
(macro-economic factors)
e. Management
Outline the human resources plan and the business model you will be using to ensure efficient and
effective operations. Other aspects include;
• The brief profile of the owners and their workers, their experience and duties
• The management team, their qualifications and experience, and skills highlighting any special
expertise they are bringing into the business. Other members of staff and their skills.
• Organisational chart showing positions and responsibilities and key professional advisors like
accountants, bankers and mentors
• The composition of your board of directors if it’s a compony. For sole trader and partnership,
you need to show the composition of the advisory board.
• Key assets and howl you protect them
• Supplier and their delivery terms
f. Strategy and implementation
This defines what you are going to do to make your plan a success. It is the operational plan of your
business clearly showing your competitive edge, pricing, operating hours, marketing plan, goals and
risks and mitigation.
g. Financial plan
It provides estimates of revenue and expenses for a particular period. It turns your business plan into
numbers. It shows;
• Projected income statement- This is the trading account and Profit and loss. It shows whether
the business will make a profit or loss based on your projected sales, cost of sales and
expenses to be incurred including depreciation of fixed assets
• Projects cash flow statement-A business may fail even when it is making a profit due to lack
of working capital or cash/funds to meet its day-to-day financial needs. The cashflow
statement shows the cash inflows and cash outflows of the business during a particular period.
When prepared well it closing balance should be the same as money the business is having in
its bank account including petty cash.
• Statement of financial position; -this shows the net worth of the business, that is, a list of the
enterprise’s assets, liabilities and equity (capital)
Your business plan should also have a list of references and you can attach lease agreements, licenses,
tax clearance certificates, partnership deed and company registration documents depending on the
type of your business.
3
Home work
What business are you interested in. Do a research in your community to find
out the market potential of your business idea. Write its business plan following
the contents of a business plan indicated above.
