EVEL

PING

USINE
S
LAN.
D.
DEVELOPING A BUSINESS PLAN

GENERATION/CREATION OF A BUSINESS IDEA

 Every business emerges from an idea.
 Businesses get started when people (customers) manifest
their needs and wants.
 Entrepreneurs develop business ideas out of the needs and
wants of people.
 Usually entrepreneurs exploit the weakness of the existing
providers of goods and services to start their own ventures.

The term business idea defined:

A business idea is a short and precise description of the basic
operations of the business.

 A business idea must show the following:

a) Product to be offered.
b) Target market/potential customers.
c) Target customers’ needs.
d) Selling approach.

Profitability and Feasibility of the business idea:

 A business idea must be profitable and feasible.
 To determine the profitability and feasibility of a business
 idea one needs to carry out a feasibility study and SWOT
analysis.
 Feasibility study relates to a detailed investigation of all
 aspects of a business idea to determine if it is likely
to be successful.
 Before starting a business, it is essential to research that
 business idea to find if it is feasible.
 A business idea should be practical and profitable.

In terms of feasibility, the entrepreneur needs to consider the following:

 Availability of a viable market
 Competition
 Location
 Infrastructure and facilities
 Raw materials
 Machinery and equipment
 Labour and other costs such as electricity insurance, water,
security etc.

BUSINESS PLANNING
Definitions of A Business Plan
Several definitions of a business plan can be observed.

 A business plan is a written statement setting forth the

1
 business mission and objectives, its operational and financial details, its ownership
and management structure, and how it hopes to achieve its objectives.

 It is a written document describing all relevant internal and

external elements and strategies for achieving objectives of
a business.

 A business plan is a document designed to provide sufficient

information about a new or existing business to convince
financial backers to invest in the business.

The purpose/importance of a business plan:

 It provides a blueprint, or a plan, to follow in developing and
operating the business. It helps keep one’s creativity on
target and helps one concentrate on taking the actions that
are needed to achieve the business goals and objectives.

 It helps to clarify the business idea. The process involved in

creating a business plan means that the entrepreneur must
ask several key questions about their idea. This should
ensure that before starting up, the business idea would have
been considered with care.

 It can serve as a powerful money-raising tool. The Plan will

often be used as a means of sharing potential investors of
lenders the viability and profitability of the business.
Financial institutions insist on seeing a business plan before
any loan is granted. Private shareholders may invest if they
believe in the entrepreneur. Professional providers of venture
capital demand evidence of careful planning first.

 It can be an effective communication tool for attracting and

dealing with personnel, suppliers, customers, providers of
capital, etc. It helps them understand your goals and
operations.
 It can help you develop as manager/entrepreneur, because it
provides practice in studying competitive conditions,
promotional opportunities, and situations that can be
advantageous to your business.

 It provides an effective basis for controlling operations so one

can monitor progress over time, to see if your actions are
following your plans.

HOW TO PREPARE A BUSINESS PLAN

You should start by considering your business background, origins, philosophy, mission and
objectives. Then, you should determine the means for fulfilling the mission and obtaining the
objectives.

A sound approach is to:

2
1. Determine where the business is at present (if an ongoing
business) or what is needed to get the business going.
2. Decide where you would like the business to be at some point
in future.
3. Determine how to get there. In other words, determine the
best strategies for accomplishing the objectives to
achieve your mission.

The following is one feasible approach you can use in preparing a business plan
1. Survey consumer demands for your products and decide how
to satisfy those demands.
2. Ask questions that cover everything from you firm’s target
market to its long-run competitive prospects.
3. Establish a long–range strategic plan for the entire business
and its various parts.
4. Develop short-term detailed plans for every aspect of the
business, involving the owners, managers, and key
employees, if possible.
5. Plan for every facet of the business’ structure, including
finances, operation, sales, distribution, personnel, and
general administrative activities.
6. Prepare a business plan that will use your time and that of
your personnel most effectively.

COMPONENTS/ELEMENTS/CONTENTS OF A BUSINESS PLAN

 The contents of a business plan vary tremendously, depending upon the type of business,
the expertise of the entrepreneur, who the plan is aimed at and how much time is spent
researching the plan.

 However, regardless the specific format used an effective plan should include at
least the following
1. Cover sheet
2. Table of contents
3. Executive summary
4. Description of The Business
5. Ownership and Management structure
6. Marketing Plan
7. Production/Operational Plan
8. Financial Plan/Analysis
9. Milestone schedule
10. Appendix

1. Cover Sheet

On the cover sheet you should include identifying information so that readers will immediately
know the business name, address, phone numbers, names and titles of the principals (owners),
and the date the Plan was prepared.

2. Table of Contents

3
 Because the table of contents provides the reader an overview of what is contained in the
plan itself, it should be written and presented concisely in outline form, using numerical
and alphabetical designators for headings and subheadings.

3. Executive Summary

It is the most important part of the business plan. It should be designed to motivate the
reader to go on to the other section of the plan. It should convey a sense of commitment,
challenge, plausibility, credibility and integrity.

It can include:

 Major aims and objectives

 Marketing strategy
 Financial projections
 Financial requirements
 Current business position:
Legal form, when formed, principal owners and key
personnel.
 Major achievements.

NB Executive summary is written last, after the rest of the plan

has been developed and should just be that – a summary –so
keep it short.

4. Description of the Business

Include the following:

a) Introduction

 Relevant brief history and background of the proposed business

 How the idea for the business original and what has been done to develop the
idea up to this point.
 Owners and manager and their experiences
 Products – capitalization/sources of funds
 Brief outline of success and achievement
 Date or proposed date for commencement
 Name of business and trading name
 Legal identity/legal form
 Industry that it falls under
 location - business addresses
 SWOT Analysis

5. Ownership and Management Structure

 Describe the owners including those you identified by name and title above
 Give more detail about their experience, qualifications
and expertise.

4
  Describe your management team, along with their abilities, training and
experience.
 Draw an organisation Chart
 Draw a table showing name, position, qualifications and experiences, duties and
responsibilities of managers and employees.
 Include organisational structure, including employee policies and procedures.

6. Marketing Plan

Include information about:

a) Marketing objectives
b) The target markets
c) Sales and marketing mix strategy
d) Competitors analysis
e) Research – that leading to product design – confirmation of demand and future
research planned.

7. Product/Operational Plan
 This motive the details of converting inputs to outputs valued by customers
 Specify products/services to be produced
 Raw materials and suppliers
 Optional location for production activities
 Costing of the products offered.

8. Financial/Plan/Analysis

 Indicate the expected financial results of your

operations
 Show prospective investors or lenders
 Include projected financial statements at least up to
three trading periods i.e. Trading, Profit and Loss
 Account; Income and Expenditure Statements; Cash
Flow statements; Balance Sheets etc.
 There should be an analysis of costs/volume/Profits
(CVP) where appropriate.
 Also include budget forecasting for: Production; Sales
and Expenses.
 Show the Financing of the business.

9. Milestone Schedule

 This involves the determination of objectives and the

timing of accomplishments.
 It is like a map of how you will go from one place/stage
in your business to the next.
 Deadlines should be established and monitored.

10. Appendix

5
This section includes supporting documentation for your Business Plan e.g.

 Names of References and Advisors and their addresses

and phone numbers
 Bargains, Tables, Charts
 Resumes of officers
 Supportive market research
 Brochures of other published information describing
the products you provide.
 Letters of recommendations or endorsements etc.