BUSINESS PLAN

Sections to be Covered
Executive Summary
Products/Services
Management and Organization
Business Resources
Market Analysis
Market Plan
Competition
Financial Resources
BUSINESS PLAN DEVELOPMENT
 Business Plan Component
• Executive Summary
• Business History, background, and objectives
• Products /Services
• Management and Organization
• Business Resources
• Market Analysis
• Marketing Plan
• Competition
• Financial Outlook
 Executive Summary
• Executive Summary is the section which help to explain
key components of your Business plan in summary
• It begins to state the motive of your business and
address challenge connecting to your
society/community.
Key Questions
• Does the idea explains the challenge in your
society/community?
• What are your approach of addressing the challenge e.g
Is it different from other competitors? Is it unique?
 Executive Summary
• Use creative words to express your idea(art of
wording) in writing in order, to position the
reader in an exciting mood.
• E.g background, purpose and objective of your
business.
• include all portions in your business plan and
demonstrate in a logical form.
• Provide facts/statistics/news to support your
idea(evidence)
 Cross Checking Questions
• Does the summary create excitement?
• Has the team adequately described the pain in
the marketplace?
• Do you believe the team has presented a
feasible solution?
• Do you have facts/evidence presented?
 Product /Services
• Product:
– An idea, a physical entity (a good), a service, or
any combination of the three that is an element of
exchange to satisfy individual or business
objectives
 Types of Products

Consumer Products:
Goods:
Those used by
Physical products
consumers for their
with form and
own use and
substance
satisfaction.

Business Products:
Services:
Those used in the
Non-physical products
running of a business
usually involving
or in the manufacture
performance
of products for resale.
 Consumer and Business Products
• Consumer Products: • Business Products:
– Products that are – Products purchased by
purchased by a firm or organization
consumers for their for its own use.
own personal use.
 Goods and Services
• Goods: • Services:
– Physical – Nonphysical
products. products.
 Application in (BP)
(BP) IT based product
(BP)Materials Engineering Product
• State: Real Time, is a
• State: Material soft aims to
company that focuses on
be the provider in creating
delivering an innovative
proprietary fabrics that can
real-time advertising
withstand harsh conditions.
solution to brands. Our
We sell our Fabrics to the
chief consumers are brand
users in the defense and
marketers and digital
coal mining industry.
marketing agencies
 Cross Checking Questions
• Does the team clearly described the products
and or services they intend to offer and that,
they understand well the customer problem
to be solved? (what is the pain?, what is the
need?)
• Do you have clear and convincing description
of how the new product/service addresses the
customer need and benefits?
 Management and Organization
• Management involves coordinating and
overseeing the work activities of others so
that their activities are completed efficiently
and effectively.
• An organization is a collection of people
working together in a coordinated and
structured fashion to achieve one or more
goals.
 Management and Organization
• People-Knowledge, skills and ability to deliver the
services
In this case consider (BP)
• To provide means of explaining mentoring
program for your business(create a well blended
team to match the objectives)
• To identify useful experience to be integrated in
an organization.
• E.g Mature and young experience
 Application in (BP)
Mature Experience Young/emerging Experience
• Eg. Musa John is the CEO of • E.g Maimuna Hamisi, is the
material soft. Prior to founder of project of …………
joining this company, he • Currently, she is a second
was the vice president, in year undergraduate, she
Expo Fabrics, His experience has spent a year working in
with the market will help to Prof. Hatibu’s multimedia
generate sales led for the laboratory. She will act as
company. the assistant CEO of………
and will seek a CEO who can
mentor and guide the team
Placing right People at the right place
(organizing)
Application in (BP)
 Cross Checking Questions
• Does the team management have the skills required to
execute the plan?
• Does this team have the experience to lead the business or
a new venture?
• If this management team is weak in either necessary skills
or experience do they list the advisors and mentors or
necessary remedial measures to develop them for business
success?
• Does the team described the types and extent of necessary
training that will be required to upgrade skills of their staffs
in order to grow the business well?
 Business Resources
• Business Resources combines
(1)Information-useful information to process business
actives(process of gathering data) eg. R&D department
assist to sustain your business.
(2)technology- Practice, process on how to perform your
activities eg. is it based or advanced in technology in
terms of machine, equipment etc
(3) Knowledge-accumulated experience of the
business(organization learning), eg. how will you
keep/store, protect eg. (documentation)
Effective organization learning for sustainability. Eg.
Succession plan
 Business Resources
(4) Business Process
A business process is defined as a set of
activities and tasks that, once completed, will
accomplish an organizational goal.
It is a collection of linked tasks in the delivery of
a service or product to a client (There is an
essence of inputs and output contributing
achieving business goals).
 Cross Checking Questions
• Has the team described the major needed and
operating technology(s) or equipment and
structures in use?
• Do you have identified suppliers with specified
locations and payment terms if any?
• Has the team made progress toward
protecting their created knowledge (license,
patents, etc)?
4. MARKET ANALYSIS
 Core Marketing Concepts
 Market:-grouping of customers based on different criteria such as needs,
products, demographic, geographic e.t.c

 Market Place: physical market e.g shops

 Market Space:- Online market e.g webpage

 Market Segmentation:-division of market based on demographic, economic,

religious differences. e.t.c(customer base)

 Target Market:-segment of the market which presents the greatest opportunity

 Marketer: someone who seeking a *response from other part

*attention, purchase, donation, vote .e.t.c

 Prospects: someone who responded to marketers’ stimulation

 Core Marketing Concepts…
 Needs:-basic human requirements e.g. food, water, air and shelter

 Wants: needs which are directed to a specific product e.g food → rice, bottle
water

 Demands:-are wants for specific products which are supported by ability to pay
e.g fried rice ; Kilimanjaro or Uhai water→ do people who want have ability to
buy?

 Value:- relation between what customer get (benefit) and what he gave in
exchange e.g water in bottles or water in a cup (500 mil for 1000?)

 Satisfaction: when benefits exceed the cost incurred by customer to get

goods/services
How best to analyze the market?
 Situation / Business Environment Analysis
Internal : S & W External: O & C
 Organization: -structure, staff, a. Macro environment forces
creativity, flexibility (PESTEL)
 Political: ideology, peace and stability
 Marketing: -market share,
 Economic: Exchange rate, Inflation,
sales, quality of goods
Depression e.t.c
&services
 Social Factors: reference group, family,
 Resources:- raw materials, staff tradition, social class
and financial resources  Technology : availability, compatibility
 Finance: -revenue, cash flow,  Environmental: climate
liquidity, financial stability,  Legal: policies , laws, regulations
capital availability
 Manufacturing: -facilities, b. Micro environment factors
capacity, skills, technology  Competitors
 Company position :- image,  Customers
reputation, operation capacity  Distributors
 suppliers
Marketing Analysis : Cross Checking Issues

 Market coverage: location, size and composition

 Opportunity: any potential for survival, Growth, diversify ,
 Customer characterization: major, minor, average
 Customer relationship: good, bad, royal
 Situation analysis: SWOT & PESTEL
 Factors affecting your market: Internal?, External?
 Marketing and Selling approach
 Pricing and Credit policy
 5. MARKETING PLAN
 Market segmentation
 Market targeting
 Market Positioning
 Marketing tools
 Distribution System/ Channel
 Market Segmentation, Targeting & Positioning
Segmentation
 is the subdividing of a market into distinct subsets of customers.
 Identify segmentation bases and segment the market.
 Develop profiles of resulting segments.

Segments
 Members are different between segments but similar within
 Evaluate attractiveness of each segment.
 Select target segments.

Positioning
 Identify possible positioning concepts for each target segment.
 Select, develop, and communicate the chosen concept.
Segmentation Variables & Considerations
– Segmentation variables;
Geographic variable ( region of the world or country , climate, size)
Demographic variables ( age , gender , income , occupation ,
education , family size , family life cycle
Social economic variables ( social status , religion , nationality )
Psychographic Variables (personality , life-style , values , attitudes _
Behavioral Variables (benefit sought , brand loyalty , readiness-to-buy
stage, ) decision making unit
– Segmentation process have to consider segments’:
Similarities and differences between , stability, size in relation to
profitability, indicators for its identifications and measurability
 Marketing Plan : Cross Checking Issues
 Market segmentation
 Market targeting
 Market Positioning
 Marketing tools
6. COMPETITION
 Competition

 Who is your competitor (s)

 How do they organised: individually or as a group
 What is your position against your competitors:
 strength and advantages
 weakness and disadvantages
 Competition: Cross Checking Issues

 Competitors analysis
 Competitive advantage
 Competitive strategies
 9. *FINANCIAL RESOURCES

 Required fund: amount and sources

 Expenditure plan:
 Profitability plan:
 Financial projections
 Key assumptions
 Understanding Finance
A Finance refers to:
 The process of how to get and use money

 The actual process of attracting and management of funds

 The study of how people and businesses evaluate

investments and raise capital
 What are Key Financial Management Decisions
Asset Management Decisions
 How do we manage existing assets efficiently?

Capital budgeting
 What long-term investments or projects should the business take on?

Capital structure
 How should we pay for our assets? Should we use debt or equity?

Working capital management

 How do we manage the day-to-day finances of the firm?

Financial decisions:
 when, where and how should a business acquire funds

Investment decisions
 capital allocations to different assets & using funds obtained from selling firms assets

Dividend:
 when to distribute all the profits to the shareholder or retain all the profits
 Expenses vs Revenue
Expense Revenue
 Fixed Cost
 Sales
 Rent payments
 Salaried employees
 Capital Investments  Interest from firm’s
 Utilities (phone, water, electric,
 Insurance
investments (e.g., a
 Property Taxes company bank savings
account)
 Variable Cost
 Materials Cost
 Supplies
 Production Wages  Royalty and Licensing*
 Contracted labor payments for appropriate
 Sales Commissions / Distribution Costs
use of firm’s intellectual
 Equipment Maintenance
property
 Ways to represent financial statement
Cash Flow/ Cash
Management
 can the company meet
its obligations?

 do the company has

enough cash to run the
business

 statement shows
beginning cash balance,
cash inflows, cash
outflows and ending
cash balance
 Ways to represent financial statement…

Income Statement/
Profitability
 Is the company make
money?
 Is the company profitable?
 Statement compares the
profitability of the firm to
prior years i.e Total (yearly)
revenues minus total
(yearly) expenditures
 Ways to represent financial statement…
Balance Sheet:
 What size is my assets?
 E.g Land and Capital
Equipment less accrued
depreciation, IP, Cash on
Hand , Accounts Receivable,
Inventory, Retained
Earnings from previous
years

 How much debt do I have

and How big is company’s
debts
 Short Term Debt (loans),
Long Term Debt (bond
issues, etc), Accounts
Payable, Interest Payable,
Taxes Payable *Total Asset – Total Liabilities = Equity
 Financial Performance Analysis / Ratio

Example 1:
 Current ratio:
 does your business have enough current assets to meet

 its current debts with a margin of safety?

 How to raise Current ratio:

 Paying off some debts
 Increasing your current assets by loans with a maturity of more than a
year
 Converting non-current assets into current assets
 New equity contributions
 Ploughing back profit
 Financial Performance Analysis / Ratio…

Example 2
 Return on Investment (ROI)
 A performance measure used to evaluate the efficiency of an
investment or to compare the efficiency of a number of different
investments.
 ROI measures the amount of return on an investment relative to
the investment’s cost.

Net Profit
Return on Investment 
Total Assets
Financial Resources: Cross Checking Issues

 Required fund: amount and sources

 Expenditure plan:
 Profitability plan:
 Financial projections
 Key assumptions