ECOMMERCE
Business Plan
LECTURER: OSMAN KANU
PHONE#: +23276141146 / +23280031888
EMAIL:
[email protected] Learning Objectives
At the end of this module, you will be able to:
Identify the essential elements of a Business Plan.
Identify how a good Business Plan can create an anchor for continued success.
What is a Business Plan?
A Business Plan is a written document that defines the goals of your business and describes how you will
attain those goals.
A Business Plan is worth your considerable investment of time, effort, and energy.
A Business Plan sets objectives, defines budgets, engages partners, and anticipates problems before
they occur.
10 Reasons Why You Need a Strong Business Plan
To attract investors.
To see if your business ideas will work.
To outline each area of the business.
To set up milestones.
To learn about the market.
To secure additional funding or loans.
To determine your financial needs.
To attract top-level people.
To monitor your business.
To devise contingency plans.
How Detailed Should Your Plan Be?
Business plans differ widely in their length, appearance, content, and the emphasis placed on different
aspects of the business.
Depending on your business and your intended use, you may need a very different type of Business
Plan:
Mini-plan: Less emphasis on critical details. Used to test your assumptions, concept, and measure
the interest of potential investors.
Working Plan: Almost total emphasis on details. Used continuously to review business operations
and progress.
Presentation Plan: Emphasis on marketability of the business concept. Used to give information
about the business to bankers, venture capitalists, and other external resources.
Assembling a Business Plan
Every Business Plan should include some essential components:
Overview of the Business: Describes the business, including its products and services.
The Marketing Plan: Describes the target market for your product and explains how you will reach that market.
The Financial Management Plan: Details the costs associated with operating your business and explains how
you will pay for those costs, including the amount of financing you may need.
The Operations and Management Plan: Describes how you will manage the core processes of your business,
including use of human resources.
Seven Common Parts of a Good Business Plan
Business plans must help investors understand and gain confidence on how you will meet your customers’
needs.
Seven common parts of a good Business Plan are:
1. Executive Summary
2. Business Concept
3. Market Analysis
4. Management Team
5. Marketing Plan
6. Financial Plan
7. Operations and Management Plan
Executive Summary
The Executive Summary of a Business Plan is a 3-5 page introduction to your Business Plan.
The Executive Summary is critical, because many individuals (including venture capitalists) only read the summary.
The Executive Summary section includes:
A first paragraph that introduces your business.
Your business name and location.
A brief explanation of customer needs and your products or services.
The ways that the product or service meets or exceeds the customer needs.
An introduction of the team that will execute the Business Plan.
Subsequent paragraphs that provide key details about your business, including projected sales and profits, unit
sales, profitability, and keys to success.
Visuals that help the reader see important information, including highlight charts, market share projections, and
customer demand charts.
Business Concept
The business concept shows evidence that a product or service is viable and capable of fulfilling an
organization's particular needs.
The Business Concept section:
Articulates the vision of the company, how you plan to meet the unique needs of your customer, and
how you plan to make money doing that.
Discusses feasibility studies that you have conducted for your products.
Discusses diagnostics sessions you had with prospective customers for your services.
Captures and highlights the value proposition in your product or service offerings.
Market Analysis
A Market Analysis defines the target market so that you can position your business to get its share of
sales.
A Market Analysis section:
Defines your market.
Segments your customers.
Projects your market share.
Positions your products and services.
Discusses pricing and promotions.
Identifies communication, sales, and distribution channels.
Management Team
The Management Team section outlines:
Organizational Structure: Highlights the hierarchy and outlines responsibilities and decision-making
powers.
Management Team: Highlights the track record of the company’s managers. You may also offer details
about key employees including qualifications, experiences, or outstanding skills, which could add a
competitive edge to the image of the business.
Working Structure: Highlights how your management team will operate within your defined organizational
structure.
Expertise: Highlights the business expertise of your management and senior team. You may also include
special knowledge of budget control, personnel management, public relations, and strategic planning.
Skills Gap: Highlights plans to improve your company’s overall skills or expertise. In this section, you
should discuss opportunities and plans to acquire new information and knowledge that will add value.
Personnel Plan: Highlights current and future staffing requirements and related costs.
Marketing Plan
The Marketing Plan section details what you propose to accomplish, and is critical in obtaining funding to
pursue new initiatives.
The Marketing Plan section:
Explains (from an internal perspective) the impacts and results of past marketing decisions.
Explains the external market in which the business is competing.
Sets goals to direct future marketing efforts.
Sets clear, realistic, and measurable targets.
Includes deadlines for meeting those targets.
Provides a budget for all marketing activities.
Specifies accountability and measures for all activities.
Financial Plan (Slide 1 of 2)
The Financial Plan translates your company's goals into specific financial targets.
The Financial Plan section:
Clearly defines what a successful outcome entails. The plan isn't merely a prediction; it implies a commitment to
making the targeted results happen and establishes milestones for gauging progress.
Provides you with a vital feedback-and-control tool. Variances from projections provide early warnings of
problems. When variances occur, the plan can provide a framework for determining the financial impact and the
effects of various corrective actions.
Anticipate problems. If rapid growth creates a cash shortage due to investment in receivables and inventory, the
forecast should show this. If next year's projections depend on certain milestones this year, the assumptions should
spell this out.
Financial Plan (Slide 2 of 2)
The Financial Plan is the most essential part of your Business Plan. It shows investors the timeframes you
have scheduled to make profits.
Some elements of the Financial Plan include:
Important Assumptions
Key Financial Indicators
Break-even Analysis
Projected Profit and Loss
Projected Cash Flow
Projected Balance Sheet
Business Ratios
Long-term Plan
Different Financial Planning Options (Slide 1 of 2)
Short-term Forecast: Projects either the current year or a rolling 12-month period by month. This type of forecast
should be updated at least monthly and become the main planning and monitoring vehicle.
Budget: Translates goals into detailed actions and interim targets. A budget should provide details, such as specific
staffing plans and line-item expenditures.
The size of a company may determine whether the same model used to prepare the 12-month forecast can be
appropriate for budgeting.
In any case, unlike the 12-month forecast, a budget should generally be frozen at the time they are approved.
Different Financial Planning Options (Slide 2 of 2)
Strategic Forecast: Incorporates the strategic goals of the company into the projections. For startup
companies, the initial Business Plan should include a month-by-month projection for the first year,
followed by annual projections for a minimum of three years.
Cash Forecast: Breaks down the budget and 12-month forecast into more detail. The focus of these
forecasts is on cash flow, rather than accounting profit, and periods may be as short as a week in order to
capture fluctuations.
Operations and Management
The Operations and Management section outlines how your company will operate.
The Operations and Management section includes:
Organizational structure of the company. Provides a basis for projected operating expenses and
financial statements. Because these statements are heavily scrutinized by investors, the
organizational structure has to be well-defined and realistic within the parameters of the business.
Expense and capital requirements to support the organizational structure. Provides a basis to identify
personnel expenses, overhead expenses, and costs of products/services sold. These expenses/costs
can then be matched with capital requirements.
Key Takeaways From This Module
Business Plans are critical for the success of a company.
Different businesses will require different types of Business Plans.
All Business Plans have some essential sections that explain the core aspects of the company.
In order to help your company have a better chance of gaining interest and investors, a Business Plan
should include seven essential sections:
Executive Summary
Business Concept
Market Analysis
Management Team
Marketing Plan
Financial Plan
Operations and Management Plan
Q &A
Thank You
