a business plan is… 1. a blueprint of how the business should look like in your mind. 2. “tell a...
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1 | THE BUSINESS PLAN
A Business Plan is…
1. a blueprint of how the business should look like in your mind.
2. “tell a story” and explain how the business will achieve its objectivesin a coherent manner. The “story” should focus on customer’s needs.
3. To identify the market, its growth prospects, target customers and main competitors.
A Business Plan is…
4. Based upon a credible set of assumptions to which the success of the business is most sensitive.
5. To identify the risks facing the business, the potential downsides and actions should be taken to mitigate the risks.
6. To describe its differences from its competitors: its source of competitive advantage and how it will be sustained in longer term.
A Business Plan is…
7. To describe the experience and track record of the management team.
8. To identify the funding being sought from potential investors.
A Good Business Plan Checklist
Tells a coherent, consistent and customer focused story;
Clearly defines market, its prospects, the customers, suppliers and competitors;
Contains credible business planning assumptions and forecasts;
Describes how business will achieve sustainable competitive advantage;
Identifies assumptions to which business is most sensitive, the potential risks and any mitigating actions;
A Good Business Plan Checklist
Is supported by those that must implement it;
Contains description of individuals involved in managing the business;
Identifies funding requirement for the business.
Who is this business plan for and why?
A Business Plan should…
1. Focus on market growth and the sources of sustainable competitive advantage for the business.
2. Emphasis on strategy, tactics and financial projections, rather than on operational detail.
A Business Plan should…
3. Provide basis for creation of business process, job descriptions and operational budgets.
4. Provide basis for monitoring and analyzing performance.
A Business Plan in Another Situation
A business unit in a large organization will prepare business plans in order to gain approval for new business initiatives from senior management and the board. However, the following questions may be asked.
1. Is the plan consistent and supportive of the business’s overall strategy?
2. What is the impact on overall financial performance of the business in terms of revenue growth and profitability.
A Business Plan in Another Situation
3. Will adopting the business plan require additional fundraising?
4. Does the business plan reinforce the position of the business’s brand?
5. Is the business plan feasible and within the scope of the organization’s capabilities?
6. Will adoption of this business plan have impact on other areas of the business?
7. What alternative opportunities could be pursued?
A Business Plan Template
Executive SummaryVision, mission, objectivesCurrent state of the businessProducts and servicesStrategy and sources of sustainable
competitive advantageCustomer acceptanceSummary financial forecastsMoney required, timing and deal on offer
Basic business informationTitleContentsContact informationDocument controlProfessional advisersDefinitionsLegal structure and corporate data
Current business situation
Definition of the current business and its market
Corporate history, major events and past financial performance
Current business and market positionCore competenciesCurrent business organization and outline
business infrastructure
Strategic analysisPolitical, economic, social and
technological analysis and impactsKey differentiators and unique selling
pointsVRIO analysisCore competencies
Configuration of resourcesValue add analysisConfiguration of resources
A Business Plan Template
Value add analysis
Value chain analysis
Value system
Resource audit
Operations resources
Human resources
Organizational resources
Financial resources
Industry life cycle
Industry structure
Competitor analysis
SWOT analysis
Strategic plan
Vision, mission and objectives
Sources of sustainable competitive advantage
Competitive position
Marketing positioning
Brand strategy
Portfolio strategy
Business design
Marketing planMarketing segments, size and growth
Description of customers and customer needs
Target market segment
Product positioning and value proposition
Marketing mix
A Business Plan Template
Description of products and services
Pricing and discounting
Advertising and promotional plans
Channel and distribution strategy
Guarantees and warranties
After-sales service and customer care
Comparison with competition
Performance and economics
Marketing forecasts
Operations/productionPhysical location
Make or buy considerations
The production process
Facilities, equipment and machinery
Scalability of operations
Engineering and design support
Quality control plans
Staffing requirements
Sources of supply of key materials
Research and developmentObjectives
Organization
Plans
Resources
Management and organization
Organization chart
Top management
Management’s ability to deliver the plan
A Business Plan Template
Corporate governance and shareholder control
Staffing
Recruitment
Training
Labour relations
Office space and amenities
Employment and related costs
Forecasts and financial dataSummary of performance ratios
Sales forecast
Assumptions underpinning financial forecasts
Profit and loss account (income statement)
Balance sheet
Cash flow statement
Evaluation criteria and valuation
Discounted cash flow
Payback
Breakeven
Benchmarks
Sensitivity analysis
FinancingSummary of operations prior to financing
Current shareholder loans outstanding
Funds required and timing
Use of proceeds
The deal on offer
Anticipated gearing and interest cover
Exit routes for investors
A Business Plan Template
Risk analysisRisk overview
Limiting factors
Critical success factors
Alternative scenarios and strategic responses
Specific risks and risk-reduction strategies
Business controlsInformation technology
Financial
Sales and marketing
Operations
Other controls
AppendicesGlossary of terms
Details of market research
Consultants’ reports
Product specifications
Marketing collateral
Orders in hand
Organization charts
Curricula vitae
Detailed financial forecasts
Technical data
Details of patents, copyright
Layout and Style
Document should be:1. Attractive2. Impressive3. Easy to read
General appearance: logo, contact details, etc.
Page layout: A4, 12 pt, ring bind, etc.Writing style: Clear, concise, evidence,
etc.
Getting Started
Basic business information:• Title• Content• Contact information• Document control• Professional advisers• Definitions• Legal Structure and corporate data
Getting Started
Legal structure and corporate data:• Full name of business• Corporate status of business• Its capital structure• Address of registered office• Registration number• Head office address
Getting Started
Executive Summary-The most important section: The 1st section to be read it must engage readers and excite them about the potential of the business idea. It should NOT be an introduction to the business plan; it should be most carefully written of all the sections. It contains:
• Current state of the business• Products and services and the customers• Sources of sustainable competitive advantage• Shareholder objectives and business strategy• Summary financial forecasts• Decision or funding being sought
Your group should start thinking your new business ideas.
Go through the concepts and business plan template just learned.