Developing a Business Plan Defining a business plan•A business plan is a formal statement of a set business goals, the reasons why they are believed to be attainable, and the plans for reaching these goals. • It defines the entrepreneur's vision and serves as the firm's resume (summary or Curriculum vitae of a Firm).

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Business plan

•A good business plan should emphasize on the •strengths and •recognize the weaknesses of the venture.

•It should convey sincerity of purpose and analysis which lends credibility to the plan and the one who/which is making it.

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Business plan A good business plan has to address two issues, namely:•A business opportunity exists which has the potential to earn the investor the return he/she demands.• It must also show that the one proposing to exploit this opportunity can do so effectively.

A business plan can be used at different times, with potential benefits for several audiences.

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Reasons for writing a business plan:• To convince oneself that the new venture is worthwhile before making a significant financial and personal commitment.

• To assist management in goal-setting and long-range planning (Medium Term Strategic Plan)

• To attract investors and get financing.

• To explain the business to other companies with which it would be useful to create an alliance or contract.

• To attract employees.

Business plan

Important note:•The plan will depend on your specific situation e.g. •description of the management team is very important for investors while •financial history is most important for banks

•Make your plan that matches its purpose.

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Scope and general rules of a Business Plan

• Should be concise (20-40) pages. • It should use good visual formatting, such as bulleted lists and short paragraphs. • Should convey large and profitable market opportunities• Should cover all aspects of business• Should convey strength and depth of management team• The language should be free of jargon and easy to understand.• The tone should be business-like and enthusiastic. • It should be strong on facts in order to convince people to invest money or time in the new venture.

Components of the Business Plan

The basic elements of a standard business plan include:

1. Title Page2. Table of Contents3. Executive Summary4. Company Description5. Product/Service6. Market and Competition7. Marketing and Selling Strategy8. Operating Plan9. Management/Organization10.Financing11.Supporting Documents

Business Plan DetailsTittle/Cover Page •Name of the Company

•Address and Contact Details

• Time Period Covered by Plan

•Date of Preparation

Executive Summary•The executive summary is the cornerstone of a good plan. •This is the section that people read in order to decide whether to read the rest. • It should concisely summarize the technical, marketing, financial, and managerial details. •More importantly, it needs to convince the reader that the new venture is a worthy investment.

Business Plan Details, cont…

Executive summary cont….In summary• Firm and its environment• Firm's current status and outlook• Product and services• Benefits to Customers•Objectives – financial and Non financial• Financial Forecast Brief• Amount of Required finances• Benefits to Investors

Business Plan Details cont…Table of Contents •Headings and Sub-headingsBusiness Description•General Description of Venture• Industry Background•Company History•Products/ Services Description, USPs•Market Potential / Goals

Business Plan Details cont…

Marketing and Sales • Sales and Revenue Objectives

•Marketing Details: Target Market, Market Size, Trends, Competition, Estimated Market Share, Distribution and Sales, Pricing, Advertisement and promotion.

•Marketing and Sales Organization

Business Plan Details cont…Organization and Management•Organizational Structure•Management Team•Key Associates/ Advisors/ Consultants•Memberships/ Registrations•Management Policies (General Philosophy, Recruitment and Selection, Training and Development, Compensation)

Business Plan Details cont…Financials •Sources and use of Funds• Financing Stages•Projected Statements (Income Statement, Balance Sheet, Cash Flow, Break Even Details, Financial Performance Summary)• Finance Policies (Debt management, Investment, Use of Earnings, Profit sharing, Cost Controls, Supplier Payment)•Departmental Budgets

Business plan

concretizing ……..

The format of a business plan•The three key questions:•What should a business plan look like, and what should be included or excluded?•Many business plans look formidable documents, running to numerous pages filled with very detailed questions.

In fact, to do its job, a business plan needs to answer three straightforward questions:

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Business plan

•Where are we now?•Where do we intend to go?•How do we get there?

•Where are we now?An analysis of the current situation of the market place, the competition, the business concept and the people involved is a necessary first step.

It will include any historical background relevant and to the position to-date.

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Business plan

Where do we intend to go?•The direction that is intended for the business needs to be clear and precise, if others are to share its vision for the future. •As well as qualitative expression of the objectives, quantifiable targets will clarify and measure progress towards the intended goals. • Identification of likely changes to the business environment will build on the opportunities outlined, and assess possible threats.

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Business plan

•How do we get there?•Implementation of accepted aims is what all the parties to a plan are interested in as a final result. •Plans for marketing and managing the business, with detailed financial analysis, are the advisable preliminaries before putting it all into practice.

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Business plan•Details of the components in a plana. Where are we now(i) Identity of the business• Introduction; Relevant history and background, date or proposed date for commencement of trading /beginning of a plan•Names: Name of business and trading names Names of managers/owners•Legal identity: Company/sole trader /partnership, co-operative, Details of share or capital structure

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Business plan •Location: Address, registered and operational Brief details of premises •Professional advisor: Accountants, solicitors, bank.(ii) The key people•Existing management: Names of the management, outline of background experience, skills and knowledge, why they are suited to the business  •Future requirements: Gaps in skills and experience and how they will be filled, Future recruitment intentions 20

Business plan

(iii) The nature of the business•Product(s)/service(s): Description and applications, Breakdown of product line as % of sales, Outline of any intellectual properties, patents, trade marks, design registrations, copyright•Key suppliers•After-sales service, or guarantees and warranties offered•Planned developments of product or service

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Business plan

•Market and customer: •Definition of target market, Trends in marketplace, Classification of customers, Needs of customers and influences in their buying decisions

•Benefits offered by business to target customers•Competition :•Description of competitors,• Strengths and weakness of the major competitors, Competitive edge; the uniqueness of your business compared to the competition.

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Business plan

b: Future direction (where do we intend to go)

• (i) Strategic influences: •Opportunities and threats, • Socio-economic trends in the business environment, • Technological trends, • Legislation and politics,• Competition,

(ii)Strategic direction : •Operations – General, Specific; • Policies - Guidelines and rules; • Activities - Action plan,• Timetable of key activities

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Business planc. Implementation of aims (how do we get there?)

(i) Management of Resources•Operations; •Premises, Materials, Equipment, Insurance, Management information systems

•People; •Employment practices, Recruitment, Retention and motivation, Payroll and personnel system, Team management

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Business plan• (ii) Marketing plan•Competitive edge; • Unique selling point of business, Marketing objectives - Specific aims for product or services in the Marketplace 

•Marketing methods; • Innovation, Features and benefits, Product mix, Product development

• Incentive; • Basis of pricing, Margins, Discount policy, Promotion -methods to be used, Consistency of image.

•  Distribution -channels used, Direct or intermediaries

•Research; Confirmation of demand, Future research planned

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Business plan(iii) Money: financial analysis  •Funding requirements; •Start-up capital, Working capital, Asset capital, Timing of funds required, Security offered.

•Profit and loss; •3-year forecast – Sales, Variable costs, Gross profit, Overheads, Net profit.

•Cash flow; •3-year forecast – Receipts, Payments, Monthly and cumulative cash flow.

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Business plan

•Balance sheet; •Use of funds, Source of funds

•Sensitivity analysis; • break-even point, What-ifs.

•Summary; •main assumptions.

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Business plan

Key Points • It is important to have an idea to innovate before developing a business plan• Innovation should be geared towards solving a problem or improving services in your organization•Before starting the implementation the analysis is very important using strengths you have and identifying your weak areas to overcome but also understand the challenges in your new venture.•Based on adequate information then the Business plan document preparation can follow. 28

Vision and Mission The Vision Definition:•A vision shows what you want your business to accomplish.• It shows a way to success. • It provides the inspiration for both your daily operations and your strategic decisions.•Effective business planning needs a vision.• It’s the vision statement that provides the destination for the journey without which there is no destination. 29

Vision•How to write a vision statement:(i). Examine your mission statement It should tell•who your organization is•what you do•what you stand for •why you do it.

(ii). Use the following formula to shape your vision statement:•To be/achieve/reach …..the best/leading ------------in offering/teaching/selling -----------in country/region--

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Vision•Using this formula to write a vision statement will force you to choose what you consider to be the most important accomplishment of your business and give you a time frame to accomplish it.

(iii)Commit to your vision statement•Take action to make your vision statement come true: Use it as the basis of your business planning

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Vision•Because the vision statement provides your destination, therefore your goals and strategies will focus and struggle to make it real.

• It is the natural basis for all of your business planning

• If you want to keep your vision statement alive then you have to share it with potential partners, staff and employees if you have.

•Print it out and post it on your desk, in your staff room, wherever you, your colleagues and your staff will see it and remind them regularly.

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Vision •Example:3.1 Vision•To provide an excellent training opportunity for trainees and graduates aspirations to higher levels of professional qualifications.

•Note: this vision has no time frame

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Mission

Mission•Mission statement is an opportunity to define your business at the most basic level.

It tells:•who your organization is•what you do and why you do it•what you stand for (It describes the purpose for which your organization exists).

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Mission

Issues that may be addressed in a mission: •Do you want to make a profit, or is it enough to just make a living? •What markets are you serving, and what benefits do you offer them? •Do you solve a problem for your customers? •What kind of internal work environment do you want for your employees?

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MissionBasic guidelines in writing a mission statement

•Start by reading other organization’s mission statements, but write a statement about you and not some other organization. •Make sure you actually believe in what you’re writing; otherwise your customers and your employees will know if you were not serious with it.•Get lots of input from the community you plan to serve, as well as from your board, staff, and other stakeholders.•Allow enough time, be open to new ideas •Keep it short at most three to four sentences long.

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Mission

Example: 3.2 Mission• To establish high quality training environment that will sustain and allow trainees to acquire professional competences relevant to their levels and aspire for attainment of higher knowledge, skills, understanding and appropriate behaviour in Pharmaceutical Sciences and health sciences.

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Mission The benefits of a well-defined mission statement•It focuses your energy and clarifies your purpose•It motivates stakeholders including the staff, volunteers, and donors as well as helps to attract people and resources.•Vision and Mission are the bases of planning for your organization

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Writing a Winning Business Plan•A sound business plan can mean difference between a company that prospers and one that flounders.

•A good business plan communicates accuracy and credibility, and generates enthusiasm for business.

•An effective business plan should be thorough, professional and realistic.