GUIDELINES FOR THE PREPARATION OF BUSINESS PLAN

The following guidelines are applicable to wide range of business which an entrepreneur may
pursue

The Introduction
The introduction should state the objectives of the plan or proposal as simply as possible.
If the plan is to be used by your key employees, the introduction should be a brief description of
how the plan is to be implemented.
If the plan is also to be used as financing proposal, the introduction should specify who is
asking for finance, how much money is required, the purposes for which the funds will be used
and how the funds will benefit the business. If the funds are in the form of equity indicate what
rate of return the investor may expect. If the funds are to be borrowed indicate when they will be
repaid.

The Industry
You must indicate the present status and prospects for the industry in which the proposed
business will operate. Discuss any new products, new markets and customers, and any other
national regional or economic trends that could have an impact on your venture.

The Business
You need to briefly describe what sort of business you are in or intend to enter. Indicate
its name, how it is organized (Single/Sole Proprietorship, Partnership, Corporation) and its main
activities (retailing, service, manufacturing, wholesaling or combinations). Describes its location
and the layout of facilities. Be sure to relate anything of importance about your kind of business
that you have learned from people such as trade supplier, banks and other business people.

The Product or Service

You must describe exactly what you are going to sell. Indicate the primary end use of
your product or services as well as any important secondary uses. Emphasize those factors which
make your product or service unique or superior to that which is already on the market. Discuss
any opportunities for the expansion of your product line or the development of related products
or services. If the product, process or service requires any design or development before it is
ready to be placed on the market the nature and extent of the work should be fully documented.

The Market
The four basic steps in determining your market are:

1. Identify your customer profile

Who will be your customer? You can classify customers into groups having common
characteristics such as age, sex or geographical location. What are their buying motives price,
quality, service convenience or perhaps necessity?
 2. Determine the size of the total market

How much should they be spending on your product or service? How many potential
customers exist within your trading area? Can this market be expanded? Why?

3. Assess the competition

What have you learned of their operations? Who are your nearest competitors? Explain
why you think that you can capture a share of their business or keep them from capturing a share
of yours.

4. Estimate your sales

Estimate the sales that you expect to attain over the three years. Make sure your estimate line up
with facts. This information is critical to your financial forecast.

Marketing Strategy
You must explain your general marketing philosophy and strategy that develop from the
assessment of the market. It should identify your target market, show how you are going to
satisfy the market, indicate your pricing policy and explain the tactics for advertising and
promotion. Do not forget to keep track of your marketing costs because they go into the financial
forecast.

Management
If your business plan is to be used as financing proposal, this section is particularly
important, Venture capitalists and lenders invest as much in people as they do in particular
business propositions. For this reason you need to demonstrate the capabilities and capacity of
your management team and its advisers.
Outline the personal history of the principals and show how their work experiences
relates to the venture. State their duties and responsibilities and indicate the salaries they expect
to draw from the business. Be sure to list your advisers such as your solicitor, accountant,
insurance broker and banker.

Labor
You need to determine and documents your manpower needs now and over the coming
years. Will they be permanent or casual, fulltime or part-time? What skills are required and are
the people you need available? What will be the costs?

Financial Forecasts
Financial forecasts represent your best estimates of future operations. If the business
already exists, you must show its current financial position before proceeding to the forecasts. If
your business plan is also a financing proposal, you need to insert a statement showing the
application and the expected effect of the new funds.
The financial plan is concerned with two issues – liquidity and profitability. Liquidity
refers to the need for sufficient cash to pay your bills as they become due. Liquidity estimates are
based on projected cash receipts and disbursements – they are documented on the form of
forecasted cash flow statements. Profitability estimates are based on the sales estimates in your
market analysis and the expenses related to achieving those sales – they are documented in the
form of forecasted income statement or profit and loss statements. Financial forecast should be
shown monthly for the first year and quarterly for the succeeding two years.

Supporting exhibits
- Detailed resumes of principals
- Credit information
- Quotations or estimates
- Letters of intent from prospective customers
- Lease or buy/sell agreement
- Legal documents
- Census or demographic data
- Design plan or engineering specifications

TIPS IN PREPARING A GOOD BUSINESS PLAN

1. Prepare an objectively short plan
2. Explain thoroughly and honestly
3. Refer to a third person
4. Always consider pitfalls
5. Stick to one business
6. Emphasize the target customers
7. Keep the plan neat and logically organized
8. Capture the readers’ interest