CHAPTER 7

THE BUSINESS PLAN

Objectives:
1.Understand the importance of a business plan, and
2.prepare the business plan.

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What is the Business Plan?
A business plan is a written document, which described the proposed business
or project to be undertaken in a comprehensive manner. It also known as a
working paper, business proposal, project paper or prospectus.

Reason for preparing a Business Plan:

1. To allow the entrepreneur to view and evaluate the proposed business venture
in an objective, critical and practical manner.
2. To analyze and evaluate the viability of proposed venture.
3. To convince relevant parties of the investment potential of the project.
4. As a guideline for managing the business
5. To allocate business resources effectively.

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 WHO NEEDS A BUSINESS PLAN

1. The Entrepreneur
2. Investors
3. Financial Institutions
4. Suppliers
5. Customers
6. Company staff

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1. Entrepreneur
A business plan will enable the entrepreneur to fully
understand the proposed business. The entrepreneur can
determine in advance whether there is market for the
proposed products or services.

2. Investors
Investors will need to fully comprehend the proposed
venture before making any investment decision. Hence, the
presence of a Business Plan will assist potential investors in
analysing and evaluating the viability of a project.
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3. Financial Institutions
In approaching the financial institutions for loans or other
forms of financial assistance, the entrepreneur is often
required to explain the purpose of the financial
assistance, its proposed usage and how repayment will
be made through the intended business.
4. Suppliers
Credit given on purchase of materials from various
suppliers is another form of assistance that is vital for
business survival. Most credit is given when the
suppliers are convinced that both the business and the
entrepreneur are able to meet the required payment or
purchase.
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5. Customers
Many businesses rely on contracts and tenders put out by institutional
clients as their main source of business. For such businesses, the
Business Plan is essential s part of the tendering process to convince
the customer of the ability and capability of the business to fulfill the
requirements of the tendered job.

6. Company Staff
A business that wants to succeed needs the right kind of people
working for it. While all businesses have to complete for staff, small
businesses have an extra hurdle of trying to attract staff, especially
more qualified people. Potential employees have to be convinced of
the jobs and the growth potential of the company. The business plan
can be used to convince potential staff members of the attractiveness
of working for the business.
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 BUSINESS PLAN FORMAT

1. Cover letter
2. Tittle page
3. Table of contents
4. Executive summary
5. Main body of the Business Plan
6. Appendices 

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1. Cover Letter
The cover letter is often enclosed with the completed Business Plan as an introduction to
the purpose and contents of the attached plan.

2. Cover Page
The cover page of a Business Plan needs to present certain basic introductory information.
The basic items needed are:

Title of the Business Plan

Name of the business and business address
Name of the writer/s
Date of submission

3. Table of Contents
This page will list the main headings, tables schedules and appendices according to page
numbers. This will facilitate the reader in identifying the appropriate pages for easy
reference. 8
4. Executive Summary
The executive summary is contained early in the paper because it is essential in convincing and
motivating the reader to spend time going through the whole plans so as to fully understand to
proposed project and consequently support the purpose of the Business Plan.

5. Main Body of the Business Plan

It contains essential information related to the various aspects of the proposed venture
particularly the administrative, marketing, operation and financial plans.

6. Appendices
This section contains supporting documents that may be relevant to the proposed business
venture but cannot be effectively fitted into the main body of the business plan. Example of
supporting documents are:

Supplier’s quotation
Agreement letter
Letter of references
Research findings
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 MAIN BODY OF THE BUSINESS PLAN

The main body of business plan contains extensive information and forms the core of
the completed plan. This section is composed of the following sections:

1. Introduction
2. Purpose
3. Company background
4. Owner/Partners background
5. Location of the business
6. Administrative plan
7. Marketing plan
8. Operation plan
9. Financial plan
10. Conclusion 10
1. Introduction
This section gives an overall introduction to the
proposed business venture. Items that need to be
covered under this section include:

a. Name of the company

b. Nature of the business
c. Industry profile
d. Location of the business
e. Date of business commencement
f. Factors in selecting the proposed business
g. Future prospects of the business
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2. Purpose
Every Business Plan is prepared with a particular purpose in
mind and this purpose must be stated in a clear, concise and
coherent manner. For instance, if the Business Plan’s
purpose is to obtain a working capital loan for Maybank Bhd.,
for amount of RM50,000, then the purpose statement can be
stated as follows:

“This business plan is prepared by Suri Bery Bakery

Enterprise for the purpose of obtaining working capital loan
from Maybank Bhd., for the amount of RM50,000.”

On the other hand, if the Business Plan is prepared as a

guide for the entrepreneur to manage the business, the
purpose statement can be stated as:
“This business plan is prepared by Sinar Gemilang
Enterprise., as a guideline for managing the purpose
venture.”
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 VISION, MISSION AND
OBJECTIVES

 Vision –It Is The Long Term Goal Of The Organization

 E.G: To Be A Leading Higher Education Institution Of Choice (KPTM)

 Mission – It Is A Statement Of Purpose Of The Organization Come Into Being

 E.G: To Provide High Quality Teaching And Continuous Student And Employer
Satisfaction At Affordable Price 
 
 Objective – It Is The Short Term Goal Of The Organization
 ORGANIZATIONAL CHART
 It Is A Schematic Representation Of The Organizational
Structure
 It Shows:
 The Hierarchy
 Span Of Control
 Intra-relationship
 Division Of Jobs And Responsibilities
EXAMPLE:

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3. Company Background
This section will give details of the company background. The basic
information required include:

a. Name of the company

b. Business address
c. Correspondence address (include website/email address)
d. Telephone number
e. Form of business
f. main activity or activities
g. Date of commencement
h. Date of registration
I. Registration number
j. Name of bank
k. bank account number 16
4. Owner/Partners Background
The information here serves to highlight the owner’s business partners’
business credibility as well as their ability to manage the proposed business.

a. Name of owner/partners
b. Identity card number
c. Permanent address
d. Correspondence address
e. Telephone number
f. Date of birth
g. Age
h. Marital status
I. Academic qualification
j. Courses attended
k. Skills
l. Experience
m. Present occupation
n. Previous business experience 17
5. Location of the Business
The purpose of this section is provide additional information on the location of the project.
Such information should include:

a. Physical location of the project (e.g. whether it is located adjacent to the main road
and other designated premises)
b. Building (e.g. type, structure, condition, size and cost of the building)
c. Basic amenities (i.e. water, electricity, telephone lines)

6. Administrative Plan
The administrative of any business forms an important base from which the business routines
are maintained and controlled. More often than not, the administration section has to manage
the overall business objective and goals.

a. Introduction to the organization

One of the best way to introduce a business organization is to state its vision and
objectives.
b. Organization chart
An organization chart will shoe how a business is structured according to the
department and/or position in the company.
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C.
C. MANPOWER
MANPOWER PLANNING
PLANNING
THE
THE ADMINISTRATIVE
ADMINISTRATIVE PLAN
PLAN NEEDS
NEEDS TO
TO INCLUDE
INCLUDE AA LIST
LIST OF
OF ALL
ALL THE
THE STAFF
STAFF POSITION.
POSITION. IT
IT
IS
IS BEST
BEST TO
TO PRESENT
PRESENT THE
THE POSITIONS
POSITIONS AND
AND NUMBER
NUMBER OFOF PEOPLE
PEOPLE FOR
FOR EACH
EACH POSITION
POSITION IN
IN
TABLE
TABLE FORM
FORM TO
TO FACILITATE
FACILITATE EASIER
EASIER UNDERSTANDING
UNDERSTANDING
       

POST NO QUALIFICATION RESOURCES

       
GENERAL MANAGER 1 DEGREE PARTNERSHIP

       
OPERATION MANAGER 1 DEGREE PARTNERSHIP

       
ADMINISTRATION 1 DEGREE PARTNERSHIP
EXECUTIVE
       
MARKETING EXECUTIVE 1 DEGREE PARTNERSHIP

       
FINANICIAL EXECUTIVE 1 DEGREE PARTNERSHIP

       
OPERATIONAL STAFF 1 SPM/STPM OPERATION 19
DEPARTMENT
D.
D. SCHEDULE
SCHEDULE OFOF TASKS
TASKS AND
AND RESPONSIBILITY
RESPONSIBILITY
AA SCHEDULE
SCHEDULE OFOF TASKS
TASKS AND
AND RESPONSIBILITIES
RESPONSIBILITIES HAS
HAS TO
TO BE
BE CONSTRUCTED
CONSTRUCTED FOR
FOR EVERY
EVERY POST
POST
THAT
THAT ISIS AVAILABLE
AVAILABLE IN
IN THE
THE ORGANIZATION.
ORGANIZATION.

Designation Description
Organizes and manages business structure
and operation systematically.
General Manager -As a coordinator to all section in business to
achieve business target monthly or yearly.
-Make sure the company reputation maintain
stabilized and harmonized.
-Involves in internal and external decision-
making.
-To control the activities of the workers and
motivate them to worked efficiently and
effectively.
-Be a referent person in business.

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E.
E. SCHEDULE
SCHEDULE OF
OF REMUNERATION
REMUNERATION
THE
THE ADMINISTRATIVE
ADMINISTRATIVE PLAN
PLAN HAS
HAS TO
TO INCLUDE
INCLUDE THE
THE REMUNERATION
REMUNERATION SCHEDULE
SCHEDULE THAT
THAT
LISTS
LISTS THE
THE SALARY
SALARY AND
AND WAGE
WAGE STRUCTURE
STRUCTURE FOR
FOR EACH
EACH POSITION.
POSITION.
POSITION NO OF SALARY EPF SOCSO TOTAL
WORKER (RM) 13% 2% (RM)
 

           
General 1 RM1800.00 RM234.00 RM36.00 RM2170.00
Manager  

           
Marketing 1 RM1300.00 RM169.00 RM26.00 RM1595.00
Executive

           
Administration 1 RM1300.00 RM169.00 RM26.00 RM1595.00
Executive

           
Financial 1 RM1300.00 RM169.00 RM26.00 RM1595.00
Executive

           
Operational 1 RM1300.00 RM169.00 RM26.00 RM1595.00
Executive 21
F.
F. LIST
LIST OF
OF OFFICE
OFFICE EQUIPMENT
EQUIPMENT
AA LIST
LIST OF
OF OFFICE
OFFICE FURNITURE
FURNITURE AND
AND EQUIPMENT
EQUIPMENT IS
IS NECESSARY
NECESSARY TO
TO FACILITATE
FACILITATE
LAYOUT
LAYOUT PLANNING
PLANNING AND
AND BUDGET
BUDGET CONSIDERATION.
CONSIDERATION.
NO ITEMS QUANTITY PRICE TOTAL

  WRITING TABLE 5 RM270 RM1350

1
  CHAIRS (MANAGER) 1 RM90 RM90
2
  CHAIRS (STAFF) 4 RM45 RM180
3
  CABINET FILES 1 RM200 RM200
4
  AIR CONDITIONER 2 RM1500 RM3000
5
  SOFA SET 1 RM399 RM399
6
KETTLE 1 RM45 RM45
7
  TELEPHONE 4 RM30 RM120
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  TOTAL 19 RM2579.00 RM5384 22
 

PEN2153 ENTREPRENEURSHIP
g. Administration Budget
In order to facilitate the overall financial planning of the business, all costs under every
section of the business plan need to be summarized under the relevant section. The cost
structure of a business can be divided into three main categories: Fixed Assets, Monthly
Expenses and Other Expenses.

Fixed Assets
Refer to the investment made in the purchase of assets that will be used in the organization
for a period of more than one year. The key items include under fixed assets include the
purchase of furniture and fittings, purchase of business premises/ or any renovation of the
premises.
Monthly Expenses
Refer to the payments that have to be made every month as part of maintaining the business
existence. The main expenses include remuneration and contributions for business
personnel, monthly payment for utilities (i.e. electricity, water and telephone), business
premises rental and office suppliers.
Other Expenses
refer to the expenses that do not fall into the above two categories. These items are often
expenses incurred once a year or on a periodic basis. Examples of these include vehicle
road tax and insurance, business registration fees, deposits for utilities, deposits for rental
and legal fees.
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 NO ITEMS CAPITAL EXPENSES MONTHLY EXPENSES OTHER EXPENSES

    (RM) (RM) (RM)

1. FURNITURE RM5384.00    
2. STATIONARY   RM150.00  
3. SALARY   RM7000.00  
4. EPF   RM910.00  
5. SOCSO   RM140.00  
6. DEPOSIT:RENTAL     RM4000.00
7. ELECTRICITY     RM300.00
8. WATER     RM300.00
9. TELEPHONE     RM200.00
10. INSURANCE   RM335.00  
11. COMPUTER RM6000.00    
12. FAX MACHINE RM1200.00    
13. PRINTER RM400.00    
14. RENOVATION RM5000.00    
15. RENTAL   RM2000.00  
16. TELEPHONE   RM400.00  
17. WATER   RM150.00  
18. ELECTRICITY   RM500.00  
19. LICENSE FEE     RM50.00
20. BUSINESS REGISTRATION FEE     RM70.00
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  TOTAL RM17984.00 RM11785.00 RM4920.00
 7.     The Marketing Plan
The success of a business venture depends very much on the ability of that
business to offer the product(s) or service(s) that is demanded by the target
market. In order to meet customer demand, the product or service must
fulfilled the needs and wants of that customer group. Among the items that
have to be discussed in the Marketing Plan are:
i. Product and service description
ii. Target market
iii. Market size
iv. Competition
v. Market share
vi. Sales forecast
vii. Marketing strategies
viii. The marketing budget
(will be discuss further…)
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8. Operation Plan
The Operation Plan also has its basic components. The items that have to be
discussed include:
i. Process flow chart
ii. Production schedule
iii. Material requirement
iv. Manpower requirements
v. Machine and equipment
vi. Operation layout plan
vii. Location
viii. Operation overheads
ix. Operation budget
(will be discuss further..)
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9. Financial Plan
The financial plan acts as a point where all the financial information in the administrative,
marketing, and operation plans are collated and summarized to give a picture of how much
the business will cost to run. All this information is needed to:
a.prepare the project implementation cost
b.plan the sources of funds
c. Plan and view the business cash situation through the preparation of the Proforma
Cash flow
d.plan and view the business profit/loss through the Preparation of the Proforma Profit
and loss
e.Plan and view the overall financial standing of the business at the end of the accounting
period through the preparation of the Proforma balance Sheet.

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The following need to be prepared as part of the Financial Plan:
a. Project implementation cost schedule
b. Source of fund schedule
c.Fixed Assets depreciations tables
d. Loan amortization schedule (if relevant)
e. Hire purchase repayment schedule (if relevant)
f. Proforma cash flow
g. Proforma profit and loss
h. Proforma balance sheet
(Will be discuss further..)
10. The Conclusion
The conclusion section end the Business Plan by giving a brief summary of the main
contents, the main purpose of the Business Plan and other related point to bring the
total plan to a close.
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THE END

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