What is a Business Plan?

- Is a document that describes the various external and internal elements involved in starting a business or
in expanding an existing venture.
- It integrates the different functional plans such as marketing, manufacturing, finance , and human
resource management.
Why Write a Business Plan?
- Business plans are important because of the following reasons:
a. It helps determine whether a proposed or existing venture is
viable given its target market.
b. It guides the entrepreneur in mobilizing the resources needed
by the business.
c. It serves as a tool in helping get financing for the business.

Who Reads It?

- The Business plan may be read by different people, including employees, suppliers,
customers, bankers, and potential investors.
 Table 1.1. Value of the Business Plan to Selected Users
Users of the Business Plan Why the Business Plan is Important to This User
Entrepreneur • serves as a road map for managing the
business
• identifies the resources needed to operate
and grow the business
• allows the entrepreneur to anticipate
potential business risks

Lender • allows the lender to assess whether the

entrepreneur will be able to meet debt and
interest payments
• provides information about collateral or
tangible assets that can be secured for the
loan

Investor • allows the investor to gauge whether

projected returns are acceptable
• provides information about the character of
the entrepreneur and about the capability of
 Table 1.2. Information Needs for Major Sections of the Business Plan
Market Information Needs Operations Information Needs Financial Information Needs
• General environmental trends • Location • Rental rates
• Specific industry trends • Manufacturing or service • Cost of equipment
operations
• Local market conditions • Equipment and/or furniture • Cost of utilities (e.g., water,
required electricity)
• Market potential • Space requirements • Personnel costs
• Demographic and/or • Labor requirements • Distribution costs
psychographic profile of target • Raw materials needed and • Cost of insurance
market potential suppliers • Registration and license fees
• Utilities
 Table 1.2. Information Needs for Major Sections of the Business Plan
Market Information Needs Operations Information Needs Financial Information Needs
• General environmental • Location • Rental rates
trends • Manufacturing or service • Cost of equipment
• Specific industry trends operations • Cost of utilities (e.g.,
• Local market conditions • Equipment and/or water, electricity)
• Market potential (e.g., furniture required • Personnel costs
market size, untapped or • Space requirements • Distribution costs
underserved markets) • Labor requirements • Cost of insurance
• Demographic and/or • Raw materials needed • Registration and license
psychographic profile of and potential suppliers fees
target market • Utilities (e.g., water and
energy requirements)
Market Information
- A critical piece of information for any aspiring entrepreneur is the potential market for his product or
service.
- It is important for the entrepreneur to gather information about the general business environment and
about the industry in particular because these could affect, directly or indirectly, the demand for the
product or service.
 Information About Operations
- Whether the business venture will be viable also
depends largely on the cost of sourcing and
manufacturing the product or of providing the service.
 Location
 Service operations
 Equipment and/or furniture required
 Space Requirements
 Labor Requirements
 Raw materials needed and potential suppliers
 Utilities
Financial Information
- The financial section of the business plan will require
the entrepreneur to include a list of all sources of
revenue and a list of all possible expenditures for the
first year of operations.
Table 1.3. Typical Content of Major Sections of the Business Plan
Table 1.3. Typical Content of Major Sections of the Business Plan
Table 1.3. Typical Content of Major Sections of the Business Plan