BUSINESS PLANNING

Lecture 1
Introduction

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 Definition of a business plan
• A business plan is a written document prepared by
the entrepreneur that describes all the relevant
external and internal elements involved in starting a
new venture.
• It is often an integration of the functional plans such
as marketing, finance, manufacturing, and human
resources

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 Definition continued
• A business plan is a written document that
describes in detail how a business—usually
a startup—defines its objectives and how it is to go
about achieving its goals.
• A business plan lays out a written roadmap for the
firm from marketing, financial, and operational
standpoints.

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 The business plan seeks to answer the
following questions:
• Where am I now?
• Where am I going?
• How will I get there?
Potential suppliers, financiers, customers, and
investor always require to read through ones
business plan before engagement.

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 External factors affecting the planning
• These external factors are basically uncontrollable
by the entrepreneur but he must plan for them.
• Such factors include but are not limited to new
regulations, the economy, competition, social
changes, changes in consumer needs, or new
technology, weather changes, political dynamics,
etc.

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 Why document a business plan?
• Business plans are important documents used for
the external audience as well as the internal
audience of the company.
• For instance, a business plan is used to attract
investment before a company has established a
proven track record or to secure lending.
• They are also a good way for companies' executive
teams to be on the same page about strategic
action items and to keep themselves on target
towards the set goals.
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 Why document cont’d

• Operating without a business plan is not usually a

good idea. In fact, very few companies are able to
last very long without one.
• There are definitely more benefits to creating and
sticking to a good business plan—including being
able to think through ideas without putting too
much money into them and, ultimately, losing in
the end.

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 Elements of a business plan
• A good business plan should outline all the projected
costs and possible pitfalls of each decision a company
makes.
• Business plans, even among competitors in the same
industry, are rarely identical. But they all tend to have
the same basic elements, including an executive
summary of the business and a detailed description of
the business, its services, and its products. It also states
how the business intends to achieve its goals.
• The plan should include at least an overview of the
industry of which the business will be a part, and how it
will distinguish itself from its potential competitors.
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 Elements of a Business Plan

• The length of the business plan varies greatly from

business-to-business. All of the information should
fit into a 15- to 20-page document. If there are
crucial elements of the business plan that take up a
lot of space—such as applications for patents—they
should be referenced in the main plan and included
as appendices.

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 Elements
• Executive summary: This section outlines the company and
includes the mission statement along with any information
about the company's leadership, employees, operations, and
location.
• Products and services: Here, the company can outline the
products and services it will offer, and may also include
pricing, product lifespan, and benefits to the consumer.
• Other factors that may go into this section include
production and manufacturing processes, any patents the
company may have, as well as proprietary technology. Any
information about research and development (R&D) can also
be included here.
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 Elements cont’d
• Market analysis: A firm needs a good handle on the
industry as well as its target market. It will outline
who the competition is and how it factors in the
industry, along with its strengths and weaknesses. It
will also describe the expected consumer demand
for what the business is selling and how easy or
difficult it may be to grab market share from
incumbents.

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 Elements cont’d
• Marketing strategy: This area describes how the
company will attract and keep its customer base
and how it intends to reach the consumer.
• This means a clear distribution channel must be
outlined.
• It will also spell out advertising and marketing
campaign plans and through what types of media
those campaigns will exist on.

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 Elements cont’d
• Financial planning: In order to attract the party reading
the business plan, the company should include
its financial planning and future projections. Financial
statements, balance sheets, and other financial
information may be included for already-established
businesses. New businesses will instead include targets
and estimates for the first few years of the business
and any potential investors.
• Budget: Any good company needs to have a budget in
place. This includes costs related to staffing,
development, manufacturing, marketing, and any other
expenses related to the business.
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 Types of business plans
• Start up plan
• Strategic plan
• Feasibility plan
• Operations plan
• Expansion plan
• What if plan
• One page plan

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 Start up plan

• A startup plan is a business plan a new company

gives to potential investors in the hopes of receiving
startup funding.
• Startup plans operate as initial plans that
businesses can adjust as needed as a company
grows.

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 Start up cont’d
• A comprehensive plan will include the following information:
• Executive summary
• Overview of the company
• Management background
• What service or product the company provides
• Value proposition
• Strategic marketing plan
• Market evaluations
• Projected startup costs
• Cash flow projections and income and profit expectations
• Within the financial section, a business also needs to explain
the exit strategy for investors and how specifically the
company
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plans to use investor money. 16
 3 course work assignment
rd

• The Dean of Students office has assigned our class a

piece of land to start up a business venture. There
are 4 business investment ideas:
• 1. A fruit shop
• 2. A piggery
• 3. A nursery school
• 4 A savings scheme
• In groups, let each group choose one enterprise and
write a business plan
• Submission: 10th week of the semester.
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 Strategic plan
• A strategic business plan details the strategies a
company will use to achieve its overall goals. Most
strategic plans include five main components:
• Company mission statement
• Company vision
• Key factors for company success
• Strategies to meet goals
• Implementation deadline
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• Strategic plans are usually for internal purposes only as a
foundational plan for an entire organization. When creating this
type of plan, management needs to assess the strengths of the
company and indicate areas that can improve by using a SWOT
analysis. A SWOT analysis stands for Strengths, Weaknesses,
Opportunities and Threats and gives organizations a greater
awareness of factors that affect business decisions. By performing a
SWOT analysis management can determine which strategies are
best to implement to leverage its strengths, choose the right
opportunities and overcome potential challenges uncovered by the
evaluation.
• The deadline implementation portion of the strategic plan outlines
how the chosen strategies move the company toward its defined
milestones. This may include guidelines for allocating resources and
key dates for completing various objectives.

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 Feasibility plan
• A feasibility plan is written when a company is
seeking a new business venture such as
producing a new product in an existing market
or selling current products to a new market.
• This plan type details what market will want
to buy the product or service and if that new
venture will result in a profit worthwhile to
the company.
•

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• Feasibility business plans normally only
include information about how well a product
will sell or if the proposed market exists and
will provide a high return on investments.
• This type of plan may require market research
in the form of crowd-funding or product-
testing to determine a product's viability in
the marketplace.

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 Operations plan
• An operations plan, also called an annual plan,
focuses on mapping out the day to day
operational activities a business needs to
complete to achieve tactical goals and is part
of strategic planning. This plan type details the
responsibilities of management, departments
and employees and how they contribute to
the company's overall success

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• . Operations plans also cover:
• Organization objectives
• Activities required to complete objectives
• Resources needed for activities
• Staffing requirements
• Implementation deadlines
• Progress tracking processes
• Operations plans are also used to justify an
increase in operating budgets, normally
requested on an annual basis.
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 Expansion plan
• An expansion or growth plan is used when a company
is looking to grow and the development requires
greater resources like a financial investment, materials
for new products and an increased number of
employees. Businesses can create growth plans for
external or internal reasons and include different
information.
• External growth plans are written when expansion
requires the assistance of outside investors. These
plans include as much detail about the company as
possible for investors to decide on financing the
company's development

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• . Details needed in an external growth plan are
lengthy. Some details required include:
• Full company description
• Thorough details about services or products
• Background on the management team
• Detailed financial projections
• Data and full analysis of market research
• Funding request
• Notable company achievements
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• External growth plans are written with the assumption
that a bank or investor has little to no information
about the company, so they normally include
everything a standard business plan does with more in-
depth details like a startup plan to cover as much as
possible.
• Internal growth plans are written when company
growth is funded from the business's own revenue.
This plan needs to include estimated expenses and
projected sales but does not need to go into details
regarding the company or product.

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 What if plan
• This type of plan is crafted when a business is
seeking financing, considering an acquisition or
contemplating another possibly risky move and
needs to have a plan for a worst-case scenario in
case they encounter less than ideal circumstances.
• A what-if plan is less formal than others and serves
more as an alternative to the original business plan.

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 What if cont’d
• For example, if a business needs financing they
would likely have a very detailed growth plan for
potential investors to review, but would also have a
contingency plan that takes into account the least
ideal situation their business may endeavor, like a
huge loss in market share, and how they would
proactively and strategically react to avoid a crisis.

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 What if cont’d
• What-if business plans also help management
considering the potential effects of making large
business decisions like expanding its workforce,
raising product prices or choosing to merge with
another company.

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 One page plan
• A one-page plan highlights the most important
parts of a lean plan, summarizing a business, and is
used to brief potential investors and partners about
the basic details of the company.
• This plan explains the company's product or service,
who the target market is and includes a sales
forecast.
• It also includes a company description spotlighting
the company's values and mission. This is also
known as a business pitch.
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 Components of a Business plan
• The most important parts of a business plan
include:
• Executive summary
• Business description
• Market analysis and strategy
• Marketing and sales plan
• Competitive analysis
• Management and organization description
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 Components of a Business plan
• Products and services description
• Operating plan
• Financial projection and needs
• Exhibits and appendices

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 1. Executive summary

• The executive summary is the first and one of the

most critical parts of a business plan.
• This summary provides an overview of the business
plan as a whole and highlights what the business
plan will cover.
• It's often best to write the executive summary last
so that you have a complete understanding of your
plan and can effectively summarize it.

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 Executive summary cont’d
• Your executive summary should include your
organization's mission statement and the products
and services you plan to offer or currently offer.
• You may also want to include why you are starting
the company if the business plan is for a new
organization.

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 2. Business description
• The next part of a business plan is the business
description.
• This component provides a comprehensive
description of your business and its goals, products,
services and target customer base.
• You should also include details regarding the
industry your company will serve, and any trends
and major competitors within the industry. Also
include you and your team's experience in the
industry and the competitive advantage you have..
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 3. Market analysis and strategy
• The purpose of the market analysis and strategy
component of a business plan is to research and
identify a company's primary target audience and
where to find this audience.
• Factors to cover in this section include:
• Where your target market is geographically located

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 Market analysis and strategy cont’d
• The primary pain points experienced by your target
customers
• The most prominent needs of your target market
and how your products or services can meet these
needs
• The demographics of your target audience
• Where your target market spends most of their
time, such as particular social media platforms and
physical locations
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 Market analysis and strategy cont’d
• The goal of this section is to clearly define your
target audience so that you can make strategic
estimations as to how your product or service will
perform with this audience.

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 4. Marketing and sales plan
• This part of your business plan should cover the
specifics of how you plan to market and sell your
products and services.
• This section should include:
• Your anticipated marketing and promotion
strategies
• Pricing plans for your company's products and
services
• Your strategies for making sales
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 Marketing and sales plan
• Why your target audience should purchase from
your company versus your competition
• Your organization's unique selling proposal
• How you will get your products and services in front
of your target audience

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 5. Competitive analysis

• Your business plan should also include a detailed

competitive analysis that clearly outlines a
comparison of your organization to your
competitors.
• Outline your competitors' weaknesses and
strengths and how you anticipate your company to
compare to these.
• This section should also include any advantages
your competition has in the marketplace and how
you plan to set your company apart.
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• You should also cover what makes your
business different than other companies in
the industry, as well as any potential issues
you may face when entering the marketplace
if applicable.

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 6. Management and organization
description
• This section of your business plan should
cover the details of your business's
management and organization strategy.
Introduce your company leaders and their
qualifications and responsibilities within your
business. You can also include human
resources requirements and the legal
structure of your company.

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 7. Products and services description
• Use this section to further expand on the details of
the products and services your company offers that
you covered in the executive summary.
• Include all relevant information about your
products and services such as how you will
manufacture them, how long they will last, what
needs they will meet and how much it will cost to
create them.

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 8. Operating plan

• This part of your business plan should describe how

you plan to run your company.
• Include information regarding how and where your
company will operate, how many employees it will
have and all other pertinent details related to your
organization's operations.

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 9. Financial projection and needs

• The financial section of your business plan should

detail how you anticipate bringing in revenue and
the funding you'll need to get started. You should
include your financial statements, an analysis of
these statements and a cash flow projection.

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 10. Exhibits and appendices

• The final section of your business plan should

include any extra information to further support the
details outlined in your plan.
• You can also include exhibits and appendices to
support the viability of your business plan and give
investors a clear understanding of the research that
backs your plan.
• END

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