Lecture 2

Business Planning
 Key questions in Business Planning
• Who should plan
• What to Plan
• Why Plan
• When to plan
• How to plan
 Who should plan

• All those who stand to benefit from business

activities.
• The owner needs profits and wealth creation
so he must spearhead the planning activity.
• For an already operational business the
workers should plan their daily operations to
ensure systematic operation
• (What would happen if they did not plan?
 What should be planned
• Type of business to be operated
• The resources required for setting up the business
• The skills that would be used to avail goods and services
• The technology that would be used to ensure the quality of
production
• The HR that would be needed to operate the business activities
• The customers who would buy the goods/services (Market and
marketing planning)
• Where
• When
• At how much
• How to deliver
• Distribution channels
• Popularization mode
 Why Plan

• Business is an entity whose authenticity depend or recorded

sequence of events
• Resources are always scarce
• Reduce failure risks
• Make mistakes on paper
• Map resources and their potential sources
• Ensure availability of needs in the market for product /service
• Identify customer needs and buying behavior
• Allow for consultation with experts
• Establish reliable sources of capital investments in the
business and the working capital
• File a verifiable document for tracking your business activities
 When to plan

• Four types of planning

• Operational planning (Daily)
• Short term covering short period of time
• Medium term planning
• Strategic management planning
• Note strategic management plans are always
accompanied with contingency plans which
answer the question (what if?)
 How to plan

• Business planning varies from simple to

complex depending on its purpose (the kind of
decisions the plan aims at addressing; timing
and magnitude.
• In a nutshell, a business planning is a practice
in due diligence for setting operations right.
 What a business Plan is
• A business plan is a document that summarizes the operational
and financial objectives of a business.
• It is a business's road map to success with detailed plans and
budgets that show how the objectives will be realized.
• A business plan is a guide for how a company will achieve its
goals.
• For anyone starting a business, crafting a business plan is a vital
first step. Having these concrete milestones will help track the
business's success (or lack thereof).
• There are different business plans for different purposes, and the
best business plans are living documents that respond to real-
world factors as quickly as possible.
• When it's done well, it will prevent entrepreneurs from wasting
time and money on a venture that won't work.
 Meaning of Business Plan Cont
• A business plan is a formal statement of business goals,
reasons why they are attainable, and plans for reaching
them.
• It may also contain background information about the
organization or team attempting to reach those goals.
• It is often an integration of all functional plans such as
marketing, finance, manufacturing and human resources.
• A written document that describes in detail how a new
business is going to achieve its goals.
• A business plan will lay out a written plan from a
marketing, financial and operational viewpoint.
 OBJECTIVES OF BUSINESS PLAN

• To objectively evaluate the prospects of business.

• To monitor the progress after implementing the plan.
• To persuade others to join the business.
• To visualize the concept in terms of
– marker availability
– organizational
– operational and
– financial feasibility
• To seek loans from financial institutions
• To identify the strengths and weakness of the plan
 
 When do you need a Business Plan
• Business Planning is continual activity
• Pre-start-up deals with resource planning operation
planning for launch.
• Existing business require operation planning for
growth and diversification
• Business in expansion require expansion plan both
in production and HRM as well as technological
planning
• Management need planning particularly in family
owned businesses
 Business Planning Process is analytical

• Clearly define the goals of the company to meet

the future requirements .
• You can analyze the market
• Understand the needs gap for your intended
product/service (market size)
• Understand different trends.
• Understand competition existing in your
intended market (Weak/ strong).
• Articulate your competitive advantage
 Develop Operational planning template

• Remember that all plans have a cost focus

• All objectives driving business activity must be smart
» S-SPECIFIC
» M-MEASURABLE
A- ATTAINABLE
» R-REALISTIC
» T- TIME-RFAMED

• Use operational planning projection to make a projected

financial budget
• Be clear of required resources and project the sources of
the same.
• Project your implementation operation plan with projected
targets at each trading season
 Planning cont..
• Project a balance sheet of the total liabilities and
fixed assets.
• Prepare and share operation plan with would be and
actual shareholders of the business (employees
/family members
• Structure the capacity requirements for the business
to facilitate training/ training material
• Build proper guidelines for attaining the business
targets more efficiently (Cost/Benefit analysis).
 
 Business Beacons

• Set focus on (Visions, Targets, Agenda, business)

• Agenda is usually for a shareholder meeting or board
meeting
• Purpose is agree on name (for new business)/usually
carries implication for product/service
• To agree on , product/product portfolio where the
organization introduce portfolio of products it holds along
with its features and value proposition, company vision,
mission and goal statement.
• Synchronize operational plans and timelines for
projecting management , team, and their credentials/roles
• Financial profile for providing financial highlights in the
form of graphs and charts /figures
 Dynamics of Business Planning?

• Business Planning Isn't Just for Startups

• It takes place when the key stakeholders in a business sit
down and flesh out all the goals, strategies, and actions that
they envision taking to ensure the business’s survival,
prosperity, and growth.
• To introduce new strategies /ways which it can benefit
/enhance success of the business.
• Anytime upper management comes together to plan for the
success of a business, it is a form of business planning.
• Business planning commonly involves collecting ideas in a
formal business plan that outlines a summary of the business's
current state, as well as the state of the broader market, along
with detailed steps the business will take to improve
performance in the coming period.
 How Does Business Planning Work?

• Every new business needs a business plan-a blueprint

of how you will develop your new business, backed
by research, that demonstrates how the business idea
is viable.
• If your new business idea requires investment capital,
you will have a better chance of obtaining debt or 
equity financing from financial institutions, 
angel investors, or venture capitalists if you have a
solid business plan to back up your ideas.
• Businesses should prepare a business plan, even if
they don't need to attract investors or secure loans.
• Business plans aren't just about money.
• The business plan outlines the general
planning needed to start and run a successful
business, and that includes profits, but it also
goes beyond that.
• A plan should account for everything from 
scoping out the competition and figuring out
how your new business will fit into the
industry to assessing employee morale and
planning for how to retain talent.
 Post-Startup Business Planning
• The business plan isn’t a set-it-and-forget-it
planning exercise.
• It should be a living document that is updated
throughout the life cycle of your business.
• Once the business has officially started, business
planning will shift to setting and meeting goals and
targets.
• Business planning is most effective when it’s done
on a consistent schedule that revisits existing goals
and projects throughout the year, perhaps even
monthly.
• In addition to reviewing short-term goals
throughout the year, it's also important to
establish a clear vision and lay the path for
your long-term success.
• Daily business planning is an incredibly
effective way for individuals to focus on
achieving both their own goals and the goals
of the organization.
 Sales Forecasting

• The sales forecast is a key section of the business

plan that needs to be constantly tracked and updated.
• The sales forecast is an estimate of the sales of goods
and services your business is likely to achieve over
the forecasted period, along with the estimated profit
from those sales.
• The forecast should take into account trends in your
industry, the general economy, and the projected
needs of your primary customers.
 Business Contingency Planning

• In addition to business planning for profit and growth, your

business should have a contingency plan.
• Contingency business planning (also known as 
business continuity planning or disaster planning) is the type of
business planning that deals with crises and worst-case scenarios.
• A business contingency plan helps businesses deal with sudden
emergencies, unexpected events, and new information that could
disrupt your business.
• The goals of a contingency plan are to:
• Provide for the safety and security of yourself, your employees, and
your customers in the event of a fire, flood, robbery, data breach,
illness, or some other disaster
• Ensure that your business can resume operations after an emergency
as quickly as possible
 Business Succession Planning

• If your business is a family enterprise or you

have specific plans for who you want to take
over in the event of your retirement or illness,
then you should have a plan in place to 
hand over control of the business.
• The issues of management, ownership, and
taxes can cause a great deal of discord within
families unless a succession plan is in place
that clearly outlines the process.
 Key Takeaways

• Business planning is when key stakeholders

review the state of their business and plan for
how they will improve the business in the future.
• Business planning isn't a one-off event-it should
be an ongoing practice of self-assessment and
planning.
• Business planning isn't just about improving
sales; it can also address safety during natural
disasters or the transfer of power after an owner
retires.
 How Does a Business Plan Work?
• If you have an idea for starting a new venture, a business
plan can help you determine if your business idea is viable.
• There's no point in starting a business if there is little or no
chance that the business will be profitable, and a business
plan helps to figure out your chances of success.
• In many cases, people starting new businesses don't have
the money they need to start the business they want to start.
• If start-up financing is required, you must have an investor-
ready business plan to show potential investors that
demonstrates how the proposed business will be profitable.
• Since the business plan contains detailed financial
projections, forecasts about your business's performance,
and a marketing plan, it's an incredibly useful tool for 
everyday business planning. To be as effective as
possible, it should be reviewed regularly and updated as
required.
• Business owners have leeway when crafting their
business plan outline.
• They can be short or long, and they can include whatever
detail you think will be useful.
• There are basic templates you can work from, and you'll
likely notice some common elements if you look up 
examples of business plans.
 A-Market Analysis
• The market analysis will reveal whether there is sufficient
demand for your product or service in your target market.
• If the market is already saturated, your business model
will need to be changed (or scrapped).
• B-Competitive Analysis
• The competitive analysis will examine the 
strengths and weaknesses of the competition and help
direct your strategy for garnering a share of the market in
your marketing plan.
• If the existing market is dominated by established
competitors, for instance, you will have to come up with
a marketing plan to lure customers from the competition
(lower prices, better service, etc.).
• C-Management Plan
• The management plan outlines your business
structure, management, and staffing
requirements.
• If your business requires specific employee
and management expertise, you will need a
strategy for finding and hiring qualified staff
 and retaining them.
 Special Areas of Business Plan
• D-Operating Plan
• The operating plan describes your facilities,
equipment, inventory, and supply requirements. 
Business location and accessibility are critical
for many businesses. If this is the case for your
business, you will need to scout potential sites.
• If your proposed business requires parts or raw
materials to produce goods to be sold to
customers, you will need to investigate potential 
supply chains.
• E-Financial Plan
• The financial plan is the determining factor as to whether
your proposed business idea is likely to be a success.
• If financing is required, your financial plan will
determine how likely you are to obtain start-up funding in
the form of equity or debt financing from banks, 
angel investors, or venture capitalists.
• You can have a great idea for a business, along with
excellent marketing, management, and operational plans,
but if the financial plan shows that the business will not
be profitable enough, then the business model is not
viable and there's no point in starting that venture
 Business Plan vs. Investment Proposal

• Business Plan • Investment Proposal

• Internal document • External document
• Guides decision-making • Attempts to convince
within the business those outside the
company to invest in the
business
 Business Plan vs. Investment Proposal
• A business plan is similar to an investment proposal. In
fact, investment proposals are sometimes called 
investor-ready business plans.
• Generally speaking, they both have the same contents.
You can think of an investment proposal as a business
plan with a different audience.
• The business plan is largely an internal document,
intended to guide the decisions of executives,
managers, and employees.
• The investment proposal, on the other hand, is
designed to be presented to external agencies.
 Key Takeaways

• A business plan is a detailed road map that

explains what the company's goals are and
how it will achieve them.
• The exact details of a business plan will
depend on the intended audience and the
nature of the business.
• It's a good idea to regularly revisit your
business plan so you know it's as accurate,
realistic, and detailed as possible.
 Business Planning & Strategy

• Why Does a Business Need a Business Plan?

• Planning is needed to grow or start a business.
• The main source of planning for a company is the business
plan.
• A business plan is a document that details the strategy of
business owners on how they intend to run their business.
• There are several objectives that should be covered in a
business plan from what the company's goals are to how many
employees are going to be hired.
• Business plans provide a road map for where the owners want
to take their businesses.
• It is also necessary to have if owners want to secure financing.
 Summary
• What is business planning?
• Planning is a fundamental cognitive skill that forms part of our
executive functions.
• Planning can be defined as ability to "think about the future" or
mentally anticipate the right way to carry-out a task or reach a
specific goal.
• Planning is the mental process that allows us to choose the
necessary actions to reach a goal, decide the right order, assign each
task to the proper cognitive resources, and establish a plan of action.
• Even though everyone has the ability to plan, some people do it in a
different way.
• In order to plan efficiently, you need the necessary information, but
you also need to be able to mentally establish an adequate synthesis
of all the data.
 Characteristics of People with poor planning capability

• Those have Difficulty when making decisions

• Those who anticipating the consequences of
their actions
• Those who are unable to correctly calculate the
time it will take to do a determined task
• Those who have trouble prioritizing and
deciding the importance of steps in a task
• People who are easily distracted and forgetful
• Those with low productivity or creativity
• Those who may do tasks quickly and
carelessly, or slowly and incomplete
• Those who have difficulties thinking or doing
more than one thing at a time
• Individuals who have a hard time with
surprises or unexpected problems
• People who take longer than others to change
from one activity to another
 Business Biblical Perspectives
• Genesis: 1:28- God places the human being above all other
creatures and instructs him to take dominion of natural resources
of the earth, water and air.
• Exodus: 20.9- six days you may labour and do all your work
• Proverbs: 19:15- laziness plunges a man into deep sleep and
sluggard must go hungry
• 6:6-11- go to the aunt O sluggard study her ways and learn
wisdom…
• 10:4- the slack hand impoverishes but the hand of the diligent
enriches
• 12:11- he who tills his own land has food in plenty but he who
follows idle pursuits is a fool
• 13:4- the soul of the sluggard craves in vain but the diligent soul
is amply satisfied
06/29/2022
• 20:13-love not sleep lest you be reduced to poverty eyes
wide open mean abundant food.
• 22;29-You see a man skilled at his work? he will stand in
the presence of kings, he will not stand in the presence of
obscure
• Ecc:11:1-2 – cast your bread upon the waters, after a long
time you may find it again. Make 7-8 portions you know
not what misfortunes may come upon the earth.
• Mathew25:26- his master said to him in reply, you wicked
lazy servant, so you knew that I harvest where I did not
plant and gather where I did not scatter?
• Titus 3:14- But let our people too learn to devote
themselves to good work to supply urgent needs so that
they may not be unproductive
 Lecture assignment
• In business planning which one do you think is
the most important element for success
between
• Money
• Customer
• Business owner