BUSINESS

PLANNING
PROCESS
 OBJECTIVES OF A BUSINESS PLAN
• Direction to the vision.
• Monitor the progress after implementing the
plan.
• Guide the entrepreneur in the actual
implementation.
• Identify resources that would require to
implement the plan.
• Seek loans from financial institutions.
• Persuade others to join the business.
SCOPE AND VALUE OF BUSINESS PLAN

• It helps to determine the viability of the

venture in a designated market.
• It provides guidance to the entrepreneur in
organizing his or her planning activities.
• It serves as an important tool in helping to
obtain financing.
 BUSINESS PLAN
Steps Involved
(1) Primary Assessment
(2) Business Planning Process
(i) Idea Generation (eg: boat)

(ii) Environmental Scanning (eg: paperboat)

(iii) Feasibility Analysis

(a) Market Analysis
(b) Technical Analysis
(c) Financial Analysis

(iv) Drawing Functional Plans

(d) Marketing Plan
(e) Production Plan
(f) HR plan
 FEASIBILITY STUDY
Areas of Feasibility study
(1) Technical Feasibility
(2) Market Feasibility
(3) Financial Feasibility
(4) Managerial Feasibility
 PROJECT APPRAISAL
Economic Aspects
(a) Increased output.
(b) Increased employment.
(c) Higher earnings.
(d) Higher standard of living.
Organizational Aspects
Managerial Aspects
 PROJECT APPRAISAL

Technical Aspects
(a) Location
(b) Site
(c) Size of the Plant/Scale of operation
(d) Technological feasibility
Financial Aspects
(a) Cost analysis, pricing.
(b) Financing, income and expenditure
Market/Commercial Aspects
(a) Planning, organizing, control, implementation of
marketing process.
(b) Analysis of the marketing objectives.
Critical Risk Contingencies of the Proposal

Risk?
1) Business Risk
2) Systematic Risk
3) Unsystematic Risk

Identifying Business Risk

(a) Hazard Based (eg: coal mines, chemical lab)
(b) Uncertainty Based (eg: Natural Disasters)
(c) Associated with opportunities
Risk
1) Types of Risk
(a) Direct Risk – Natural disaster, Legal,
Economical, financial, staffing,
environmental, market.
(b) Indirect Risks – Suppliers, Customers &
location.
2) Risk Management
3) Risk Assessment
 Risk Management
1. Preparing a Risk Management Plan and Business Impact
Analysis
2. Identify risks to your business
(a) Assessing your business.
(b) Ways of identifying risk.
(c) Ask ‘What if’ questions?
(d) Brainstorm.
(e) Analyse other events.
(f) Assess your processes.
(g) Consider the worst case scenario.
 Risk Management
3. Analyze and evaluate the impact of risks
- Analysing the Level of Risk
(Level of risk = Consequence * Likelihood)

Likelihood Scale Example:

Level Likelihood Description
4 Very likely Happens more than once in a yr in this
industry.
3 Likely Happens about once a year in this industry.

2 Unlikely Happens every 10 yrs or more in this industry.

1 Very
Unlikely
Has only happened once in this industry.
Risk Management
Consequences Scale Example:

Level Likelihood Description

4 Severe Financial losses greater than Rs.
50,000
3 High Financial losses between Rs.10,000
and Rs. 50,000
2 Moderate Financial losses between Rs.1,000
and Rs. 10,000
1 Low Financial losses less than Rs.1,000
 Risk Management
Evaluating Risks:
Risk Rating Table Example
Risk Rating Description Action
12-16 Severe Needs immediate corrective
action.

8-12 High Needs immediate corrective

action within one month.

4-8 Moderate Needs immediate corrective

action within three month.

1-4 Low Does not currently require

corrective actions
Risk Management
4. Treat risks to your business (Prioritizing)
(a) Avoid
(b) Reduce
(c) Transfer
(d) Accept

5. Review and update your risk Management plan

(Business continuity)
6. Conduct a business impact analysis (PPRR
 Contingency Planning
Risk Assessment
(a) Address all business critical operations
(b) Identify risks
(c) Prioritizing risks
Contingency Planning
Developing the Plan
1. Main goal is to maintain business operations.
2. Define time periods.
3. Identify the trigger
4. Keep the plan simple.
5. Consider related resource restrictions.
6. Identify everyone’s needs.
7. Define success
8. Include contingency plans in standard operating
procedures.
9. Manage the risks.
10. Identify operational inefficiencies
Contingency Planning
Maintaining the Plan
1. Communicate the plan to everybody.
2. Inform people of their role and responsibilities.
3. Consider disaster drills.
4. Assess the results of the drills.
5. Distribute revised plans throughout the company, and make
sure that the old plan is discarded.
6. Keep copies of the plan off site and in a place where they
can be accessed quickly when needed.
7. Audit the plan periodically.
8. Reassess the risks to the business.
9. Recommend and make changes, if necessary
Scheduling and Milestones
Scheduling
Milestones
An Effective milestone is:
i) Specific
ii) Measurable
iii) Attainable
iv) Relevant
v) Timely
vi) Open
vii) Small
viii) Assignable
ix) Progressive
x) Significant