Chapter 7 Business Plan

Fundamentals of Entrepreneurship All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T), 2013 1– 1

CHAPTER 7
BUSINESS PLAN

Objectives
The objectives of this chapter are to:

provide and understanding of preparing a systematic, effective
and viable business plan
provide a better understanding of the difficulties and challenges
of preparing a good business plan

Learning Outcomes
At the end of this chapter, students should be able to:

apply a systematic business planning methodology which can be
applied to many other tasks or undertakings
learn the various scopes and disciplines of business planning
such as marketing operation, finance, organization and human
resources management, many of which involve generic planning
skills that can be applied in their working careers and their life.

Learning Outcomes (cont.)
 use and enhance their communication skills through business

plan presentation
 develop their creativity, innovativeness and critical thinking skills
when they work out their business plan.
 improve their social skills by working in teams effectively and
harmoniously on the business planning project.
 prepare a good business plan that is effective, practical and
viable.

Business Plan
 A business plan is a written document that outlines the

detailed execution plan of the business. It will include
details of the:
− organization, administration and human resource plan
− marketing plan
− production plan
− financial plan
 The business plan should enable an entrepreneur to determine
whether the project is viable, needs to be modified or whether
the project is not feasible and should be abandoned altogether.

Key Planning Elements

Purposes of Preparing a Business
Plan
 The business plan is normally written for the following purposes:

– it is used as a feasibility study to ascertain the viability of the project
– it is a guide for project implementation
– it is used as a document to justify and support loan application or to
entice and convince a partner or investor to invest in the business

Project Preliminary Screening
 Before you prepare the business plan of the project, an

entrepreneur should do a preliminary screening on the suitability
of the project. At least he should have a general idea that the
proposed business is fairly satisfactory on the following issues.
– The viability, sustainability and growth potential of the business
concept, model and strategy
– Overcoming initial start up hurdle or chasm: The provision of
adequate capital, skill manpower and the ability to achieve early
break even sale volume

Business Plan Format
A basic business plan should include:

executive summary
table of content
introduction
company background
owner/partner background
location
organization, administration and human resource plan
marketing plan
operation plan
financial plan
conclusion
appendices

Example of a Simple Business
Plan
Introduction
The following is an example on how to prepare a simple business
plan for a burger kiosk. It shows important planning elements that
must be worked out, i.e.
organization, administration and human resources
market planning
operation planning
financial planning

Organization, Administration
and Human Resources Plan
for Burger Kiosk
Basic issues that need to be resolved for man power planning are:
Manpower requirement and the organization structure for the
company.
Manpower planning also includes planning for their job
qualifications, job specification, recruitment and their remunerations
budget.

Organization Chart

Employee’s Salary, EPF and SOCSO
contribution

Administrative Budget

Marketing Plan for Burger Kiosk
Basic marketing issues that need to be resolved are:

 What is your product and its special attraction or quality?
 Who is your target market?
 What is the market size?
 Who are your competitors and what are their competitive
strengths?
 What is your market share and your sale forecast?
 What are your marketing strategies?
 What is your marketing budget and plan?

Marketing Strategies

Target Market Profile

Target Market Profile (cont.)
 Based on the issues as outlined in the above table, the

following are issues for the burger kiosk.
 What is your product range?
– burgers, hot dog, kebab, etc.
 Where are you going to do your business?
– It should be at strategic location where there is sizable market or
traffic and accessible. The market growth potential is good.

 Who is your target market?

− Let’s say the purchases expected from the main group of customers in
the area of operation are as follows:
− College students
− Factory workers
− Local residents
− Tourist and others

 What is the total market size?

 The estimation of the total purchase of similar products in the
locality including those purchased from your competitors.
 Let’s say daily market size is as follows:
− College students 100@RM3.00 RM300.00
− Local residents 50@RM3.00 RM150.00
− Factory workers 30@RM3.00 RM 90.00
− Tourist and others 20@RM3.00 RM 60.00
− Total daily market size RM600.00

 Who are your competitors?

 Let’s say you only have one competitor in the area.
 What is your market share and your daily sale forecast?
− Let’s say, your market share is 50 per cent, thus sale forecast is
RM300.00 per day
− What is your promotion strategy?
− Roadside banners and signboard only.
− What is you selling price?
− RM3.00 per burger

 What is your marketing Budget

 Let’s say, you are going to promote your burger through pamphlet
and roadside banner:
− Pamphlet—Printing and distribution RM200.00
− Banner—Printing and permit RM200.00

Operation Plan for Burger Kiosk
 Basic production plan issues that need to be resolved are:

− What products do you want to produce and what are its quality
specifications and characteristics? Does this quality meet the target
customers’ needs and wants?
− What is the cost of production per unit and what is the possible
selling price the market can absorb?

(cont.)
 How many do you need to produce per day/week / month so that

you can cater for your sale forecast?
 Based on quality and quantity required, what is the best
production plan for the job; you will have to decide whether it is
going to be fully mechanized, semi-mechanized or totally
manual?
 You will have to outline your material, machines, tools, space
and lay out needs based on the production process flow chart.

(cont.)

(cont.)
 Based on your production schedule, you will have to plan and
calculate the following items:
– Product: chicken and beef burgers
 Let’s say your operation is quite simple. Your material input cost
per burger is only RM1.00 and your selling price per burger is
RM3.00.
– Estimated sale per day RM300.00
– Cost of raw material for one day RM140, therefore for 5 days (one
week) RM700/week
– Sale for five days/week RM300 ×5 days = RM1,500/week
– Salary:
• RM20.00 /person for 2 persons
• 5 working days/ week, RM20 × 2 persons × 5 days = RM200/week
 Let’s say your asset equipment cost is only RM1,500.00
Process Flow Chart

Process Flow Chart (cont.)

Financial Plan for Burger Kiosk
Basic financial plan includes the following:

project implementation cost
sources of fund for the project
financial schedule for asset depreciation and loan amortization
cash flow projection
income statement projection (profit and loss)
balance sheet projection

Project Implementation Cost
Example of project implementation cost of burger kiosk:

 Project implementation cost is as follows:
 Assets (equipment) RM1,500
Working capital for one week i.e. salary and raw material:
 RM100@5 days + RM40@5days= RM 700
 Registration cost RM 100
 Banner and pamphlet (one time) RM 400
 Total project implementation cost RM2,700

Sources of Funds

Project Implementation Cost
Table

Depreciation Table

Loan Amortization Table
Example of loan amortization table for the proposed burger kiosk

project: Let’s say, the loan amount is RM1,000, duration 4 weeks,
interest at RM10.00 per week.
Period Principal Interest Loan balance
1st week 250 10 750

2nd week 250 10 500
3rd week 250 10 250
4th week 250 10 0

Social Entrepreneurship Project
 As an alternative, students can also do a social entrepreneurship

project for their practicum.
 Students can look into the internet to gain some ideas on the
types or themes of the social entrepreneurship project that can
be undertaken.
 For instance, some non-governmental organizations (NGOs)
organize efforts to help the urban or rural poor, orphans, single
mums, ex-drug addicts, HIV or cancer patients, etc.
 There are NGOs that work on environmental causes, animal
protection or organize to fight child labour, pollution, etc.


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Fundamentals of Entrepreneurship All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2013 1– 1

Fundamentals of Entrepreneurship All Rights Reserved

The objectives of this chapter are to:

Fundamentals of Entrepreneurship All Rights Reserved

At the end of this chapter, students should be able to:

Fundamentals of Entrepreneurship All Rights Reserved

 use and enhance their communication skills through business

Fundamentals of Entrepreneurship All Rights Reserved

 A business plan is a written document that outlines the

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

 The business plan is normally written for the following purposes:

Fundamentals of Entrepreneurship All Rights Reserved

 Before you prepare the business plan of the project, an

Fundamentals of Entrepreneurship All Rights Reserved

A basic business plan should include:

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Basic marketing issues that need to be resolved are:

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

 Based on the issues as outlined in the above table, the

Fundamentals of Entrepreneurship All Rights Reserved

 Who is your target market?

Fundamentals of Entrepreneurship All Rights Reserved

 What is the total market size?

Fundamentals of Entrepreneurship All Rights Reserved

 Who are your competitors?

Fundamentals of Entrepreneurship All Rights Reserved

 What is your marketing Budget

Fundamentals of Entrepreneurship All Rights Reserved

 Basic production plan issues that need to be resolved are:

Fundamentals of Entrepreneurship All Rights Reserved

 How many do you need to produce per day/week / month so that

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Basic financial plan includes the following:

Fundamentals of Entrepreneurship All Rights Reserved

Example of project implementation cost of burger kiosk:

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Example of loan amortization table for the proposed burger kiosk

Period Principal Interest Loan balance

1st week 250 10 750

Fundamentals of Entrepreneurship All Rights Reserved

 As an alternative, students can also do a social entrepreneurship

Fundamentals of Entrepreneurship All Rights Reserved

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