Business Plans

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Business Plans

• So you want to write a business plan?

2
Why write a plan?

• In business you need to know how to
• run the business
• raise finance
• identify customers
• manage production technology
• organise people
• That is be an entrepreneur

3
What do you need to know?

• An entrepreneurs will know how to
• manage money
• manage people
• direct business operations
• do marketing
• manage production
• His business plan will show he knows all these
  business skills

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Business Skills

• Managing Money
• Preparing a budget
• Borrowing money
• Managing People
• Delegating
• Motivating
• Directing Business Operations
• Legal requirements, licencing, regulations
• Accessing finance

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Business Skills cont

• Marketing
• Knowing customers competition
• Selling Salesmanship
• Knowing your product or service
• Choosing the right location
• Managing the production
• Knowing suppliers/raw materials
• Knowing the technology/process

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What help do you need?

• An entrepreneur will need to seek guidance on
• Manufacturing production
• Marketing Management
• General Organization Management
• Financial Management
• A business plan will illustrate that guidance is
  sought where to get it

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Getting Assistance

• Manufacturing Production
• Plant, machinery and tools
• Location of equipment, production flow
• Materials handling
• Goods inward and out ward, warehousing
• Marketing Management
• Identifying customers, knowing competitors
• Selling plan, salesmanship
• Developing products or services
• Pricing policy
• Distribution

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Getting Assistance cont

• General Organization Management
• Managing human resources, conditions of
  employment
• Performance management measurement
• Motivation of staff public relations
• Legal matters
• Planning business, markets, production,
  finances
• Financial Management
• Start-up capital
• Understanding financial statements
• Understanding cost of credit
• Financial record keeping
• Profitability tax planning

9
Business Associations/Linkages
Access to finance
Access to information
Access to markets
Support services needed
Access to technology skills development
Access to land or work-space
Management Skills Entrepreneurial Development
General Business HR Management
Personal Entrepreneurial Competencies
Financial Management
Marketing Strategy
Production management
Conducive Regulatory Environment
Pillars of a successful business
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Manufacturing Production

• Your business plan will need to specify
• your product range
• what plant, machinery tools you will be using
• new or second hand
• out-source or in-house
• process flow from beginning to end of production
• raw materials in
• finished Goods out
• how to handle warehousing
• raw materials
• work in progress
• finished goods

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Marketing

• Your business plan will explain
• who where are your customers
• an analysis of your competitors
• how you will sell your goods
• your plans to develop new products or services
• pricing policy
• distribution channels
• What location will your business take?
• close to customers
• close to raw materials
• close to workforce, facilities, roads/ports

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General Organization Management

• Your business plan will outline
• Skills that are necessary for
• Production
• Selling
• Business management
• Management of human resources
• proposed conditions of employment
• performance management measurement
• motivation of staff public relations
• Legal entity of your business

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Financial Management

• Your business plan will present
• Uses sources of funds
• Understanding cost of credit
• Cash-flow forecasting
• Profit loss accounts
• Break-even point
• Projected balance sheet
• Profitability tax planning

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Uses sources of funds

• Uses
• Buildings
• Machinery Equipment
• Vehicles
• Raw materials
• Sources
• Own funds
• Investors (partners shareholders)
• Loan

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Cash-flow forecasting
Cash in - Cash out Cash flow

• Cash-in from
• Sales
• Own funds, overdrafts, loans investors
• Creditors
• Cashout to
• Purchases
• Equipment, machinery, tools, vehicles
• Raw materials
• Wages
• Expenses
• Rent, insurance, legal fees etc
• Selling, communication costs
• Loan servicing,

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Profit loss accounts
Sales - Cost of goods sold - expenses - depreciati
on profit/loss

• Gross profit
• Sales minus
• Cost of good sold
• raw materials direct labour
• Net profit/loss
• Gross profit minus
• Expenses depreciation

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Projected Balance Sheet

• Balance Sheet
• Liabilities Assets
• Investors Capital Fixed assets less
  depreciation
• Previous profits
• Loans
• Current Liabilities Current assets
• creditors debtors
• overdraft cash/bank balance
• profit (loss) stocks
• Total liabilities Total assets

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Break-even
Sales
Profit
Cost of goods plus expenses
Breakeven point
Cost of goods
Income/expenses
(Loss)
Expenses
Unit sales
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Sensitivity Risk

• Add 10 to costs
• Labour
• Raw materials
• Other direct costs
• Reduce sales by 10
• Quantity
• Price
• What is the chance this will happen?

What happens to profit level?
What happens to profit level?
What is the risk?
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Other information

• Previous business experience
• Accounts, product/service, personnel
• CVs of key people
• General manager
• Financial manager
• Sales marketing manager
• Production manager
• Your advisors

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Further reading

• Management so you think you are a successful
  manager?
• Entrepreneurship do you have what it takes to
  be an entrepreneur?
• Selling Salesmanship so you to be a success
  at selling?
• Marketing for SMEs how to guide SMEs marketing
  efforts?
• Production Management how to guide production
  management for SMEs

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Discussion Points

• How do you think a business plan can help your
  business?
• Who would read your business plan?
• How often do you think a business plan should be
  written?
• Is there any point in writing a business plan for
  an existing business?
• Which section of a business plan is most useful
  to you?
• What else would you consider as important in a
  business plan?