Characteristics of the Average

American…
• Average Women..

-Lives 78.6 years

-Has body with 28 percent fat
-Own 30 pairs of shoes
-Tries on 16 pairs of jeans to fine a perfect fit.
-Spends 15.7 minute on her hair each
morning
Average Man

• Lives 71.6 years

• Has a body with 15 percents fat
• Owns 15 dress shirts, six pair of slacks, six
sports shirt, five knit shirts and three sweaters
• Spends four hours a year tying his tie
• Devotes 3,350 hours to shaving during his
lifetime.
 THE
BUSINESS PLAN
 THE BUSINESS PLAN
SESSION OBJECTIVES
At the end of the session, students
should be able to:
• understand the importance of a
business plan, and
• prepare a business plan
What Is a Business Plan?

A business plan is a written document which

described the proposed business or project to
be undertaken in a comprehensive manner.

It is also known as a working paper,

business proposal, project paper
or prospectus.
Audiences of the BP

1. Entrepreneurs
2. Investors
3. Bankers
4. Financial Assistance Providers
5. Suppliers
6. Customers
7. Employees
Business Plan Format
1. Executive Summary
2. Table of Contents
3. Introduction
3. Title Page
* Title of the business plan
* Name and address of the business
* Name of writers
* Date
3. Main Body of the Business Plan
6. Appendices
PURPOSE OF EXECUTIVE
SUMMARY

To briefly and concisely

describe the key elements
of the proposed business
venture:
Company,product,opportunity,market,
plan and management
Main Body of the Business
Plan
Section 1: Introduction
Section 2: Purpose
Section 3: Background of the Business
Section 4: Background of
Partners/Shareholder
Section 5: The Organization/ Admin Plan
Section 6: The Marketing Plan
Section 7: The Production/Operation Plan
Section 8: The Financial Plan
Section 9: Justification
 Section 1: Introduction

• Name of the business

• Type of business
• Industry overview
• Location of the business
• Date of commencement
• Factors influencing choice of business
• Business potential
Section 2: Business Plan Purpose

2. Purpose
Each business plan is prepared for a specific purpose.
The entrepreneur should clearly and specifically state the
purpose for preparing the particular business plan.

Examples:
a. This business plan is prepared by Syarikat Fair One
Sdn. Bhd. to obtain a term loan for the amount of
RM50,000 from SME Bank.

b. This business plan is prepared by Syarikat Fair One

Sdn. Bhd. as a guideline in managing the business.
Section 3: Background of the
Business
a. Name of the business
b. Business address
c. Correspondence address
d. Telephone number
e. Form of business
f. Main activity
g. Date of commencement of business
h. Date of business registration
i. Business registration number
j. Name of bank
k. Bank account number
l. Equity contribution
Section 4: Background of
Partners/ Shareholders
a. Name in full
b. Identity card number
c. Permanent address
d. Correspondence address
e. Telephone number
f. Date of birth
g. Age
h. Marital status
i. Academic qualification
j. Courses attended
k. Skills
l. Experiences
m. Current job/position
n. Other/Previous business experiences
Administration
Plan
Section 5: The Organization/
Admin Plan
a. Introduction to the organisation
b. Organizational chart
c. Table of job designation and number
of workers
d. Job Description
e. Remuneration table
f. List of office furniture, fixtures and
fittings
g. The administrative budget
Please prepare the following:

• Introduction to organisation
• Organisation Chart
• List of Personnel
• Schedule of task and responsibilities
• Schedule of remuneration
Introduction to the Organisation

• Introduce the business by stating the

business:
• Mission- is a statement of the purpose or reasons
for its existence
• Objectives- more specific, stated in a shorter
term and have a definite time frame
• Business address
• Location of the business
a. Physical location of project and proximity to
roads, highways etc (Provide road map for
exact location)
b. Building (type, structure, size and value)
c. Infrastructure (water, electricity, telephone)
Organisational Chart

• It is a schematic representation of the

organizational structure
• It shows:
• The hierarchy
• Span of control
• Intra-relationship
• Division of jobs and responsibilities
 Organisation Chart

Manager

Administrative Marketing Operations

Finance Officer
Officer Officer Officer
List of Administration Personnel

Position No. of Personnel

Manager 1
Administrative Officer 1
Marketing Officer 1
Operations Officer 1
Finance Officer 1
 Schedule of Tasks and
Responsibilities

Position Tasks and Responsibilities

Manager • To plan, implement and control the

overall management of the business
• To plan and monitor the strategic
progress of the business.
• To be accountable for the overall
performance of the business
Administrative officer
Schedule of Remuneration for
Administrative Staff

Position No. Monthly EPF SOCSO Amount

Salary Contribution (2%) (RM)
(RM) (12%) (RM)
(RM)

Manager 1 2500 300 42.85 2842.85

Administrative 1 1200 144 20.15 1364.15

Officer

Marketing 1 1200 144 20.15 1364.15

Officer
 List of Office Equipment

Item Quantity Price/Unit Total Cost

(RM) (RM)
Office 2 sets 2000 4000
Furniture
Personal 2 sets 3000 6000
Computer
Air-Cond 1 set 2500 2500
Administration Budget

• Fixed assets Cost

• Investment made to purchase of assets that will be used
in the organisation for more than 1 year.

• Monthly Expenses
• Payments that have to be made every month as part of
maintaining the business existence.

• Other Expenses
• Expenses that do not fall into the above categories.
• Expenses incurred once a year or on a periodic basis.
 Administration Budget

Fixed Assets Monthly Other Expenses

Expenses Expenses (RM)
(RM) (RM)
Building xxxxx
Furniture & Fittings xxxxx
Renovation xxxxx
Rental* xxx
Utilities : water, xxx
electricity, telephone
Salary xxx
EPF & SOCSO xxx
Rental Deposit xxx
Utilities Deposit xxx
Stationery xxx
Business Registration xxx
Marketing Plan
Section 6: The Marketing Plan

a. Introduction to the product/services

b. Target market
c. Market size
d. Competition
e. Market share
f. Sales forecast
g. Marketing strategies
h. The marketing budget
Please prepare the following:

• Product or service description

• Target market
• Market size
• Competition
• Market share
• Sales Forecast
• Marketing strategy
Product or service description

• Describe clearly the product or service

offered. Relate the proposed product/
service to target customer needs and
wants.
Product

• Creative to develop “niche product”:

• Example:
• Drink- Nutritional drink
• Tv- LCD/LED/3D TV
• Hp- Smart telephone
• Car-Hybrid car
• Shower Gel-herb shower gel
etc
Target market

• State the customer's profile in the target

market area. Identify different market
segments that exist in the same market
area.
Target market is defined as the groups of
customers that have needs and wants
that can be satisfied by the business
through the supply of goods or services
Ex: Herb Shower Gel: Ladies age 25 to 35
years old. Married. Career .
Malacca resident
Market size

• State the market size in units of product or

unit of sales (in ringgit) or both.

Market size refers to the total potential

purchase of the target market
Population:45000 people
Competition

• List at least three main competitors that

exist in the same market area. State their
strengths and weaknesses.

Competitors refer to other businesses that

offer similar, substitute or alternative
products/ services to the same target
market.
Competition

• Example:

Competitors Strength Weakness

PNG
Market share

• Compute the market share as a

percentage of the market size. Product or
service information, customer needs and
wants as well as market competition must
be taken into consideration.

Market share refers to the estimated

potential sales of the business after taking
into consideration the market size and
competitors’ influences.
• Example:
• Market Share Before Entry of Ramlan Ent.

Competitors Market share Sales per year

Gard Sales & Service 40% RM 90,000

Highlight 30% RM 67,500

Tan Chong 30% RM 67,500

Total 100% RM225,000

Sales Forecast

• Definition: expected purchases

from the identified target market.
• It is quoted in units or in Ringgit for
a period of a year or a month
Sales Forecast
Month Units Sales (RM)
January 0 0
February 100 1,000
March 350 3,500
April 400 4,000
May 400 4,000
June 350 3,500
July 400 4,000
August 600 6,000
September 600 6,000
October 600 6,000
November 750 7,500
December 750 7,500
Total 5,300 53,000
Marketing strategy

• Discuss the strategies concerning the

following marketing mix:
• Product or Service
• Price
• Place or Distribution
• Promotion
• List of marketing personnel
• Schedule of tasks and responsibilities
• Schedule of remuneration

*Use the same format as in admin plan

 Marketing Budget

Fixed Assets Monthly Other

Expenses Expenses Expenses
(RM) (RM) (RM)
Van xxx
Pamphlets and xxx
brochures
Commission xxx
Salary, EPF & xxx
SOCSO
Petrol xxx
Road tax and xxx
insurance
Operational Plan
Section 7: The Production/ Operation
Plan
a. Process Flow Chart
b. Unit output/Hours of operation
c. Material requirement
d. List of direct workers
* designation
* remuneration
e. List of machines and equipment
f. Plant/office layout
g. Location
h. Schedule of operation
h. Operation overhead
h. The production budget
Please prepare the following:

• Operations process
• Process Flowchart
• Capacity Planning/Production
Schedule
• Materials requirement
• Machine and equipment
Operations process

• State the key steps or phases in the

operations process towards producing the
product or providing the service.
Chief mechanic gets information from client on the problems with the vehicles

Discuss repair work with client

Preliminary inspection of the vehicle by mechanics

Get agreement from client on repair work to be done

Chief mechanics fill Job Order form

Pass the Job Order form to mechanic on duty

Process Flowchart

• It is schematic representation of the

production/operation process from the
start until the product or service is sold or
delivered
• It must show:
• The sequence (step by step)
• Description of each process/activity
 Conventional Symbols

Symbol Activity Description

Operation Materials are being processed or
information being processed or the
process
. of planning and
calculating
Transporting Movement of materials from one
place to another.
Inspection Inspection on the quantity or
quality of the product.

Delay Process is delayed or materials

waiting for further process.
Storage Materials are stored in the storage
area or warehouse.
Example
Capacity Planning/Production
Schedule
• Operations output
• Unit of product per day, or
• Hours of service
 Materials requirement

• List down the raw materials or inventories

required in the operations process.

Item Quantity Price per unit Total Purchase

Required
Flour 100kg RM2/kg RM240

Butter 25kg RM10/kg RM250

Machine and equipment

• All machines and equipment must be listed

together with the estimated price, number
of units and suppliers name.

Type Price Per Quantity Total Cost

Unit (RM)
(RM)
Machine X 12,000 1 12,000
Stove On loan/
rented
• List of operations personnel
• Schedule of tasks and responsibilities
• Schedule of remuneration

*Use the same format as in admin plan

Operations space layout plan

• Draw a floor plan of the operations space

layout with the key items (e.g. store room,
exit doors and electrical points) that have
to be taken into consideration.
Layout of a Typical Piccadilly Cafeteria
Hotel Layout???

• Pls discuss..
Melaka Waste to Energy
Location

• Specify the location where the business

operations section is sited. State whether
the building is rented; built by the business
owners or purchased as a ready built
premise. If the premise is rented, state the
rental deposit and any renovation cost
incurred.
Tools for Scheduling Service Operations

Gantt chart diagrams steps to be

performed and specifies the time
required to complete each step
Tools for Scheduling Service Operations

PERT chart breaks down large projects

into steps and specifies the time
required to perform each one
Operations Budget

• List all the operations expenses involved

under the following categories:
• Capital Expenditure/Fixed Asset
• Working Capital/Monthly Expenses
• Other Expenses
Financial Plan
Section 8: The Financial Plan

a. Project Implementation Cost

b. Sources of Financing
c. Table of Depreciation
d. Loan Amortization Schedule
e. Hire Purchase Repayment Scheme
f. Cash Flow Proforma
g. Profit and Loss Proforma
h. Balance Sheet Proforma
The Importance of A Financial Plan
• To determine the amount of money to be
invested – the project cost.
• To identify and propose the relevant
sources of fund.
• To ensure that the initial capital is sufficient.
• To appraise the viability before actual
investment is committed.
• As a guideline for implementation.
Sources of Financial Information

Financial information is gathered through

budgets.
• Operational budget
• Administrative budget
• Marketing budget
• Production budget
• Financial budget
• Project implementation cost
• Sources of fund
• Projected cash flow statements
• Projected profit & loss statements
• Projected balance sheet statements
Steps in Preparing a Financial
Plan
• Step 1:
• Prepare the project implementation cost schedule.
• Step 2:
• Prepare the sources of fund to finance the project
cost.
• Step 3:
• Prepare the projected cash-flow statements.
• Step 4:
• Prepare projected trading, profit & loss statements
(for 3 years).
Project Implementation Cost

• Project implementation cost refers to the total

costs (short & long-term costs) needed to
implement the proposed business/project.

• Long-term costs refer to capital expenditure

required to buy fixed assets (ex. land, building,
machinery, equipment, furniture and vehicle).

• Short-term costs refer to expenditure to finance

day-to-day operation of the business (ex. raw
materials/inventory, wages & salaries, utilities
and other overheads.
Elements in Project Cost
Schedule
• Capital Expenditure
• Land
• Building
• Renovation
• Machinery & Equipment
• Furniture & Fixtures
• Vehicle
• Working Capital ( _xx month)
• Administrative
• Marketing
• Operation
Elements in Project Cost
Schedule
• Pre-operational costs
• Business registration & licenses
• Legal fees
• Road tax & insurance
• Stamp duties etc.
• Deposits
• Rental
• Utilities
• Provision for contingencies
• (2 to 5 percent)
Example: Project Implementation
Cost Schedule
RM RM

Capital Expenditure
Building 45,000
Machinery & Equipment 23,000
Furniture & Fixtures 7,000
Van 25,000
Renovation 4,000
104,000
Working Capital (1 month)
Administrative 8,000
Marketing 1,500
Operation 8,000
17,500
Pre-operational costs 2,700
Deposits 800
Allowance for contingencies (10%) 12,500

Total cost 137,500

Exercise: Project Implementation
Cost Schedule for Gegak Gempita
RM RM
Capital Expenditure
Equipment 100
100
Working Capital (1 day)
Administrative 10
Marketing 5
Operation 160
175
Preoperational Cost 160
Deposits Rental 10 170

Grand Total 445

Allowance for contingencies (5%) 22.25

Total cost 467.25
Sources of Fund

• Sources of fund refer to the source where

fund to finance the project cost is secured.
It can be internally or externally generated.
Sources of Fund
• Equity Contribution
• the total amount of funds contributed by the owner or the
partners in the business
• inclusive of cash and personal asset contributions by the
owner(s).
• Term Loan
• long and short terms funds obtained from financial providers
• Hire-Purchase Scheme
• to a form of financing often used in the purchase of fixed
asset such as vehicle, machinery, and furniture and fittings
• Others
• finance may include government grants, personal borrowings
from individuals and companies.
Example: Sources of Finance

Source RM

Equity Contribution
Cash 27,500
Asset 45,000

Term Loan 45,000

Hire-purchase Finance 20,000

Total 137,500
Cash-flow Projected Statements

• It is projected statements of cash inflows

and outflows throughout the planned
period.
• It shows the following:
• Cash inflows
• Cash outflows
• Deficit or surplus
• Cash position (beginning & ending balances)
 Month Pre-Operation Jan Feb Mac Apr May June July Aug
A CASH INFLOWS
Beginning cash balance 0 30,000 30,909 31,818 32,727 33,636 34,545 35,454 36,363
Equity - Cash 27,500
Term-loan 45,000
Cash sales 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
B Total Cash Inflows 72,500 50,000 50,909 51,818 52,727 53,636 54,545 55,454 56,363
C CASH OUTFLOWS
Operational Expenditure:
Raw materials 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Direct labor 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Operational overheads 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Marketing Expenditure:
Sales commission 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Entertainment allowance 500 500 500 500 500 500 500 500
Adminstrative Expenditure:
Salaries & Wages 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
EPF & SOCSO 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Adminstrative overheads 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Loan Repayment:
Principal 750 750 750 750 750 750 750 750
Interest 375 375 375 375 375 375 375 375
Hire-purchase repayment:
Down payment 5,000
Principal 333 333 333 333 333 333 333 333
Interest 133 133 133 133 133 133 133 133
Capital Expenditure:
Machinery & Equipment 23,000
Furniture & Fixtures 7,000
Renovation 4,000
Pre-operational Expenditure 2,700
Deposits 800
D Total Cash Outflows 42,500 19,091 19,091 19,091 19,091 19,091 19,091 19,091 19,091
E Cash Surplus/(Deficit) 30,000 30,909 31,818 32,727 33,636 34,545 35,454 36,363 37,272
F Ending cash balance 30,000 30,909 31,818 32,727 33,636 34,545 35,454 36,363 37,272
Elements in Cash-flow
Statement
• Cash Inflows
• Equity – cash only
• Term-loan
• Cash sales
• Collection of receivables
• Sales of asset
Elements in Cash-flow
Statement
• Cash Outflows
• Operational expenditure
• Marketing expenditure
• Administrative expenditure
• Loan repayment
• Hire-purchase repayment
• Purchase of fixed assets
• Pre-operational expenses
• Miscellaneous expenses
Elements in Cash-flow
Statement
• Cash Surplus or Deficit
• Inflows > Outflows = Surplus
• Inflows < Outflows = Deficit
• Cash Position
• Beginning cash + Surplus/
(- Deficit) = Ending cash
Note: The ending cash balance for a
particular month becomes the beginning
balance for the next consecutive month
Example: Profit & Loss Account

Sales 240,000

Less: Expenses
Administrative 96,000
Marketing 18,000
Operational 96,000
Financial:
Interest on term loan 4,500
Interest on hire-purchase 1,600
Depreciation charges 11,800
Pre-operational expenditure 2,700
Total Expenditure 230,600
Net Profit 9,400
Balance Sheet Pro-forma
Statements
• It is a projected statement which shows
the financial position of the company at
a specific point in time in terms of assets
owned and how those assets are
financed.
• Projected statements are prepared for
the period of three (3) years.
Elements in a Balance Sheet

• Fixed Assets
• List all fixed assets at its book value (Cost –
Accumulated depreciation)
• Current Assets
• List all current assets (e.g. cash, stocks, account
receivables, deposits etc.)
• Equity
• Equity contribution (cash + assets) plus net profit
(accumulated)
• Long-term Liabilities
• Term-loan (year end balance)
• Hire-purchase (year end balance)
 Example: Balance Sheet for
Manufacturing & Trading Companies

Fixed Assets
Machinery & Equipment 18,400
Furniture and Fixtures 5,600
Renovation 3,200
Van 20,000 47,200
Current Assets
Cash 40,900
Closing stock for raw materials 3,000
Closing stock for finished goods 3,000
Deposits 800 47,700
Total Assets 94,900
Equity
Capital 27,500
Net profit 15,400 42,900
Long-term Liabilities
Term-loan 36,000
Hire-purchase 16,000 52,000
Total Equity & Liabilities 94,900
Example: Balance Sheet for
Service Companies
Fixed Assets
Machinery & Equipment 18,400
Furniture and Fixtures 5,600
Renovation 3,200
Van 20,000 47,200
Current Assets
Cash 40,900
Deposits 800 41,700
Total Assets 88,900

Equity
Capital 27,500
Net profit 9,400 36,900
Long-term Liabilities
Term-loan 36,000
Hire-purchase 16,000 52,000
Total Equity & Liabilities 88,900
Section 9: Justification

Concludes and justify why the project

is worthy of finance