Writing a Business Plan

Business Plans
Session Objectives

• Look at the components of a business plan and the details of each section

• Carry out some exercises/activities on how present some information

(especially financial data) in a business plan.

• Sit back, relax and watch some video case studies and draw some lessons
from them.
 Video case studies
• Case study 1: David Brown (Grafitti artist) 2.10 – 15.18

• Case study 2: Kerry (The coffee bag) 18:40 – 29

• What lessons can you draw from these two cases regarding the importance of feasibility study?

3
 What is a Business Plan?
• A business plan is a written document
prepared by an
entrepreneur/intrapreneur that provides
information, analysis and evaluation
about the internal and external elements
and strategies for starting, running or
expanding a business venture.

• It is an integration of typical functional

areas of a business such as operations,
finance, human resources,
manufacturing, sales and marketing.
 Your business plan
The goal of a Business plan
• Whether you’re planning to open
a restaurant that makes the best
oriental meal in town or run an
online business, you will need to
convince others why your
business is necessary and how it
will differ from what is already
available. That is where your
business plan comes in. It
provides investors, lenders and
potential partners with an
understanding of your company’s
structure and its goals.
• Why do a business plan?
• It gives you very detailed knowledge about your
business environment and helps the entrepreneur
to organise resources.
• It gives you a clear picture of how you intend to
supply your product or service.
• It allows you to make your mistakes on paper which
you are able to correct rather than the market –
which may be too late and costly to correct.
• It helps determine the viability of the venture in a
designated market and gives bank managers, other
lenders and investors confidence.
Remember the maxim: Failing to plan is planning
to fail.
 Important questions before you
write a plan
• Who is the plan for?
 Yourself?
 Your venture team?
 An investor, lender, partner or customer?
?
• What do you want the plan to achieve?
 Provide a structure and direction for the business?
 Raise investment or loan capital?
 Sell the idea of the business?
?
 Users of the business plan
• Lenders e.g. bank, trade creditors, Higher Purchase creditors are Lessors
• Support agencies and soft loan providers.
• Other investors e.g. Business Angels, Venture Capitalists and
Shareholders.
• The business: to launch, run or grow your business.
• Management: to support an intrapreneurial idea
• Others: e.g. partners, employees, Consultants, advisers, suppliers and
customers of the business.
 When Business Plans are required
Apart from starting a new business, there are several opportunities where a
business plan may be needed by established businesses e.g.,
• Filling an identified market gap or creating demand for a new product,
service, process or experience (New market opportunities)

• Providing a product or service better or cheaper than competitors (new

competitive strategies)

• Implementation of new innovative ideas in the products, services,

processes and the business model (Innovation opportunities)

• Identified internal and external opportunities (Growth opportunities)

 Types of Business Plans
Summary Business Operational
Plan Full Business Plan Business Plan
Works best for Primarily meant for
Works best for
businesses are internal
businesses in the early
expanding and are in consumption. Works
stages of development.
need to funding. It more as a blue print
Idea is to taste the
serves as a blue print for all operational
waters and see how
for the business’s areas of the
investors will react
operations (usually 25- business as well as
(usually 12-15 pages)
35 pages) providing guidance
for managers
(usually 40-100
pages)
Components of a business plan

17–10
 Components of a business plan
• Summaries what you expect your business
Executive Summary to accomplish and highlight what you intend
to discuss in the rest of the plan.

• Provides a description of the business and its legal

Description of the structure.
business

• Provides details of the market like the size,

Market expected market share, market segments and
analysis profile of targeted customers.
 Components of a business plan
• Presents a clear comparison of your business to
Competitive analysis your direct and indirect competitors, showing their
strengths and weaknesses and how your business
will stack up.

Organisation and • Details about the management team, organisation

Management of structure and other operational details.
the business

• Provides detailed description of your

Products and services product/service, highlighting key features of the
product/service and degree on innovation, problem
is solves and benefits it offers to customers.
Components of a business plan
• Detail the marketing strategy you plan to use.
• Describe your marketing plan, including your
Marketing and sales strategy, advertising and promotion
sales analysis plans, pricing policy, and channels of
distribution.

• How do you plan to assure continuing access to

critical supplies of raw materials and
Operational
component parts at reasonable prices?
Plans • Will you produce or subcontract your
production?
• Launch plans
 Components of a business plan
• Determine the funds required to run the
operation or additional unit.
• Develop short and medium term financial
Financial
projections including:
analysis • Cash flow forecasts
• Pro forma profit and loss statements
• Pro forma balance sheet

• What were the strong and weak points of your

Growth plans venture idea?
and SWOT • Did your assessment indicate the business was
analysis likely to be profitable?
• Is it sufficiently attractive to proceed with the
development of a complete business plan?
Business Plan – detailed analysis

17–15
 Executive Summary
• This should give a concise overview of your business plan. It should be short
(no more than 1 page), and written succinctly and accurately. Your goal is to
draw the attention of your readers so they want to learn more about your
business.
• Though this section appears first, it should be written last, after you have worked
out the details of your plan.
• It should include:
• Summary of what you expect your business to accomplish.
• Overview of products and/or services being offered
• Investment requirements and key financial highlights.
• Mission and vision statements
• The specific purpose of the plan (to secure investors, set strategies, etc.)
• NB: the executive summary covers both parts of the assessment and does
go towards your word count.
 Description of the Business
• The preliminary page may include some or all of the following:
 Name and address of business
 Nature of business and its legal status e.g. sole proprietorship, partnership,
limited liability or social enterprise.
 Information about owners, including their names, percentage of ownership,
extent of involvement within the company and a biography listing their
background and skills
 The key professional advisors (lawyers, accountants, auditors, etc.) if any.
17–18
 Marketing and Sales plan summary
4 sub-sections should be detailed
1. Market Analysis
 How big is your market
 What is your client profile?
 How you penetrate the market
2. Competitive analysis
 Their strengths and weaknesses
3. Marketing strategy
 Overview of your Marketing plan.
4. Sales strategy and forecasts
 Overview of your sales forecasts.
Overview of each sub-section
Market size (value and/or population), penetration
strategy. The past, present and future of the market.
Target customers (current and future) – demographic
characteristics and location. Market research to
support pricing decisions and new market entry
strategy
Who are your immediate competitors (direct or
indirect)? How will you capitalise on their weaknesses
and respond to their strengths? Your competitive
strategy e.g. Cost leadership, Differentiation, etc.
How will you promote your products/services to
customers and how will you get them to switch? Are
their switching costs? Which media will you use to
communicate with customers? At what costs?
How many units will be sold? At what price? At what
cost per unit? Show month by month targets for first 12
months.
 Market Analysis
• Your market analysis should show that you know the ins and outs of the
industry and the specific market you’re planning to enter.
• You will need to use data and statistics to talk about where the market has
been, where it is, where it’s expected to go and how your business will fit into it.
• You will also need to provide details such as:
• The profile of your target customers, e.g. demographic characteristics such as
income levels, gender, age, ethnicity, etc., and where you will find them.
• The size of your target market?
• Potential demand for your product or service (projected market share)
 Competitive analysis
• A competitive analysis is a critical part of your marketing plan which you use to
establish what makes your product or service unique.
• Evaluate your main competitors by placing them in strategic groups according to
they directly or indirectly compete with you.
• For each competitor, you should be able to answer questions such as:
• Who are your competitors?
• What products or services do they sell?
• What is each competitor's market share?
• What are their current strategies (distribution, pricing, promotion, advertising)?
• What type of media are used to market their products or services?
• What are each competitor's strengths and weaknesses?
• What potential threats do your competitors pose?
• What potential opportunities do they make available for you?
Competitive Analysis template
Competitive Factor My Idea/ Business Competitor A Competitor B Value to
  Clients

Strength Weakness Strength Weakness Strengths Weakness Key

Products & services  New and unique to  Unknown to  Tried and tested  Old fashioned     3
the market customers
Price  Low prices  Low margins/         1
customer
scepticism
Quality & reliability  Low- medium           2
quality
Target Customers              

Brand image/reputation              

Location              

Customer choice              

Distribution channels              

Marketing strategy              

Resources              

Other              

??              

In the last column, estimate how important each competitive factor is to the customer. Key 1 = critical; 5 = not very important.
Example of Competitive Analysis
 Marketing Strategy
• In your business plan, it’s important to describe how you intend to get your
products and services to your potential clients. That is what marketing is all
about.
• It outlines the outreach and PR campaigns to be undertaken over a period,
including how the business will measure the effect of these initiatives.
• The marketing plan is made up of several components including the
following:
 Tailored messaging that targets identified market segments and geographic
areas
 Selecting suitable platform for promoting product and service, e.g., social media,
radio, TV, Internet, trade magazines, etc.
 Metrics that measure the effectiveness of the marketing efforts.
 Sales Strategy
A sales strategy is a
plan by a business on
how it will go about
selling its products and
services and increasing
sales and profits e.g.
selling through its
website, social media,
brick and mortar or third
parties.
 Sales Strategy
• Your sales strategy identifies which customers your business is targeting,
how you will reach them, and how you will convince them to buy from you. It
sets out your sales forecasts, allowing you to measure performance and see
opportunities to improve.
• A successful sales strategy will turn your marketing plans into profit. The
sales strategy should involve:
 Understanding your target customers
 Identifying suitable channels for your product/service to reach target customers.
 Prepare a detailed breakdown of the sales you plan to achieve by month, by
customer and by product taking into account breakeven targets.
 Measuring sales performance.
 Sales Forecast
In calculating your sales forecasts, you need to:
Determine wherever possible, how many units you will sell monthly and the
unit price you will charge
Determine wherever possible, the unit cost for your products or services
Determine your gross and net profit margins.
Assume a steady growth in sales over the months to come, e.g. 5% per
month (allow, if necessary for seasonal variations). Explain how the growth will
be achieved e.g. market penetration, new product development, etc.
Any growth should be in line with the sector and the general economic
conditions that exists.

28
Financial Projections
• Financial projections are an essential part of your business
plan if you want serious attention from investors.
• The financial section of your business plan determines whether or
not your business idea is viable and will be the focus of any
investors who may be attracted to your business idea.
• The financial section is composed of three financial statements:
 the income statement (or profit and loss statement)
 the cash flow projection,
 and the balance sheet.
 Breakeven analysis
 Sales forecasts (if this has not been included in the marketing plan)
Financing Life Cycle
 Cash flow Cycle
Obtain capital:
Own capital, share capital, loans

Withdrawals or
dividends
Money leaving
Buy assets:
Retained profit the business Fixed & current
Taxation

Net profit Loan interest & Day-to-day Sales

other non- operating
routine costs costs

Operating profit
 Cash flow forecasts
• The cash-flow statement is one of the most critical financial document your
business as it shows:
 how much cash will be needed to meet your obligations,
 when it is going to be required,
 from where it will come.
• It is a schedule of the money coming into the business and money going out
of the business. The result is either a negative or positive balance at the end
of each month. The balance from the previous month is carried over to the
next month to show the cumulative amount.
• If you end with a negative balance at the end of the month, it is a strong
indicator that you will need additional cash to meet expenses that month.
• The cash-flow statement should be prepared on a monthly basis during the
first year, on a quarterly basis during the second year, and on an annual
basis thereafter.
 Cash Flow projections

• Projection of the cash inflows and outflows of the business

 Prepared monthly in year one (could be quarterly in 2nd year and annually thereafter)
 Takes into account the timing of receipts and payments.
 Includes both capital and revenue income and expenditure.
 Shows the cash requirements of the business.

• Inflows - sales, commissions, capital, loans, grants, other income, etc.

• Outflows - purchases of materials, salaries and wages, overheads, other

operational costs, machinery and equipment, VAT payments, taxation,
owners drawings/dividends, etc.

See Template and example

 Cash Flow Example
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Total
Cash on Hand (beginning of month)  
0 0 0 0 0 0 0 0 0 0 0 0 0
   
                         
CASH RECEIPTS  
                         
Cash Sales  
                         
Collections from Debtors  
                         
Loan/ other cash inj.  
                         
TOTAL CASH RECEIPTS 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Cash Available (before cash out) 0 0 0 0 0 0 0 0 0 0 0 0 0 0
                             

CASH PAID OUT                            

Purchases (Stock)                            

Purchases (Other)                            

Salaries                            

Payroll expenses (taxes, etc.)                            

Outside services                            

Supplies (office etc.)                            

Repairs & maintenance                            

Advertising                            

Car expenses                            

Accounting & legal                            

Rent                            

Telephone                            

Utilities (Water, Electricity, etc.)                            

Insurance                            

Taxes (real estate, etc.)                            

Interest                            

Other expenses (specify)                            

Other (specify)                            

Other (specify)                            

Miscellaneous                            

SUBTOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Loan principal payment                            
Capital purchase (specify)                            
Other start-up costs                            
Reserves or Savings                            
Withdrawals / Dividends                            
TOTAL CASH PAID OUT 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cash Position (end of month) 0 0 0 0 0 0 0 0 0 0 0 0 0 0

                             
Example of Cash Flow
 Cash Flow Statements
Always remember to include your starting capital in the 1st month. The 1st month will usually
start with NIL balance if it is a new business.
The closing cash balance at the end of the month is the opening balance the following month.
Do not include non-cash items and provisions e.g. depreciation as they are not cash items i.e.
they do not result in movement of cash in or out of the business.
Don’t forget to incorporate warning signals into your cash flow projections e.g. if negative cash
flows are predicted do you have arrangements in place for overdraft? You need to plan ahead!
Remember that a cash flow forecast can only determine the short-term liquidity of a company.
The longer the forecast horizon, the higher the chance of an inaccurate projections.
Taxes (e.g. VAT) do not usually appear in the 1st month of operation and are normally paid
quarterly and not monthly unless you have a direct debit arrangement to pay your taxes.
Corporation tax is paid in arrears and so would not appear in the 1 st year.
Remember to include loan repayments (plus interest where applicable).
There is a difference between a Cash Flow statement and a statement of Cash Flows. You are
doing the former and not the later.

37
 Statement of Cash Flow
• Important!!
• Do not confuse the cash flow projection with the cash flow statement (see
example below). The cash flow statement describes the cash flow that has
occurred in the past. The cash flow projection shows the cash that is anticipated
to be generated or expended over a chosen period in the future.

38
 Break-even Projection
• If you've done a good job projecting
your sales and expenses, you should
be able to identify when your
business breaks even i.e. when it
becomes profitable.
• As a start-up business, this is not
expected to happen overnight, but
potential investors want to see that
you have a date in mind and that you
can support that projection with the
numbers you've supplied in the
financial section of your business
plan.
Breakeven Analysis
• The Breakeven analysis can tell you what sales volume you are going to need
in order to generate a profit. It can also be used as a guide in setting prices.
• There are three basic ways to increase the profits of your business:
 Generate more sales;
 Raise prices
 Lower costs.
• All can impact on your business in a number of ways.
 If you raise prices, you may no longer be competitive
 If you generate more sales you may need added personnel to service those
sales which would increase your costs
 Lowering the fixed costs your business must pay each month will have a
greater impact on the profit margin than by changing variable costs but how
do you achieve this?
40
 Breakeven key words and definitions
Fixed costs: Rent, insurance, mortgage, salaries, etc.
Variable costs: the cost at which you buy your products and other costs the varies with output (e.g.
packaging, heating, wages, transport, etc.)
Contribution Margin: This is the selling price minus the variable costs. It measures the
amount available to pay the fixed costs and make a profit.
Contribution Margin Ratio: This is the amount of total sales minus the variable costs, divided
by the total sales. It measures the percentage of each sales amount to pay fixed costs and make a
profit.
Breakeven Point: This is the amount when the total sales equals the total expenses. It
represents the minimum sales amount you need to reach before you make a profit
Breakeven Point in Units: This is the total of Fixes Costs divided by the unit selling price
minus the variable costs per unit. It tells you have many units you need to see before you make a
profit.
Breakeven Point in Dollars: This is the total amount of fixed costs divided by the
contribution margin ratio. It is a method of calculating the minimum sales dollar to reach before
you make a profit.
• If the sales dollars are below the breakeven point, your business is losing money. 41
 Costs, Volume, Revenue and Breakeven
Illustration: Break-even Cost or
M
revenue £

TC

analysis
Break-even point
         

The break-even analysis table calculates

a break-even point based on fixed costs, A B
variable costs per unit of sales, and Fixed
revenue per unit of sales. costs
L X Y Output volume
Activity
Penford sells sofa beds for £200 per unit (excluding VAT). The variable cost per
sofa bed is £166 and fixed costs are £102,000.
1. What is the contribution per sofa bed in £ and as a Percent (%)?
2. What is your breakeven point in:
(a) Units
(b) Sales volume
3. Suppose the rent or other fixed costs goes up? What will be the impact on
the breakeven point?
4. What if the margin goes down, because a competitor opens nearby, what will
be the impact on your breakeven?
5. If your strategy was to reduce your breakeven point, what options do you
have?

43
 Solution

Penforth Sofa Beds

Unit Selling Price (ex VAT) £200
Variable cost £166
Contribution £ 34
17%
Breakeven =
£102,000 = 0.17 ££600,000

In this example you have to turn over £600,000 in sales volume which is 300 sofa beds to
break even. Each sale makes a contribution of £34 i.e. 17% gross margin.
*In some Business Plans, Breakeven analysis is presented as part of the Sales plan*
44
 Forecast Profit & Loss Account
& Balance sheet
• Trading income - sales
Less
• Cost of sales
• Overheads and general expenses (including depreciation)
= Budgeted net profit for the year.

Forecast Balance Sheet

• Statement of assets and liabilities “as at” a particular time i.e.
on a date.
 Profit and Loss Statement
 
January 2019 to December 2019
 
 
Income:
 
Sales
Other Income
 
Total Income:
 
Expenses:
 
Salaries/Wages
Payroll Expenses
Legal/Accounting
Advertising
Travel/Auto
Dues/Subs.
Utilities
Rent
Depreciation
Permits/Licenses
Loan Repayments
Misc.
 
Total Expenses:
 
Net Profit/Loss: 46
 BALANCE SHEET
Name of Business
As of ________________

ASSETS LIABILITIES

Current Assets: Current Liabilities:

Cash ...................................................... $
Petty Cash............................................ $
Accounts Receivable .............. ............ $
Inventory ................................. ............ $
Short-term Investment ......................... $
Prepaid Expense .................................. $
Long-term Investments ........................... $
Fixed Assets:
Accounts Payable ................... $
Notes Payable ........................ $
Interest Payable ...................... $
Taxes Payable:
Income Tax ........................ $
State Income Tax .......................... $
Self-Employment Tax ............. $
Sales Tax (SBE) ............................ $
Other Taxes ................................... $

Land ................................................... $ Payroll Accrual .......................... $

Buildings............................................... $
Improvements ...................................... $
Equipment ............................................ $
Furniture ............................................... $
Automobiles/Vehicles ........................... $
Long-Term Liabilities .............. $
Notes Payable............................ $
Total Liabilities ......................... $

Other Assets:

1. ................................................... $
2. ................................................... $
3. ................................................... $ Net Worth/Owner’s
4. ................................................... $ Equity/Retained Earnings ......... $

TOTAL ASSETS: $ TOTAL LIABILITIES ................. $

Note: Total Assets will always equal Total Liabilities plus Total Net Worth, i.e. the bottom -line figures 47
for Total Assets and Total Liabilities will always be the same.
 Financial Assumptions

• IMPORTANT!!!
• Remember to be clear about the underlying assumptions
that support your projections, e.g. sales increase per
month, date when loan repayments begin (and end), extra
workers taken on, seasonal variations in cash flows, etc.
• Without stating your assumptions some of your
projections may not take sense to someone reading your
financial plans.
Business Launch Plan

49
 SWOT Analysis
• Investors will always want you to be honest in your predictions and to reflect
on your business idea and you as the proposer. By doing a SWOT analysis,
you will be demonstrating to investors that you have considered the pros and
cons and you are therefore a calculated risk taker.

• Usually short bullet points (up to six in each section).

• Fit the business plan.
• Could combine with personal SWOT
• Strategies for dealing with weaknesses and threats to the business.
 Example of SWOT Analysis
Business SWOT analysis Founders SWOT analysis

Positives Factors Negative Factors Positives Factors Negative Factors

Strengths Weaknesses Strengths Weaknesses
Internal Factors

• Relatively new

Internal Factors
• New player to the
market market • Strong knowledge of • Not enough experience
• Just two direct • Market is not digital marketing in e-commerce.
competitors mature, so no much • Strong experience in • Finances are not our
• Unique service that data available project strengths
make us move from • Small time to start management
red ocean to a blue with • Data analytics skills
ocean
SW SW
• New Trent for buying
OT OT
External Factors

External Factors
online • New player could
• Innovative Digital • The ecosystem is Spain • We need to create a
move into the very good
technologic available is very good for young
market relationship with our
• Partnership with entrepreneur
• Lose the partnership
stablish and well • Spanish has a very partners us they can
with the leave us for our
known supermarkets good networking
supermarkets competitors
• Large market
Opportunities Threats Opportunities Threats
 TOWS or SWOT analysis
TOWS analysis is a variant of the
SWOT analysis which looks to
match internal to the external factors in
order to identify relevant strategic
options that your plan/idea could pursue
– something that the SWOT analysis
does not do.

TOWS enables the idea/enterprise to:

- Match its internal strengths, and
external opportunities (SO) to
develop ‘maxi-maxi’ strategies –
those with the greatest potential for
success.
- Highlights the plan/idea’s
vulnerability to threats based on its
weaknesses and develop strategies
that minimises them while avoiding
threats (WT) – ‘mini-mini’ strategies.
- In between is the mini-maxi (WO)
and maxi-mini strategies (ST) are
there to strengthen weaknesses,
utilising opportunities, and minimise
threats utilising strengths.
Product and Service Concept
• In general, this section of the business plan should include:
• A brief description of your product/service that emphasizes customer benefits
• An explanation of the market role of your product/service and advantages it
has over competitors
• Information about the product/service's life cycle
• Relevant intellectual property details
• How innovative is the product/service? What is unique about it?
• Does it solve a problem or flaws in existing products and services or fill a gap
in the marketplace?
• Does the product/service make sense? Is it something that customers would
be excited about? What value does it create for the customers?
• Consider adding pictures or diagrams.
 Operations plan
• The operations plan part of the business plan is designed to describe how the
business will function on a continuing basis.
• It highlights the logistics of the organization such as the responsibilities of the
management team and tasks assigned to key employees.
• Some of the issues addressed here includes:
• How about regulatory and other compliance issues e.g. licences, permits or
planning permission?
• How are you going to produce the product or provide the service at a profit e.g.
manufacture, sub contract, franchise, licence?
• Intellectual Property issues. Do you need to register your patents, trade marks,
copy rights, etc.?
• An explanation of how the company will function, including the operations cycle
and flow charts (from acquisition of supplies through production to delivery).
 Operations plan
Some of the questions the operations plan seeks to address are:
1. Production capacity/ anticipated production volumes
2. Sources of supplies, including lead times
3. Distribution logistics (e.g. wholesale, retail, agents, direct mail, online?) in-house or
outsources?
4. Health and safety and other legal/regulatory compliance issues like permits and licenses
5. Quality issues - How do you ensure the right quality (customer satisfaction issues)
6. Recruitment plan and organisational structure and details of key personnel
7. Have adequate arrangements been made for patenting and copyright?
8. Have adequate lease arrangements for premises been made?
6. Is there sufficient insurance and or warranties?
7. Returns policy - how will returns be handled?
8. How will pilferage, waste, spoilage, and scrap be controlled? (CSR and sustainability issues)
9. Other operational details.
NB: NOT EVERYTHING WILL BE RELEVANT TO YOUR BUSINESS.
 Business Plan Structure

The complete structure of the business plan will look

like …
 Complete Structure
• Executive Summary of the business proposition (to cover both parts)
• Proposal (Context section) – structure and content as discussed in previous sessions
• Product/Service concept/ Plan: details about the products/services, including statement
of Innovativeness
• Description of the business: What the business does and its legal structure
• Market Analysis: with details about the market e.g. size, target market segment, etc.
• Marketing, plan: with details of market analysis, marketing plan, sales strategy and
competitive analysis
• Operations Plan: Owith details of operations, management, people, processes,
flowcharts, organization structure, etc.
• Financial Plans: Investment and working capital requirements, Sales projections, pricing,
costs, gross and net margins and breakeven, analysis, cash flow statement (monthly for
first 12 months), proforma P&L and balance sheet (up to 3 years)
• Launch Plan: Milestones leading to the launch of the business
• TOWS analysis of the idea/business and conclusion
• Appendices: Must be clearly labelled and made reference to in the main body.
NB: Structure, content and level of detail of a Business Plan is dynamic and varies to suit the needs of the stakeholders
and also reflects the practice adopted in different countries.
 Appendix

• Appendix (contains backup material)

 Letters
 Industry and market research data
 Leases or contracts
 Price lists from suppliers.
 Additional financial data and projections
 Other relevant supporting material
 Other information supporting your project’s viability
 Enhancing your business plan
Recognise what your best competitors are doing and be able to offer an
alternative.
Look at every major aspect of the business and ensure each has something
different in it.
Use the potential of the internet in some way.
Make contact with customers to ensure you are meeting their needs.
Use modern trends to see what you should be doing.
The plan is a projection, not reality
Use real information not assumptions in your plan
Set realistic targets for sales and production
Plans should be dynamic not static – markets and other factors will change (so
plan needs to change over time)
Business Plans: Investor Decision Process

Market Attractiveness
• Market Need
• Size of Market
• Market Growth
• Access to Market Expected
Product Differentiation Return
• Uniqueness +
• Product Life
• Profit Margin
• Value Added
Decision
Managerial Capabilities to Invest
• Management Skills
• Marketing Skills
• Financial Skills
• References Perceived --
Resistance to Threats Risk
• Barriers to Entry
• Obsolescence Risk
• Downside Risk
• Economic Cycle Risk
Dollinger (2002) Entrepreneurship: Strategies and Resources
 Searching for Ideas
Search for a product or service idea

From your From From a

From
previous casual deliberate
hobbies
employment observation search

Product
Magazines Trade shows Government Use
licensing
and other and agencies and creative
information
publications conventions departments thinking
services

Evaluate the possible alternatives

Determine your preferences

 Important Questions to consider
Is the business just an idea, or is it an
opportunity with real potential?
Is the product or service viable? Does it add
significant value to the customer? Was a
feasibility analysis completed?
Does the business have a well-defined target
market?
Is the management team experienced, skilled,
and up to the task of launching the new
business?
Is the business organised in an appropriate
manner? Are its strategy and business
practices legal and ethical?
Is the industry in which the product or service
will be competing growing, stable, or declining?
How will the competitors react to your entrance
into their markets?
What are the critical risks surrounding the
business, and does the management team
have contingency plans in place?
Does the firm have an exciting and sensible
business model? Will other firms be able to
easily copy it?
Are the financial projections realistic, and do
they project a bright future for the firm? What
rate of return can investors expect?
Source: foba.lakeheadu.ca