From the foregoing, one will agree that business plans are decision-making tools. There is no fixed content for a business plan. Rather the content and format of the business plan is determined by the goals and audience of that enterprise. Some entrepreneurs simply see a business plan representing all aspects of business planning process that include only the vision and strategy with sub-plans to cover marketing, finance, operations, human resources as well as a legal plan when required. To some others, it has to be more detailed than that. It has to typically include an introduction/overview, a short description of the business idea and opportunity, what makes it different, who will be involved in the business, how you will provide your product or service, your marketing and sales strategy and financial situations and forecasts for the expected profitability. Consequently, it is essential to know that the structure of business plans vary.
However, this discussion uses a typical structure for a business plan for a start up venture.
ii.i. Executive Summary:This is the general overview of the entire business. It is a summary of the business idea, the mission statement, a sketchy report of where your business fits in the market place and why it will succeed. Questions that have to be answered here include:
ii.i.a. What is the business? A brief description of the business idea and why it should be a success, History of the enterprise and its ownership, Information about the entrepreneur’s qualifications, experience and financial status and location.
ii.i.b. What is the market? A description of the product and what it does, an explanation of ways in which the product is distinctive and unique, Analysis of the competition, How the product will be developed and what new products are being considered as replacements, Intangible assets & protection (e.g. copyright, trade marks)
ii.i.c. What is the potential for the business? Size and expected growth of the market, Analysis of market by segments, Identification of target segments, Competitors - who they are, ownership, size, market share, likely response to the challenge, Customers (existing & potential) - who they are, how they buy, why they buy, Distribution channels
ii.i.d. What are the forecast profit figures? A statement of what the business should achieve over a given time target (three or five year period)
ii.i.e. What are the Funding requirements?
ii.i.f. What are the prospects for investors and lender?
Please note that all these need not be in details as they are only the overview of the whole plan.
ii.ii. Business Description: This is a detailed description of the business, with an in-depth explanation of the product or service being planned for the market and its benefits to those who will buy or use it.
ii.iii. Business Environment Analysis: This should explain the detailed strategy and tactics to be employed for bringing the product or service to the market. Strategy is the broad approach to the achievement of objectives while tactics refer to the details of the strategy. This includes the business name, the image and how they will be protected.
· Determines how to get to the market?
· Summarizes how to fulfill the entrepreneur’s objectives.
· The detail will be contained in programmes and budgets.
· the pricing structure to be established.
· the estimated sales projections.
ii.iv. Market Analysis:This should thoroughly describe the customers, your competitors, the need for your product or service, and the health and vitality of the market place. This cannot be guess work. It must be based on a careful and reliable research. Other key questions it must answer are:
· What is the size and growth rate of the market?
· How is the market segmented?
· What is special about the product or service?
· What are the competitive advantages?
· What is the marketing strategy?
ii. v. Marketing Plan: The marketing has to be adequately planned for and must include the:
· Market research
· Segmentation and targeting
· Detailed outline of the product or service
· Unique selling points
· Chosen pricing strategy
· Promotional plans
· Distribution strategy
· Customer service strategy
ii.vi Operations Plan: Operations plan include the production process which must be explicitly explained. The process of bringing your product or service to the market, office space, production schedules, inventories, suppliers, supplies, official licenses, and insurance, meeting and existing business regulations must all be thoroughly discussed. The following may also be included depending on the type of business.
· Physical location
ii.vii. Management and Organization: This explains the organizational structure of the enterprise whether it will be sole proprietorship, partnership, Limited Liability Corporation, or other status and those to be involved. Other are
· Details of senior management
· Corporate governance
· Staffing requirements
· Key personnel
· Recruitment and selection
· Training
· Rewards (financial & non-financial)
· Labour relations
· Employment and related costs
ii.viii.) Financial Plan: This offers the idea about the finances to be involved. The available amount, the required amount and how and where you will secure the difference. It should also be able to give the investment appraisal - payback and discounted cash flow as well as break even analysis. Other expectations from the plan are:
· Details of capital required and uses
· The plan must include details of the external finance required. This will be equal to the finance required, less the finance raised internally from existing owners and from operations
· The plan will outline how it is proposed to raise the finance
· Sources of finance: Short, medium and long term; Debt v equity
· Evaluation criteria for performance review
· Ratio analysis: net profit margin, Gross profit margin, return on capital employed, liquidity and solvency analysis
Effective business planning has to begin with an honest and realistic appraisal of the current position of the business.
