Lecture 10 - Business Plan

Business Plan

Dr Noor Muhammad [email protected]

Learning Outcomes

1. Understand the importance of planning

2. Be aware of the contents of a business plan

3. The tools for delivering and managing the planning process

What is a Business Plan ?

1. Document outlining your business concept

2. Blue print for running a business:

Where are we now? Where are we going? How will we get there? When will we arrive?

3. Management tool which can help prevent costly mistakes

4. A selling document?

Finance can be a Key Objective

1. Lender needs to be convinced of being repaid

2. Demonstrate there is a good market

SELL THE IDEA AND TEAM

What Does Investors Look For?

1. Market opportunity and idea

2. Evidence of market research

3. Team, track record, strengths and gaps

4. Convincing case for profitability and high returns

What Does A Business Plan Cover?

1. Every aspect of a business - not just financial

2. Economic factors

3. Environmental factors

4. Marketplace

5. Customers

6. Suppliers

7. Competitors

8. Production processes

9. Management and employees

10. Training etc

Why Prepare a Business Plan?

“Those who fail to plan, plan to fail.”

George Hewell

Why Prepare a Business Plan?

1. Increases chance of success

2. Guides the management team

3. Improves communication (both externally and internally)

4. Establishes benchmarks to monitor and measure actual performance

How Does Planning Increases Success?

1. Identifying strengths, weaknesses, opportunities and threats

2. Quantifying and reducing business risks

3. Understanding internal barriers

4. Establishing priorities

5. Anticipating and avoiding problems

6. Encouraging realism

Common Reasons Given for Not Planning

1. Time

2. Ignorance

3. Over-confidence

4. Resources

Human Financial

What You Must Include?

1. What is the product or service

2. What is the market

By secondary and primary research

3. The management team

4. How the product will reach the market

5. The costs involved

Typical Contents

1. Executive summary 2. Company analysis 3. Industry analysis 4. Analysis of customers competition 5. Marketing plan 6. Product design / development plans 7. Operations Plan 8. Management Team 9. Financial Plan 10.Risks and assumptions 11.Appendices

Executive Summary

1. Preferably one page

2. Purpose of the plan

3. Brief description of the business and the marketplace

4. A statement of how much finance is required

5. Summary of financial highlights

6. Calibre of management

Company History

1. Length of time in operation and progress to date

2. Ownership structure

Legal

Capital, equity, loans, options

Involvement of shareholders

3. Location, contact details

Product/Service

1. Detailed description

2. Why it is unique

3. What benefits it offers / potential applications

4. Details of supplier

5. Status

1. Description of sector

2. Current size, historic and projected growth, trends

3. Segmentation

4. Main competitors

Identity, market share, strengths, weaknesses, potential new entrants

6. Include statistical information

7. Methods

Market Analysis

Marketing Strategy

1. Marketing mix

2. Market positioning - quality, price, customer service, brand, image, etc

3. Pricing policy

Cost-based, demand based, discounts, warranties

4. Field / product support

5. Advertising and promotion methods, costs, frequencies, web based, etc

6. Distribution channels

Operations Management

1. Premises

Location, size, facilities, cost, leasehold v freehold,

planning and legal issues, alterations, growth plans

2. Staffing and labour, sub contractors

3. Supply base

4. Plant and machinery

1. Excessive detail

2. Inappropriate emphasis

3. Lack of clarity

4. Lack of commitment

Pitfalls

Thank You