business plan explained

8/2/2019 Business Plan Explained

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This is an explanation of the final business plan,

A business should have a unique name, logo, and motto.

For formatting, use Times New Roman, font 12 and 1 line spacing for text.

A final business plan will vary from 25 to 50 pages depending on the businessactivity and creativity of the person.

You should do some research work to get some statistics that will show thatyour business plan is a realistic one.

Moreover, a good business plan is also a well-presented business plan.Differentiate title with subtitles

Tiles are like, executive summary, the business and the management teamwhich are in red

Subtitles are management risks, marketing risks, operating risks, which are bold

and underline.

It would be wiser to start every title on a fresh page.


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Cover Page

Display Index No., Programme of Studies, and Tutors Name

Put your business name, logo, and motto

Table of Contents

It would good that you have an introduction of Mauritius as a country doing

business, this will show that you have a knowledge of how business are set up

in Mauritius and what procedures to adopt, moreover, include some statistics

showing SME business in Mauritius,( revenue, size of market, number of

SMEs)

I. Executive Summary

A. The Opportunity Can be a problem to be solved or a need to be filled.

B. Brief Description of the Business

How the business proposes to solve the problem or fill the need

C. Source(s) of Competitive Advantage

Brief Description of the business model

D. The Target Market (One or more segments)

E. The Management TeamF. Brief Summary of the Financial Projections

The amount of capital needed and what the capital will be used for, (if the plan is

going to a potential investor/financer)

G. Description of Business Needs

H. Any exit Strategy for Investors (if the plan is going to investors)


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II. The Business

A. The Opportunity

Detailed description of the problem to be solved or need to be filled. From idea to

Business Opportunity.

Describe the opportunities that are available in Mauritius, that is, opportunities

for setting up an SME, we can also talk on how competitors product are different

from our product, and you can add 1 or 2 statistics to show that the market is

really an opportunity to do business. Also, explain why your idea is a business

opportunity, for someone who want to open a Lifestyle Physical Therapy and

Balance Centre, it will be an opportunity as there is no such clinic or centre in

Mauritius that facilitate rapid recovery of neurological dizziness and balance

disorders, as well as musculoskeletal disorders.

B. The Description of the Business

Description of how the proposed business plans to solve the problem or fill the need

- Explain also the business will consist of how many persons, how you will do

your business, how to market your business, what are the potential market outlets,

mention also how your production will satisfy the need in the market,

Company history or background

- Since it will be a new business, there will no background, but if you are

planning to take-over an old business, then you should describe the business details

Company Vision, Mission and objectives

- Do state your objective, that is, what you want to achieve through the production of

your good, for vision, mission and objectives, try to look at big companies, they have

a nice vision and mission statement, and a motto with a logo. Objectives can come in

the form of values that the company nurture.For example, a goal might be to have a

healthy, successful company that is a leader in customer service and that has a loyal

customer following. Objectives might be annual sales targets and some specific

measures of customer satisfaction.


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Business Philosophy: What is important to you in business?

C. Competitive Advantage

Description of the business model

- explain which type of business you will have, company, partnership or sole-

trader, you can also mention what will be your major source of income, you can also

state your distribution channel.

How the business will create a sustainable competitive advantage

- your competitive advantage can be in terms of experience, your labour, your

machinery or the innovative item that you are coming with, and how this will capture

the market. Moreover, you can mention that the business is more quality oriented

and customer oriented.

D. Current Status and Requirements

Description of where the business stands today

- This is what you have done till now, e.g. you have a building, you have apermit, you have some stocks, you have already done some surveys, its means what

you already possess and what you have acquired to start your business

Description of what the business needs to move forward

you have stated what you have done till now and but in this section

you need to state what need to be done, despite having a minimum

requirements to start up a business , you may have something that ispending e.g. loans approval, market surveys, results of surveys, purchase

of equipment or utilities( electricity, water and waste water)


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III. Management Team

A. Management Team

Management qualifications/experience

- state the qualifications and experience of the manager or owner(it is not for

employees) in the business, mention who will form part of the management team,

you can also mention on what basis you have recruited your employees, whether

they will be permanent workers or will be on a XX months or years of probation

Management ability/competences

- in this section you should mention about the qualities that you possess,

some have very good communication skills, some are the leader type, some are

good at coordinating the production process, some have marketing skills,

Technical expertise

- mention whether you want to recruit or you have already recruited

an expert, for e.g., a laboratory expert that will do some testing for your

product, vetinerary, graphic designer

B. Board of Directors

Number of directors

Composition of the board and responsibilities

normally a board of directors is formed when it is the case of a company,For the board, you can mention, that it will take decisions about how the

funds will be managed, how the assets will be managed, what strategic

decisions will be taken,


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C. Board of Advisers (if any)

Number of advisers

Composition of the advisory board

it is an optional factor, you can say that you will appoint someone, or its a relative

or a friend, you can have , financial advisor, marketing advisor, sales advisor, supply

and logistics management advisor, legal advisor, production advisor. But for those

doing a partnership business or sole-trader, it will be most suitable to have a board

of advisors, this will compensate for the board of companies, here just mention who

will form part and what will be the duties of the board, what type of decisions will be

taken, decisions can be in form of introducing new packages, seeking new loans,

where you need some advice as you dont have the necessary expertise in the field

D. Key Professional Service Providers

Law & Accountancy firms

Bankers

explain what your accountancy firms will do ,how you will deal with your

bankers, what services you will require from both the accountancy firm and

bankers,

For the law firms, it is most appropriate to have it for a company, as it is a

more complex structure than the sole trader is, but you can say, you have a

friend, a brother or a relative who is a lawyer, that will take be the law

advisor


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IV. Organisation Structure, Ownership and Intellectual Property

A. Organisational Structure

Organisational chart

- You need to draw an organisational chart it may take the form below (it is

just an example)

Now you should state what are relationships between employees, for e.g. if there is a

defect in production, the foreman will report to the production supervisor and the

production supervisor will report to the production manager. Then the production

manager will inform the foreman through the production supervisor what should be

done. If the production manager is not able to take a decision, he may consult his

managing director. This is a democratic style adopted in the company, where there is

two-way communication. You can also mention it. You can also mention what type of

leadership style you will adopt. You can also attach a job description for each

employee in your appendix

* A job description is a fully detailed report for a specific post in a business


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V. Industry Analysis

A. Industry description

Industry trends, size, attractiveness

- you should do a SWOT Analysis, Porters five forces model and include the

PEST factors, you should also include statistics on the market size, customer taste

and preferences, surveys results on customers reaction towards new innovativeproducts, market saturation, industry statistics about average revenue, average

profit, average capital to start a business in that industry. You can include statistics

for doing business in Mauritius and business facilitation in Mauritius and laws and

regulations that help to promote business activity. The status of the industry can be

for example, a monopoly, an oligopoly or an open market approach. Other industry

issues include the industry trends (e.g. influence of technology), industry

attractiveness (e.g. industry life cycle). Is it a growth industry? What changes do you

foresee in the industry, short term and long term? How will your company be poised

to take advantage of them?

Profit potential

- If you can include a profit potential, it will be good. To give a more precise

profit potential, you can use your market analysis results and some statistics as wellas your cash flow forecast and budgeted profit and loss account. In case of a loss,

this will help you to identify factors that help you to remedy to the situation.

B. Target Market

Description of target market (market segments)

- You should mention the specificities of your target market e.g. buyingbehaviour, disposable income, individuals or institutions. You should include


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statistics. You should also mention how your competitor acts in the market segments

you are targeting. Moreover, in a market segment, you may adopt a positioning and

targeting strategy to grasp the most out of the segment. A market can be segmented

in terms of age, gender, income, region, habits, taste and fashion.

C. Competitive position within target market

Competitor analysis

- It is mostly a survey that you need to do between your business and

competitors (max 3 best competitors), the results will show if you are the leader,

concurrent or the starter. Also, include your competitors market shares, average

revenues, average profit, average workers and average production. The use of the

competitor analysis is to assess the products/services, market share, pricing

strategies and other business policies. Your competitor analysis may include the

following questions that you need to get information:

What market segments do competitors position themselves?

Are competitors importing, manufacturing or just reselling?

What are competitors annual turnover?

Do competitors focus on price, on product or on customers?

Do competitors sell branded or generic products?

What are competitor sources of competitive advantage?

What are competitor strengths and weaknesses?

You should then compare the answers of your competitors with your business to

know if your business is better that competitors and in which aspect it is better.


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VI. Marketing Plan

A. Product Feasibility and Strategy

Concept testing

- You can include a feasibility study about your products, e.g. product

feasibility, market feasibility. You can even compare your business with other

business or compare it with industry benchmarks. You may also analyse

competitors strengths and weaknesses.

Product strategy

- You can give your plans concerning packaging, sizes, volumes,

presentation. New products inform people, make them aware, and inform them of

benefits of new products/services, as people may not be aware of their needs. You

can talk on your packaging, what details will be on the packaging, how the product

will be in the packaging.

Features and Benefits

List all of your major products or services.

For each product or service:

Describe the most important features. What is special about it?

Describe the benefits. That is, what will the product do for the customer?

B. Pricing Strategy

- You need to mention about pricing strategies, it is not the same with saying

that a pen will cost Rs 10, pricing strategies are marginal cost pricing, cost based

pricing, penetration pricing, price-skimming, psychological pricing, competitor based


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pricing or standard pricing. Does your pricing strategy fit with what was revealed in

your competitive analysis?

Compare your prices with those of the competition. Are they higher, lower, the

same? Why?

How important is price as a competitive factor? Do your intended customers really

make their purchase decisions mostly on price?

What will be your customer service and credit policies?

An example of psychological price is Rs 9.99, 16.99,

C. Channels of Distribution

- you should state your channel of distribution, you should include how may

intermediaries you have and why you have chosen those intermediaries, and you

can also mention about competitors channel of distribution and show that your

channel of distribution is better than your competitor. An example is shown below:

D. Marketing Communications Strategy

- Your plans for advertising, any press advert, brochures, direct marketing strategy,

TV, radio, explain how your advertising will be done to attract more customers. How

will you get the word out to customers?


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Advertising: What media, why, and how often? Why this mix and not some other?

Have you identified low-cost methods to get the most out of your promotional

budget?

Will you use methods other than paid advertising, such as trade shows, catalogues,

dealer incentives, word of mouth (how will you stimulate it?), and network of friends

or professionals?

What image do you want to project? How do you want customers to see you?

E. Customer Support (depend on type of business)

Customer support strategies

- How do you plan to develop a relationship with customers in view of

retaining them?

Customer support obligations

- Any contractual agreements with customers e.g. hire purchase. Deposit

agreements


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VII. Operations Plan

A. Method of Production or Service Delivery

- For a product, you should mention whether it will be a manual production or

mechanical production, Industrial manufacturing, semi manual, automatic, semi-

automatic and how many machines would be used.

- For a service, you should mention how you would render your service, how

you would make it available to customers

Explain your methods of:

Production techniques and costs

Quality control

Customer service

Inventory control

Product development

B. Availability of Qualified Labour Pool (may require separate HR Plan)

- For this part, if you plan to employ more than 10 people, then you prepare a

separate HR plan, otherwise, you should include how many employees you will

have, what are their qualifications, skills, competences? How the recruitment and

selection process will be done.

Location Plan, Layout Plan


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Layout plan, it is a detailed overview of the business place, it shows administration

office, toilets, rest room, production room, it can be done on paint or AutoCAD. An

example is shown below:

Location plan includes a satellite overview of the business as it will include roads,other buildings, and land of other persons. An example is shown below:

C. Quality Control


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- It will depend on the type of the business, but some might require qualitycontrol systems to be put in place, procedures, systems (e.g. TQM), ISO standards(Certification and Accreditation issues).

VIII. Financial Plan

A. Capital Requirements for the Next 3 to 5 Years

Sources and uses of funds, where you will get the money and what will be

amount of the money.

B. Overview of Financial Projections ( Give a brief overview of your P&L, balance

sheet and cash flow)

C. Profit & Loss(This is just an example, you may modify it or change the format)

Profit and Loss Projection (3 Years)Enter your Company Name here

2006 2007 2008

Sales $ - $ -$-

Cost/ Goods Sold (COGS) - - -

Gross Profit $ - $ -$-

Operating Expenses

Salary (Office & Overhead) $ - $ -$-

Payroll (taxes etc.) - - -

Outside Services - - -

Supplies (off and operation) - - -

Repairs/ Maintenance - - -

Advertising - - -

Car, Delivery and Travel - - -

Accounting and Legal - - -

Rent - - -

Telephone - - -

Utilities - - -Insurance - - -


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Taxes (real estate etc.) - - -

Interest - - -

Depreciation - - -

Other expense (specify) - - -

Other expense (specify) - - -

Total Expenses $ - $ -$-

Net Profit Before Tax - - -

Income Taxes - - -

Net Profit After Tax - - -

Owner Draw/ Dividends - - -

Adj. to Retained Earnings $ - $ -$-

D. Cash Flow Projections (This is just an example, you may modify it or change the

format)


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Name

Cashflow Statement (Direct Method)

For the year ended .

Notes $ $

Cashflow from Operating ActivitiesCash received fromcustomers XXX

Cash paid to suppliers (XXX)

Other operating expenses (XXX)

Cash generated fromoperations XXX/(XXX)

LessTaxation paid (XXX)

Less Interest paid (XXX)

Net cashflow from operating activities XXX/(XXX)

Cashflow from Investing Activities

LessPurchase of non current assets (XXX)

AddSales of non current assets (XXX)

Add Interest received XXX

AddDividends received XXX

Net Cashflow from Investing Activities XXX/(XXX)

Cashflow from Financing Activities

Proceeds fromissues of shares XXX

Proceeds fromlong termborrowings XXX

Payment of finance lease liabilities (XXX)

Redemption of shares (XXX)

Repayment of loans (XXX)

Dividend paid (XXX)

Net Cashflow fromFinancing Activities XXX/(XXX)

Net Cashflow XXX/(XXX)

Cash and Cash Equivalent at the beginning XXX/(XXX)

Cash and Cash Equivalent at the end XXX/(XXX)

E. Balance Sheets (This is just an example, you may modify it or change the format)

Balance Sheet (Projected)Enter your Company Name here

Beginning Projected

as of mm/dd/yyyyas of

mm/dd/yyyy

Assets

Current Assets


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Cash in bank $ - $ -

Accounts receivable - -

Inventory - -

Prepaid expenses - -

Other current assets - -

Total Current Assets $ - $ -

Fixed Assets

Machinery & equipment $ - $ -

Furniture & fixtures - -

Leasehold improvements - -

Land & buildings - -

Other fixed assets - -(LESS accumulateddepreciation on all fixedassets) - -Total Fixed Assets (netof depreciation) $ - $ -

Other Assets

Intangibles $ - $ -

Deposits - -

Goodwill - -

Other - -

Total Other Assets $ - $ -

TOTAL Assets $ - $ -

Liabilities and Equity

Current Liabilities

Accounts payable $ - $ -

Interest payable - -

Taxes payable - -Notes, short-term (duewithin 12 months) - -Current part, long-termdebt - -

Other current liabilities - -

Total Current Liabilities $ - $ -

Long-term Debt

Bank loans payable $ - $ -Notes payable tostockholders - -

LESS: Short-term portion - -

Other long term debt - -

Total Long-term Debt $ - $ -

Total Liabilities $ - $ -

Owners' EquityInvested capital $ - $ -


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Retained earnings -beginning - -Retained earnings -current - -

Total Owners' Equity $ - $ -

Total Liabilities & Equity $ - $ -

F. Payback and Exit Strategy (if the business plan is sent to potential investors)

IX. Critical Risk Factors

A. Management Risks

- It is linked to the performance of managers, management team, board of

advisors, Leaks from staff acting unethically

B. Marketing Risks


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- The effects of marketing strategies on the business and also the actions of

competitors through their marketing strategies.

C. Operating Risks

- It will arise based on the production strategies adopted, the existence of

defective goods/services, health and safety incidents. Faulty equipment and

environmental risks

D. Financial Risks

- It is based on the financial projections of the business, a loss will surely lead

to some risk, as well as a big amount of loan, and there might be embezzlement.

E. Intellectual Property Infringement

- Violation of rules, trademark regulations, copyrights, or trying to copy part of

a copyrighted product

X. Appendix

A. Supporting Documents

C.Vs of founders and key employees

Diagrams of product prototypes

Other documents as appropriate

Design of plant and equipment


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Copies of contractual agreements with partners, employees, suppliers,

customers etc.

Brochures and advertising materials

Industry studies

Blueprints and plans

Maps and photos of location

Magazine or other articles

Detailed lists of equipment owned or to be purchased

Copies of leases and contracts

Letters of support from future customers

Any other materials needed to support the assumptions in this plan

Market research studies

List of assets available as collateral for a loan