LECTURE #5A OVERVIEW OF THE BUSINESS PLAN
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TOPICS TO COVER IN THIS LECTURE Elements of the Business Plan SWOT Analysis Corporate Planning Organizational Designs Management Functions Corporate Strategies
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ELECMENTS OF THE BUSINESS PLAN
Purpose of the Business Plan The Organization & Management Plan The Human Resource Plan The Marketing Plan The Financial Plan 3
PURPOSE OF THE BUSINESS PLAN
Gives you the opportunity to examine the entire project objectively and give serious thought to chances of its success The detailed information and analyses help you to:
Work out your policy Identify areas of weakness and strength Predict possible problems and correct or prepare for them before they eventually occur.
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PURPOSE OF THE BUSINESS PLAN
In the initial stages of the project, the business plan acts as your “Bible”. It is a working guide against which progress can be measured. The Plan is flexible. It details analyses about key aspects of the operation make it easier for you to make adjustments when faced with unexpected changes. 5
PURPOSE OF THE BUSINESS PLAN
The Plan describes the project for
Lending agencies who need to evaluate the feasibility of your business idea. Professionals who will be involved with the business Your employees who will join the organization at a future date. 6
8 REASONS FOR WRITING A BUSINESS PLAN 1. 2. 3. 4. 5. 6. 7. 8.
Sell yourself on the business Obtain financing Obtain investment funds Arrange strategic alliances Obtain large contracts Attract key employees Complete merger and acquisitions Motivate and focus employees 7
The Organization & Management Plan
Building an organization that will last requires careful planning and strategy. Potential investors are interested in the quality of the management team. The initial organization design is simple. The entrepreneur handles multiple 8
THE MARKETING PLAN
How will you introduce the product/service to the market? Who will buy the product/service? Can the money from sales cover the costs of running the business and will this money come in when needed so you can pay your bills on time? 9
THE MARKETING PLAN
Pricing Strategy Promotion and Advertising Packaging Distribution Customer Service Overall – deals with all the Ps. 10
THE MARKETING PLAN – Purpose & Timing
The Marketing Plan establishes how the entrepreneur will effectively compete and operate in the marketplace.
Marketing planning should be an annual activity focusing on decisions related to the marketing mix variables 11
THE MARKETING PLAN – Purpose & Timing
The Marketing Plan Section of the BP should focus on strategies for the first three years of the venture: 1.
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3.
For the first year, goals and strategies should be projected monthly; For years 2 & 3, market results should be projected based on longer term goals; Preparing an annual marketing plan becomes the basis for planning other aspects of the business. 12
The Financial Plan Provides a complete picture of: How much and when the funds are coming into the organization. Where the funds are going How much cash is available The projected financial position of the firm 13
The Financial Plan – its components 1. 2. 3. 4. 5. 6.
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Operating and Capital Budgets Pro forma income statements Pro forma cash flow Pro forma Balance Sheet A Break-even Analysis Pro forma Sources and Uses of Funds Software Packages
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The Human Resource Plan
The Human Element in the Business Sourcing and Staffing Considerations Arrangements for Training and Development Performance Evaluation Occupational Safety and Health 15
The Organization & Management Plan SWOT Analysis Corporate Planning Organizational Designs Management Functions Corporate Strategies
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Examples of SWOT Factors Internal
Strengths Core Competencies Financial strength Well-planned strategy Skilled management Weaknesses Production inefficiencies Inadequate financial resources Poor management Poorly planned strategy
External
Opportunities Untapped market potential Favourable shift in market Emerging technologies New product Threats New competition Rising demand Increased government 17 regulations
The Management Team
Management team:
Consists of managers and other key persons who give a company its general direction
Characteristics of a Strong Management Team Capable of securing the resources needed to make business a success Reassures investors about their investment and the continuity of business Diversity of talent makes the team stronger than an individual entrepreneur
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