The preparation for a business proposal
includes the presentation of a clearly defined Business Plan or Feasibility Study
as the case may be. Mr. Sina Monehin
is noted for his expertise in this area, and I think I should share his understanding
of this all important matter.
Objectives
At the end of the session, you will:
l Learn and
understand the content of a business plan and what to include in it;
l know what
data to use in facilitating the business financial projection;
l Become
skilled in writing a business plan.
 |
| Grow from small |
What is a Business Plan?
l The Concise
Oxford Dictionary defines a plan as “a detailed proposal for doing or achieving
something’.
l The Encarta
Dictionary defines a business plan as “a plan that sets out the future strategy
or financial development of a business, usually covering a period of several
years”.
What is a Business Plan?
l
“A business plan should set out the business
objectives; how and when these will be achieved; the resources that will be
needed; the evidence that supports the assumptions”. – Paul Barrow in ‘The
Best-Laid Business Plans’
l
“Business
plans are simply a formal list of your objectives and a road map which
illustrates how you plan to achieve them with a budget for doing so attached” –
Sahar & Bobby Hashemi in ‘Anyone Can Do It’
Does a Business Plan Help?
l Having a
business plan does not necessarily guarantee the success of a business.
l Not having a
business plan too does not necessarily mean that a business will fail.
l There is
however a high correlation between not having a business plan and failure rate
of a business.
l Having a
business plan helps; the business gets more matured and chances of survival
increase.
Some Arguments against Business Planning
l ‘I’m not
borrowing any money so I don’t need a business plan’. Wrong.
l ‘You cannot
predict the future’. Partly correct but remedy do exist.
l ‘My business
has been going for long. I don’t need a business plan – I won’t go bust.’ Risky
statement. The universe is constantly changing.
Sound businesses need a business plan. It’s not optional.
The Benefits of Business Planning
l It’s the
recipe for success.
- it will help you
identify needed resources;
- it will help you test
your business propositions b4 you commit to action;
- it will ensure that
your business is best suited to the changing business environment.
l Business
planning makes you feel more confident about the future.
l It helps
give an invaluable tool to monitor and control your business.
l It is a
great communication medium in terms of getting the commitment of others to its
execution.
l By
identifying weaknesses during the implementation phase, it helps in better
resource allocation.
l
Removes reliance on taking decisions through hunch
feelings.
What Sort of Plan?
l Not a
universal form of plan exists.
l Different
plans for different purposes.
l Requirement
too varies from plan to plan.
l Common reasons for needing a plan include:
- To raise money
- To obtain approval for a course of action
- Performance enhancement
- enlist external support i.e. from suppliers, government body,
etc.
What Makes a Good Plan?
l The business
is not going to exist in space but within a given economic system.
l Knowledge of
key macro-economics indices is important.
l For Nigeria, the
following are the key indices:
–
GDP in real terms -
External Reserve
–
Inflation -
External Debt
–
Interest Rate -
Exchange Rate
–
Oil Revenue -
Employment situation
Before You Start to Write Your Plan
l The plan
must be fully researched and documented. Avoid sweeping generalisations.
l Be appropriate.
Just tell the users of the plan what they need to know.
l Be
understandable. Avoid technical jargons.
l Ensure that
it can pass the reality test.
l Report must
have a smart and professional appearance.
l Presentation
must be first-class.
The Business Plan Guide – Executive Summary
l Usually the
last section of your plan to prepare but the first to come up in your
presentation.
l As the name implies, it is a summary covering
the essential features of the business.
l Covers basic business information of:
–
Name of business (and when it was started if old)
–
Legal status (sole trader, partnership, limited, etc.
–
Authorised and issued share capital (and major
shareholders)
–
Registered office and trading addresses
–
Professional advisers (bankers, lawyers, accountants,
etc)
–
Current mission and objectives
–
Milestones and financial performance
–
The opportunity and strategy
–
The target market
–
Competitive advantage
–
Profitability potentials
–
The management
–
The offering
The Industry, the Company and its Products or Services
l The Industry:
- Present the current status and the prospects
l The Company:
- Describe briefly what business area your company is in or
intends to enter, what products or services; and who will be the principal
customers.
l The Products
or Services:
- What USP’s (Unique Selling Points)
- Product Offerings
Market Research and Analysis
l The
marketplace as where everything plays themselves out.
l Sound
marketing information as the foundation for all financial projections.
l Must be very
comprehensive and not leave unanswered questions.
l Might
involve the use of professionals, consultants, apart of doing it yourself.
What Information?
l Customers:
- Who are they? How homogeneous (major market segment)? What
characteristics? What influences purchase decision? Etc. List potential
customers if they exist.
For existing business,
list principal customers. Discuss trend in sales, expected growth rate, what
share of the market, etc.
l Market Size
and Trends:
- What is the size of the total market?
- What is the potential annual growth rate?
- Projections should be for at least 3 yrs.
l Competition:
- Who are your competitors? What market share?
- What are their strengths & weaknesses?
- Compare on basis of price, performance, service,
sales/distribution network, production capacity, and other pertinent features.
What strategy to defeat them?
- What’s exit and entry like in the industry recently?
l Competitive
Business Strategy:
1.
Determines what makes your business different from the
others and why it will succeed.
2.
Your strategy will form a linkage between your
mission, the business objectives, marketing and financial projections.
3.
Environmental Scanning - PEST
4.
P – political pressures
5.
E – economic pressures
6.
S – social pressures
7.
T – technological pressures
Ø SWOT
Analysis:
-
S – Strengths
-
W- Weaknesses
-
O – Opportunities
- T –
Threats
For more business and entrepreneurial advantages refer to further references for self reliance.
