Business Plans


About a Business Plan

A business plan is effectively a Marketing document for any new venture. Business budgets are needed to ensure adequate money is available in order to apply for finance and to ensure adequate finances have been planned for the future venture.
A business plan provides a control mechanism over subsequent spending.

Most budgets begin with the previous years actual figures and make assumptions in the following manner:

  • Adding a percentage for inflation.
  • Adding new costs and activities.
  • Deleting old costs and activities.

A start up company has no historical figures to work from so you can budget in two directions:

  • "Revenue down" starts by working out how many units you expect to sell and at what price.
  • This gives you total Revenue.
  • Estimate what percentage of Revenue is accounted for by various costs.
  • Scale up your budget to the point where you exceed the capacity to produce.
  • "Cost up" budgeting starts from the cost of making the product.
  • You add a profit margin big enough to cover marketing expenses, salaries, overheads and a profit.
  • Multiply this by the total of product cost and the margin of unit you expect to sell.
  • The difficulty with this is your selling price is unrelated to the market.

 

Business Plan - Target Costing


This is a relatively new method of costing. Identify the maximum price customers will pay. This means you have to look very hard at: Quantity, Suppliers, Materials Used, Use of Technology, Alternative Sources.

The Four Main Objectives of a Business Plan

  • To attract financial and other support for establishment of the new business.
  • Set out basic estimates and assumptions relating to the market potential of the new business.
  • Present financial projections e.g. Investment involved, cost structure , proposed sources of finance.
  • Operational Plan for implementation and management of the new business for the first 5 years or so.

Rules for the Structure and Presentation of the Business Plan

  • Not more than 30 pages.
  • Executive Summary at the beginning.
  • Detailed budgets included in the Appendices.
  • Only short tables and charts in the text.

Contents of a Business Plan

  • Business Details.
  • Entrepreneur Assessment Questionnaire.
  • Marketing Strategy.
  • Legal Requirements.
  • Investment, Financing and Assistance.
  • Budgets.

Business Details

  • Contact details for the new business.
  • Brief outline of the products\services being produced.
  • Entrepreneur Assessment Questionnaire.
  • Profile of the entrepreneur detailing education, practical experience, motivation and personal qualities.

Marketing Strategy

  • Market Research.
  • Image.
  • Product \ Service Range.
  • Pricing.
  • Place.
  • Personnel.
  • Presentation.
  • Promotion.
  • Competitors.

Legal Requirements

  • Type of business entity.
  • Business name.
  • Planning regulations.
  • Qualifications.
  • Licenses.
  • Insurance.
  • Taxation.
  • Accounting.
  • Trading laws.
  • Premises.

Investment, Financing and Assistance

  • Personal Investment.
  • Other finance.
  • Grants.
  • Reducing risks.