INTRODUCTION OBJECTIVE
To introduce your business and your intended business activities.
It may include the following:
- Name of the business;
- Type of ownership (e.g. sole proprietorship, partnership, co-operative or company);
- Location and principal activities;
- Expected major achievements.
OVERVIEW OF INDUSTRY, MARKET. PRODUCT/SERVICE AND BUSINESS OBJECTIVE
To provide the data needs of the business and the quantitative base of market information upon which the planner will develop business strategies and sales forecasts.
a) INDUSTRY ANALYSIS
- Name of industry segment that your business will go into;
- Size and growth patterns of segment e.g. units produced/ sales per annum ;
- Characteristics (competitive forces, capital and labour requirements).
b) Products/Services of your Business
- Name and describe the product/service;
- State competitive advantages of your product/service.
c) Nature of Business
- Name investors and amounts to be invested;
- Brief history of the business in terms of past achievements in assets, annual
- Sales/profits.
- Or forecasts if proposal is for new business.
d) Market Analysis
Target Market Area
• State area in which your product/services will be sold;
• Size of target market area (i.e. amount of product/services needed to satisfy
• Demand in target market area e.g. annual unit consumption or sales;
• Growth/decline trends of your target market;
• Estimated annual sales i.e. your market share, (your forecast annual sales as a
• Percentage of total demand in target market area).
Customer Profile
- Your potential customers within the target market area (individuals, organizations and institutions);
- Consumption/buying patterns (how often and how much they buy the product/service);
- Reasons for buying i.e. prices, quantity, etc.
Competition
- Name (at least 3) major competitors supplying/servicing your target market;
- Competitors size, strengths and weaknesses;
- Your business competitive advantages
BE ADVISED: If you cannot sell it, don't make it!
STRATEGY FORMULATION
OBJECTIVE
To decide on how the business will operate to be able to sell profitably within the market and industry.
a) MARKETING STRATEGIES
Advertising and Promotion
• Advertising media;
• Other promotion activities;
• Frequency and monthly cost of advertising and promotion.
Pricing
• Product/service prices;
• Average product/service mark-up;
• Pricing considerations e.g. cost, competitors' prices, target customers,
product quality etc.
Methods of Selling and Distribution
• ways of supplying e.g.. counter sales, inhouse sales, sales agents, etc.
Selling Terms
• Cash and discounts;
• Credit sales, credit limit, credit period, etc;
• G uarantees and conditions for guarantees;
• P ackaging and after sales service.
OPERATIONS AND PRODUCTION STRATEGIES
i) Premises and Facilities
• Size of premises needed;
• Facilities, (water, power, storage, etc);
• State whether premises will be rented, leased or owned.
ii) Machinerv/Equipment and Raw Material (Stock) Requirements
• Machines, tools, motor vehicles, furniture and fittings and sources of supply;
• Raw material/stock requirements and sources of supply.
iii) Production Methods
• Production stages;
• Production capacity (i.e.. output per given time)
ORGANIZATION STRATEGIES
Key Personnel (Management)
• Key operations staff;
• Job functions and descriptions;
• Ownership in the business;
• Compensation (salaries, benefits, etc)
Staffing Plan
• Job functions/titles;
• Number of people per job within the next 3 years;
• Salaries/wages offered per job;
• Conditions of service.
Management Assistance and Staff Training
• Training for management in relation to weakness areas;
• Training plans for other staff;
• Training institutions to be used for staff training and other training.
Supporting Professional Services
• Professional services required by the business, i.e. essential services but not required on regular basis and sometimes your business cannot afford to employ a full time person e.g.. Accounting;
• Organizations that will provide the service and the annual cost of these services.
Action Plan
- Three year plans stating main goals to be achieved such as annual sales/profit. Forecasts and major capital acquisitions or intended expansions;
- Detailed outline of steps to be taken to achieve year 1 goals;
- Threats to business' success and plans to overcome them.
FINANCIAL FORECASTS OBJECTIVE
To forecast the results that are expected in the strategy formulation section and to outline the investment to be made to achieve the results.
START-UP COSTS
• Details and cost of initial business requirements. (These include assets that are already available. If you intend to import, the costs should include freight and clearance-charges);
• Start-up costs include: Land, buildings, machinery, equipment, vehicles, stock (materials/finished goods), working capital.
SOURCES OF FINANCE
• Equity - what owners will contribute including any assets already owned and intended for use in the new business;
• Loan required i.e. total start-up requirements less total equity provided;
- Repayment period in years;
- Expected interest rate %.
SALES FORECASTS
• Monthly breakdown of annual forecast sales taking into account seasonal variations;
• Seasonal variations;
• Total annual sales.
PROFIT AND LOSS FORECAST
This is a statement, which compares revenue generated from the sale of goods in the business's usual line or services provided, with regular expenses incurred in the day to day running of the business to find out how much profit or loss has been made.
A detailed proforma profit and loss statement showing sales and operating expenses month by month will be required for year one and on a quarterly basis for years two and three (CASHFLOW ).
CASH FLOW BUDGET
This is a detailed forecast of the business cash position at a given point in time, showing sources and amounts of cash to be received (inflows) and intended payments (outflows) and forecast cash balances at the end of every period. Details of inflows and outflows will be shown month by month for year one and then quarterly for years two and three forecasts. (CASHFLOW BUDGET).
BALANCE SHEET
A balance sheet is a classified statement showing business' assets (what the business owns) and its liabilities (what it owes) .It is intended to show a venture's financial position at a point in time. A forecast balance sheet must therefore show the following;
- Fixed Assets
- Current Assets
- Current Liabilities
-Working Capital
- Net Asset Value
- Owners Capital
- Long Term loans
- Total Capital employed (See example)
