Business plan

Question 1

Benefits of a business plan

Answer 1

-Realistic, integrated perspective on the ‘bright idea’
-Encourages teamwork between executive team and key personnel
-Predicts funding requirements to pre-empt liquidity problems
-Can monitor progress against targets
-forces director to focus on long-term strategy

Question 2

Executive Summary:

Answer 2

-Background
-Product and Services
-Marketing and marketing strategy
-Operations and manufacturing
-Legal, social and environmental
-Executive and key personnel
-Financial projection

Question 3

Background

Answer 3

-Vision, mission and objectives
-Key products, markets and customers

Question 4

Product and Services

Answer 4

• Description of the life cycle of the product
• Explanation of its competitive advantage
• Business model - once-off sales, repeat business, after-sales services
  -Protection of intellectual capital through patents, copyrights or trademarks

Question 5

Marketing and marketing strategies:

Answer 5

• Industry growth rates and changes
• Expectations of demand, and determining factors
• Details and of major competitors market share
• Details and market share of major customers
• Customer profile and demographics
• Size and credentials of sales team
• Advertising format and media
• Sales network

Question 6

Operation and manufacturing

Answer 6

-Outsourcing vs manufacturing
- Inventory management
- Location and distribution network
- Supply chain

Question 7

Legal, social and environmental:

Answer 7

• Compliance with laws and regulations
  -Work experience
• Technical and academic qualifications
• Balance between production, marketing and finance functions
• Remuneration structure
• Clear responsibilities for each role
• Organisational chart

Question 8

Executive and key personnel

Answer 8

• Employment equity
• Gender equity
• BEE status
• Sustainability and integrated reporting
• Prevention/treatment of hazardous waste and pollution
• Employee health and safety

Question 9

Financial projections

Answer 9

• Cash flow forecasts
• Detailed monthly forecasts for first year
• Annual forecasts for rest of planning period
• Include:
  ⁻1. Projected capital expenditure on PPE
  ⁻2. Target capital structure (debt vs equity)
  ⁻3. Financing repayments
  ⁻4. Financial ratio analysis
  ⁻5. Contingencies
• Show all underlying assumptions

Question 10

Reviewing of business plan

Answer 10

• SWOT analysis
• Porter’s five forces
• PESTEL analysis