Chapter 7 Flashcards
What is a business plan ?
It is a blueprint that provides a written, logical and systematic explanation of WHAT is planned, HOW it will be done and WHY the (new or existing) business will be successful
Business plan
It is more than just the entrepreneur’s ideas for a business venture written on a piece of paper. Often used to convince potential investors to invest their money in the business or to lend money to entrepreneur for the business venture
Importance of Business plan
- logically set out and easy to follow
- includes relevant details and excludes unnecessary details
- includes information in schematic format (diagrams)
- neat and free of errors
Why is a business plan important?
- entrepreneur has to identify all possible issues (swot)
- forces the entrepreneur to give careful consideration to all the aims and objectives for each section of the business and to write it in a logical way
- it is a tool that can be used to obtain financial assistance for investors when they are convinced to contribute capital to become co-owners
The format/elements of a business plan
- Cover page
- Contents page
- Executive summary
- SWOT
- Financial section
- Production plan
- Marketing
- Human resources
- Summary
- Appendices
The cover page
- must look professional and contain information such as the business’s :
- name and address
- contact details
- logo and slogan
- date that the business plan was done
- gives it relevance
Content page
- each section of the business plan should be numbered and the numbers are used when the plan is developed and prepared
- should also have page numbers
Executive summary
- written at the end, once entrepreneur has thoroughly discussed all the aspects of the business
- needs to be short and brief enough to attract the reader’s attention, has to motivate to continue reading
- the information must include :
- name/s and contact details of entrepreneurs a swell as brief background
- form of ownership that is going to be entered into
- short description of product / services and the location
Feasibility and Viability
A Feasibility study: Is the idea workable and can it be practically implemented?
A Viability study: Will the business generate profit, ROI
Vision, mission and objectives
Vision - the direction that the business aims for in a specific industry
Mission - the core activities and values of the business
Objectives - need to be SMART (specific, measurable, achievable , realistic/relevant. timeouts)
SWOT
- strengths(int) , weaknesses(int) , opportunities(ext) , threats(ext)
- can be tangible or intangible
Production Plan
Information that needs to be included in this section of the plan include :
- details of suppliers
- the method that will be used to manufacture products has to be discussed in detail, also machinery and equipment (leased or hired)
- forecast of the projected volumes that will be manufactured
- quality control (sampling)
Fixed and Variable costs
Fixed - these costs remain the same no matter how many items are manufactured
Variable - change according to the amount of goods manufactured
Production methods
Mass - huge quantities
Batch - large quantity made
Jobbing - customers’ preference
Break-even point
It is the volume of production where expenses are equal to income generated
