BUSINESS PLAN

Introduction

A BP plan is a “written document that

acts as a blueprint for your biz” (the
more you know about your plan the
more likely you will succeed!).
A BP helps you stay focused on where
you want your biz to go & how you are
going to get there. A BP is like a road
map of your biz.
 Business Plan Process: Issues

- Identify & evaluate the steps to start a new biz

- Analyze your biz through SWOT analysis –
Strengths, Weaknesses, Opportunities &
Threats
- Give clearer view of the potential of biz idea. Is
the risk taken (your biz) can bring in good
returns on the investment?
- Can investors/bankers/biz partners convince or
believe that the biz will be a success?
 Functions of BP

1) A guideline to the management team to carry

out a planned biz activity & achieve targeted
goals.
2) A tool to the mgt team to evaluate the co.’s
performance in order to remain competitive &
ensuring growth/expansion.
3) A tool for financial support or outside capital
to finance a start-up/biz expansion.
 Who needs BP?

- Entrepreneur himself/herself & his mgt team

(as a guideline on how to organize, operate,
market, to compete etc.)
- Financial Institutions/gov. agencies that offer
loans (can the biz pay back the loan)?
- Suppliers (want to know whether biz can
afford to pay goods/materials they supplied)
- Investors (biz partners/would be investors or
anybody who are interested to invest in the
biz)
 Who should prepare BP?

- New entrepreneur/would be entrepreneur who

is looking for outside financing for their new
biz start-up
- Existing entrepreneurs who are looking to
expand their business
- Any entrepreneur who is looking to improve
the success of his/her business. (the more
you know about your plan the likely you will
succeed)
 Why is a BP important?

• Provides an opportunity to identify problems &

solutions.
• Helps biz to focus on the objectives.
• Allows the entrepreneur to use a BP as a
checklist to evaluate the progress & future of
the biz. Helps to minimize weaknesses &
failures.
• Convince investors & financiers in an effort to
gain financial support.
 BP COMPONENTS

BP consists of 4 main components:

1. Introduction
2. Business Matter
3. Financial Information
4. Attachments
 BP COMPONENTS

1. Introduction
This area covers the following items:
a) Main Page
b) Contents
c) Executive Summary
a) Main Page
It is to inform the reader of what they are about to read &
provide information regarding the business. The main
page consists of the name of persons involved, name of
company that prepare the BP, company logo, address,
phone number, fax number & e-mail address.
 BP COMPONENTS…
b)Contents. Consists of all the chapters in the
BP. It is a document that helps the reader
track a specific topic. Every page, section &
sub-section is important & needs to be
numbered.
c)Executive Summary. The main area of a BP. It
explains in brief the main elements of the
proposed business idea. 1 to 2 pages only.
Financiers & investors will read this first to
grasp hold of the main idea of BP. It must be
able to capture the attention of the reader.
The “MAKE OR BREAK” of a BP.
 BP COMPONENTS …

Exec Summary should also discuss in brief the

following items:
- Company Status?Company mgt/Key
personnel/ Strengths?
- How the product looks like or is going to look
like and what makes it unique?Target market,
size & market share?
- Financial flow; Forecasted sales, revenue &
profits? Financiers? (bank & biz. partners)
 BP COMPONENTS

2) BUSINESS MATTER
This area provides the information on status
& trend, product information & product
development, description of mgt team &
marketing strategy. It consists of:
a) The Industry; b)The Company; c) The
Product; d) Market Analysis; e) Marketing
Plan; f) Production or Operation Plan; g)
Management Plan
 BP COMPONENTS

a) THE INDUSTY
- An entrepreneur should define the industry
& his objectives.
- Understand the industry clearly. At which
stage is the industry? Introduction, growth or
mature industry?
- Is the industry affected by changes in
technology, economy, demography & other
surroundings?
- An entrepreneur should identify & evaluate
true competitors to his/her own capabilities.
 BP COMPONENTS

b) THE COMPANY
Company information can be described in 3
phase:
1. Company history
2. Current status
3. Future planning
 BP COMPONENTS

1) Company History
- Formation: When and who is the founder?-
Who owns the company?- Why and how
was it formed?
- Type of company; sole proprietor or
partnership or private limited - What is the
company’s product? Why is it the choice &
how does it fit the need of the market?
- Is network created with the suppliers & the
clients? - What is the success rate in the
market? - What are the problems faced &
what is the solution?
 BP COMPONENTS

2) Current Status of Company

- Co: Is there any difference? If there is, what
is the unique and outstanding feature? -
Product: If there are any difference, Explain!
What is unique about it? How does it fit the
need and environment of the market?
- It should also explain the mgt, target
market, size and market share, financial,
product improvements, trends, other
changes in plans as compared to past
achievements.
 BP COMPONENTS

3) Future Planning
- What are the future plans for the product?
Explain if it should differ from now. -
Marketing Plans: short term & long term
goals to penetrate the market and achieve
financial success. - What is the facilities &
resources needed?
- How to capitalize on the strengths & reduce
the weaknesses? - How to overcome
resource shortage such as technology,
human resource, finance etc.
 BP COMPONENTS

c) PRODUCTS
Should be explained through description, application and
advantages;

DESCRIPTION APPLICATION

PRODUCT

ADVANTAGES
 BP COMPONENTS

i) Product Advantages
The advantage of a product is normally
described as unique by the customers:
- Performance – Price - Multi-Purpose - Long
Lasting - Speed
- Accuracy - Cost Effective – Quality - Design
and others
 BP COMPONENTS

ii) Product Description

- Types of products?
- types of products to be produced?
- what makes it different? - uses?
- what is the lifespan of the products?
- what are the accessories and is it ready for
the customers? Etc..
 BP COMPONENTS

iii) Product Application

- Is it a new product or a new brand or an
existing product?
- how is the product used and who is the
customers - product manuals ?
- Will the product be purchased repeatedly or
once?
- is it able to compete with other products in
the market?
 BP COMPONENTS

d) MARKET ANALYSIS
this of should describe the knowledge of the industry
and provides the data of the market research;

Customer analysis

Market analysis

Competition analysis
 BP COMPONENTS

i) Customer analysis
- identify clients
who are the buyers? Age, job, income,
geographical location, lifestyle, attitude and
others?
- why do buyers buy?
why and what makes it profitable? Fulfill
the needs or just wanting it? Is the lifestyle
different should the product be bought?
 BP COMPONENTS

ii) Market analysis

- identifying market
How many potential buyers? What is the
market share and size? How often do they
buy? Market status: new or mature? Market
potential with economic growth or
government policy or changes in the
environment? Can it affect the market?
- Market segment
What is the kind of market segment?
Geography or activity or customers
purchasing power or attitude?
 BP COMPONENTS

iii) Competitive analysis

- identifying competition
who are the main competitors to the
company or the products? where are they
and how long they’ve been in the biz.? Are
they expanding or deteriorating? How far
are they controlling the market? Is the
competition intense?
- competitive analysis
types of products and types of market
segment , need to evaluate strength ,
weakness , opportunity and threats of
competitors .
 BP COMPONENTS

 Example ; competitive analysis based on strengths and weaknesses .

Ratings from 1 to 10
Factors Company Competitor Competitor Competitor Competitor
(Boleh ditambah lagi) 1 2 3 4
Products

Production costs

Price

Profit margin

Technology

Management

Financial capital
 BP COMPONENTS

e) MARKETING PLAN
- Marketing plan is done to enable the
company to operate in a competitive
environment, to maintain profit & market
domination. This is done through 4 Ps
strategy.
4Ps: 1) Pricing strategy , 2) Promotion
strategy, 3) Distribution strategy (Placing) &
4) Product strategy .
 BP COMPONENTS

i)Pricing strategy
- what are the price of the products ? Are the
customers sensitive to pricing ? Why is this
pricing strategy chosen ? Will the price
reduce when the sales increase ?
1)Additional cost price: set the price by adding
fixed cost + variable cost + % of profit
wanted. 2) Demand price: set the price
according to demands in the market, if
demand is high you can set at a higher price.
3) Competitive price: set the price according
to competitors’ price. 4) Additional price: set
price by adding the profit wanted.
 BP COMPONENTS

ii) Promotion strategy

- How do you inform & offer the products to
potential buyers? Which is the best method
to inform about the advantages & reliability
of the products ?
It can be done in a few ways ;
- advertising - sales promotion - personal
sales – good public/customer relations
 BP COMPONENTS

iii) Place (Distribution strategy)

- how to distribute products to the buyers?
Who will distribute? What types of distribution
network depends on the industry and the
market size.
Distribution methods ;
- direct selling, manufacturers sale from
factory, agents, wholesaler, broker, direct
mailing, selling through internet.
iv) Product strategy (already discussed –
product advantages, product applications,
product descriptions)
 BP COMPONENTS

e) OPERATION / PRODUCTION PLAN

- This part describes all activities involved in
production process from raw materials to
finished products including determining the
facilities & production tools used .
- i) Lists out what is needed to produce the
products
- What are the items of components needed ?
Where do you get ? How much does it cost
? How much do you need for stock ? Why
do you need any stock ?
 BP COMPONENTS

ii) List out the tools needed for production

operation cost. Show if these tools are
bought or rent . What are the costs?
iii) Lists out skilled laborers needed to operate
the tools & machineries. How much is the
compensation and salary?
iv) Space – Space needed to create products ,
store the raw materials , keep the finished
products, car parking facilities . How much
is the rent ?
 BP COMPONENTS

f) MANAGEMENT PLAN
- Mgt plan identifies who the
managers/supervisor/workers are , their
positions, responsibilities & experiences
needed in the organization/company .
- organization chart & mgt structure is
needed to describe the chain of command
and authority.
 BP COMPONENTS

3. FINANCIAL INFORMATION
- the main focus of the BP readers - should be
made easy for the reader to understand ,
evaluate & make financial analysis on the
project or business .
- Financial analysis should contain PRO
FORMA of 3 financial statements ;
1)cash flow statement, 2) profit & loss
statement, 3) balance sheet.
 BP COMPONENTS

i) Cash flow statement

- incoming & outgoing of cash flow in a
business - consists of revenue & expenses,
money receives (cash in) or payments (cash
out)
ii) Profit & loss statement
- consists of revenue and expenses ,
financial surplus/deficit - prepared based on
financial year end - capable of showing
profits - return on investment. Usually the
total amount of sales minus the cost &
expenses.
 BP COMPONENTS

iii) Balance sheet

- to show assets & liabilities of the business
- consists of fixed assets , current assets ,
current liabilities , debt , loans and total
liability and equity.
- prepared yearly - helps the reader to
determine the strengths & weaknesses of the
business through financial analysis such as
current ratio, acid-test ratio, the average
collection period, Long-term debt ratio and
others .
 Balance Sheet
 As mentioned ‘a Balance Sheet is about assets,
liabilities & owners equity of a business.
 Fixed assets + current assets = liabilities +
owner’s equity.
 Fixed assets:building, machines, vehicles &
furnitures. Current assets: cash at hand, cash
in bank & stocks.
 Liabilities: loans & debts. Equity: capital or
money provided by owner’s to his business.
Balance Sheet (example of ABC
Company as at 31/12/2007)
Fixed assets Liabilities
Building 100,000 Loans 200,000
Machines 75,000
Vehicles 50,000 Debts 10,000
Furnitures 25,000

Current assets Equity

Cash (hand) 20,000 Capital 105,000
Cash (Bank) 38,000
Stocks 6,000
Borrowers 1,000

Total RM315,000 RM315,000

 BP COMPONENTS

4. Attachments
any documents to support your BP
- such as supporting research data - financial
goals ; map to your business premise, a copy
of business registration, letter of permit
approval, agreements - personal testimony -
pictures of products , pamphlets etc.
 BP FORMAT

Front Page
Contents
Executive Summary
1.0 Industry
2.0 The Firm/The Business
2.1 History of the Company
2.2 Current Status
2.3 Future Plan
 BP ASSIGNMENT

3.0 Product
3.1 Product Description
3.2 Product Application
3.3 Product Advantageous
4.0 Marketing Analysis
4.1 Customer Analysis
4.2 Market Analysis
4.3 Competitor Analysis
 BP ASSIGNMENT

5.0 Marketing Plan

5.1 Pricing
5.2 Promotion
5.3 Distribution & Positioning
6.0 Operation/Production Plan
7.0 Management Plan
BP ASSIGNMENT

8.0 Financial Plan

8.1 Cashflow Statement
8.2 P & L Statement
9.3 Balance Sheet
9.0 Attachments
Thank You