TOURISM AND WILDLIFE BASED ENTREPRENEURSHIP

LECTURE 6
THE BUSINESS PLAN
Business Plan

 Once you have a good business concept, you can create a business plan to put that
concept into place
 It refers to a detailed analysis and description of all aspects of a business over a given
time frame such as owners goals, history, market (s), products, strategies, management,
organisation, operations, projections
 A Business Plan summarizes the plan of action after a course of action has been
determined through the Feasibility Study
Cont…

 A Business Plan provides a Planning function

 A Business Plan outlines the actions needed to
take the proposal from “idea” to “reality”
 A Business Plan tells How your business will be
created and Why it will be successful
 A Business Plan provides a road map for
strategic planning
Difference Between Business Plan and
Marketing Plan

 The primary difference that sets the two documents apart is the purpose of the
documents.
 A business plan is what you create when you want to wow investors and bankers into
giving you money.
 While a marketing action plan is what you create when you want to wow customers and
clients into giving you money
 When the existing business is to assume a major change or when planning a new venture -
a 3 to 5 year business plan is essential
Cont…

 Marketing plan contain day to day activities.

 A marketing plan can be part of a business plan
 It is a document used to raise money, obtain credit, perhaps recruit management or
directors
 Explains the opportunity in the market, product or service, and potential profits for
investors
 It explains to lenders and investors why the new business deserves financial support
Purposes of the Business Plan

 Primary purpose of a business plan is to help entrepreneurs gain a deeper

understanding of the opportunity they envision. It enables you to look at the business
concept in an objective manner and can be strong reality check
 It is a map/framework to be followed by management. It assist you in planning and
managing the business and prepares your success.
Cont…

 It is a strong communication tools.

 It defines your purposes, your competitors, your management and personnel
 The finished business plan provides the basis for your financial proposal , while seeking
financing from banks
 A business plan will help you cope with change because while you are writing your plan
you become a student of the business
Cont…

 To explain the business to other companies with which it would be useful

to create an alliance or contract
 To attract employees
 To convince oneself that the new venture is worthwhile before making a significant
financial and personal commitment
 B/P can help an entrepreneur to allocate resources appropriately, handle unexpected
problems, and make good business decisions
Who needs a business plan and when

1. Start-ups – the typical business plan is an

entrepreneur seeking funds to start a new
business/ new venture
2. Established firms - existing companies write
business plans to secure additional financing,
engage distributors or partners , or seek support
for new initiatives
When

 Starting a new venture ( organization, product or

services)
 Seeking financing from financial institution
 Expanding an existing organization, product or
service
 Buying an existing organization, product or service
Types of Enterprise business plans

 Start-ups plan
 Operational enterprise plans
 Expansion enterprise plan
Qualities of good enterprise business plan

 Sufficiently concise but clear

 Bear all important sections
 Written in a simple language
 Free from common errors
 Tailored to the specific purpose
 Measurable by specifying specific task to be done, timelines, activity
Steps in Developing a Business Plan

 The steps below will give you a good idea of what

is involved in putting together a business plan.
 The timetable for developing the plan will depend
on the complexity of the situation and your own
time schedule
Cont…

1. Make commitment to go into business or develop your existing business for yourself.
2. Analyze your strengths and weaknesses, paying special attention to your business
experience, business education and desires.
3. Choose the product or service that best fits your strengths and desires.
4. Research the market for your product or service to find answers to such questions as
these: Who are my customers? Where are they? What is their average income
Cont…

5. Forecast your share of market, if possible.

 Then forecast your sales revenues over a 3-year period
6. Choose a site for your business; then answer this question
 Why do I prefer this site to other possible sites?
7. Develop your marketing plan, answering such questions as these:
 How am I going to create customers? At what price? By what kinds of advertising and sales
promotion? Through personal selling? How?
Cont…

8. Develop your organizational plan, answering this question:

 What kinds of skills and talents will I need to make my business grow?
 Draw up an organization chart that spells out who does what, whom have
what authority and who reports to whom .
10. Develop your legal plan, focusing on whether to form a sole proprietorship, a
partnership, or a corporation, and then explain your choice.
11. Develop your accounting plan
Cont…

12. Develop your financial plan by preparing these statements:

 A 3-year cash budget. Show how much cash you will need
before opening for business and how much cash you expect
will flow in and out of your business, broken down as follows:
 First year – monthly
 Second year – quarterly
 Third year – yearly
 An income statement for the first year only.
Cont…

 Balance sheets for the beginning and end of the first

year.
 A profit graph (breakeven chart), showing when you
will begin to make a profit.
 Then determine how you will finance your business and
where you expect to raise money.
13. Write a cover letter summarizing your business plan, stressing its purpose and its promise.
Components of business plan

 Section I: Executive summary

 It appears in the first chapter of the business plan, but it is the last
chapter to be written.
 It should be short ( capable of being read for example 5 to 10
minutes)
 Summaries current state of the business, objectives,
implementation, marketing and selling aspects, financial
requirement, and profit expected
 Keep the language strong and positive
 Should be not more than one page long ( this depends on the size of
the business plan.
 Resist temptation of including everything
Section II: Business/Company description

2.1 An overview of your industry/industry background

 Begin your business description with a brief overview of the industry you will be competing in.
 Demonstrate that you are in hot industry
 Discuss both present situation in the industry as well as future possibilities
 E.g tourism industry is growing very fast worldwide. For the year 2017 tourist arrival recorded
to be 24% ……
Cont…

2.2 describe your company/business

 Describe company vision, mission statement, objectives and value
 Describe when was it founded
 What type of business?
 What is your company legal structure? Sole proprietorship?, partnership or corporation?
Cont…

2.3 Product description

 State uniqueness of the product or services
 Describe your products and services
 State how is it looking like
2.4 Company positioning
 Position your business to enable customer to differentiate
 E.g some company say the fasted, the most dependable, the cheapest, healthier etc
Section III: Production plan/Service
development

3.1 Production and operation process

 State stages of product/service production from the inception to of the idea to when it can be
sold
 E.g if starting a winery, your production process section would describe the harvesting,
fermenting, and bottling
 What about tour company/game drive???
 Make or buy???
 Location?
Cont…

3.2 Cost of products/service development

 Present and discuss a design and development budget.
 This budget should include the cost of the design of a prototype as well as the expenses to take it
into production
 Be sure to include labor, materials, consulting fees, and cost of professional such as attorneys
Cont…

3.3 Labor requirement

 Provide details of labor you will need to start up and run your business. Do not include
management team
 Address how many people and what skills do they need to posses
3.4 Expenses and capital requirements
 You must create three financial forms-operation expenses, capital requirement, cost of goods
Cont…

Operation expenses
 Pull together all expenses incurred in running your business- these include marketing,
sales, and overhead such as travel cost, administrative cost etc
Capital requirement
 This detail the amount of money you will need to procure the equipment used to start up
and continue operations of your business
 It also include depreciation detail of all purchased equipment
Cont…

Cost of Goods
 Refers to all cost incurred in the production
 To generate cost of goods table you need to know total number of units you sell for a year
as well as inventory you have in hand
Section IV: Market Analysis and competition

4.1 Target market (customers) identified

 Describe who are your target customer and their characteristics
 Undertake market segmentation

4. 2. Market size and trends

 Use number as well trend to describe
4.3 Competition
 Description of competition
 Market share distribution
 Barriers to entering the market
4.4 Analysis
 SWOT analysis
 Marketing strategies such as
 Your pricing strategy
 Promotion strategy
Section V: Operations

 Location
 Proximity to supplies
 Access to transport
 Zoning
 Taxes
 etc
Section Vi: Management and organization

 Management team-key personnel

 Ownership
 Organizational structure
 Board of directors, advisors, consultants
 Support services
Section vii : Financial plan

 Financial risks
 Description of financial plan
 Income Statements
 Cash Flow Statements
 Balance Sheet
 Breakeven Analysis
 Funding requirements
Section Viii: Expansion or exit plan

 Long range goals

 Diversification, penetration, increasing market share
 milestones