Toolkit on how to Start and Improve your Business

Business Planning

 

 

 

   

 

 

 Introduction to Business Planning   [top]                                                  

A business plan is the most essential document for starting, building and making businesses successful. It is an effective tool for raising the necessary capital to start and/or run business enterprises. The business plan describes what the business will do, how and where it will be started. Many businesses fail due to lack of planning and preparation. 

The preparation of a business plan
is important because it provides information about:

  • What profit your business can expect to make in the future;

  • How much money you can expect to come into and go out of your business;

  • Level of profit expected from your business within the period of the life of the business;

  • Which part of your business you can improve.

The two most important planning documents for your business are:

  • Sales and cost plan;

  • Cash flow plan.

When you make business plans:

  • Make them simple;

  • Choose the most suitable period;

  • Make them before you need to use them;

  • Look for information.

In working out your own project, you should prepare a sound business plan based on data which you collected and in which you have the utmost confidence. Make your business plan tailor-made based on your specific strengths and weaknesses. Decide on how much of your savings should be invested in the project, how much income you should generate from the business, who your clients would be, and which technical process is in line with your level of skills, resources and market size. 

The following two checklists are presented to show you two business plan formats. 'Business plan format 1' is envisaged to serve people who engage themselves in micro and small enterprise activities, whereas 'Business plan 2' may be used by medium and large businesses. The formats will help you take practical steps to prepare your business plan accordingly. You will find help topics and explanations for the majority of the elements of 'Business plan 1'.  When applying the formats, you need to organise and make use of data collected in the information seeking stage.

 

 Business Plan format 1 for Micro and Small Enterprises   [top]           

Business Plan

1.  Full name of the business operator ..............................................................

2.  Address: Woreda / Sun-City............................... Town .................................

Kebele......................................................................... House no......................

3.  Type of the plan/work/business.........................................................................................

4. Date of business plan:  From..................................... to .............................

5. Work premises at the disposal of the operator ..........................................
(location, size, facilities)

Specify, if there is any advantage or problem related to the location:

.......................................................................................................................

    6. Yearly sales plan:

No.

Product/service to be sold per year

Unit of measurement

Qty.

Unit price

Total price

Remark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

 

 

 

 

 

 Months during which sales are expected to be high .........................................  

   7.  Equipment currently owned by the operator:

No.

Type of equipment
and year of purchasing

Unit of measurement

Qty.

Unit costs

Total costs

Remark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total

 

 

 
    8.  Equipment to be purchased by the operator:

No.

Type of equipment

Unit of measurement

Qty.

Unit 
costs

Total 
costs

Remark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total costs of equipment

 

 

 
   9. Annual raw material requirements:

No.

Type of raw material

Unit of measurement

Qty.

Unit price

Total price

Remark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total yearly raw material costs

 

 

Sources of raw materials ......................................................................

   10. Other annual operating expenses:
    (e.g. labour expenses, sales expenses, depreciation expenses, tax expenses)

No.

Types of expense

Amount of expense
in Birr

Remark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total.expense

 

 

 
    11. Annual production/service plan:

No.

Types of production/ service planned to be produced / rendered

Unit of measurement

Qty.

Unit 
costs

Total 
costs

Remark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total costs

 

 

 
    12. Annual Profit and Loss Statement

Company: ........................................................

Profit and Loss Statement

Period: from...............  to....................

Gross Sales

 

Less: Returns and allowances

-

 = Net Sales

=

Less: - Costs of goods sold

-

Direct material

-

Direct labour

-

Factory overhead

-

 = Gross Profit

=

Less: - Administrative and selling expenses

-

Salaries

-

Telephone

-

Water

-

Electricity

-

Rentals

-

Others

-

= Operating Profit

=

Less: - Interest expense

-

 = Net Profit before Tax

=

Less: - estimated Income Tax

-

= Net Profit after Tax

=

Date
Signature

 Introduction to some components of business plan 1
 

 

 Business Plan format 2 for Medium and Large Enterprises   [top]      

 

Business Plan

 

 Executive summary                                                                                    

  a.     Brief description of the business

  b.     Brief profile of the entrepreneur

  c.     Business's contribution to the economy

 

 1.  Sales and marketing                                                                             

1.1     Product description

1.2     Competitors

1.3     Business location

1.4     Market area

1.5     Major customers

1.6     Estimated total demand

1.7     Estimated market share

1.8     Selling price

1.9     Sales forecast

1.10   Promotional measures

1.11   Marketing strategy

1.12   Marketing budget

 

 2.  Production                                                                                             

2.1     Required fixed asset

2.2     Life of fixed asset and production process

2.3     Maintenance and repair of fixed assets

2.4     Sources of equipment

2.5     Terms and conditions for purchasing equipment/tools

2.6     Factory location and layout

2.7     Raw material needed

2.8     Cost of raw material raw material availability

2.9     Labour availability

2.10   Cost of labour

2.11   Factory overhead expenses

2.12   Total production cost

2.13   Planned capacity (capacity projection for at least 3 years)

 

 3.  Organisation and management                                                             

3.1     Form of business

3.2     Organisational structure

3.3     Business experience and qualification of the entrepreneur

3.4     Pre-operating activities

3.5     Pre-operating expenses

3.6     Office equipment required

3.7     Administrative expenses

 

 4.  Financial plan                                                                                       

4.1     Project cost

4.2     Financing plan and loan requirement

4.3     Profit and loss statement

4.4     Cash flow statement

4.5     Balance sheet

4.6     Break even point analysis

4.7     Return on investment

Instruction to business plan 2: Instruction

The business plan for medium and large enterprises is a rather complex and extended one. Normally the business plan format 1 should be sufficient for your business purpose.

[top]

 

 

Business plan  I  Cost calculation  I  Financing  I  Administration  I  Marketing
Supply and Infrastructure  I  Product development  I  Business management

 

 

 

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