BUSINESS PLANNING

OBJECTIVES OF THE COURSE

• At the end of the course, students should
be able to identify business ideas and
develop these into business plans.
• Students should actively learn, not so as to
pass the course (which is important), but in
order that they can acquire the skills.
• The only way you learn to develop a
business plan is by developing it.
 SPECIFIC OBJECTIVES
Students should be able to:
• Identify, screen and select viable business ideas;
• Carry out market assessment and prepare
marketing plans;
• Prepare operational, organizational and
management plans;
• Prepare financial plans; and
• Package and market the plan
 METHODOLOGY
• Highly participatory – do it.
• Learning by doing.
• Actually preparing business plans.
• Group and within group work (don’t loaf,
or don’t allow loafing!).
• Quality of output (language,
presentation) is important.
THE BUSINESS IDEA
 BUSINESS IDEA
• A business idea is a concept which can be used for
commercial purposes.
• It typically centers around a commodity or service
that can be sold for money, according to a unique
model.
• A promising business idea must satisfy these
tests:
– 1-Does it fulfill a customer need or solve a problem?
– 2-Is it innovative and unique?
– 3-Does it have a market or create a new market?
– 4-Is it profitable in long term?
 HOW TO COME UP WITH A BUSINESS IDEA
• Get your creative juices flowing.
– do something that gets you thinking and then focus that energy
into creating an idea/concept/product.
• Know your limits.
– consider your education, skills, experience, etc
• Seize upon any inspiration.
– Get a small notebook to carry around with you and write ideas
in.
• Identify a problem.
– Think about how you can make the world a better place with
your invention or business idea.
• Study demographics to see which type of customers will
appreciate your business idea the most.
 WHAT IS A GOOD BUSINESS IDEA?
• Good business ideas provide a lot of value to a lot of
people (market potential).
– What problem does your business idea solve?
– What options currently exists that consumers can use
to solve this problem? Are there any other?
– Is there just a niche group of people that are having
this problem? Or do all kind of people have this
problem?
– Is this a problem that is solved once and that’s it? Or
does your idea continually provide value to the same
person?
– Do others think you have a good business idea? Or are
they simply telling you that it is a good business idea?
 WHAT IS A GOOD BUSINESS IDEA?
• Good business ideas can be scaled
–Has potential for further growth

• A good business idea is strategically priced

–Consider various pricing approaches to ensure that you appropriately price your
product to appeal to your target market.

• A good business idea is very profitable

– it must be commercially viable,
– find out how much it’ll cost to make your product and how much you’ll sell it for.

• Good business idea should be supported by a professional team.

• Business idea must work within the constraints of a start-up
business. A business idea may be good in one situation and not so
good in another, so be sure to consider all the variables before
launching your startup.
 9 STRATEGIC WAYS TO FIND A GOOD
BUSINESS IDEA
1. Find a specific problem and create a solution.
2. Find an area where further improvement or development of an
idea could be valuable.
3. Find a fault in a product or service and remove it.
4. Find an area where there is something missing in a product or
service and supply it.
5. Find a perceived gap in the market.
6. Find an area where the current way of doing things imposes a high
cost.
7. Find an area where there is a need which is not being met.
8. Listen to your hunches/feelings.
9. Make a wish come true.
 SOURCES OF BUSINESS
Business ideas are always available through different
sources;
1. Copying existing activities (copycats),
2. Modifying existing businesses by coming up with
different concepts,
3. Completely new (novel) concepts (brainstorming)
4. Attending various conferences, seminars,
workshops, etc.
5. Reading various publications such as newspapers,
journal articles, magazines, etc
6. Etc.
 SCREENING A BUSINESS IDEA
• Are you convinced that there is a ready market
for the product/service. Do you have some
indications?
• Do you have, or can you quickly acquire the key
success factor (KSF) for the business?
• Is the market saturated?. If yes, think twice
• Does it have growth potential? – is the industry
declining/stable/growing
• Does the promoter have or can she/he develop
Sources of Competitive Advantage (SCA) quickly?
 SCREENING A BUSINESS IDEA
• Is it apparently more attractive than any other
alternatives?
• Have enough alternatives been considered? The
first idea is not necessarily the best.
• Avoid concentrated industries unless you have a
unique product concept.
• Can you possibly raise the investment capital
required?. If not, don’t waste your time and
energy on developing a business plan which will
not be implemented.
THE BUSINESS PLAN
 BASIC FACTS ABOUT BUSINESS PLAN
• The purpose of a business enterprise is to make
profit.
• The profit is determined by the operator’s success
in opportunity pursues and management of
business process.
• The purpose of a business plan is to focus an
operator’s attention and effort on the essential
factors that determine profit.
• Therefore the operator must take responsibility
for implementing a plan successfully.
 When is it useful to have a business plan?

• When starting a business.

• When deciding a strategy to grow a
business.
• In order to monitor and control the
performance of a business at any time.
• When seeking financial assistance at any
time.
 WHAT IS A BUSINESS PLAN?
• It is a detailed analysis and description of all
aspects of a business over a given time frame.
It analyses the products, activities and
processes and operations of the business,
objectively assessing their viability charting
the course of action that will yield to
maximum effectiveness and efficiency. Finally,
the business plan projects the financial results
of the business over the planning period
 CONTENTS OF A BUSINESS PLAN
• The owners’ goals for the enterprise, both short
and long term (vision, mission and objectives).
• A description of products or services to be
offered.
• History to-date, if existing business or background
to the business idea if a new business.
• Description of the market opportunities
identified, how they have been identified,
validated, confirmed and analysis of the
competitive situation in the sector.
 CONTENTS OF A BUSINESS PLAN
• Description of the marketing strategies to be used
to realise the objectives in light of the identified
opportunities and competition.
• Description of how the business will be organised,
managed and staffed.
• Description of the operations (facilities, inputs,
processes, outputs) envisaged.
• Projections of financial results (income, cash
flows, balance sheets ratios, etc.
 CONTENTS OF A BUSINESS PLAN
In brief therefore, a business plan consists of:

6. Financial Plan
5. Organization &
Management Plan

4. Operations Plan

3. Marketing Plan
2. Market Assessment
1. Background Information
 BENEFITS OF THE BUSINESS PLAN
• The business plan can significantly increase the chances of
success/reduce the chances of failure. It serves the
following purposes:
– It is a map/framework to be followed by management.
– By analysing every aspect of the business and
projecting financial results, it provides the promoter
with a basis for deciding whether or not to proceed
with the idea.

• It forces the promoter to think long term.

• It may compensate for lack of capital. A well-developed

business plan can be used to solicit funds from banks,
venture capitalists, individuals, etc.
 BENEFITS OF THE BUSINESS PLAN
• The promoter learns a lot about products, customers,
competition, regulations, taxes, constraints, etc in the
course of doing the background study/assessment as
inputs into the business plan. This can compensate for
lack of experience.

• It provides an opportunity for the promoter to display

his/her entrepreneurial flair and managerial talent and to
communicate his/her ideas in a way that is easy for them
to understand.
 PROCESS OF DEVELOPING A
BUSINESS PLAN
• Identify ideas/concepts for new businesses or
expansion.
• Screen ideas to choose one for further
development.
• Validate the Idea: Assess the viability of the
market.
• Develop a Marketing Plan, on the basis of
knowledge from market assessment.
• Develop an operations plan.
• Develop an organisation and management plan.
 PROCESS OF DEVELOPING A
BUSINESS PLAN
• Prepare a financial plan (sources and uses of
money) and projections of financial results.
• Show assumptions.
• Show benefits.
• Package it: define your vision, mission and
objectives for the business and mesh them with
the rest of the plan, such that the plan is a means
to realise your personal, economic and other
aspirations.
 PRE-REQUISITES FOR DEVELOPING A
GOOD BUSINESS PLAN
• Commitment of the promoter.
• Hard work and perseverance.
• Personal involvement and ownership of the process by
the owner. This ensures his/her values are embedded in
the business, and maximised learning about the
business.
• Willingness and readiness to learn from various sources.
• Alertness to opportunities and problems and readiness
to change/modify the initial idea in light of new
knowledge/ information.
• Money and time.