E2 Business plan

Question 1

Define a business plan

Answer 1

A business plan is a detailed report outlining a business or new venture and should include information about a company’s legal and ownership structure, the executive team, the firm’s products, the market, marketing strategies, the manufacturing process and technical information.

Question 2

Objective of a business plan

Answer 2

To enable management to properly plan the company’s future direction and ensure that the company’s capabilities match its growth expectations.

Question 3

Advantages of a business plan.(6)

Answer 3

1. Enables one to obtain a realistic and integrated perspective of the business or product.
2. It enhances communication between members of the executive team and other key personnel of the firm.
3. Enables a firm to properly plan and determine its funding requirements.
4. Improves a firm’s ability yo obtain financing from banks, private equity and venture capital funds as well as development agencies.
5. Forces management to focus on strategic issues rather than day-to-day operational issues.
6. Enables a firm to monitor progress in relation to targets.

Question 4

Pitfalls to successful implementation(5)

Answer 4

• Unrealistic goals/ expectations
• Goals are not measurable
• Lack of skills, experience and resources
• Risks, weaknesses and threats
• No customer need was established

Question 5

Components of a business plan(11)

Answer 5

1). Introduction
-Background information │Nature of the business/venture │Purpose of the
business plan
2). Executive summary
-Prepared after the plan is completed │summary 2-3 pages │ read by investors
│should address specific issues or questions
3). Industry analysis
-Customer profile │Suppliers/ supply chain │Competitors │Substitute products/
services │Barriers to entry
4). Description of project/venture
-Product/service │Time frame │ General resources required
5). Value chain (production plan/ operational plan /service plan)
-Inputs│ logistics │processes │outputs │support activities
6). Marketing plan
- Pricing │Distribution │ Promotion strategies │Controls
7). Organisational structure / plan
- Legal structure │ Organisational layout │ Roles and responsibilities
8). Risk assessment
- Risk strategy │Risks identified (strategic/operational) and measured
(likelihood and impact) │ Mitigating controls
9). Financial plan/ feasibility
- Budget/Income Statement │ Balance sheet │ Cash flow │ Capital
Investment calculations │ Break-even analysis │Financial analysis
10). Performance measures/ reporting
- KPI’s and CSF’s │ Reporting benchmarks (e.g. balanced scorecard,
integrated report (six capitals)
11). Additional material
- Detail reports and supporting documentation

Question 6

Components/building blocks for consideration and analysis (9).

Answer 6

1. Customer segments
2. Value propositions
3. Channels
4. Customer relationships
5. Revenue streams
6. Key resources
7. Key activities
8. Key partnerships
9. Cost structure