Here are a few basics:
Business plan guidelines (with recognition to Business partners)
The drafting of a proper business plan to get an investor or financier interested must be realistic and executable as a plan. Apart from fine tuning the business plan in detail for implementation it must basically be able to be implemented . If it is only your vision you will not get investors or financiers involved.
Idealistic ideals and community involvement is not important for especially financiers. It should be a very small part of your motivation
Any credit application has to address the following 3 critical areas;
The entrepreneurs; You will have to convince a financier/investor beyond a reason of a doubt that you know what you are doing and will be able to sustain the business.
Cash flow : You must be able to proof beyond any reasonable doubt that the business will be able to sustain the projections show in your financial calculations. If R x amount of turnover is projected proof how you got there. (letters of intent , orders , minutes of meetings , newspaper clippings etc etc.) The same applies to all other figures in the cash flow
Security. Very few if any financier will finance a project without own contributions from entrepreneurs and or security . These are normally notarial bonds on equipment , mortgage bonds on immovable property, sessions on debtor books etc.
Any Business plan must be compiled using information obtained in a proper feasibility study conducted by the entrepreneurs. This might include visits to potential suppliers , clients , competitors and end users of the envisaged product. The more comprehensive this study is conducted the better chance of successful involving investors and or financiers
Elements of the Plan
EXECUTIVE SUMMARY
The executive summary is the MOST vital part of the business plan — it has to sell your strategy for success to the investor.
The summary is an overview of the entire plan and must contain the highlights of the business plan and summaries of each section. Therefore, although it is at the beginning of the document, it is usually written last to capture the essence of the plan.
The summary stands alone and should not refer to other parts of your document.
1. Write a business profile, including the following:
- information on the background and history of the business
- indicate the business form (proprietorship, Close Corporation, Company)
- Is it a new business, take over, expansion, franchise?
- The mission, and the company's long and short term objectives in terms of business growth and development, as well possible exit strategies (for example: buy out investors, sell to larger company, go public, etc)
- It is imperative that this must be specific –vague ideas does not impress an investor/financier
2. The product or service
- describe in full the product or services offered by the business and the innovative features of these products and services and the competitive edge they afford the business over rivals in the market.
- the expected product life cycle where applicable
- include descriptions of key technologies employed and current and future research and development
3. Describe the location, premises and — where applicable — production facilities
THESE AGAIN MUST BE VERY SPECIFIC
4. Production and technology
- describe production processes and capacity, identifying any existing constraints and possible problem areas
- include a detailed analysis of the process of installing and commissioning any new technologies and production processes
- include information on quality assurance systems and procedures, and certification
- details of suppliers and sub-contractors, and any contractual arrangements governing the supply of key inputs
5. Elaborate on the business's past achievements and strengths and past problems and weaknesses, and critical success factors
1. The entrepreneurs
- include a description of the skills and experience of the entrepreneurs covering the key areas of technology and product development, production, sales, marketing, finance and administration
- describe the position and the specific functions and responsibilities of each entrepreneur and/or manager
- attach a detailed curriculum vitae of each entrepreneur
- indicate the financial contribution of each entrepreneur to the business, and the current shareholding structure.
2. The management structure of the business(ORGANIGRAM FORMAT )
- show company ownership structure, business units and subsidiaries where applicable
- attach an organisation chart showing the functions and responsibilities of directors, key management and staff
- formulate remuneration, incentives, share options, and conditions of employment of key management and directors
- analyse of any deficiencies in management and how these positions are to be filled
- comment on current and future employment levels, labour relations and union membership
- include details of systems to be implemented: information technology, accounting, administration, management information and stock control systems
- include details of auditors, attorneys, bankers and professional advisers
3. Franchise information (where applicable)
If the business is a franchise, include what is covered in the management package the franchisor provides in this section
1. Industry analysis
Summarise the industry in which you will compete. Find most of the facts from government statistics and trade organisations. Discuss topics such as:
- current trends and developments in the industry
- large and important players in the industry
- how the industry is segmented
- problems the industry might be experiencing
- national or global events influencing the industry
- national and global growth forecasts
- how legislation affects the industry (for example, how the law limiting smoking in a restaurant affects the industry)
2. Market analysis
- describe the existing market and its potential for growth
- include a detailed analysis of the size and maturity of the market, trends and seasonality exhibited by the market, and the business's current and expected market share together with an analysis of the time, resources and actions required to achieve this desired market share
- list existing and potential customers, supported by letters of intent, orders on hand, contracts, where applicable
- include a detailed analysis of competitors, the price and quality of their products, service and delivery, and their expected reaction to your activities
- highlight and discuss your competitive advantage
1. elaborate on current and planned sales and marketing strategies and promotional activities (advertising, exhibitions, promotions, public relations, etc.)
2. describe your distribution strategy and channels
3. formulate sales staffing, recruitment, remuneration and commission structures
4. include a detailed motivation and substantiation of sales projections (in monetary and physical terms) with a comprehensive analysis of the lead time expected to reach sales targets and milestones (e.g. break-even point)
5. elaborate on your pricing strategy and how it compares with your competition
6. where the business is a franchise, include the full marketing strategy of the franchisor
