COMPONENTS OF A BUSINESS PLAN

COMPONENTS OF A BUSINESS PLAN

A business plan includes a study and plan on various aspects of a business commonly referred to as "elements of a business plan". These elements include general description of a business, statement of the mission, goals and objectives, marketing, production, management/organisational and financial plan.

General description of the business

The general description of a business is a summary statement which shows:

The type of business an entrepreneur is planning
The needs of the market it seeks to fulfil
The unique features of the business from other businesses
The strengths, weaknesses, opportunities and threats (SWOT analysis) the business is likely to face

SWOT ANALYSIS

(a) Strengths

These are things, features and qualities which put the entrepreneur’s business products at an advantage compared to competitors. They include:

High quality products
Customer friendly but profitable prices
Ability of the product to meet the customer’s tastes
Efficiency and effectiveness in serving customers
Ability to attract customers
Good business location
Good and well trained marketing staff
High entrepreneurial spirit, etc.

(b) Weaknesses

Weaknesses are the limitations or constraints that the business products may face in the market. They include:

Being new in the market and having a weak market image
Weak distribution image
Below the average marketing skills
High overall unit costs relative to competitors
Inability to finance needed marketing changes
A narrow product line
Inaccessible location to customers, etc.

(c) Opportunities

Opportunities are external possibilities or chances that may occur and benefit the business. However, the business has no control over such occurrences and they may or may not happen. They include:

Possibility of getting business offers from the government
Sudden shifts in customer’s tastes, which favour the entrepreneur’s products
Changes in market trends due to new developments such as a new school opening in the neighbourhood
Falling trade restrictions and barriers in attractive overseas markets
Faster market growth

(d) Threats

Threats are undesirable occurrences in the market and are disadvantageous to the business. They include:

Entry of low cost companies into the market
A rise in the sale of substitute goods
Adverse shifts in foreign exchange rates and trade policies
Costly regulatory requirements
Growing bargaining power of customers and suppliers
Changing customer/buyer needs and tastes
Changes in demographics
Negative changes in government policies

The business description allows the writes to prove that they know their business by providing information and numbers to sell their business case. An important aspect of the plan is the management team; effective managers make a business grow and prosper.

2) STATEMENT OF MISSION, GOALS AND OBJECTIVES

(a) Mission statement

A mission statement is a brief statement which indicates the purpose of the business. It seeks to address the following questions:

What business are we in or what business do we want to be in?
What customer needs are we satisfying and how do we intend to satisfy them?
What type of work environment do we intend to provide for our employees?
Who are our shareholders and what do we expect in terms of returns to the investment?
What is our community and what do we expect to contribute to the external community?

(b) Goals

Goals are medium and long-term aspirations which an entrepreneur wants the business to achieve, based on his/her mission statement. An example of a goal statement: ‘To maximise profits’.

(c) Objectives

Objectives are specific targets set by an entrepreneur to move him/her into the direction of achieving his/her goals. Objectives are derived from the goals, and one goal may have more than one objective designed to achieve it. Examples of objectives include: