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INTRODUCTION TO BUSINESSPLANNING.June 20111
CON TENTS1Introduction . 41.1Why Do You Need a Business Plan? . 41.2What can a Business Plan do for you? . 41.3How will this handbook help you? . 41.4The Business Plan belongs to you . 42The Malta Enterprise Business Planning Philosophy . 52.1What a Business Plan is not. 52.2What a Business Plan is . 52.3Identifying your needs . 52.4The thinking process . 52.5SUCCESS OR FAILURE . 63The Business Plan Format . 73.1The Contents . 73.2Useful points . 73.3A simple format . 73.4Table A - Essential contents of a Business Plan . 73.5KEEPING IT SIMPLE . 124The Business Plan. 134.1EXECUTIVE SUMMARY . 134.2ENTERPRISE DESCRIPTION . 144.3PRODUCT OR SERV1CE DESCRIPTION . 144.4INDUSTRY ANALYSIS . 154.5COMPETITION ANALYSIS . 154.6SWOT ANALYSIS . 162
4.7MARKETING AND SALES SUB-PLAN . 174.7.1THE PRODUCT OR SERVICE (WHAT you want to sell). 174.7.2THE CUSTOMER (WHOMWHOM you wish to sell to) . 174.7.3THE PLACE (WHEREWHERE you sell your product). 174.7.4THE METHOD (HOWHOW you advertise and sell your product) . 184.8OPERATIONS SUB-PLAN . 184.9HUMAN RESOURCES SUB-PLAN . 204.10FINANCIAL SUB-PLAN . 214.11SELECTED OPTIONS AND CRITICAL MEASURES. 224.12MILESTONE SCHEDULE. 223
1 INTRODUCTION.INTRODUCTION .The Business Plan is a useful and versatile tool. It is a guide that can also be described as thebusinessman’s best friend. In today’s global and highly competitive business environment, enterprises,whether large or small, cannot hope to compete and grow without proper planning.1.1W HY DO YO U N EED A B USINE SS PLA N?You may need a Business Plan for a number of reasons. Here are the most important: If you are starting a new project or venture If you are looking for a business partner If you require finance, government or EU grants and incentives To manage your business better To measure actual performance compared to what was planned1.2W H A T C A N A B U S IN E S S P L A N DO F O R Y O U ?A good Business Plan can be useful to you in a number of ways. It can: Help highlight aspects of the business that need special consideration Help identify your core competencies (what you can do best) and weaknesses Help identify weaknesses and threats to the business Open your eyes to new opportunities Help you understand your competitors Help you plan your operational setup better Help you use your financial resources more efficiently and ultimately more profitably Assist your management capabilities in relation to specific tasks and functions as well as bringawareness to human resources and capacity needs1.3H O W W I L L T H IS H A N D B O O K H E L P YO U ?This Handbook is intended to answer the following basic questions in a simple and practical manner: What is a Business Plan? How does it help you to achieve your goals? What are the thinking processes you have to go through? What value does it have for you as a manager or as an entrepreneur starting up a new business? How is it prepared?1 . 4 T H E B U S I N E S S P L A N B E L O N G S TO Y O URemember, nobody knows your business as well as you do. Knowing what you are capable of, and whereyou want to be in the future, is the essence of a good Business Plan. With these two points in mind, all youneed to do is develop the right strategies to achieve your goals.4
2 THE MALTA ENTERPRISE BUSINESS PLANNINGPHILOSOPHY.PHILOSOPHY .Business Planning is fundamental to Malta Enterprise’s mission in assisting Maltese enterprises to startup, restructure and grow to become more competitive in line with Malta’s economic policy.Before we proceed to explain what a business plan is, it would be useful to eliminate some commonmisconceptions and explain what a business plan is not.2. 1 W HAT A BUSINE SS PL AN IS NOTContrary to what some may think, a business plan is not: A set of financial projections An application for financial assistance A guaranteed formula for success2. 2 W HAT A BUSINE SS PL AN ISMalta Enterprise sees the Business Plan as a thinking process performed by the enterprise for theenterprise itself. Every start-up enterprise needs to go through a thorough thinking process in order tocome up with viable options and strategies that will strengthen its present position and facilitate its futuredevelopment. Finally, the thinking process should culminate in a set of measures for the implementation ofthese strategies. This implementation plan is generally referred to as the milestone schedule.2 . 3 I D E N T IF Y I N G Y O U R N E E D SThe milestone schedule referred to in 2.2 above should form both the starting and concluding point of yourplanning process. In the first instance, well before you start writing the plan, you should make a list of allthe things that you could possibly need in order to make your business a success.Once you have gone through the business planning process you will be in a much better position to identifyand prioritize your needs in line with the realities of your business venture.2. 4 THE THINKING P ROC ESSAll entrepreneurs think about their business. In fact, most businessmen do nothing else but brood andworry about problems and challenges that are the daily companions of every entrepreneur. To think aboutyour business is not enough. It is important to think in a logical and structured manner, looking at everyaspect of your business (both internal and external) in a SYSTEMATIC, OBJECTIVE and ANALYTICAL way. This iswhat we mean by the thinking process.5
A good thinking process should lead to good Business Planning where sensible decisions are based onreliable information and not on ‘gut feeling’. This handbook is intended to guide you through your thinkingprocess in a structured manner putting all the issues that you need to consider in a logical order.2 . 5 SU C CE SS O R FA ILU R EOften, the cause of failure is that entrepreneurs do not anticipate simple factors that could easily havebeen foreseen had they taken the time and trouble to go through a logical thinking process. The process offormulating a business plan helps scrutinize, in a formal way, basic matters that need clarification, suchas: Gut feelings and ideas Assumptions that have not been verified Calculations made without full knowledge of underlying principles e.g. tax rates and bank interestcharges Regulations and legislation that could affect you External dynamics such as political changes and new technology that could have implications foryour businessScrutiny within a broader plan can help identify weak points early enough to make positive changes and / oradapt plans accordingly.6
3 THE BUSINESS P LAN F ORMAT.ORMAT .In reality there is no standard format for the presentation of a good business plan. Business plans vary incontent and size according to the nature and size of the business concerned and on the emphasis that isplaced on certain critical areas as opposed to others.3 . 1 T H E C O NT E N T SEvery business plan should address a number of fundamental issues without which it would not becomplete. These issues can be grouped under six major areas that are the pillars of every business activitywhether large or small. The six major areas are: Sales and Marketing Operations Human resources Finance Technology and ITC Management Information3. 2 U SE FUL POINTSTable A lists the important elements of a business plan and offers some simple points that need to betaken into consideration in regard to each section. It is worth noting that these points are by no meansexhaustive and are meant to serve only as examples. The table is intended to provide you with a simpleframework/format upon which to base your business plan.3. 3 A SIMPLE FOR MATThe format provides you with a framework for presenting your thoughts, ideas and strategiesin a logical, consistent and coherent manner. In other words the business plan format helps you to clarifyyour own ideas and present them clearly to others.3 . 4 T A B L E A - E S S E N T I A L C O N T E N T S O F A B U S IN E S S P LA NThe various sections are explained in detail in section 4 of this manual.CONTENTSUSEFUL POINTS1. EXECUTIVE SUMMARY Highlight the attractions of your business. Show that your plan is well researched withfigures to back up your forecasts. Demonstrate your management ability. Show that your product has a market. Provide an overview of your business idea. State why you chose to go into this particularThis section is a brief overview of the wholeBusiness Plan.2. ENTERPRISE DESCRIPTION7
It is important that you demonstrate a clearunderstanding of the business you would like to bein.business. Show any personal skills and/or experience thatwill help you in your business.You should also explain your business concept andthe reasons why you think it will be a success. State why you believe the business will be asuccess.3. PRODUCT OR SERVICE DESCRIPTION Describe your range of products or services. Mention plans for new additions to your range. Speak about innovative ideas. What value would the clients place on yourproducts? What will your clients expect from yourproduct? Example: Quality, Design, Reliability, Innovation,Reasonable Price, Customer Care How big is your sector? How many companies operate this sector? What are the general trends? How is your industry changing? How will these changes affect you? Are you aware of legislation and/or regulationsthat could affect your business? Have you thought about any other changes political, economical or technological - thatcould affect your business? Who are your competitors?(local and foreign) What are their strengths and weaknesses? How can you be different? How can you become more competitive?Thissectionhelpsyoutothinkabout your product or service which reflects on yourability to understand and cater for your clients’expectations.4. INDUSTRY ANALYSISThis section helps you to understand the industrialenvironment you intend to be working in andthrough it you can identify important changes thatare likely to take place in your market.5. COMPETITION ANALYSISIn order to compete successfully in any businessyou need to know your competitors. It is useful tostudy how and why they achieve success. Also youneed to be aware of their failures to avoidcommitting the same errors.6. SWOT ANALYSISINTERNALS StrengthsW Weaknesses What are your
Every business plan should address a number of fundamental issues without which it would not be complete. These issues can be grouped under six major areas that are the pillars of every business activity whether large or small. The six major areas are: Sales and Marketing Operations Human resources Finance Technology and ITC Management Information Table A lists the .
