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:
- To increase sales by 10 percent per year over a five year period;
- To realise a 20 percent increase in profits per annum.
