HOW TO PREPARE A BUSINESS PLAN
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1 HOW TO PREPARE A BUSINESS PLAN An easy guide for you One of the biggest problem that most of the A Level business studies students faces is the trauma that they have when they approach UNIT 5 Business Planning paper. In my view this paper is rather simple and easier than your Unit 6. The main reason of the worry is that you are not given the case in advance and the uncertainties regarding the structure of the Business plan. So let s try to approach this Unit now. First and the foremost thing that you need to understand in this Unit is that the case study is issued only in the exam hall. Indeed it s a real task for an average student to read the case study and the appendix and evaluate it and prepare a business plan in a time of 1 hour 30 minutes. But as a student who has opted for this Unit, you have no other choice other than to appear it with confidence. When you get the case study in hand, just spend few moments to relax yourself and then proceed with the case. Since time is a limiting factor, even at your first reading itself be attentive enough that you observe and collect up all the points that are required for the Business plan. With the context you will be given four to five appendixes for further evaluation. Go through both the case and the appendix carefully and note down where ever you could use the appendix properly. Beware that simply paraphrasing the case is not advisable. You should be able to show a reasonable degree of knowledge and understanding across a number of aspects of business planning from objectives, implementation strategy, SWOT and PEST analysis, Ansoff Matrix or even Porters Five Forces Model and know how to apply that accurately. In my view you can start your answer in two different ways: Do the evaluation and select and option for the plan first and then proceed with your business plan. Start the plan in the format and make the evaluation and choose your option for the plan after writing the Executive summary. The selection of the strategy of writing could be made in accordance with the question given. If the question is asking you to make the evaluation and select an option and then prepare the Business plan then the first strategy is better. 1 Prepared by: Emmanuel George
2 Let s start the plan here. 1. EXECUTIVE SUMMARY It should contain a good description of the product/service concept, but in other respects should summarize the key issues extremely concisely. If appropriate use "bullet" points (*) rather than sentences and paragraphs - your key points will stand a better chance of being understood and remembered. What is the product/service and the opportunity? What is your target market? What is the market size? What are your sustainable competitive advantages? What is the technology/innovation in the plan? What are the startup costs? How will startup funding be used? What is the payoff? (Economics, profitability, harvest potential) Who comprise your management team? What is your overall company strategy/vision? 2. Evaluation of Options: SWOT analysis for option 1 and option 2 PEST analysis common for industry. 3. Choosing the option: Which option is selected? Why is it selected? Here the option which is selected should be compared with the other option Emphasize on more advantages of selected option than the other. 4. Business plan for selected option: Under this the candidate has to discuss regarding 1) Business Process Planning Vision Mission 2 Prepared by: Emmanuel George
3 Objectives (Here, candidate has to write the importance of vision and mission and suggest one or two Long-term and Short-term objectives) THE COMPANY & THE PRODUCT/SERVICE BUSINESS MODEL How will your business make money? THE PRODUCT/SERVICE What is your product/service? How does it work? In what way is your product/service innovative? PRODUCT/SERVICE VALUE What is your value proposition? What problem does it solve, what unmet need does it fill, or what opportunity does it take advantage of? MARKET ENTRY AND GROWTH STRATEGY How do you plan to sell your product/service? How do you intend to grow your sales? What is the right timing for your market entry? What trends will you exploit? 2) Marketing Plan: Here the candidate has to suggest the importance of; Market Definition Who are your potential customers? What similar products/services currently exist or are upcoming in the marketplace?. 3 Prepared by: Emmanuel George
4 Marketing Research sampling methods What are your sources of data? How did you analyze your data? MARKET SIZE What is the size of your target market? Be sure to translate it in terms of $/year in sales. How quickly would you be able to penetrate the market? How much of your market (i.e. market share) will your product/service capture over time? Market segmentation MARKETING STRATEGY How are you going to penetrate the market and drive adoption of your product/service? Unique Selling Point COMPETITOR PROFILE Who are your competitors? How do their products/services compare with yours? Local Monopoly PLC, BCG, Ansoff Porters Five Forces Porters Generic Strategy Marketing Mix MARKETING PLAN How will you make customers aware of your product/service? How will you promote your product/service? How will you price your product/service? How will you deliver your product/service to your customers? Who will be your first, second, third, etc. customers? 4 Prepared by: Emmanuel George
5 3) Financial Plan: Here Candidate has to suggest the importance of; Budgeting BEP Ratios(Gearing Ratios) Sources of funds Investment appraisal Balance Sheet and Profit and loss Account What is your projection of your financial performance? What are the assumptions behind your projection? What are the risks? Provide a summary of your financial statements in this section and the complete ones in your Appendices (see below) 4) Human Resource Plan; Recruitment and Selection Training and Development Motivation and Communication Management leadership Working conditions Salary, incentives and fringe benefits Redundancies, Transfer, lay off Hierarchical levels; decentralization or centralized or any other hierarchy. 5) Operation Plan: Critical Path Analysis Gantt charts Decision Tree analysis Production Methods Lean production Job Production Batch Production Flow Production Kaizen JIT and TQM and Economies of scale 5 Prepared by: Emmanuel George
6 Candidate can discuss any three issues comprehensively in the plan, for instance; the case emphasizes on marketing, finance and HR then they are not required to explain operation plan comprehensively Here Candidate suggesting what kind of theoretical model can be applied and the importance of models to the business Candidate should not focus on each model s meaning, advantages and disadvantages. 5. Conclusion: Candidate should give stress on the information that are lacking in the case for a comprehensive analysis Note: Don t Panic!!! This may seem bigger. You don t need to write all the sections that are mentioned above. You can choose the sections based on the available information in the case. 6 Prepared by: Emmanuel George
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