BUSINESS PLANNING

1. What is meant by the term business plan?

A business plan is a management tool which focuses on the nature of the business in a logical and an organized manner.

2. Explain the elements of the business plan. 1. The General description of the business. This constitutes names, the type of the business and SWOT analysis. 2. Statement of mission, goals and objectives. A mission statement is a brief statement that indicates the purpose of the business."To improve on the diet of the customers through providing them high quality products at a price which is a affordable". 3. The marketing plan. This is an analysis of the possible position and opportunities of the business being planned in a present market situation. 4. The production plan.This is an analysis of the projected needs for producing the proposed goods and services. 5. The financial plan.This covers the financial requirements for the proposed business idea. 6. The organization plan.This is the frame work around which people, machines, the equipment and other physical parts of the plan are put together to have a moving organization. 7. The action plan. This is the careful laying out of the sequence steps towards achieving the business goal. It acts as a time table when complementing business activities. Question Who are the users of business plan information? 1. Donors 2. Investors 3. Bank lenders 4. Government ie for tax purposes 5. Share holders Question a) Analyze the steps followed when preparing a business plan.

1. Identify the type of the business to engage in. 2. Selecting the best business to engage in. 3. Conducting market research for the selected business. 4. Collecting the relevant data and information. 5. Drafting proposed business plan 6. Discussing the draft of the business plan with the experienced person in a similar business. 7. Finalizing the business plan by preparing an action plan for business implementation. b) What are the uses of a business plan? 1. It helps the business employees to identify the business targets, goals and objectives. 2. It helps an entrepreneur to make adequate preparation for the business before it is commenced. 3. It acts as business basis for determining the government revenue from the business’ profits. 4. It provides information to the financial institutions where an entrepreneur may obtain loans. 5. It facilitates the monitoring of the business performance based on set goals and objectives as the standard measurements. 6. It helps an entrepreneur to identify the business competitors. 7. It provides a sense of direction to an entrepreneur. 8. It facilitates control and evaluates business performance. 9. It acts as a time-table for implementation of the business ideas during the designation of the action plan. 10. It helps an entrepreneur in designing specific goals and objectives which serve as a bench mark to measure the progress of the business. 11. It acts as a legal tool for operating business activities. 12. It facilitates financial decision making. 13. It helps an entrepreneur to identify the strength, opportunities, weakness and threats of the business. 14. It encourages innovation and creativity. 15. It establishes criteria for effective utilization of resources such that they are no possible deviations in the future. Question a) What factors may hinder an entrepreneur from successful implementation of his proposed business plan. i. Limited entrepreneurship skills. This blocks entrepreneurs from preparing effective business plan. ii. Poor book keeping skills. iii. Inadequate capital to meet the operational expenses when preparing a business plan. iv. Failure to have information necessary for business implementation and planning. v. Political instability in some areas of the country. vi. Many procedures and bureaucratic steps involved in business plan preparation. vii. Inadequate supporting services like bank to avail some financial support. viii.Failure to get skilled personnel to guide the entrepreneur. ix. Government interference in business operations. x. Changes in the economic situations. xi. Failure to involve stake holders in the preparation of the business. Question a) What is meant by the term business planning? A business plan is a management tool,which focuses on the nature of the business in a logical and organized manner.It acts as a control device a gainst which management can measure its achievements. b) What are rationale/ reasons for preparing a business plan? i) To test the feasibility and viability of the business idea. ii) To give the business the possible chance of success. iii) To secure the external funding .e.g getting loans from banks iv) To attract investors. v) To identify the challenges which are most likely to face the business in advance? vi) To define specific goals and objectives of the business. vii) To identify the expected production targets. e.g quantity targets viii) To provide an entrepreneur with information about where the business is going. ix) To enable the entrepreneurs to make investment decisions. x) To enable the government to fairly assess the tax on a business. xi) To enable the entrepreneur to monitor the business performance. xii) To assess the SWOT analysis of the business xiii) To identify the business target customers. Question Give the contents of the following components of the business plan. 1. General description of the business. - Business name and address. - Products offered - The needs the business is seeking to solve or its purpose. - Type of the business being planned. e.g manufacturing - SWOT analysis - What makes the business different from the businesses? - Which needs of the market it will seek to fulfil? 2. Marketing plan: This is an analysis of the possible position and opportunities of the business being planned in the present market situation.

- Products offered and their uniqueness e.g unique packaging - Target customers - Price to be charged - Means of distributing products. - Marketing expenses e.g expenses to print out fliers, business cards etc - Position of the business competitors. - Expected sales. - Terms and conditions of sale e.g cash sale, credit sale etc. 3. Production plan: This is the analysis of the projected needs for producing proposed goods & services. - Business location - Raw materials used. - Machines and equipment - Labour requirements - Means of disposing wastes - Packaging materials used. E.g polythene bags. - Utilities to be used e.g water, electricity etc. - Labour requirements used i.e skilled or semi-skilled. 4. Organization plan. This is the framework around which machines and workers are put together to have a moving organization. - Nature of employees to be employed. - Source where employees can be sourced from. - Level of qualification for workers. - Wages and salaries to be paid. - Other benefits to be given to workers such as workers’ allowances, accommodation, lunch etc. - Tasks and responsibilities to be performed by each worker. - Methods to be used when recruiting workers - Administrative expenses to be met by the business such as telephone expense. 5. Financial Plan. This is an analysis of the financial requirements needed for the production of the proposed goods & services.

It covers the following. - The total costs for the proposed goods and services. - Source of funds needed to operate the business. - Allocation of costs. - Expected sales. - Expected profits - Expected return on investment. Business implementation plan (Action plan) An action plan is a management tool that involve laying out a series of sequenced steps that enable an entrepreneur to implement the planned activities of the business in a sequenced way so as to meet itself; target Importance or uses of an action plan to an entrepreneur ü It helps and guides the entrepreneur to remain focused during the implementation of his business activities ü It helps an entrepreneur to identify business obstacles in advance and take appropriate measures to overcome them ü It helps the entrepreneur to allocate the serious sources of information and the resources needed for a business ü It helps an entrepreneur to identify strength, weaknesses, opportunities and threats of his business and those of competitors ü It helps the entrepreneur to obtain information (feedback) on the progress of the business ü It serves as a time to implementing business plan (activities) You have mobilized students to form a partnership business with capital of shs 5,000,000 Design a one-month’s Action plan for the business Example of an action plan. ACTIVITY TIME FRAME RESOURCES NEEDED PERSON(S) RESPONSIBLE INDICATORS OF SUCCESS Formalizing   the formation of the partnership Carrying   out of preliminary survey Selection   of the site/renting the business premises Constructing   a buildin Opening   up a bank accoun Acquisition   of tools & equipment Installation   of equipment Recruitment   of staff Purchase   of raw materials Production   trial Publicity Commercial   production Launching   /inauguration of the business Uses of mission statement ü It indicates / defines the purpose of the business ü It helps to distinguish an organisations from others ü It helps to keep an organisation focused ü It helps in communicate the direction of the organisation ü It helps to make day – to –day operating decisions ü It helps to motivate employees by indicating their objectives as a team ü It attracts people who support it ü It creates action rather than reaction ü It attracts opportunities and helps an enterprise to maximize them ü It enables an organisation to gain strength and stand chances in the market Question a) What are the steps followed when preparing business plan. 1. Identifying the type of the business to engage in e.g juice processing. 2. Selecting the best business to engage in 3. Conducting market survey. 4. Drafting a proposed business plan. 5. Discussing the draft of the proposed business plan with experts. 6. Fundraising the business plan by preparing an action plan for business implementation. b) What are the challenges? i. Limited entrepreneurship skills. ii. Poor book keeping skills. iii. Inadequate capital to meet operational expenses. iv. Political instabilities in some parts of the country. This limits entrepreneurs to access such areas. v. Limited government support. This discourages investments. vi. Limited information needed for business plan implementation. vii. Many procedures to be followed. viii. Inadequate supporting services like banks to avail financial support. ix. Limited skills for business plan preparation. x. Changes in economic situations like price changes. xi. Failure to involve stake holders in business plan preparation like customers, employees, shareholders etc. c) Factors determine / affect / influence the success of business plan in Uganda. i. availability of funds ii. level of competition for market iii. degree to which stakeholders in decision making iv. government policy of high taxation and subsidization v. level of market assessment about the business vi. political climate vii. level of planning by the entrepreneur viii. sources of raw materials ix. level of inflation x. level of experience and skills of the entrepreneur xi. Nature of targets set by the entrepreneur. d) Measures that can be taken to ensure successful implementation of a business plan. i. Involving stakeholders in decision making. ii. Conducting thorough market survey so as to select profitable business opportunity. iii. Ensuring political stability to protect economic activities. iv. Identifying reliable suppliers of raw materials. v. Ensuring economic stability for instance stable prices for goods and services. vi. Employing effective planning by the entrepreneur. vii. Setting realistic targets that are attainable within the given time period. viii. Employing skilled and experienced workers capable of implementing the business activities. ix. Lobbying government support through Associations for tax holidays/ subsidization. x. Ensuring availability of funds needed to start and operate business