Entrepreneurship Development: Planning your business (II)

Last week, in “Planning your business (I)”, we discussed what business planning is, the benefits of business planning, types of business plans, the elements of business plans, etc. Today we will be introducing the content of a business plan.

The first thing to understand is that, for our purposes here, the content of a business plan is different from its presentation. The content of a business plan remains generally the same, but the presentation and emphasis may differ from one business to another and from one recipient to another.

The best way to derive what the content of a business plan should be is from its “elements” that we discussed last week. The internal elements, as we said, will include resources such as human capital, available finances, functional strategies, competitive advantages, etc. So, some of the contents of a business plan from the perspectives of its internal elements will include:

Business premise and philosophy: Your business plan should start with your business premise and philosophy. Your business premise and philosophy are the fundamental bases on why you want to do what you want to do or why you are doing what you are already doing. This may include internal factors such as competitive advantage you already have or environmental issues such as opportunities in a market space. It may also be just your personal philosophy about something you hold dear or that you believe. Your reasons, whatever they are, must, however, be established to be commercially feasible.

Sam Walton started Walmart on very simple principles. Those principles were also part of his strategies. They include the belief that people deserve to get quality goods at cheap prices. Similarly, Mr Walton originally opened his stores in small and rural communities because he wanted to avoid competition and also believed that those communities deserved access to a large variety of goods at cheap prices. Opened first in 1962, Walmart had a turnover of $524bn from some 11,500 stores and e-Commerce websites in 2020.

About your company: Regardless of the specific purpose you may be developing your business plan for, you should know and write comprehensively about your company. These should include your company’s legal status, the raison d’etre (most important reason) of its incorporation, those behind it as major shareholders, executives and management, product offering, what capabilities you have that distinguishes you from your competition, etc.

Marketing plan: Your marketing plan should fully describe how you intend to serve your target market profitably. This should include what products you are or will be offering, your target market, logistics and, specifically, the delivery plans to your customers, service plans, etc. Your marketing strategy should bring out how you intend to do things differently and better than the competition in ways that will enable you to achieve your objectives.

Depending on the size and scope of your business, details about your competition, sales strategy, promotions may be included here or composed separately. Irrespective of what you opt to do, the issues must be thoroughly discussed.

Financial plan: Your business plan should include details about your financial resources and strategy. What is your current financial situation? Do you have all the finances you require? If you have any financial needs, how do you intend to meet them? What are the current financial performances of the business? What is your credit policy?

Your financial plan should also bring out what your financial targets and projections are as well as how you intend to achieve them. Your financial strategy should be discussed in detail. Issues like funding and liquidity management, relevant financial ratios etc. should all be presented.

Human resources: The most important resource of any organisation is its human capital. Irrespective of the size of your business, therefore, you should highlight the strength of your human capital. Bring out the experiences and qualifications of your key people, as well as their past and current achievements. Where there are few key people, you will need to detail how the operations of the business are protected from any risks to them.

Operations: Depending on the nature/type and scope of your business, you will need to discuss your production and overall supply chain operations. These will include raw materials sourcing, processing, as well as delivery to your distributors or consumers. Any cost benefits that dovetail into your financial plan should be brought out. In our context, it is appropriate, for instance, to bring out how your perishable goods will be protected from risks whilst in transit on our roads.

Any state-of-the-art technology that you have in your production plant, some Customer Relationship Management application that you have, etc., should be discussed here and the advantages they offer your business over and above the competition.

Attachments: If you are communicating your business plan to a third party, you may attach copies of incorporation documents, permits, property rights, patents, licences, contracts, some key staff resumes, etc. You may also include photographs of equipment, farmland, products, marketing materials, charts on financial and market status and projections, etc.

We have presented above some of the typical content of a business plan from the perspective of the internal elements of a business. Next week, in the third part of “Planning your business”, we will discuss the content of a business plan from the perspective of the environmental elements of a business.