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0 BUSINESS PLAN CONTENTS
Executive Summary
Marketing Plan
1) Product/Service Description
2) Target Buyers
3) Market Coverage
4) Demand, Supply and Gap Analysis with Sales Forecast
5) Business Marketing Strategy
6) Range of Products and Price List
7) Fixed Assets for Marketing
8) Total Estimated Marketing Expenses
Production and Technical Plan
1) Factory/Warehouse/Service Delivery Location and the Map
2) Methods/Processes
3) Fixed Asset Requirements and Depreciation Cost
4) Raw Material Requirements and Cost
5) Labour Requirements and Cost
6) Production Overhead Cost
7) Total Production Expenses
Organisation & Management Plan
1) Name, Logo and Form of Enterprise
2) Entrepreneur/Partner Profiles
3) Business Structure
4) Salaries of O&M staff
5) Fixed Assets for O&M and Depreciation Costs
6) O&M Overheads
7) Pre- Operation Activities and Cost
8) Total Management Expenses
Financial Plan
1) Total Investment Cost and Financing Plan
2) Security on Loan
3) Loan repayment and Interest Calculation
4) Projected Profit and Loss
5) Projected Cash Flow Statement
6) Projected Balance Sheet
7) Financial Ratios and Analysis
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1.1 EXECUTIVE SUMMARY
An executive summary of a business plan is an overview. The purpose is to summarise the key
points of the business plan for its readers, saving them time and preparing them for upcoming
content. An appropriate executive summary summarises a more extended business plan or
proposal in such a way that readers can rapidly become acquainted with a large body of text
without having to read it all.
Brief Description of the Business
[What is your business name? What products/services will you offer?]
Brief Profile of the Entrepreneur
[Briefly describe your (and partners’ if any) background, experience and future plans.]
Summary of the Marketing Plan
[Briefly describe your business target group(s), the marketing strategies (4Ps) & the marketing
budget.]
Summary of the Production and Technical Plan
[Briefly describe the production technology, volume, process, personnel and the total production
cost.]
Summary of Enterprise Set up and Management Plan
[Briefly describe the form of your business, organization and the total cost.]
Summary of the Financial Plan
[Briefly indicate the total investment, the financing plan, projected profits and other financial
highlights of the business.]
Conclusion on the Business
[Conclude your business plan with a statement denoting importance of the business in your life.]
1.2 MARKETING PLAN
1) Description of product(s)
[Describe the range of product(s). Write the varieties, sizes, shapes, colours and any
other special features your product(s). If possible paste a picture with descriptions.
2) Target market segments
[To whom do you plan to sell the products /services? Describe them here such as age
group, income group, living area, family size, etc. For institutions, describe the key
features and basis of segmentation.]
3) Target market area
[State the area of coverage & name it (villages, towns, district, or state, online).]
4) Sales Forecasts
[Sales Forecasts are done in many ways. Gap Analysis: The gap exists between demand
and supply per day/month/quarter/year, is one way.
SMEs are small in scales; their sales forecasts are mainly about the target markets
geographically defined and their product packaging.
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Provide your right assumptions and reasons on your sales forecasts.]
Note: The sales forecast is crucial. The sales forecast decides the rest of the projections.
It is important to make realistic assumptions. Take into account the nature of product and
losses, which may incur during storage, sales and marketing. State by what percentage
the sales were increased/ decreased from year to year by product, increase/decrease in
selling price by product and any other relevant assumptions made in arriving at the sales
forecast.
5) Business Marketing strategies
[Product strategy: What are the special features? You can focus on quality, branding,
packaging, customer service, etc.
Place /Distribution Strategy: How are the products made available to the customers?
Explain the major distribution channels.
Promotion Strategy: How to communicate about the products to the targeted buyers? Do
they use advertising, personal selling, sales promotion, direct marketing or publicity?
Price Strategy: What is the pricing strategy? Is it demand, cost or competitor-oriented?]
6) Range of Products and Price List
[Introduce your range of products/services and their unit price list. Consider the
wholesale and retail prices, discounts, promotion pricing, etc. Total Sales Value should
tally with the Total sales Forecast]
7) Fixed Assets for Marketing and Depreciation Cost
[What are the fixed assets required for marketing? Check the purchase price and learn
to provide for depreciation so that replacement becomes easier. If you already own the
fixed assets, use the current market value as the purchase price. For example,
advertisement and name boards, distribution vehicle, Promotion LED Monitors, etc.]
Depreciation
Purchase Estimated per year in
Description price in Naira life in years Naira
of assets Specifications (a) (b) (a/b)
1 Marketing Fixed
Assets
2 Marketing Vehicles
3 Marketing
Equipment
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Total
8) Total Marketing Expenses
[What expenses do you envisage to incur on your marketing efforts for the next 3 years?
For example, what will be the cost of sales personnel, and other overheads such as
promotion, rent, electricity, etc.?]
1.3 PRODUCTION AND TECHNICAL PLAN
1) Factory/Warehouse/Service Delivery Location and Maps
[Describe the location of the factory/Warehouse/Service Delivery Outlet. What is the
significance in choosing this particular location? Write the advantages of the location.
Draw the location.]
2) Methods/Processes
[What are the techniques, methods and processes that will be used in the production
function? Outline the steps involved in the right sequence.]
3) Fixed Asset Requirements and Depreciation Cost
[What fixed assets do you require? What are their values and quantities? What is their
depreciation rate/ estimated accounting life?]
Description No. of Items Purchase Total cost of Estimated Depreciation
of assets required price in Naira the Assets life in years per year in Naira
(a) (b) (a/b)
Or
Or Depreciation rate Total Assets Value x Dep.
Rate
1. Land & building
2. Machineries
3. Vehicles
4. Equipment
5. Furniture &
Fixtures
6. Tools
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7. Others
Total
Note: Depreciation rates vary on types of assets per year.
Land - 1-2%
Building (Concrete) - 5%
Machinery - 20%
Vehicles - 20%
Furniture and Fixtures - 33.3%
Equipment & Tools - 50%
4) Raw Material Requirements and Expenses
[What raw materials do you require? How much do you expect to need to produce per
month? Then calculate it for a year. Then find out the cost per year. Start with the sales
forecast.]
Description of Unit Price Quantity required Total Total cost per year
Raw Material Naira Per unit (a) required quantity (b) (a) X (b)
Raw material cost for Year 1
Raw material cost for Year 2
Raw material cost for Year 3
5) Labour Requirements and Cost
[What type of labour you need? How many of them do you require? How much do you pay?]
Type of Labour Number of Salary per month Total monthly Total cost per
(Direct and Indirect, employ-ment including tax/pension Cost (A x B) year (AxBx12)
Skilled, seasonal or fully (A) contributions (B)
time etc.)
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Total production labour cost for Year 1
Total production labour cost for Year 2
Total production labour cost for Year 3
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6) Production Overhead Expenses
Type of Cost Cost per unit No of units Total monthly Total cost per
Required per month cost year
Total Depreciation on Fixed Assets
Production Overhead Expenses for Year 1
Production Overhead Expenses for Year 2
Production Overhead Expenses for Year 3
[What are the overheads requirements? These are mainly the energy, insurance, water,
rent, rates and other bills we pay monthly. If it is not possible to identify the units and its
prices, go for an estimate after researching. Always keep some allocation under
‘Others’.]
Total Production Expenses
[What is the total production cost?]
Category Year 1 Year 2 Year 3
1 Raw Materials
2 Labour Cost
3 Overheads including depreciation
Total Production Expenses
Assumptions:
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1.4 ORGANISATION & MANAGEMENT (O&M) PLAN
1) Name, Logo & Form of the Business
[How would you like to set up your business enterprise? There are different forms such
as sole proprietorship, partnership, private limited company, etc. What is your
preference? Select a suitable form of business for right reasons. You can decide on a
logo. Have you searched for your business name? Is it still available for registration?]
2) Entrepreneur/ Partners Profiles
[Write about yourself. Do you have any business partners? And write about your
business partners. Write about the business experience, technical skills, unique
background, network and contacts and the investment/contribution (capital investment,
time, expertise and others). You can also mention any business management
responsibility and role they take in the enterprise.]
3) Organisation Structure
[Organisation structure shows various business management functions/roles, managerial
power/authority with responsibilities, control and coordination, and information flows at
various levels in a hierarchical order. As per requirement of the business, the
entrepreneur can design an ‘Organogram’ here. An organogram/organisation structure
links to the business objectives, strategy, business orientation and decision-making power
sharing.]
4) Salaries of O&M Staff
[How many staff do you need for administration? What is the cost of salaries including
the tax and pension contributions?]
Total monthly cost Total cost per year
Type of Staff Number of Salary per month including
(a) x (b)
employment(a) tax/pension contributions(b) (a) X (b) x 12
(Part/Full time)
Total Salaries - Year 1
Total Salaries - Year 2
Total Salaries - Year 3
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5) O&M Fixed Assets and Depreciation Costs
[What fixed assets do you require? What are their values and quantities?
What is their depreciation rate/ estimated accounting life?]
6) Total O&M Overhead Expenses
[What are the overheads requirements? These are mainly the energy, insurance, water,
rent, rates and other bills we pay monthly. If it is not possible to identify the units and its
prices, go for an estimate after researching. Always keep some allocation under
‘Others’.]
7) Pre-Operating Activities and Expenses
[Identify all the activities prior to the business start-up. List and indicate the time Period
with costs. For example, the SME Start-up Loop course participation is one of the pre-
operating activities. You have your cost contribution to the course. The Loop duration is
4-5 months.]
(Sometimes the pre-operating costs comes higher and then the entrepreneur can decide to
divide the expensesover a period of time than an expense for the first year)
1.5 FINANCIAL PLAN
1) Total Investment Cost
[What is the Total Investment/Project Cost (TPC) of my business? The previous
marketing, production and organisation & management plans will provide necessary cost
elements in TPC calculation. The purpose of the TPC is to identify total investment and
plan financing strategy.]
Items Total Sources
Value Equity Loan
A. Fixed Assets
(List all the fixed assets identified under the
three previous plans)
Land
Building
Machinery
Equipment and Tools
Vehicles
Furniture
Other assets
Total Fixed Assets
B. Working Capital
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(Identify the Working Capital Cycle. It is the
period in between production and
sales. Otherwise simply take the 2 -3
month’s expenses.)
Marketing Expenses
Production /Service Delivery Expenses
Organisation & Management Expenses
Financial Expenses
Total Working Capital
C. Pre-operating Expenses
Total Project Cost(A+B+C)
Financing in percentage
Security on loan
[No need to always go for a bank loan. There are other ways of obtaining (co)-
financing. In case, you have decided to go for a bank loan, you need to describe the
details of your security here.]
2. Loan Repayment and Interest Calculation
[The calculation is to identify a repayment plan which is the principal borrowed and
the interest. The repayment varies as per the borrowing conditions. Here, we assume
an interest rate close to the market average (Ex: Average 25% per annum in Nigeria)
and plan the repayment within 3-5 years for practical reasons. The loan identified in
the TPC calculation is the principal.]
The Loan Amount: ……………………… Repayment Method: …………..
Interest Rate: ………………………… Period of Repayment:………….
Grace Period (If any):………………………(During Grace Period, only the interest is
collected)
Year Beginning Interest Principal Total Annual Monthly payment Ending Balance
Balance Payment Payment
(Just for knowledge)
Total
Assumptions:
3. Projected Profit & Loss Statement
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[Projected Profit & Loss can show your business profits as gross and net. Business start-ups in
early years do not make high profits. It needs time and business experience. The entrepreneur
eventually will learn the business by doing it. Some businesses do not give profit in first year at
all. Therefore, to prepare three- year statements estimate is useful.]
Year 1 Year 2 Year 3
Sales
Less:
Returns (5%)
Net Sales
Less:
Cost of production
Gross Profit
Less:
Overheads
Marketing Expenses
Organisation and
Management Expenses
Bad Debts
Finance Expenses
(Loan interest, bank charges,
etc.)
Net Profit Before Tax
Less:
Tax %
Net Profit After Tax
4) Projected Cash Flow Statement
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Pre- 1 2 3 4 5 6 7 8 9 10 11 12 Year
Operating
Period
Opening
Balance
Cash Inflows
Sales
Equity
Loan
Total Inflow
Cash Outflow
Fixed Assets
purchase
Working
Capital
Other Expenses
Total Cash
Outflows
Closing Balance
5) Projected Balance Sheet
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[Balance Sheets are Profiles of a business on a given date. Balance Sheets should have a date.
Prepare the three year-end Balance Sheets estimates to see the business at the end of Year 1-3.]
YEAR 1 YEAR 2 YEAR 3
Current Assets:
Cash
Accounts Receivable
Inventories
Total Current Assets
Fixed Assets:
Less: Depreciation
Net Fixed Assets
Total Fixed Assets
TOTAL ASSETS
Current Liabilities:
Accounts payable
Provisions for income Tax
Total Current Liabilities
Long Term Liabilities:
Loans
Total Long-Term Liabilities
TOTAL LIABILITIES
Equity:
Capital
Accumulated Profit
Total Equity
Total Liabilities and Equity
6) Break-even Point (BEP) Analysis
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[BEP is a point of sales where no profit no loss made, i.e. the initial investments have
been covered through the profit made since inception. Knowing the BEP helps businesses
to set sales targets and ensure profitability of the business. The break-even point can be
expressed in terms of sales volume (quantity), selling price (with volume), or sales
(amount).
Calculate your BEP using one of the formulas.]
BEP sales (Quantity) = . Total fixed cost .
Unit selling price - Unit variable costs
BEP selling price = Total fixed costs + Total variable costs
Total sales volume (Quantity)
1) Financial /Investment Analysis
Profitability ratios are used to examine an enterprise’s operating performance during an
accounting period. The common ratios used are profit margin and return on investment
(ROI).
Profit Margin
Profit margin is a commonly accepted measure of profitability. The ratio is also called
percentage return on sales, margin on sales or net profit percentage. Divide earnings
before interest and taxes (EBIT) by sales. The higher the ratio, the greater the profit
margin is.
EBIT
Profit Margin = -----------
Sales
Return on Investment (ROI)
Return on investment is an indicator of the effectiveness with what the business resources
were or would be used. It relates profits (returns) to a given level of investment
(resources) used to generate profits. Divide earnings before interest and taxes (EBIT) by
total assets/total investment.
EBIT
ROI = -----------------
Total Assets
2) Financial Assumptions
[State assumptions made in arriving at the financial plan. It is important to make realistic
assumptions. All your financial projections will be looked at with these assumptions.]
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