You are on page 1of 27

KNOW ABOUT

BUSINESS
Entrepreneurship Education
in Schools and Technical Vocational Training Institutions
and Higher Education

MODULE 9
How to Elaborate Ones
Own Business Plan

Authors:
George Manu
Robert Nelson
John Thiongo
Klaus Haftendorn

Editors:
Peter Tomlinson and Klaus Haftendorn

International Labour Office, Geneva


International Training Centre of the ILO, Turin

Copyright International Training Centre of the ILO 2008


This publication enjoys copyright under Protocol 2 of the Universal Copyright Convention. Applications for
authorization to reproduce, translate or adapt part or all of its contents should be addressed to the
International Training Centre of the ILO. The Centre welcomes such applications. Nevertheless, short
excerpts may be reproduced without authorization, on condition that the source is indicated.

Know About Business


ISBN 92-9049-396-8
First published 1996
Second edition 2000
Third edition 2002
Fourth edition 2004
Revised edition 2005
Revised edition 2007
Revised edition 2008

The designations employed in the publications of the International Training Centre of the ILO, which are
in conformity with United Nations practice, and the presentation of material therein do not imply the
expression of any opinion whatsoever on the part of the Centre concerning i.a. the legal status of any
country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The
responsibility for opinions expressed in signed articles, studies and other contributions rests solely with
their authors, and publication does not constitute an endorsement by the Centre of the opinions
expressed in them.
Publications of the Centre, as well as a catalogue or list of new publications, can be obtained from the
following address:
Publications
International Training Centre of the ILO
Viale Maestri del Lavoro 10
10127 Turin, Italy
Tel: +39 11 693-6693
Fax: +39 11 693-6352
E-mail: publications@itcilo.org
http://www.itcilo.org

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

MODULE 9

How to Elaborate Ones


Own Business Plan
Module objective:

To enable learners to apply KAB knowledge to a real


market situation and to evaluate a business idea for either
self-employment or a micro business.

Module coverage:
Page
1. How to Elaborate the Business Plan ............................ 5
Standard Business Plan............................................. 8

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

How to Use This Module


Module 9 is the last module of the Know About Business training programme.
Learners have learned the essentials about entrepreneurs, their role in society, how
enterprises contribute to the economic growth of a nation and how an enterprise
functions thanks to the personality and motivation of the entrepreneur as the key to
success.
By developing a personal business plan, Module 9 allows the learner to apply the
knowledge he/she has gained during the KAB training cycle to a real life situation.
There are different ways Module 9 can be used within the KAB training cycle:
1. The development of ones own business plan at the end of the training can be
made compulsory and serve as the final examination for the subject
Entrepreneurship Education.
In this case the individual learner has to conduct all the investigations, and work
out the business plan and assess it alone. Alternatively, this could be done as
group work by 3 or 4 students. The business plan is based on an identified need
and a market survey.
The plan could also be presented in a business plan competition organized by the
school, a group of schools, or any other organization that may wish to launch such
a competition.
2. The development of a business plan could be done during the KAB training cycle
either as class work, group work or individual work. In this case, after each topic
that is relevant to the business plan, the facilitator will ask the students to do the
investigations and elaborate the corresponding chapter. At the end of the KAB
training cycle one or several business plans will have been worked out. The
facilitator will facilitate the process during the elaboration period. The business
plans can also be presented in business plan competitions.
3. The development of the business plan could be done as an out-of-school activity
by those learners who have a strong motivation to become self-employed or to
create a micro or small business as soon as possible after school. The KAB
facilitator will give advice to this group and facilitate the process of the business
plan development.
The business plan will help the learner to evaluate the feasibility of her/his
business idea and to search for partners and funding.
Participation in business plan competitions with a prize could help to gather the
initial funding.

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

TOPIC 1:

How to Elaborate the Business Plan

II

SUGGESTED TIME:
2 sessions

III

OBJECTIVE:
To enable learners to apply KAB knowledge to a real market situation.
To inform learners that a business plan must contain a number of items of
information. However, the layout of a business plan can and has to be
adapted to a concrete case.

IV

RATIONALE:
During the KAB training, the learners became familiar with all topics related
to:
- how to generate a business idea,
- how to organize a business, and
- how to operate a business.
To elaborate the business plan learners have to apply the knowledge
acquired during the KAB training in order to collect and process information
related to their business idea. The business plan will allow them to set out
this information in a structured form.
The business plan mainly has two functions:
- first, to show the business starter whether his business idea is viable or
not, and
- second, to raise money from family or friends or to get credit from a
bank.
A Standard Business Plan makes sure that all the information required is
collected and taken into consideration. However, funding institutions, such
as banks or investment promotion schemes, often have their own
requirements and may ask for a business plan developed by them to be
filled in.

ACTIVITIES:
1. Discuss with learners the links between the elements of the business plan
and the related KAB topics as you as teacher has taught them.

Know About Business

Business Plan
Business Idea

Market
Product, Price, Place, Promotion
Legal Form

Start-Up Capital

Sources of Start-Up Capital

Organization and Staff


Business Operation and Costs

Monthly Sales Plan

Monthly Cost Plan

Cash Flow Plan


Profit Margin
Opening Balance

Module 9: How to Elaborate Ones Own Business Plan

KAB Topic
Module 5
Topic 2: Generating Ideas
Topic 3: Identifying and Assessing
Business Opportunities
Module 6
Topic 1: Selecting a Suitable Market
Marketing Mix (also Module 7: Topic 3)
Module 6
Topic 3: Legal Forms of Business
Ownership
Module 6
Topic 4: Money Needed to Start an
Enterprise
Module 6
Topic 5: Obtaining Money to Start an
Enterprise
Module 7
Topic 1: Hiring and Managing People
Module 7
Topic 6: Knowing the Costs of an
Enterprise
Module 6
Topic 1: Handout 4 Developing a Sales
Plan (also Module 7: Topic 3)
Module 7
Topic 6: Knowing the Cost of an
Enterprise
Module 7
Topic 7: Managing Money
Module 7
Topic 8: Using Financial Statements

2. Review with the learners the relevant topics one by one and give hints on
how to collect and process information for the business plan.
3. Show the learners the layout of the Standard Business Plan and discuss
with them the content. Explain that the learners should use the tables as
examples and adapt them to the needs of their own business plan.
4. Show learners other business plan forms collected from local banks or
funding institutions for micro and small businesses.

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

The elaboration of a business plan is a process that has to be done very carefully.
Data collection has to be executed very seriously.
The inexperienced student or learner needs close guidance from the facilitator who
should insist on reality checks at every stage of the business plan development.
Exposing the research findings of the learners to a peer review and peer critics will
often reveal the weak points of a research method or interpretation.
The most important part of the business plan is the market survey. The survey will
show if the business idea can be transformed into a business opportunity.
But apart from this, the market survey will also show if there are competitors and if
there is room for a new business in the market, and what could be the share.
The findings from the market survey are the foundation for the planned business. If
the market assessment has been done too optimistically, the business will not reach
the planned product sales or services in terms of quantity or prices and the business
will fail.
If the assessment is too pessimistic, then the planned income from the business might
look too low for a successful start.
A realistic and prudent estimation of the market for the planned business reduces the
risk of failure.
Another important element of the business plan is the cost side. An underestimation
of the start-up costs and the running costs may show a good profit margin on paper.
Once the business has started it can turn out that the revenues dont cover the costs.
A realistic estimation of this cost aspect is required and in addition a certain
percentage for unforeseen costs should be calculated.
At the end of the elaboration process the business plan will show whether the
business idea is viable or not.

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Standard Business Plan

Elaborated by: ____________________


Date: ____________________

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Content
Page
Executive Summary .................................................... 10
Business Idea and Market ............................................ 12
Marketing Plan Product ................................................ 13
Marketing Plan Price.................................................... 14
Marketing Plan Place .................................................. 15
Marketing Plan Promotion ............................................ 16
Legal Form ................................................................ 17
Start-up Capital.......................................................... 18
Sources of Start-up Capital .......................................... 19
Organization and Staff................................................. 21
Business Operation and Costs....................................... 23
Cash Flow Plan ........................................................... 25
Profit Margin .............................................................. 26
Opening Balance......................................................... 27

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Executive Summary
Name of business

Legal form
Contact address

Tel.

E-mail

Type of business
Manufacturer

Service provider

Brief description of the business idea


Products or services

Customers

10

Wholesaler

Retailer

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Owner(s)
(Name, Address, Qualification, Function in the business, Relevant experience)

Number of jobs to be created


Start-up capital
Investment
Working capital

Total
Source of capital
Own savings
Partner
Family loan
Bank loan

11

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Business Idea and Market


Description of the business idea
(e.g. identified needs, who are the customers, type of products or services to
satisfy the needs, how to reach the customers, etc.)

Description of the market


(e.g. geographical area, town, type of customers, size of total market,
description of competitors, market share for the new business, etc.)

12

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Marketing Plan Product


Detailed description of the product or product range or service

Product/service

(1)

(2)

(3)

(n)

Denomination

Specification
(e.g. size, colour,
quality)
Packaging

After sales service

Product/service
Denomination

Specification
(e.g. size, colour,
quality)
Packaging

After sales service

13

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Marketing Plan Price


Product/service

(1)

(2)

How much are


customers willing
to pay?

Highest ; Average;
Lowest

Highest ; Average;
Lowest

Competitors price

Highest ; Average;
Lowest

Highest ; Average;
Lowest

My price

Reasons for setting my


price
Margin for discount?

Yes (?

Product/service

%)

No

Yes (?

(3)

%)

No

(n)

How much are


customers willing
to pay?

Highest ; Average;
Lowest

Highest ; Average;
Lowest

Competitors price

Highest ; Average;
Lowest

Highest ; Average;
Lowest

My price

Reasons for setting my


price
Margin for discount?

14

Yes (?

%)

No

Yes (?

%)

No

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Marketing Plan Place


Location of the business
Description of the planned location for the business

Reason for choosing this location

Reaching the customers by selling to


Individuals

Retailers

Wholesalers

Others

Reason for choosing this way of distribution

15

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Marketing Plan Promotion


Start-up promotion
Description of the planned actions to inform customers about the opening of
the new business (e.g. printed information, brochures, posters, newspaper
articles, radio advertisements, opening ceremony, etc. Also make inquiries
about the costs for the different types of promotion)

16

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Legal Form
The legal form of the business will be:
Reason for choosing this legal form

17

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Start-Up Capital
Estimation of start-up capital

Amount

INVESTMENT
Land
Building
Equipment
Miscellaneous
Total Investment
WORKING CAPITAL
____ months of staff costs
____ months of operational costs
Total working capital
TOTAL START-UP CAPITAL

Specification of investment items


Investment item

Specification

Land

Surface

Building

Surface

Equipment

Type, technical specification

Tools
Transport
Miscellaneous
TOTAL ACQUISITION COSTS

18

Price

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Sources of Start-Up Capital


Sources of funding
Type
Equity capital

Source

Conditions
(duration/interest)

Amount

Own savings
Partner

Loan 1

Family
Friends
Money lender

Loan 2

Credit cooperative
Government scheme
Bank loan

TOTAL FUNDING

Information about funding sources


Loan 1
Name and address of creditor or credit institution

Credit agreement

under discussion

finalised

money available on (date) ________


Loan 2
Name and address of creditor or credit institution

Credit agreement

under discussion

finalised

money available on (date) ________

19

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Debt Service
Repayment
period
Loan 1
Instalment
Interest
Loan 2
Instalment
Interest
Debt service
Sum of Instalments

20

Amount Amount Amount Amount Amount Amount Amount Amount

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Organization and Staff


Organization of the business
Staff requirements
Position

Tasks, Responsibilities and Qualifications

1
2
3
4
5
6

Planned organization chart


(Sketch of planned organization chart)

21

Know About Business

Module 9: How to Elaborate Ones Own Business Plan

Staff costs
Position

Qualifications

Salary
per month

1
2
3
4
5
6

Organization of business premises


(Sketch of planned shop, office or workshop)

22

Social
security

Total
staff cost

All products

Product n

Product 3

Product 2

Product 1

Month

Turnover

Turnover

Quantity

Price

Turnover

Quantity

Price

Turnover

Quantity

Price

Turnover

Quantity

Price

All products, product range or services

Monthly Sales Plan

Business Operation and Costs

10

11

12

Know About Business


Module 9: How to Elaborate Ones Own Business Plan

23

24

Quantity

All costs

Quantity

All costs

Quantity

All costs

Total costs

Total costs

Total costs

Total costs

Interest

Product 2

Materials

Product 3

Materials

Product n

Materials

Materials

+ Staff

+ Others

= Operation

+ Capital cost

All costs

Materials

Total costs

Depreciation

Quantity

Product 1

Month

Planning is based on the monthly sales plan

Monthly Operational Cost Plan

10

11

12

Know About Business


Module 9: How to Elaborate Ones Own Business Plan

I II Cash at the
end of the month

II: Total cash out

+ Any other

+ Interest

+ Operational cost

+ Investment

I: Total cash in

+ Any other

+ Sales

+ Loans

+ Equity

Cash beginning of
the month

Month

Preoperation

Monthly Cash Flow Plan

Cash Flow Plan


1

10

11

12

Know About Business


Module 9: How to Elaborate Ones Own Business Plan

25

26

Net profit
(after tax)

- Income tax

I II Profit
(before tax)

II. Total Costs

Interest

- Capital cost

____ %

Depreciation

Total costs

Turnover

Quantity

Turnover

Quantity

Turnover

Quantity

Turnover

Quantity

- Operation

I. Total Sales

Product n

Product 3

Product 2

Product 1

Month

Monthly Estimation of Net Profit

Profit Margin
2

10

11

12

Know About Business


Module 9: How to Elaborate Ones Own Business Plan

Total Long-Term Liabilities

Total Fixed Assets

Others payable
Total Current Liabilities

Inventory

Total Current Assets

Total Liabilities and Net Worth

Taxes payable

Accounts receivable

Total Assets

Accounts payable

Cash and bank

Current Liabilities

Others

Others

Current Assets

Loans

Equipments

Long-Term Liabilities

Equity

Liabilities

Mortgage

Value

Building

Land

Fixed Assets

Assets

Opening Balance of My Business (Date)

Opening Balance

Value

Know About Business


Module 9: How to Elaborate Ones Own Business Plan

27

You might also like