Professional Documents
Culture Documents
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
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
MODULE 9
Module coverage:
Page
1. How to Elaborate the Business Plan ............................ 5
Standard Business Plan............................................. 8
TOPIC 1:
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.
Business Plan
Business Idea
Market
Product, Price, Place, Promotion
Legal Form
Start-Up Capital
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.
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.
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
Executive Summary
Name of business
Legal form
Contact address
Tel.
Type of business
Manufacturer
Service provider
Customers
10
Wholesaler
Retailer
Owner(s)
(Name, Address, Qualification, Function in the business, Relevant experience)
Total
Source of capital
Own savings
Partner
Family loan
Bank loan
11
12
Product/service
(1)
(2)
(3)
(n)
Denomination
Specification
(e.g. size, colour,
quality)
Packaging
Product/service
Denomination
Specification
(e.g. size, colour,
quality)
Packaging
13
(1)
(2)
Highest ; Average;
Lowest
Highest ; Average;
Lowest
Competitors price
Highest ; Average;
Lowest
Highest ; Average;
Lowest
My price
Yes (?
Product/service
%)
No
Yes (?
(3)
%)
No
(n)
Highest ; Average;
Lowest
Highest ; Average;
Lowest
Competitors price
Highest ; Average;
Lowest
Highest ; Average;
Lowest
My price
14
Yes (?
%)
No
Yes (?
%)
No
Retailers
Wholesalers
Others
15
16
Legal Form
The legal form of the business will be:
Reason for choosing this legal form
17
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
Land
Surface
Building
Surface
Equipment
Tools
Transport
Miscellaneous
TOTAL ACQUISITION COSTS
18
Price
Source
Conditions
(duration/interest)
Amount
Own savings
Partner
Loan 1
Family
Friends
Money lender
Loan 2
Credit cooperative
Government scheme
Bank loan
TOTAL FUNDING
Credit agreement
under discussion
finalised
Credit agreement
under discussion
finalised
19
Debt Service
Repayment
period
Loan 1
Instalment
Interest
Loan 2
Instalment
Interest
Debt service
Sum of Instalments
20
1
2
3
4
5
6
21
Staff costs
Position
Qualifications
Salary
per month
1
2
3
4
5
6
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
10
11
12
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
10
11
12
I II Cash at the
end of the month
+ Any other
+ Interest
+ Operational cost
+ Investment
I: Total cash in
+ Any other
+ Sales
+ Loans
+ Equity
Cash beginning of
the month
Month
Preoperation
10
11
12
25
26
Net profit
(after tax)
- Income tax
I II Profit
(before tax)
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
Profit Margin
2
10
11
12
Others payable
Total Current Liabilities
Inventory
Taxes payable
Accounts receivable
Total Assets
Accounts payable
Current Liabilities
Others
Others
Current Assets
Loans
Equipments
Long-Term Liabilities
Equity
Liabilities
Mortgage
Value
Building
Land
Fixed Assets
Assets
Opening Balance
Value
27