Unit 5 Business planning

1. UNIT 5: BUSINESS
PLANNING Nabaraj Upadhaya
Agriculture and Forestry
University
nabaraj2077@gmail.com
9868560353

2. Define business plan:
◦ According to James Stephenson, “Economic activities performed for earning profits are termed as the
business.”
◦ A business plan is a written document prepared by the entrepreneur that describes all the relevant external
and internal elements involved in starting a new venture: its operational and functional details: its marketing
opportunities and strategy and its managers skills and abilities. The plan serves as an entrepreneur's road map
on the journey towards a successful business. It describes the direction the company is taking, what its goal
are, where it wants to be, how it' s going to get there. The plan is written proof that the entrepreneur has
performed the necessary research and had studied the business opportunity adequately.
Functions of Business plan
◦ It gives managers and employees as a sense of direction
◦ To attract lenders and investors
◦ To submit government authorities for registration and tax purposes

3. Importance of the business plan
◦ The business plan must be comprehensive enough to address the concerns of employees, investors, bankers,
venture capitalists, suppliers, and customers.
◦ Three perspectives need to be considered:
◦ The entrepreneur understands the new venture better than anyone.
◦ The marketing perspective considers the venture through the eyes of the customer.
◦ The investor looks for sound financial projections.
◦ The depth of the business plan depends on the size and scope of the proposed venture. The business plan is
valuable to the entrepreneur and investors because:
◦ It helps determine the viability of the venture in a designated market.
◦ It gives guidance in organizing planning activities.
◦ It serves as an important tool in obtaining financing.

4. Elements of Business Plan
1. Executive Summary
The Executive Summary is a brief overview of the whole business plan. Here are some simple hints to help you
build your Executive Summary:
◦ Description of Business: Provide some information about the product or service you wish to offer.
◦ The Market: What markets do you intend to target?
◦ Growth Potential: What is the potential for your business?
◦ Sales & Profit Forecast: Give a summary of the sales and profit forecast figures (for the next three years).
◦ Financial Requirements: How much money would you require: To start the business. To sustain your
business during the first three years.
◦ Utilization of Finances
◦ Repayment of Loans: How long do you expect the loan repayment period to be ?

5. 2. Define Vision, Mission, Values, Goal and Objective of
the Enterprise:
◦Vision defines the desired future state of the enterprise or the
world in which it operates in terms of its fundamental objective
and/ or strategic direction. Vision is a long-term view. Mission
defines the fundamental purpose of an enterprise, succinctly
describing why it exists and what it does to achieve its vision.
Values are the beliefs that are shared among the stakeholders of
an enterprise. A goal or objective is a general target for
medium to long term accomplishments, or just a direction
which an enterprise wants to follow.

6. 3. SWOT Analysis
STRENGTHS OPPORTUNITIES
Provide a list of your core competencies that give your
product or service certain advantages. Example:
• High quality
• Competitive pricing
• Customer Care
Given the right conditions, which business
opportunities can you identify for growth and greater
profitability? Example:
• New markets
• Export potential
• Joint Venture proposal
WEAKNESSES THREATS
Given the necessary resources, which areas of your
business would you need to improve? Example:
• Lack of funds
• Lack of management skills
• Unskilled workforce
Think about possible factors which could adversely
affect your business in the future. Example:
• Imported products
• New entrants
• Political I Economic changes

7. 4. Develop Marketing Plan:
◦ Details of the product
◦ Competitors
◦ Target market/market area
◦ Sales price determination
◦ Market demand and sales target
◦ Marketing channel or channel of distribution
Your marketing plan will include detail about:
◦ your products and /or services
◦ the place in which you sell them and the way that
you distribute them
◦ the price you charge for them
◦ the promotion you undertake @4P
5. Develop Production Plan:
◦ Enterprise location
◦ Processing methods and technology
◦ Procurement and storage
◦ Wetting or soaking
◦ Cleaning
◦ Drying
◦ Environmental and social plan (EIA/IIE)
◦ Production cost
◦ Fixed assets and depreciation
◦ Raw materials cost
◦ Direct (Variable) labor cost

8. 6. Develop Financial Plan:
◦ Total project cost (Initial capital
requirement)
◦ Sources of fund
◦ Repayment of loans and interests
◦ Per unit cost analysis
◦ Profit & Loss Statement
◦ Break-even point (BEP)
◦ Return on Investment (ROI)
◦ Payback period (PBP)
◦ Cash Flow Projection Statement
7. Develop Organization and
Management Plan
◦ Ownership and organizational
structure of the enterprise
◦ Financial and administrative
policy
◦ Monitoring and evaluation
◦ Entrepreneur profile
◦ Pre-operating costs
◦ Fixed costs

9. 8. Analyze Risk Factors and Mitigation Strategy:
◦ Raw Materials and Fuel/Energy
◦ Human resource
◦ Policies, rules, and regulations
◦ Quality Control
◦ Competition and market share
9. Environmental issues & Social responsibility of business:
◦ Positive and negative impact of enterprise development in environment.
◦ Give first priority to local people (in case of employment, infrastructure development, raw material,
economic development)
10. Conclusion:

10. 11. Appendix
◦ The appendix is used to support the rest of the business plan. Every business
plan should have a full set of financial projections in the appendix, with the
summary of these financials in the executive summary and the financial plan.
Other documentation that could appear in the appendix includes technical
drawings, partnership and/or customer letters, expanded competitor reviews
and/or customer lists.

11. Components of business plan
The successful business is the result of the business plan consisting of these components:
◦ Marketing plan: A document that describes marketing strategy and a list of actions.
◦ Production plan: A document that contains process f production, quantity and quality
of products and cost required for production and provides cost per unit.
◦ Financial plan: A document with an annual projection of income and expenses for an
enterprise.
◦ Organization and management plan: A written plan that describes how enterprise
will be operated, its organizational structure, resource allocation, staffing, management
etc.
◦ Raw material plan: A document with source of resource supply, raw material quality
and quantity, legal obligations, storage, harvesting method etc.

12. Methods for preparing a business plan of forest-based
enterprises:
◦ Gandaki Betbas Furniture Udyog Entrepreneurs Introduction:
◦ Name: Mr xxxxxxxxxxxx
◦ Age: 41 years
◦ Education: SLC
◦ Past experience: Ex-policeman, experience on betbas fumiture
◦ Present occupation: Agriculture Familiar with marketing environment with hetauda and surrounding area
Project Highlights:
◦ Name of Industry: Gandaki Bet bas furniture
◦ Major products: Chair: Table, Rack etc.
◦ Location: Hetauda 2,
◦ Sanopokhara Market area: Hetauda, Birganj, Chitwan, Kathmandu

13. Total Capital Requirement: Rs 80,000 00
◦ Fixed: 4800
◦ Pre operating: 5000
◦ Working: 70,000
◦ Bank Loan: X
◦ Equity: Rs 80,000
◦ Annual Sales: Rs 540,000.00
◦ Annual Expenses: Rs 479,833.00
◦ Annual profit: Rs 60,169.00
◦ Break Even point: 56%
◦ Returnment on investment: 75%
◦ No of worker: 4

14. l. Market Plan
1.1 Description of the product: Betbas Furniture: chair, Table & Racks
◦ Better quality than the other competitors (good finishing, looks attractive and strong)
1.2 Comparison with product of competitors: Mr G.C is going to produce the goods, which will prefer
by upper middle-class family. Mr G.C. will use high quality raw material to produce better item than
competitors. The furniture will be stronger than competitors.
1.3 Location: The factory will be located in Hetauda 2, Sanopokhara. This location has been choosen for
the following purpose:
It is close to prospective markets.
Good transportation and communication facilities
Family members can supervise the factory
Easy to collect raw materials.

15. ◦ 1.4 Market area: Mr G.C. Plans to distribute his furniture principally in some market
centers i.e Hetauda market, Parsa, Pathalaiya, Simara, Birganj, Chitwan, Kathmandu.
◦ This area has been selected because G.C. knows main businessmen of these area
◦ This area is sufficiently close to the factory by transportation network.
◦ 1.5 Main customers: The main customers of these products are upper middle class
and higher income family groups, tourist hotels & Restaurant.
◦ 1.6 Production Sales target: Production items Monthly Yearly Chair & Table set 15
Set 180 set (4 chair & I Table) Mr G C, expects that all the output will be sold.
◦ 1.7 Sale Promotion: To meet above sales target Mr G.C. will be in close contact with
market i.e. direct customers as well as intermediaries. 10 day credit will be extended
for retailers. Mr G.C. maintains market information system and takes necessary action
when required.