MPU22012 Lecture 4 - Small Business Management and Planning

1
SMALL BUSINESS
MANAGEMENT AND
PLANNING
by Mohd Zaini Zainudin
MPU22012 – ENTREPRENEURSHIP
POLYTECHNIC VERSION
CHAPTER 4

MOHD ZAINI ZAINUDIN
LECTURER
Hi Everyone, you are in Entrepreneurship MPU22012 class!
Woot! Woot!
Definition of business plan, the purpose of
business plan, the important elements, and
the standard format of the business plan.
The characteristics of a good business plan,
format and minimum requirement required
by financial institutions and government
agencies.
INTRODUCTION

TOPIC OUTLINES
Upon completing this course, students
should be able to :
1. Explain the overview of business plan.
2. Explain human resource management for small business.
3. Explain marketing elements for small business.
4. Explain basic operation management for small business.
5. Explain the basics of a financial plan for small business

Upon completing this course, students
should be able to :
1. Develop a viable business plan by organizing business objectives according to priorities.
(A4, CLS 4)
COURSE LEARNING OUTCOMES

5
BUSINESS PLAN
DEFINITION
“
A formal statement of business goals,
reasons they are attainable, and plans
for reaching them. It may also contain
background information about
the organization or team attempting to reach
those goals.

6
BUSINESS PLAN
Business Plan Pain
“Business Plan:
A document investors make you
write that they don’t read.”
– Steve Blank
Silicon Valley entrepreneur

what you do today can
improve all your
tomorrows!
Mr Jai - someone smart

OVERVIEW ORGANIZATION PLAN MARKETING PLAN
BUSINESS PLAN TIMELINE
H E R E W E G O !

PRODUCTION PLAN FINANCIAL PLAN CREATE
BUSINESS PLAN
BUSINESS PLAN TIMELINE
H E R E W E G O !

1
10
BUSINESS PLAN
OVERVIEW OF BUSINESS PLAN
OVERVIEW OF
BUSINESS PLAN

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PURPOSE OF
BUSINESS PLAN
DEFINE
BUSINESS PLAN

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DEFINE BUSINESS PLAN
i
• A business plan is a written document that describes in detail how a
business, usually a new one, is going to achieve its goals. A business plan
lays out a written plan from a marketing, financial and operational
viewpoint.
• Include: An executive summary - this is an overview of the business you
want to start. Your vision and business idea - a short description of who
you are, what you plan to sell or offer, why and to whom, your business
goals and key selling points - see your business, its products and services.
• Written document between 25 to 40 pages. Must be blueprint of
company (logical & realistic)
• To convinces the reader – business can produce enough revenue or profit
and sound investment opportunities.

13
PURPOSE OF BUSINESS PLAN
ii
• It spells out your purpose, vision and means of operation. It also serves as
your company's resume, explaining your objectives to investors, partners,
employees and vendors.
• 2 primary purposes :
o First - used to help run your company with a more cohesive vision. It is
your roadmap. By truly analyzing your plan for marketing, sales,
manufacturing, website design, etc., you greatly improve your
chances for success.
o Second - to be the reason most clients request plan. That is, a
financial institution or other lender will not invest in your company
unless you can demonstrate that you have a roadmap to success.
Banks want to mitigate their risk of default and private investors, such
as Angel’s, want a realistic forecast for when they will be reaping a
return on their capital.

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ENTREPRENEUR
SHAREHOLDER
CLIENTS / CUSTOMERS
BANKERS / CREDITORS /
FINANCIAL INSTITUTIONS MANAGEMENT /
EMPLOYEES
INVESTOR
SUPPLIERS

2
15
BUSINESS PLAN
IMPORTANT ELEMENTS OF BUSINESS PLAN
IMPORTANT
ELEMENTS OF
BUSINESS PLAN

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IMPORTANT ELEMENTS OF BUSINESS PLAN
02
MARKETING
PLAN
03
PRODUCTION
PLAN
01
ORGANIZATION
PLAN
04
FINANCIAL
PLAN
Fantastic
4
ELEMENT
I M P O R T A N T

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IMPORTANT ELEMENTS OF BUSINESS PLAN : ORGANIZATION PLAN
ii
ORGANIZATIONAL
STRUCTURE
iii
SWOT
ANALYSIS
i
VISION &
MISSION 01
ORGANIZATION
PLAN

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IMPORTANT ELEMENTS OF BUSINESS PLAN : ORGANIZATION PLAN - VISION & MISSION
Vision & Mission
MISSION
More specific than your vision. Expresses the "what and how" of your effort, describing what your group is going to do to
make your vision a reality. An example of a mission statement: "Our mission is to develop a safe and healthy neighborhood
through collaborative planning, community action, and policy advocacy.“ While your vision statement inspires people to
dream, your mission statement should inspire them to action. Make it concise, outcome-oriented, and inclusive.
STRATEGY
Strategies explain how your group will reach its objectives. Broad approaches for making change include advocacy,
coalition building, community development, education, networking and policy or legislative change. For example, a
child health program could choose a broad strategy of social marketing to promote adult involvement with children.
Specific strategies guide an intervention in more detail. To promote the health of children, you might also enhance
people's skills (offer training in conflict management), modify opportunities (offer scholarships), or change the
consequences of efforts (provide incentives for community members to volunteer as youth mentors).
VISION
Your dream, a picture of the ideal conditions for your community. As a unifying statement for your effort, it also reminds
you what you are striving to reach and guides important decisions. A vision statement should be a few short phrases or
a sentence that conveys your hopes for the future. Catchy phrases such as "Healthy teens," "Safe streets, safe
neighborhoods" and "Education for all" illustrate the common characteristics of a vision statement.

Vision
Mission
WRITE YOUR
Mission & Vision
…………………………………………………………………………………………………
…………………………………………………………………………………………………
………………………………………………………………………………………………...
…………………………………………………………………………………………………
…………………………………………………………………………………………………
………………………………………………………………………………………………...

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IMPORTANT ELEMENTS OF BUSINESS PLAN : ORGANIZATION PLAN – ORGANIZATIONAL STRUCTURE
Organizational Structure
The typically hierarchical arrangement of
lines of authority, communications, rights
and duties of an organization.
Organizational structure determines how
the roles, power and responsibilities are
assigned, controlled, and coordinated,
and how information flows between the
different levels of management.

21
4
•Functional
•Divisional.
•Matrix.
•Flatarchy.
Common Types Of
Organizational
Structures
Watch first

22
1.
Functional
Also commonly called a bureaucratic organizational structure, the functional structure divides the
company based on specialty. This is your traditional business with a sales department, marketing
department, customer service department, etc.
The advantage
- individuals are dedicated to a single function.
- clearly defined roles and expectations limit confusion.
- The downside is that it’s challenging to facilitate strong communication between different
departments.
CEO
Marketing Financial Operational
Information
Technology

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2.
Divisional
Refers to companies that structure
leadership according to different products
or projects.
Gap Inc. is a perfect example, there are
three different retailers underneath the
heading: Gap, Old Navy, and Banana
Republic.
Each operates as an individual company,
but they are all ultimately underneath the
Gap Inc. brand.
CEO
Product A
Sales &
Marketing
R&D
Purchasing
Product B
Sales &
Marketing
R&D
Purchasing
Product C
Sales &
Marketing
R&D
Purchasing

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3.
Matrix
Employees have multiple bosses
and reporting lines. Not only do
they report to a divisional
manager, but they also typically
have project managers for
specific projects.
While matrix structures come
with a lot of flexibility and
balanced decision-making, this
model is also prone to confusion
and complications when
employees are asked to fulfill
conflicting responsibilities.

25
4.
Flatarchy
A ‘flatter’ structure seeks to open up the
lines of communication and
collaboration while removing layers
within the organization.
Flatarchies are organizations that aren't
quite flat nor are they hierarchical. They
are actually a combination of both types
of structures. In other words, an
organization can be relatively flat yet
can create an ad hoc hierarchy to work
on a project or function and then
disband

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IMPORTANT ELEMENTS OF BUSINESS PLAN : ORGANIZATION PLAN – SWOT ANALYSIS
SWOT Analysis
SWOT analysis is a strategic planning
technique used to help a person or
organization identify strengths, weaknesses,
opportunities, and threats related to
business competition or project planning.

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Strength
Opportunities
Weakness
Threats
S W
O T
OUR SWOT
What do you do well?
What unique resources can you draw on?
What do others see as your strengths?
What is your organization's Unique Selling
Proposition (USP)?
What opportunities are open to you?
What trends could you take advantage of?
How can you turn your strengths into
opportunities?
What threats could harm you?
What is your competition doing?
What threats do your weaknesses expose you
to?
What could you improve?
Where do you have fewer resources than others?
What are others likely to see as weaknesses?

PROS VS CONS
PROS
Zero cost
Important results
New ideas
CONS
Additional research needed
Subjective Analysis
Submission not critical

GROUP
SESSION!
Iphone
Domino
Pizza Hut
McDonald
KFC
Nokia

31
IMPORTANT ELEMENTS OF BUSINESS PLAN : MARKETING PLAN
i
MARKET
STP
ii
MARKETING
MIX
iii
MARKETING
STRATEGY
iv
COMPETITORS
ANALYSIS
02
MARKETING
PLAN

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IMPORTANT ELEMENTS OF BUSINESS PLAN : MARKETING PLAN – MARKET SEGMENTATION
Market Segmentation, Targeting and Positioning
Segmentation, Targeting and Positioning (STP) is
a familiar strategic approach in Modern
Marketing.
STP is second most popular after SWOT / TOWs
matrix.
In the 1950s, for example, the main marketing
strategy was 'product differentiation'.
The STP model is useful when creating
marketing communications plans since it helps
marketers to prioritise propositions and then
develop and deliver personalised and relevant
messages to engage with different audiences.

33
S
Segmentation
Market segmentation is the activity of dividing
a broad consumer or business market,
normally consisting of existing and potential
customers, into sub-groups of consumers based
on some type of shared characteristics.
Marketing term referring to the aggregating of
prospective buyers into groups or segments
with common needs and who respond similarly
to a marketing action.
Market segmentation enables companies to
target different categories of consumers who
perceive the full value of certain products and
services differently from one another.

34
S
Segmentation
BEHAVIORAL By how people use the product, how
loyal they are, or the benefits that
they are looking for
DEMOGRAPHIC By personal attributes such as :
Age
marital status
gender, ethnicity
Sexuality
Education
Occupation.
GEOGRAPHIC Country
Region
State
City
neighborhood.
PSYCHOGRAPHIC Personality
risk aversion
Values
lifestyle.

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T
Targeting
Target Marketing involves breaking a market
into segments and then concentrating your
marketing efforts on one or a few key
segments consisting of the customers whose
needs and desires most closely match your
product or service offerings.
It can be the key to attracting new business,
increasing your sales, and making your business
a success.

T
Targeting
Age What age range am I catering my products/services to, Kids, Adults, Senior, Gen X,
Millennials
Gender Am I targeting men, women, or both sexes
Marital Status Are my target customers married or single
Family What is their family structure (number of children, extended family, etc.)
Location Where do they live? Am I looking to sell locally? Regionally, Nationally
Education How well are they educated
Income What is their income
Occupation What do they do for a living
Religion Are they members of a particular religious group
Language Are they members of a particular language group
Lifestyle What is their lifestyle like
Motivation What motivates them
Size What is the size of the target market

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P
Positioning
Market Positioning refers to the ability to
influence consumer perception regarding a
brand or product relative to competitors. The
objective of market positioning is to establish
the image or identity of a brand or product so
that consumers perceive it in a certain way.
For example:
• A handbag maker may position itself as a
luxury status symbol
• A TV maker may position its TV as the most
innovative and cutting-edge
• A fast-food restaurant chain may position
itself as the provider of cheap meals

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P
Positioning
Types of Positioning Strategies
A few examples are positioning by:
• Product attributes and benefits: Associating your brand/product with certain characteristics or
with certain beneficial value
• Product price: Associating your brand/product with competitive pricing
• Product quality: Associating your brand/product with high quality
• Product use and application: Associating your brand/product with a specific use
• Competitors: Making consumers think that your brand/product is better than your competitors

39
IMPORTANT ELEMENTS OF BUSINESS PLAN : MARKETING PLAN – MARKETING MIX
Marketing Mix
The term marketing mix was coined in an
article written by Neil Borden called “The
Concept of the Marketing Mix.”
The marketer, E. Jerome McCarthy,
proposed a four Ps classification in 1960.
Robert F. Lauterborn proposed a four Cs
classification in 1993.
History

40
Marketing Mix
Marketing Mix is a combination of marketing tools
that a company uses to satisfy their target
customers and achieving organizational goals.
The marketing mix is
probably the most
famous marketing
term. Its elements are
the basic, tactical
components of a
marketing plan. Also
known as the 4 P's.

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OUR 4 P’S
Product
Price
Place
Promotion
PRODUCT
The goods and/or services offered by a company to its customers.
A product refers to any item that intends to satisfy the needs and
wants of a target customer. It can be a tangible good, such a
clothing item or piece of software, or intangible, like a service or
experience
Contribute : variety, quality, design, features, brand name,
packaging, services

42
OUR 4 P’S
Product
Price
Place
Promotion
PRICE
The amount of money paid by customers to purchase the product.
Pricing strategy is an art and a science, in that it involves both
market data and careful calculations, as well as skillfully balancing
between pricing that is too high or too low, and understanding how
skewing either way might damage the brand.
Contribute : list price, discounts, allowance, payment period, credit
terms

43
OUR 4 P’S
Product
Price
Place
Promotion
PLACE
The activities that make the product available to consumers.
Place refers to providing customers access to the product, and it
also calls into play convenience for the customer. Marketing,
through digital means or otherwise, is about putting the right
product, in the right place, at the right price, at the right time, in
front of the customer.
Contribute : channels, coverage, assortments, locations, inventory,
transportation, logistics

44
OUR 4 P’S
Product
Price
Place
Promotion
PROMOTION
The activities that communicate the product’s features and benefits
and persuade customers to purchase the product.
Now, how to make an audience aware of the product? Within the
framework of the four Ps, promotion refers primarily to marketing
communications.
Contribute : advertising, personal selling, sales promotion, public
relations

45
IMPORTANT ELEMENTS OF BUSINESS PLAN : MARKETING PLAN – MARKETING STRATEGY
Marketing Strategy
Marketing strategy is the section of your business
plan that outlines your overall game plan for
finding clients and customers for your business.
Sometimes marketing strategy is confused with
a marketing plan, but they are different.
•Marketing strategy focuses on what you want to achieve for your business and marketing efforts.
•Marketing plan details how you'll achieve those goals.

46
Write a successful
marketing strategy
Identify your business goals Using SMART
method:
•Specific
•Measurable
•Achievable
•Relevant
•Time
State your marketing goals
Research your market
Profile your potential customers
Profile your competitors
Develop strategies to support your
marketing goals
Use the ‘4 Ps of marketing‘
Test your ideas

47
Marketing
Strategy
Plan
5W 1H
HOW
WHERE
WHY
WHAT
WHO
WHEN
Your company personality, What kind of company are you?
Creative, Look and feel, Tone of voice, Language you’d use
Keyword phrase, What buyers type into Google
Marketing tactics & Content strategy, etc.
Where are they?
Google, blogs, Facebook, Twitter etc.
How are you remarkable?
What value do you bring?
Proof
Credibility indicators, guarantees, testimonial, etc.
Problems you solve for this buyer?
Why are they buying from you?
Actions you’d like them to take
Enquire, order, buy, connect, etc.
Buyer Persona
Description
Who is this person?
What problems does this buyer have?
Things to do today
Things to do next week
Things to do next month

48
IMPORTANT ELEMENTS OF BUSINESS PLAN : MARKETING PLAN – COMPETITORS ANALYSIS
Competitors Analysis
Identifying your competitors and
evaluating their strategies to
determine their strengths and
weaknesses relative to those of
your own product or service.

49
Once you identify your main competitors, answer
these questions about each one. And be
objective. It's easy to identify weaknesses in
your competition, but less easy (and a lot less
fun) to recognize where they may be able to out
perform you:
What are their strengths?
Price, service, convenience, extensive inventory are all areas where you may be
vulnerable.
What are their weaknesses?
Weaknesses are opportunities you should plan to take advantage of.
What are their basic objectives?
Do they seek to gain market share? Do they attempt to capture premium clients? See your industry through
their eyes. What are they trying to achieve?
What marketing strategies do they use?
Look at their advertising, public relations, etc.
How can you take market share away from their business?
How will they respond when you enter the market?

50
Name of
Store
(and link)
HQ Mission
Statement
Product
Offering
Sales Channels (i.e.
Amazon, eBay,
Facebook, physical
store, etc.)
Strengths Weaknesses Competition
Category (Primary,
Secondary, Tertiary)

51
[COMPANY
NAME]
200
400
600
800
1000
[COMPETITOR 1] [COMPETITOR 2] [COMPETITOR 3 [COMPETITOR 4

52
IMPORTANT ELEMENTS OF BUSINESS PLAN : PRODUCTION PLAN
ii
RAW
MATERIAL
SOURCES
iii
LAYOUT
PLANNING
i
OPERATION AND
PRODUCTION
PROCESS 03
PRODUCTION
PLAN

53
IMPORTANT ELEMENTS OF BUSINESS PLAN : PRODUCTION PLAN – OPERATION AND PRODUCTION PROCESS
Operation And Production Process
Production and Operations
Management ("POM") is
about the transformation of
production and operational
inputs into "outputs" that,
when distributed, meet the
needs of customers.

54
Example

55
Example

56
IMPORTANT ELEMENTS OF BUSINESS PLAN : PRODUCTION PLAN – RAW MATERIAL SOURCES
Raw Material Sources
Raw materials are the resources
used by a company to produce
its finished goods and products.

57
IMPORTANT ELEMENTS OF BUSINESS PLAN : PRODUCTION PLAN – RAW MATERIAL SOURCES
Raw materials can be
divided into 2 groups:
Direct materials are used within the final product.
Examples include the wood used to make furniture or
the fabric used to make clothing.
Indirect materials are used throughout the
production process, but are not directly included in the
final product. Examples include the oils used to
maintain machinery or the lightbulbs in a factory.

58
IMPORTANT ELEMENTS OF BUSINESS PLAN : PRODUCTION PLAN – LAYOUT PLANNING
Layout Planning
Deciding on the best physical
arrangement of all resources that
consume space within a facility.

59
Example

60
01
02
03
FURNITURE + STORAGE +
EQUIPMENT
OFFICE
LAYOUT
OFFICE
ACTIVITIES
TIPS
TO
DO

61
IMPORTANT ELEMENTS OF BUSINESS PLAN : FINANCIAL PLAN
i
BUSINESS
STARTUP COST
ii
BREAK EVEN
ANALYSIS
iii
INCOME
STATEMENT
iv
CASH FLOW
04
FINANCIAL
PLAN

62
IMPORTANT ELEMENTS OF BUSINESS PLAN : FINANCIAL PLAN – BUSINESS STARTUP COST
Business Startup Cost
Startup costs are the expenses incurred
during the process of creating a new
business. All businesses are different, so
they require different types of startup
costs. Online businesses have different
needs than brick-and-mortars; coffee
shops have different requirements than
bookstores do.
Advertising and promotion
Borrowing costs
Employee expenses
Equipment and supplies
Insurance, license and permit fees
Research expenses
Technological expenses

63
IMPORTANT ELEMENTS OF BUSINESS PLAN : FINANCIAL PLAN – BUSINESS STARTUP COST
Example

64
IMPORTANT ELEMENTS OF BUSINESS PLAN : FINANCIAL PLAN – BREAK EVEN ANALYSIS
Break Even Analysis
Break-even analysis is a
technique widely used by
production management and
management accountants.
Total variable and fixed costs are
compared with sales revenue in order
to determine the level of sales volume,
sales value or production at which the
business makes neither a profit nor a
loss (the "break-even point").

65
Example
Break Even Point =
𝑭𝑭𝑭𝑭𝑭𝑭 𝑪𝑪𝑪𝑪𝑪𝑪𝑪𝑪𝑪𝑪
𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺 𝑷𝑷𝑷𝑷𝑷𝑷𝑷𝑷𝑷𝑷 −𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽𝑽 𝑪𝑪𝑪𝑪𝑪𝑪𝑪𝑪𝑪𝑪

66

67
IMPORTANT ELEMENTS OF BUSINESS PLAN : FINANCIAL PLAN – INCOME STATEMENT
Income Statement
It indicates how the revenues are
transformed into the net income.
An income statement or
profit and loss account is
one of the financial
statements of a
company and shows the
company’s revenues and
expenses during a
particular period.

68
IMPORTANT ELEMENTS OF BUSINESS PLAN : FINANCIAL PLAN – INCOME STATEMENT
Example

69
IMPORTANT ELEMENTS OF BUSINESS PLAN : FINANCIAL PLAN – CASH FLOW
Cash Flow
the total amount of
money being
transferred into and
out of a business,
especially as
affecting liquidity.

70
IMPORTANT ELEMENTS OF BUSINESS PLAN : FINANCIAL PLAN – CASH FLOW

we know how
to make it right
teambuilding
people first
celebrate together
job descriptions
knowledge
regular check
monthly staff
trainning
we are real pro’s
innovations
god bless
scientist
keep your head in
the cloud
international
community

3
72
BUSINESS PLAN
CREATE A BUSINESS PLAN
CREATE A
BUSINESS PLAN

73
a. Table Of Content
b. Execute Summary
c. Introduction
d. Purpose Of Preparing A Business Plan
e. Business Background
f. Owners Background
g. Organizational Plan
h. Marketing Plan
i. Operational Plan
j. Financial Plan
k. Project Implementation Schedule
l. Conclusion
LETS
CREATE!

PROJECT TIMELINE
phase 1 – planning
phase 2 – writing
phase 3 – submit
1 2 3 4 5 6 7 8 9 10 11 12
Group discussion
planning
Content power
writing
Binding well
submit
week

THANKS!
76
Does anyone have any questions?
mozaspace@gmail.com.com

MPU22012 Lecture 4 - Small Business Management and Planning

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MPU22012 Lecture 4 - Small Business Management and Planning