BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATEPRINCIPLES OF ENTREPRENEURSHIP (ENT530) WRITTEN REPORT BUSINESS PLAN (30%) OVERVIEW A business plan venture is a document that details out what a business wants to accomplish with its new product or services. It is a detailed road map used to convert ideas and visions int o a real and functioning product or services that is profitable and viable for the business to market. INSTRUCTIONS 1. This is a group project and the students are required to form groups comprising of 5 MEMBERS ONLY. 2. Each group needs to choose and write one viable business idea (product or service). 3. The group needs to write and present final report of the business plan using the given format. 4. Use Times New Roman 12 or Arial 11 with 1.5 spacing for written business plan report. 5. The report must be submitted on or before ______________. Failure to do so will jeopardize the student’s grade for this subject. ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE BUSINESS PLAN WRITTEN GUIDELINES & TEMPLATE 1. COVER PAGE BUSINESS PLAN TITLE Faculty : Program : Program Code : Course : Course Code : Semester : Group Name : Group Members : Submitted to Lecturer’s name…… Submission Date JUNE 2018 ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE 2. TABLE OF CONTENTS Page Number Contents 1. Executive Summary 2. Company Profile 3. Environmental Industry Analysis 4. Description of Venture 5. Operation / Production Plan 6. Marketing Plan 7. Organization Plan 8. Financial Plan 9. Appendices: ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE BUSINESS PLAN OUTLINE Note: Before you begin writing within this section make sure that you have done some research. Business plan research helps you make informed decisions and create a successful direction for your business plan. Gather information sources Record relevant information Analyze the information you have gathered and note the associated opportunities and risks If you are going to submit the blueprint to investors, research what types of investment opportunities are available to you, why you need investment (banks, government, private equity investors, etc.) 1. EXECUTIVE SUMMARY The executive summary is usually short and concise. The summary articulates what the opportunity conditions are and why they exist, who will execute the opportunity and why they are capable of doing so, how the company will gain entry and market penetration; it answers the questions: “for what reason does this venture exist and for whom?” Essentially, the executive summary needs to reflect the criteria presented in the Business Opportunity Analysis Exercises. This is your chance to clearly articulate how your business is durable and timely, and how it will create or add value to the end user. This summary is usually prepared after the other sections of the business plan are completed. o Brief description of the business and product concepts o The target market and projections o The competitive advantages o The profitability o The management team 2. COMPANY PROFILE o Details of company name and logo o Company Background 3. ENVIRONMENTAL INDUSTRY ANALYSIS o Convey to the investor that the company and product truly fill an unmet need in the marketplace. o The characteristics that set the product and company apart from the competition need to be identified (competitive advantage). o The industry and trends in which the company operates should be identified. ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE o Also include analysts’ predictions for your industry or market segment. o Description of the industry in which your company operates or will operate: Structure Size Major factors affecting market growth Industry trends Market trends Competitive environment New entrants Key technologies Products/Service: o Differences between what is currently on the market and what you will offer o Detail each product or service: Primary end use and significant secondary applications Benefits of product Unique features Any possible drawbacks of the product or service Present state of development of the product Time and money required to fully develop, test, and introduce Competitive advantage over the competition Opportunities for the expansion of the product line o Technologies / Special Know-how: Highlight any aspects of your product that may be protected by current IP or patent law. Provide evidence of how your offerings are different from the competition. Development status of product(s): Time frame Resource requirements ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE Difficulties and risks Design or development stages Technological advantage: Patent, trademark, copyright, or intellectual property rights Extent of search for infringement licenses Product improvement and new products: Costs Time frame Resource requirements Difficulties and risks Design or development stages 4. DESCRIPTION OF VENTURE o Opportunity: Briefly describe the general nature of your company. From this section the investor must be convinced of the potential success of the business. What problem will your company’s product or service solve? What is the Value Proposition? (economic benefit of solving the problem) Why will your company be successful? Demonstrable customer demand o Outlook / Benchmarks / Timelines: Describe the major events that will take place in the short and long-term future (i.e. product launch, acquisition of first customer, milestones for customer base growth or sales growth). Milestones: Complete management team Product development stages (proto-type, etc.) Production capability Customer acquisition ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE Breakeven Cash flow positive Funding 5. OPERATIONS AND PRODUCTION PLAN o Facilities and improvements: Location(s) Plant(s) Office space(s) Timing o Machinery and other capital equipment: Special tooling o Future capital needs: Timing Cost o Operating cycle: Manufacturing processes Quality control, production control, inventory control o Strategy and plans: Make-or-buy policy Subcontractors and/or suppliers o Regulatory and legal issues 6. MARKETING PLAN Information in this section needs to support the assertion that the venture can capture a substantial market in growing industry and stand up to competition. Because of the importance of market analysis and the critical dependence of other parts of the blueprint on this information, you are advised to prepare this section first. o Customers ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE Discuss who the customers for the product or service are or will be. Potential customers need to be classified by relatively homogeneous groups having common, identifiable characteristics (e.g., by major market segment). Show who and where the major purchasers for the product or service are in the market segment. Include national regions and foreign countries, as appropriate. Indicate whether customers are easily reached and receptive, how customers buy (wholesale, through manufacturers’ representative, etc.). o Market Size and Trends Show for three years the size of the current total market and the share you will have, by market segment, and/or region, and/or country for the product or service you will offer, in units, ringgit, and potential profitability. Describe also the potential annual growth for at least three years of total market for your product or service for each major customer group, region or country, as appropriate. Discuss the major factors affecting the market growth (e.g. industry trends, socio- economic trends, government policy, and population shifts). o Competition and Competitive Edges Make a realistic assessment of the strengths and weaknesses of competitors. Competitors Strengths Weaknesses Compare competing and substitute products or services on the basis of market share, quality, price, performance, delivery, timing, service warranties, and other pertinent features. Compare the fundamental value that is added or created by your product or service, in terms of economic benefits to the customer and to your competitors. Discuss the current advantages and disadvantages of these products or services and say why they are not meeting customers’ needs. o Estimated Market Share and Sales Based on your assessment of the advantages of your product or service, the market size and trends, customers, competitors and their products, estimate the share of the market and the sales in units and ringgit that you will acquire in each of the next three years. Remember to show assumptions used. ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE Product/service Market Share and Sales Year Market share (%) Total sales in units Total sales in RM o Marketing Strategy Overall marketing strategy. Describe the specific marketing philosophy and strategy of the company, given the value chain and channel of distribution in the target market. Include, for example, a discussion of the types of customer groups that you are targeting for initial intensive selling effort those that you are targeting for later selling efforts. Pricing. Discuss the pricing strategy, including the prices to be charged for your product and service, and compare your pricing policy with those of your major competitors. Sales tactics. Describe the method (e.g., own sales force, sales representatives, direct mail, or distributors) that will be used to make sales and distribute the product or service. Service and warranty policy. If your company will offer product that will require service, warranties, or training, indicate the importance of these to customers’ purchasing decisions and discuss your method of handling service problems; also, highlight the kind and term of any warranties to be offered, whether service will be handled by company service people, agencies, dealers and distributors, or return to the factory. Advertising and promotion. Describe the approaches the company will use to bring its product or service to the attention of prospective buyers. Distribution. Describe the methods and channels of distribution you will employ. 5. ORGANIZATION PLAN This section includes a description of the function that will need to be filled, a description of the key management personnel and their primary duties, an outline of the organisational structure for the venture, a description of the board of directors, a description of the ownership position of any other investors, and so forth. You need to present indications of commitment, such as the willingness of team members to initially accept modest salaries, and of the existence of the proper balance of technical, managerial, and business skills and experience in doing what is proposed. ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE o Organization Present the key management roles in the company and the individuals who will fill each position. Key Management Roles Name If it is not possible to fill each executive role with a full-time person without adding excessive overhead, indicate how these functions will be performed (e.g., using part-time specialists or consultants to perform some functions), who will perform them, and when they will be replaced by a full-time staff members. o Key Management Personnel For each key person, describe in detail career highlights, particularly relevant know- how, skills, and track record of accomplishments that demonstrate his/her ability to perform the assigned role. Names & Positions Career Highlights Describe the exact duties and responsibilities of each of the key members of the management team. Names & Positions Duties & Responsibilities o Management Compensation and Ownership State the salary to be paid, the share ownership planned, and the amount of equity investment (if any) of each key member of the management team. Names & Positions Monthly salary Share of ownership Amount of Equity Invested ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE o Supporting Professional Advisors And Services Indicate the supporting services that will be required. Indicate the names and affiliations of the legal, accounting, advertising, consulting, and banking advisors selected for your venture and the services each will provide. Name of Professional Advisors Services Provided 7. FINANCIAL PLAN Sound financial management is one of the best ways for the business venture to remain profitable and solvent. In this section think through some of the general issues you will have to address in your formal business plan. To effectively manage your venture finances, plan a sound, realistic budget by determining the actual amount of money needed to start your venture (start-up costs) and the amount needed to keep it open (working capital or operating costs). o Start-up Cost Estimate the costs incurred in conjunction with one-time activities that the venture undertakes when it opens a new facility, introduces a new product or service, conducts business in a new territory or with a new class of customer or beneficiary, initiates a new process in an existing facility or commences some new operation after considerable research and discussion. ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE o Working Capital Working capital represents the amount of initial expenditure required to finance the daily operation until the business gets its first sale. The amount of working capital is therefore dependent upon the period until the firm can generate enough sales to cover its short-term expenditure. ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE o Start-up Capital and Financing Total start-up capital incorporates both start-up cost and working capital needed to start a project. The most common source of finance for new venture is the entrepreneur’s own equity contribution. The equity contribution can be in the form of cash or assets. The next most common source of finance is term loan. This is a form of long term financing offered by most commercial banks. The term loan can be used to finance fixed assets as well as working capital requirements. The interest rate and the loan period depend on the current interest rate and the amount of loan required respectively. o Cash Flow Statement A cash flow pro-forma statement refers to the projected statement of cash inflow and outflow throughout the planned period. Under normal circumstances, the pro forma cash flow statement is prepared between three to five consecutive years. However, longer periods are sometimes needed depending upon the projects undertaken. The pro forma cash flow statement must be able to show the following information: Cash inflows – the projected amount of cash flowing into the company. Cash outflows – the projected amount of cash flowing out of the company. Cash deficit or surplus – the difference between cash inflows and cash outflows. Cash position – the beginning and ending cash balances for a particular period. ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE o Income Statement The next step in developing a financial plan is to prepare the pro forma income statement which shows the expected profit or loss for the planned period, usually for three to five consecutive years. Generally, the pro forma income statement consists of the following elements: Cost of good manufactured (production cost) Gross profit Net profit Cost of goods manufactured (also known as production costs) refers to the total production cost involved in producing the finished goods. It includes all costs such as direct materials, direct labour, manufacturing overheads and the differential value between the beginning and ending balances of the work-in-progress (if any). Gross profit is the gross margin realised after deducting the cost of goods sold from sales. It represents the amount of profit before deducting other operating expenditure. Net profit (or net loss) is defined as the difference between gross profit and operating expenses for the planned period. ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE o Balance Sheet While the pro forma income statement shows the financial performance of the company for the planned period, the pro forma balance sheet shows the financial position of the company at a specific point in time in terms of assets owned and how those assets are financed. The pro forma balance sheet is prepared for a period between three to five years. ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE 8. PROJECT MILESTONES o This section includes a month-by-month schedule that shows the deadlines or milestones of activities critical to the venture’s success. Examples of activities that are critical to the success of the venture are: Incorporation of the venture, completion of design and development, completion of prototypes, obtaining of sales representatives, signing of distributors and dealers, ordering of materials in production quantities, starting of production or operations, receipt of first orders, delivery of first sales. Activities Deadlines ENT530 : RN 2017 BUSINESS PLAN (ENT530) : GUIDELINES & TEMPLATE 9. CONCLUSIONS End with a brief conclusion and the next step of action to be taken. The conclusion can include the entrepreneur’s decision on how to proceed next. It can be a statement providing viability of the proposal business and seeking grants or loan approval. 10. APPENDICES Attach any material that does nots easily fit into the body of a business plan such as: Resumes of the top management team members. Photos or diagrams of product or prototype All charts, financials, visuals, and other related items can be placed here and referenced in the report. Market research projections. Projected financial statements: cash flow, profit & loss, and balance sheets Source of market data Capital equipment and facility requirements ENT530 : RN 2017