WRITING A BUSINESS PLAN

INTRODUCTION The business Plan could be the most useful and important document you, as an entrepreneur, ever put together. When you are up to your card in the details of starting the business, the plan keeps your thinking on target, keeps your creativity on track, and concentrates your power on reaching your goal. An effective plan does more than just help convince prospective investor that the new business is sound. It provides a detailed blue-print for the activities needed to finance the business, develop the products, market it, and otherwise manage the new business or continuing operations of a firm. When developing the plan, consider the business background, origins, philosophy, mission, vision and objectives, as well as the means of fulfilling that mission and attaining objectives. Presenting the business plan is almost as important as preparing it. Presentation involves both writing the plan and presenting it to the targeted audience. Be honest, logical, interesting and thorough Use the third person ( not the first person- I or We) Use transitional words i.e. but, otherwise, etc Avoid redundancies, such as future plans Use short, simple words where feasible Use visuals, such as tables, charts, photos, computer graphics to present your ideas effectively Proofread the plan before presenting it Both written and oral presentations should be very positive and upbeat.

They should demonstrate that you have marketable product/services and that the business has a feasible plan for aggressively marketing it at a profit. When writing a business plan your purpose is to convey as much information as possible in as little reading as possible. The guidelines outlined in this document tries to cover both educational requirements and investors point of view. Not every point will be relevant to every type of business but the general format can be followed with explosis laid as appropriate

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BUSINESS PLAN
CHAPTER ONE 1.0 BUSINESS DESCRIPTION

Introduction The purpose of this part of the business plan is to provide the company or business with the opportunity to describe the condition and prospects of the targeted industry. Included should be the following: 1.1 Mission Statement 1.2 Business Name, Location Address and Logo 1.3 Form of Business Ownership 1.4 Type of Business 1.5 Products / Services 1.6 Justification of the Opportunity 1.7 Industry Analysis Industry Characteristics Technology Viability 1.8 Business Goals 1.9 Entry and Growth Strategies 1.1 MISSION STATEMENT The purpose of your company existence) i.e. why are you in the market place. A good mission statement should be stated in consumer terms, indicating the products / services. (What consumers need do you intend to meet or achieve). This focuses on what the company/business or institution really wants to do (motto or your dream). It has to reflect the: Market opportunity or need Company / business competence and Gain the commitment of your people. 1.2 BUSINESS NAME, LOCATION ADDRESS AND LOGO History and position to date, year of formation, choice of name and logo design; if registered, give particulars, office space. 1.3 FORM OF BUSINESS OWNERSHIP This describes the form of business ownership you have adopted. This section has to reflect the following. Reason for adoption one form of ownership Describe the key players and their contribution Give details of any patent(s), copyright or trademarks you hold. NB Most business may operate in one of the following three legal forms of organization a) the sole proprietorship b) the partnership c) the limited company or corporation Thus, one should thoroughly understand the characteristics associated with each form so that the most appropriate legal form of business is selected from that particular business.

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1.4 TYPE OF BUSINESS This section describes the type of business one is involved in. It must be clear and realistic. They type of businesses include: manufacturing, wholesale, retail trade, services etc. 1.5 PRODUCTS / SERVICES Describe your products i) A business plan should describe clearly in details ad specify the nature and type of products that the business is going to offer. ii) It should indicate the major differences between business products / services and those completing business in the same industry. iii) What benefits or distinctive attributes will you give your consumers? iv) Why will the consumers buy your products/services and not competitors? This will determine your competitiveness. v) Indicate future development of your services products. This is the extensions of your products / services. vi) Include engineering studies, production / services process, maps etc to help further understanding. 1.6 JUSTIFICATION OF THE OPPORTUNITY This section focuses on existing opportunities. Carry out a SWOT analysis Strength, Weakness, Opportunities and Threats to new trends in the market, i.e. economic, technological and political. Evaluate services / products in new and existing markets. 1.7 INDUSTRY ANALYSIS Identify the types of industry you are going to operate in. To prepare a business plan one needs to research and analyse the industry in which the business will operate in. New businesses are usually started after a consideration of the market or the industry. The industry is your broad environment. Industry analysis might reveal some things that could greatly affect your business and they may not be apparent in your marketing research. Industrial analysis should determine the opportunities that the business will be able to exploit in the industry. Provide a brief discussion of the industry you are in e.g. engineering. Determine industrial size; determine size, sale volume, and number of competitors industry profitability. 1.7.1 Industry Characteristics Determine the important characteristics of the industry and those that are likely to affect your business e.g. those that would impact positively or negatively on your business and you might need to consider tem, e.g. capital requirements does your business required high entry costs. (How do you deal with it).Industry characteristics include: Legislation (some industry are heavily regulated) Globalization does is it affect the business. 1.7.2 Technology affecting the Industry Show businesses are vulnerable to technological changes eg. IT (information Technology). Some business are very competitive (too many players / substitutes) Market segmentation. Are the markets segmented? Are market too segmented, size of competitors, distribution channels. Discuss industry future i.e discuss what is likely to happed to the sales, profits an competitors. Are they likely to increase, decrease or stabilise.

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1.7.3 Viability of the Industry A business can only be viable of there is demand Number of customers, competitors, feasibility, market, location. There are unique aspects of your concept, opportunity cost (resources required to make the venture a reality) sustainability of your business etc. 1.8 BUSINESS GOALS This section discuss marketing strategy enabling you to achieve the set goals, for the next one, two, or three years what do you want to be (your share of the market) Prime business objectives. You should discuss both the short-term goals as well as long-tern goals for your business. Show how you intend to achieve them. You must be clear to the point and as realistic as possible. 1.9 ENTRY AND GROWTH STRATEGIES Focus on growth opportunity. Carry out SWOT analysis. Indicators, adjusting to new trends (economic, technological and political). Industry precast products/services improvement s and new products / service. Key Factors for Success/Entry Strategies Briefly discuss pre-start-up, start-up, growth and maturity stages. Strategies for coping and managing change. In this section you will be required to briefly discuss, knowledge in business experience, machinery, location, accessibility to business, methods of advertising, recruitment of qualified personnel. ASSIGNMENT 1. Identify a business you would want to start. 2. Write a mission statement 3. Business name location and address. Provide a brief history of your business if it is new discuss when it will be opened the name, name, logo 4. Give the particulars of legal status and briefly described the location. 5. Indicate type of business, manufacturing service, trade e.t.c. 6. Business goals or objectives. Indicate your prime objectives. The objectives should include short tern and long terms.

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CHAPTER TWO 2.0 MARKETING PLAN

Introduction The marketing plan is the second stage of preparing your business plan. This phase is highly critical because it provides the basis for the organizational, operational and financial plans. You will need to conduct a market survey and in-depth analysis of your intended market. This will enable you to describe your market opportunities and challenges. Then, you can develop the marketing strategies, tactics, and policies required to exploit the market opportunities. You should note the sources of any market data you convincingly. Potential customers (Describe) Describe your potential competitors compare your proposed product(s) service(s) vis-vis of your competitors Describe your pricing strategy Describe the methods you will use to advertise / promote your products/service(s) to your customers. Describe the channels of distribution that you will utilize. The following are sections found in the marketing plan chapter: 2.1Marketing Objectives 2.2 Customers 2.3 Market share 2.4 Competition 2.5 Methods of promotion and advertising 2.6 Pricing Strategy 2.7 Sales Tactics 2.8 Distribution strategy This is the most important and probably the most difficult part of the business plan. The objectives of the market analysis market are to. Demonstrate that you can understand the market. That you are in control of the critical success to reach its goals. Prove that there is a demand for your product or services and that you understand your potential customers very well. Your potential customers need to be able to buy at a profit. 2.1 MARKETING OBJECTIVES State marketing objectives Market size Profitability 2.2 CUSTOMER Define the target market by describing your potential customers, their locations, why they or might buy from you. The expectation of price and quality, if you business has a track record discuss how its products or services have been received in the market place. It is important that you discuss potential negative reactions to your products / services as well and how you intend to overcome them. 2.3 MARKET SHARE Discuss market share to be captured e.g. matatu operators Page 5 of 31

Public having private vehicles Institutions Farmers (transport of goods, such as farm inputs and out puts)

2.4 COMPETITION This is your competitive analysis. Basically show that you are fully aware of the competitive forces in the market place. Explain your strengths and weaknesses over your competitor. How you will counter act their advantage and how you are going to compensate for your weaknesses. Illustrate the business SWOT analysis. Name and describe the companies or businesses that will be your key competitors their market share and there potential compared products/service with your competition on the basis of price, performance, services and other important features. Review your competitors strengths and weaknesses in financial marketing and operational areas. If you have no competitor, describe the possible development of competition and, from where it is likely to come from. Discuss the barriers to entry and the likelihood of technological or other obsolescence. 2.5 METHOD OF PROMOTION AND ADVERTISING Discuss how you will generate awareness of your products/service and the promotion tools you will use. The tools must be realistic and relevant to your consumers at low cost but effectively. Some of the promotion tools that you will use include:i) ii) Advertising billboards, radio, posters, Television, handbills etc. Sale promotion this are short term incentives meant to increase sales (trade discounts). Those that give the consumer motivation to buy now e.g. price down, half price, free samples etc. Publicity and public selling a very powerful tool, for example using media for commenting. Direct marketing.

iii) iv)

2.6 PRICING STRATEGY Discuss the prices to be charged for products or services. Start with explaining how your pricing will be done to gain acceptance of your product or services and maintain and increase market share and provide for a profit. Cost oriented pricing Demand oriented pricing Penetration pricing Justify the prices you will choose especially if they would be above or below the existing market prices of similar products or services. You should also prove that your pricing decision has the ability to generate profit for your business. 2.7 SALE TACTICS Discuss how you will generate awareness of your products/services and the sales tools you will use. The tools must be realistic and relevant to your consumers ay low cost but effectively. Some of the promotion tools you may be required to use are: i) Advertising billboards, radios, poster, handbills, television etc. ii) Sales promotion These are short term incentives meant to increase sales. Those that give the consumer motivation to buy products now, for example, price down, half price, free samples. iii) Publicity and public selling a very powerful tool, for example, using media for commentating. iv) Direct marketing. Page 6 of 31

2.8 DISTRIBUTION STRATEGY This refers to means or methods of reaching the target groups. Speeding up stock movement and encouraging repeat. It also refers to physical movement of products/services. How will you use distribution to increase sales? Some distribution channels may include: retailers, jobbers, wholesalers, brokers, door to door, mail order, agents and other relevant methods suitable to your business. Discuss any relationship you have with the suppliers and distributors. For example a product place in Kenyatta Avenue in Nairobi City conveys a message to the consumer this means it is expensive difficult to get and it is of high quality. A product placed in a shop at River Road in Nairobi City will mean it is of low quality and easy to get. Briefly discuss how you will cope with potential changes you have identified. ASSIGNMENT Write a detailed marketing plan for your proposed business venture.

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CHAPTER THREE 3.0 ORGANISATION AND MANAGEMENT PLAN Organisation and Management Plan is composed of the following sections: 3.1 Organisation and management plan objectives 3.2 Business Managers and Qualifications 3.3 Personnel, Number, Duties and Responsibilities 3.4 Organisation Structure 3.5 Recruitment, Training, and Promotion 3.6 Remunerations and Incentives 3.7 Licenses, Permits and By-laws 3.8 Support Services 3.9 Managing Change The key objective of this chapter is to show control and efficiency of the administrative functions and to demonstrate that your management and leadership is capable and able to fulfill the goals of your business organisation, and to outline your business organisation, lines of authority and responsibility clearly demonstrated, Including a sketch of your staffing, employee motivation and how ownership will be distributed. What you need to accomplish in your business Organisation and Management Plan: Describe how your business will be managed. Give evidence that your business has proper management balance. Demonstrate your understanding of the administrative details Prove that you have adequate expertise in management. Explain what personnel are needed and how you will fill these positions. Complement yourself in the areas where you are weak. Differentiate between ownership and management roles. Make an organisation chart that illustrates your business organizations structure lines of authority, responsibility and delegation. Give a brief summary of your management style and systems 3.1 Organisation and Management Plan Objectives State both the short-term and long-term objectives. Your objectives must be specific, measurable, attainable or achievable realistic and time bound. The objectives must be related to the contents of the chapter. Relate the objectives to the main sections as presented in this chapter. By so doing you will be able to formulate your objectives easily. State what you want to achieve in regard to people plan, for example, to ensure quality customer care through employment of qualified personnel or, to make sure human resources development plans are met. 3.2 Business Managers and Qualifications Discuss your management team adequately. Give a brief background of the key managers. Describe each key managers competence and what they bring to your business. Discuss education, experience, and knowledge of the industry, special talents, training, skills, attitudes and abilities possessed by your managers. Discuss the duties and responsibilities of your managers in your business. Specify adequately the number of your personnel required for specified duties and responsibilities. Demonstrate that the management and the leadership are capable to fulfill the goals of the business. Show how leadership will be distributed Demonstrate that you have adequate expertise in the areas of management, marketing, finance, production etc. You should demonstrate that the management team does complement each other. Page 8 of 31

 Provide the management team profiles that is, from each manager. Manager Name Age Experience Qualifications Expertise Duties and Responsibilities 3.3 Personnel, Number, Duties and Responsibilities Discuss each personnels position duties and responsibilities in your business. Specify adequately the number of personnel required for each duty and responsibility. Discuss your other staff or staffing needs for example number, deployment, and for each give profile except name. Age Experience Qualifications Expertise Duties and Responsibilities Discuss if you will need future staff addition 3.4 Organisation Structure Illustrate how your leadership will be distributed using an organogram or organisation chart. This should illustrate the business leadership from the highest office to the lowest cadre of employees. Draw how you will manage your employees in a diagrammatic format and justify it. Explain how it will work. Explain how your business organisation management team is organised; briefly show each member relates to another in the structure and how it balances the skills in the organisation. The organogram or the organisation structure must be realistic. 3.5 Recruitment, Training and Promotion Discuss your current and future personnel and their corresponding functions. Describe how personnel will be identified, attracted, hired developed and promoted. Provide a sample role description for a key position. Discuss human resources issues Recruitment (Recruitment methods) Selection (Criteria for selection) Motivation (Methods of reward, recognition etc.) Development and Training (For each of these elements describe how you will conduct them and a rationale. More importantly indicate future human resources development programmes.) The above information can be illustrated using a table such as the one shown below. 3.5.1 Staff Training and Development Table
ITEM No. 1 2 3 4 COURSE DESCRIPTION TARGET GROUP DURATION AND PERIOD COSTS TO BE INCURRED REMARKS

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Remunerations and Incentives Use accurate, systematic and realistic data to discuss each managers compensation package and terms of employment. Discuss distinctively what each managers objective is with your business. Discuss any legal employment contracts that each may execute with the business. Discuss remuneration/ pay system or package and monetary recognition of performance. Discuss systematically and realistically each employees compensation package and terms of employment. It is worthwhile to use table(s) to illustrate remuneration and incentives of all employees. Below is an example of a Remunerations and Incentives of employees. 3.6.1 Remunerations and Incentives Table
SALARY ITEM No. 1 2 3 4 5 6 7 JOB TITLE BASIC CEILLING BENEFITS HOUSE ALLOWANCE MEDICAL ALLOWANCE MEDICAL ALLOWANCE OTHERS (SPECIFY) TOTAL SALARY

3.6 Licenses, Permits and By-laws Discuss the primary objectives of the owners and the managers of the business. Give relevant and realistic details of the licenses, permits and by-laws that will affect your business. Include actual amounts and sources of licenses permits and by-laws necessary. This will require that you establish the actual requirements and actual amounts from the actual sources of licenses, permits and by-laws. Discuss legal issues that relate to human resources management. The legalities that you must comply with as you do your human resources management, insurance Health Act, safety (Factory Act), Compensation Act etc. Show how you will comply with them. Show that you understand the legal requirements and how you will implement them. You can use the aid of a table to illustrate the above information. For example as shown in the table below: 3.7.1 Legal Requirements Table
ITEM No. 1 Trade license 2 - N.S.S.F. -Compensation for injury or loss - V.A.T. - P.A.Y.E. -Customs duty - Motor vehicles -Business premises - N.H.I.F. - Sanitary and hygienic conditions - Food production & handling Local authority by- laws Occupation license - Service charge - Land rates - Garbage collection - Hire purchase - Leases - Title deeds - Guarantees - Loan agreement Representation in disputes Other (specify) Labour laws Government regulation on trade licensing DESCRIPTION Registration REQUIREMENTS Business formation SOURCE OF ASSISTANCE Office of the Attorney General District Trade Development Office FEE PAYABLE REMARKS (Forms to be Filled) Forms to be filled before at pre-start-up stage

Taxation

Insurance

Public health

6 7 8

Building regulations Local authority regulations occupation and other licenses Local authority taxation

Contracts

10 11 12 13

Litigation and arbitration Other (specify)

TOTAL AMOUNT PAYABLE

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3.7 Support Services (External) Discuss other services you will require externally. Provide names and addresses of services providers and exactly what you require, for example, auditing/accounting, legal representation, banking, business advisory, repair and maintenance, risk and insurance etc. Describe your professional team of external experts, advisors, consultants, counsellors relevant to your business. Show how they will assist in the development and expansion of your business. State the cost of each of the professional support services rendered. Be specific, clear, and realistic in this aspect. This information may be presented in table format as shown in the following example, 3.8.1 External Support Services
ITEM No. 1 TYPE OF SUPPORT SERVICE Banking SERVICE PROVIDER KENYA COMMERCIAL BANK MUMIAS BRANCH P.O BOX 3204 MUMIAS JAMBO NET P.O BOX 6000 KISUMU. FEES CHARGEABLE (Kshs) REMARKS This will allow the business to deposit the money, safeguard its valuable and always make them available when required. The bank shall also provide the business with Loan for starting the business. This will facilitate access to the web sites. The Jambo Net will offer Internet service providers (ISP) with a high-speed connection to the Internet backbone. This facility eliminates the need for the (ISPs) to lease their own international circuits fro which they have to negotiate individually. Unforeseen fires, accidents and deaths threaten our business. This can only be catered for by insurance company. The main purpose of the insurance company will be to transfer the burden, stated above from the business to the community. It will ensure that insurance services are done fairly in conditions of mutual trust and honesty under proper supervision of law. The services will be provided by This shall be needed to provide power to the businesses so that it can be operational.

Internet Services

Insurance

ALICO INSURANCE COMPANY KAKAMEGA P.O BOX 3080 KAKAMEGA

Electricity

Legal Services / Advocate

KENYA POWER AND LIGHTENING COMPANY KAKAMEGA P.O BOX 248 KAKAMEGA. KHALAI AND SONS ADVOCATES P.O BOX 380 KAKAMEGA

This will be required to defend or protect the business.

Other (specify)

3.8 Managing Change - Discuss the changes that you expect. These are changes related to people, human resources etc. - Establish the exact changes taking place in the market, for example employment of younger people, technology change and any other unique changes. CHAPTER SUMMARY A business cannot be better than the people in it. This section of the business plan should identify who will be involved in the business, what roles they will play in this operation and what position they will be in to increase the businesss chances for success. Businesses succeed because they are run by people whose decisions are better than their competitors decisions. Be sure that you put together a team that will give you a competitive advantage. When you bring together capable and experienced people in your business, your business will be able to hit the ground running.

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CHAPTER FOUR 4.0 OPERATIONAL / PRODUCTION PLAN The pertinent features of the Operational / Production Plan include the following: 4.1 Operational / Production Plan Objectives 4.2 Production Facilities and Capacity 4.3 Production Strategy 4.4 Production Process 4.5 Regulations Affecting Operations / Production The main objective of this chapter is to explain accurately and clearly how you will produce your product or offer your service in a cost effective way and make it ready for the market. Demonstrate have extensive knowledge on all aspects of your planned businesss production and operation process. Describe how you will make your product or services. Discuss how you will minimize costs and manage the problems inherent in production and in providing service. The manufacturing and operations plan should describe the kinds of facilities, plant location space, capital equipment, and labour force (human resource, part- and full-time) that are required to provide the businesss product or service. For a manufacturing business, discuss your policies on inventory control, purchasing, production control, and make-or-buy decisions (i.e., which parts of the product will be purchased and which operations will be performed by your work force.) A service business may require particular attention to and focus on an appropriate location, an ability to minimize overhead, and measures for obtaining competitive productivity from a labour force. 4.1 Operational / Production Plan Objectives State clearly what you want to achieve within a given period of time State your objectives clearly and must reflect on all the pertinent features of this chapter. The objectives should be stated in terms of long-term and short-term objectives. The objectives must be specific, measurable, attainable or achievable, realistic and time-bound. 4.2 Production / Operational Facilities and Capacity Discuss your physical facilities (machines, tools, equipment, etc), whether owned or leased, depreciation, schedule of when required and value / cost attached, setup and facility layout (shop planning or plant layout to cater for space requirements), quantities of resources (raw materials or inputs). Use accurate, realistic and relevant data and adequate layout to describe the characteristics of your planned facilities. Highlight how the facilities and equipment will give you a better production or operating advantages over similar businesses. Discuss correctly the short and long range needs and plans for your facilities and equipment. If yours is an existing business, describe the facilities currently used to conduct the business. This should include plant and office space; storage and land areas; and machinery, special tooling, and other capital equipment. If your venture is a start-up, describe how and when the necessary facilities to start production or offering service will be acquired. Discuss whether equipment and space will be leased or acquired (new or used), and indicate the costs and timing of such actions. Indicate how much of the proposed financing will be devoted to plant and equipment. (These cost data will become part of financial plan.)

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Discuss how and when plant space and equipment will be expanded to the capacities required by future sales projections. Discuss any plans to improve or add existing plant space or to move the facility. Explain future equipment needs, and indicate the timing and cost of meeting them. A three-year planning period should be used for these projections. The above information may be illustrated using the following tables or modification of such tables: 4.2.1 Production / Operational Facilities Table
ITEM No. DESCRIPTION MODEL/ MAKE DEPRECIATION SUPPLIER COST PER UNIT QUANTITY AVAILABILITY WHEN REQUIRED TOTAL AMOUNT REMARKS

4.2.2 Product / Service Capacity Table

ITEM No. PRODUCT / SERVICE MAXIMUM LEVEL (Optimum) MINIMUM LEVEL (Break-even levels) REMARKS

4.2.3 Production / Operational Plant or Shop Layout Draw your plant or shop layout clearly and label all the locations in the layout. The plant or shop layout must complement the production process or service process. The rooms must be arranged in such a way that all the process flow smoothly without creating unnecessary movements. 4.3 Operations / Production Strategies Discuss product development, capacity and level of production (production cycles and output limitations), labour utilization, production control procedures (flowchart / schedule), quality control plans, engineering and design support, inventory or stock control (make or buy considerations). Describe your product or service design and development plan. Show originality, clarity and viability in your product or service, design and development. Use accurate, realistic and relevant data as appropriate to support your production or operational strategies. Describe the operation / production process involved in your products production or providing service and any other decisions with the respect to the subcontracting of components as opposed to complete in-house production. The make-or-buy strategy adopted should be determined by consideration of inventory financing, available labour skills, and other non-technical questions, as well as purely production, cost, and capability issues. Justify your proposed make-or-buy policy. Discuss any surveys of potential subcontractors and suppliers, and indicate who these are likely to be. Present a production plan that shows cost-volume information at various sales levels of operation with breakdowns of applicable material, labour, purchased components, and factory overhead. Discuss the inventory required at various sales levels. These data will be incorporated into cash flow projections. Explain how any seasonal production loads will be

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handled without severe dislocation- e.g., by building to inventory or using part-time help in peak periods. Describe briefly your approach to quality control, production control, and inventory control. Explain what quality control and inspection procedures the company will use to minimize production and service problems and associated customer dissatisfaction. In designing and developing your operational and production strategy, consider the following: List of monthly materials requirements Sources (suppliers) of the materials cost of the materials Transportation of the materials to your business Number of direct and indirect production workers required Level of the workers skills Total labour costs per month List of preliminary production costs and amounts involved Total cost of production in a given period Cost of production per unit 4.3.1 Geographic Location Discuss your planned location in terms of closeness to customers, availability of labour and suppliers, access to transportation, energy utilities and other resources. Discuss how your location will affect your production and operation costs. Detail your short-range and longrange location plans. 4.3.2 Locating Operational / Production Staff Table
ITEM No. LIST OF ACTIVITY / JOB SKILLS NEEDED EDUCATION REQUIRED AVAILABILITY YES NO STAFF ASSIGNED REMARKS

4.3.3 Working Hours / Shifts Schedule Table Briefly discuss your business working / shifts schedule and how the working hours benefit your business. Draw a table to illustrate your business working hours. 4.4 Operational / Production Process Describe how you will produce your product(s) or conduct your service operations step-bystep. Discuss the methods of processes involved. Illustrating each process of production or conducting service clearly. State how much will be done internally and show how much will be sub-contracted. Detail your raw materials needs and how they will be supplied. Describe how your business and its production operations will impact on the environment and the community. 4.4.1 Operational / Production Process Chart Briefly describe your operational / production process. Draw a clear and a systematic process flowchart.

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4.4.2 External Factors Likely to affect Production / Operational process Table Briefly discuss the external factors that are likely to affect production / operational processes.
ITEM No. 1 2 3 4 5 6 EXTERNAL FACTORS Electricity Water Weather Insecurity Shortage Others (specify) PRECAUTIONARY MEASURES

4.5

Regulations Other Compliances, Approvals and Environmental Issues Affecting Operations Include here any relevant regulatory requirements unique to your products, process, or service. What approvals are necessary in order to begin operations such as permits, licenses and zoning, health, and environmental approvals? What laws or other regulatory are necessary and unique to your business. Note any pending regulatory changes that can affect the nature and timing window on your opportunity, such as occurred in the Kenyan market liberalization and establishment of the East African Community. Are there any legal or contractual obligations that are also pertinent? Discuss specifically state and local authority laws and regulations that will affect your business. You should also include health regulations, trademarks, patents, copyrights, safety regulations, etc relevant to your business. It is important to state the actual Acts of Parliament and By-laws governing each regulation. You should be thoroughly conversant with all governmental regulations, compliances, and approvals likely to affect your business. Remember to mention the following: Permits and Licences required and where obtained Costs of permits and licences Local taxes payable and amounts involved Approvals and compliances required before commencing operations Costs to be incurred in obtaining approvals and meeting compliances Building regulations enough space for workers, clean floors and walls, proper roofing, ventilation, fire fighting and other safety measures. Health regulations / conditions toilets, clean water, drainage and sanitation, medical certificate, and clean surrounding. Condition for business registration. Environmental regulations e.g. N.E.M.A. Regulation for competition if any. This information can further be illustrated in table format as shown below. 4.5.1 Complying with Production / Operational Requirements
ITEM No. 1 2 3 4 DESCRIPTION OF REQUIREMENT Licences Taxes Other approvals (specify) TOTAL FEE PAYABLE REQUIREMENTS SOURCE OF SERVICE FEE PAYABLE REMARKS

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CHAPTER FIVE 5.0 FINANCIAL PLANNING Introduction This section will be highly scrutinized by potential investors, financiers, and other stakeholders. In this regard this chapter must be thoroughly and convincingly written in all aspects. Document the need for funds accurately, and realistically. Detail how you will use them and how they will help ensure your businesss success. Show that your projections and statements are realistic, based on sound economics, comparables and revenue data. Support your cash flow projections with accurate data figures and reasonable assumptions. One of the most important steps in launching a new business venture is fashioning a well designed logical financial plan. Potential lenders and investors demand such a plan before putting their money into a start-up business. More important the financial plan is a vital tool that helps entrepreneurs manage their business effectively, steering away from pitfalls that cause failures. The financial plan is basic to the evaluation of an investment opportunity, and it should represent the entrepreneurs best estimates of future operations your best judgments of the results you believe are realistic and attainable. The purpose of financial plan is to indicate the ventures potential and its timetable for financial viability. The financial plan can also serve as an operating plan for financial management of the venture. There exists various new spreadsheet programmes, such as VisiCalc, MultiPlan, and their clones, have been invaluable time savers in modeling the financial requirements necessary to execute the opportunity. Thus, if you have access to a personal computer, you could enter the spreadsheet programme model into your personal computer. These programmes enable you, much more readily than by hand, to apply the relevant financial benchmarks to your venture, in order to evaluate the realism and relevance of your estimates. In addition, it has been found that such programmes can greatly enhance creativity with which you look at your venture and the development of alternative ways of launching it. In case of an existing business seeking expansion capital, income statements and balance sheets for the current and prior two years should be provided in addition to these estimates. After you have completed the preparation of the financial statements, briefly highlight in writing the important conclusions that can be drawn. These might include the maximum cash requirement and when it will be reached, when you will reach the break-even and positive cash flow, the amount of debt and equity needed the levels of profits as a percentage of sales, how fast any debts are repaid, and so forth. Specify the assumptions behind the business plan, such as how you estimated sales level and growth, collections and payables periods, days inventory requirements, minimum cash balance, cost of goods, and other line items comparable to the profitability ratios. 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 Financial Plan Objectives Pre-operational Costs or Expenses Operational Costs or Expenses Estimation of Working Capital Preparation of Pro-forma Cash Flow Preparation of Pro-forma Income Statement(s) Preparation of Pro-forma Balance Sheet(s) Calculation of Break-even Point Calculation of Profitability Ratios Page 16 of 31

5.10 5.11

Desired Financing Proposed Capitalization

5.1 Financial Plan Objectives State the specific objectives covering such areas as return on capital employed, profit growth, gross margin, gearing on liquidity. More importantly one should try to cover all the sections in the business plan in the setting of the financial plan. The objectives must be specific, measurable, attainable or achievable, realistic and time-bound. 5.2 Pre-Operational Costs or Expenses Determine the amount of cash that will be spent prior to start-up. A table has been provided to assist you with the task of developing the pre-operational costs. State all the costs all your expected costs or expenses to be incurred. These refer to all the expenses of the total amount of cash that will be spent prior to the business start up. This section assists the entrepreneur to forecast or plan for the expected expenses that the business may incur during the preparation process before start-up. 5.2.1 Pre-operational Costs or Expenses Table
ITEM / PARTICULARS Deposit on utilities Computers Furniture Printers Licenses and permit Advertisement/promotion Stock Transport Market Survey Meeting People Photocopying Installations Miscellaneous Others (Specify) TOTAL AMOUNT

5.3 OPERATIONAL COSTS OR EXPENSES This section discusses all the estimated monthly expenses based on the itemized expenses. 5.3.1 Operational Costs or Expenses Table
YEAR 1 YEAR 2 YEAR 3 EXPENSES Salaries and wages Rent Electricity bill Water Bill Telephone bill Stationary Advertisement Loan Interest on Loan Repairs and maintenance Insurance Purchases Transport Postage License and permit Miscellaneous Others (Specify) TOTAL

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5.4 ESTIMATION OF WORKING CAPITAL This section provides the estimated capital required during the first three years of business operation. State any assumptions you made in arriving at your figures. The working capital deals with the current accounts listed in the balance sheet that is current assets and current liabilities. Every account shown on balance sheet labelled current such as cash, accounts receivable notes receivable accounts payable and notes payable is part of working capital. Networking capital is defined as the difference between current assets and current liabilities. That is Networking Capital = Current Assets Current Liabilities. Many people think of a business in terms of land, buildings, equipment, and machinery. These are hard or fixed assets, but in many businesses, approximately 50 percent of these assets are made up of currents assets. Many businesses collapse because of poor working capital management. Working capital management means the management of individual current accounts and ensures that there is good interrelationship between them. Excess current assets mean a drain on profit and can be a source of undue risk. Too little current assets on the other hand may entail revenue loss since a shortage of inventory for example may mean that goods wanted by customers are not readily available. 5.4.1 Estimation of Working Capital Table
PARTICULARS Current Assets Stock of raw materials Work in progress Stock of finished goods Debtors Cash at bank Cash in hand TOTAL CURRENT ASSETS Less Current Liabilities Current Liabilities Creditors Insurance Tax payable Accrued wages Others (Specify) TOTAL LIABILITIES NET WORKING CAPITAL YEAR 1 YEAR 2 YEAR 3

5.5 PREPARATION OF PRO-FORMA CASH FLOW This is a forecast of when and by what means you expect to receive income and when to you will have to make payments to others. The pro-forma cash flow should be prepared for three years, the first cash low should cover one calendar year, and then the consequent cash flows should be prepared on quarterly basis. The purpose of the forecast is to highlight changes in the level of income and the times when you cash is most needed, so that you will be able to predict and plan your funding requirements. Once the cash flow forecast is prepared, the entrepreneur is required to analyse it to determine the status of the accumulative balance line of the statement. If the accumulative cash balance does not drop below zero, then no additional cash is needed, if the accumulative cash flow is a negative balance at the end of any month, then additional cash is required. NB: All the projections must be based on realistic expectations.

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The objective of this section is to forecast when money will flow into and out of your business so that the business will be in a position to pay its bills and manage its cash flow efficiently. In this connection, a major planning and management tool is a well prepared sheet which shows, month by month, how much money is flowing in or out. Once you have fully prepared your cash flow forecast, you must analyse it to determine whether or not the accumulative balance line of the statement drops below zero. If it doe not drop below zero then no additional funds are required, if the accumulative cash flow has a negative balance at the end of any month, then additional funds will be required. The amount of funds required will be equivalent to the largest negative amount that appears in any month in the accumulative balance line. Most importantly the projections must be based on realistic expectations. For a new venture the cash flow forecast can be more important than the forecast of profits because it details the amount and timing of the expected cash inflows and outflows. Usually the levels of profits, particularly during the start-up year of a venture, will not be sufficient to finance assets needs. Given a level of projected sales and capital expenditures over a specific period, the cash flow forecast will highlight the need for and timing of additional financing and will indicate the peak requirements for working capital Discussion of Assumptions This should include assumptions made on the timing of collections of receivables, trade discounts given, terms of payments to vendors, planned salary and wage increases, anticipated increases in any operating expenses seasonality characteristics of the business as they affect inventory requirements, inventory turnovers per year, and capital equipment purchases. Thinking about such assumptions when planning your venture is useful for identifying issues that may later require attention if they are not to become significant problems. Cash Flow Sensitivity Once cash flow forecast has been completed, discuss the implications for cash needs that possible changes in some of the crucial assumptions would have, for example, an increase in the receivable collection period or sales below forecasts. This will enable you to test the sensitivity of the cash budget to a variety of assumptions about business factors and to view a wider range of possible outcomes. Investors are vitally interested in this because it helps them to estimate the possibility that you will need more cash sooner than planned. Cash Flow Analysis Cash flow is essentially the movement of money into and out of business; it is the cycle of cash in flows and cash out flows that determine your business solvency. Cash flow analysis is the study of the cycle of your business cash inflows and out flows with purpose of maintaining an adequate cash flow for your business and to provide a basis for cash flow management. Cash flow analysis involves examining the components of your business that affect cash flow such as accounts receivable accounts payable inventory and credits terms. By performing a cash flow analysis on these separate components you will be able to more easily identity cash flow problems and find ways to improve your cash flow. A quick and easy way to perform a cash flow analysis is to compare the total unpaid purchases to the sales due to at the end of each month. If the total unpaid purchases are greater than the total sales due, you will need to spend more cash than you receive in the next month, indicating a potential cash flow problem.

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5.5.1 Preparation of Pro-forma Cash Flow Table Projected Cash Flow for the Year Ending 31st December, 20xx MONTHS
PARTICULARS Cash Balance CASH IN FLOW Add Cash Sales Collection form Debtors Loan Others (Specify) TOTAL CASH IN FLOW (1) CASH OUT FLOW Pre-operational Expenses Cash Purchases Payment to Creditors Wages and Salaries Rent Water Bills Telephone Bills Electricity Bills Transport Stationary Postage Loan Repayment Interest on Loan Repairs and Maintenance Advertising Taxes Others (Specify) TOTAL CASH OUT FLOW (2) NET CASH FLOW (1)-(2) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

5.6 PREPARATION OF PRO-FORMA INCOME STATEMENT(S) Your pro-forma income statement projections must be based on accurate and realistic data expectations. Be prepared to support all your data for at least a period of three years. On annual bases (depending on the choice of the proprietor) reflect projected income statement realistic, optimistic as well pessimistic expectations. The pro-forma income statement summarizes all revenue and expenses for an accounting period, and calculates after tax income for the period. It deals with both cash and non-cash items. When sales exceeds expenses, then the business is said to be making profits, and when the expenses exceeds sales then the business is said to be making a loss. Page 20 of 31

The income statement (or profit and loss statement or P & L) compares expenses against revenue over a certain period of time to show the firms net profit or loss. The income statement ismoving picture of the firms profitability over time. The annual Profit and Loss statement reports the bottom line of the business over the fiscal or calendar year. The income statement is perhaps the more important of the two statements, that is, income statement and balance sheet. It shows how far the business has achieved or failed to achieve its primary objective of earning a profit. The statement summarises the revenue generated over a specific period and the expenses incurred in generating that revenue to disclose the net resulting position of either profit or loss. Net profit results when revenue generated exceeds the costs and net loss when the costs exceed revenue. The income statement differs in detail between businesses depending on their size and type. There are five specific steps to calculate, to determine the Profit and Loss statements. Revenue / Sales: The revenue figure in the income statement is the value of total sales; the quantity of sales multiplied by unit selling price. Revenue also called sales income is received by a business either in cash or credit. It is important to note that revenue is recognized when a sale is made whether payment has been received or not. Revenue is therefore recorded even where goods are sold on credit. The sale revenue figure in the income statement includes all sales that have been due or received. Revenue is sometimes stated as net sales revenue where some of the goods sold may have been rejected or returned and have been deducted from the total sales. Cost of goods sold: is the price paid by the business for merchandise or goods sold; it can be computed by adding the value of goods purchased during the period to the beginning of the stock. (Beginning stock figure can be obtained from the previous income statement), and then subtracting the value of the stock on hand at the period. Alternatively, cost of goods sold is the total of the costs incurred in the purchase or production of the goods that have been sold during an accounting period. In a small trading business where all goods purchased are sold and no stocks remain at the end of the period, the cost of goods sold is simply the total purchase price plus any transport charges paid on the goods. As a business grows, purchases are made in larger amounts and stocks are carried of goods that have not been sold by the end of the period. The costs of goods sold then include the cost of purchases in the period plus any stocks brought forward from the previous period and less any stocks of the goods remaining unsold at the end of the period. Gross profit: Gross profit is the amount by which the sales revenue for the period exceeds the cost of goods sold. Calculated by subtracting, the value of the stock on hand at the end of the period. The gross margin indicates how efficient a business has been in purchasing or manufacturing the goods sold. A business could also make a gross loss if the cost of goods sold or manufactured exceeds the total revenue from sales. Expenses: Expenses are the costs of performing the services or sales to generate revenue. As in the case of revenue, the expenses are recognized when incurred. The figure in the income statement includes all costs incurred by the business during the trading period even where the business has not made payment. Includes labour costs and other costs of operating the business Page 21 of 31

Net profit: Amount remaining when the expenses are deducted from the gross profit. These figures indicate whether you are operating at a profit or a loss. Generally Profit and Loss account has two major sections the SALES and the EXPENSES. 5.6.1 Preparation of Pro-Forma Income Statement Income Statement for the Year Ending December 31, 20xx PARTICULARS Sales Less cost of goods sold Gross Profits LESS EXPENSES Pre-operational cost Salaries and wages Electricity bill water bills Telephone bill Advertisement Transport Licenses and permit Stationary Rent Maintenance & repair Insurance Loan repayment Interest on loan Postage General expenses Depreciation Other (Specify) Total Expenses Net Profit Before Tax Less provision for tax Net Profit After Tax YEAR 1 YEAR 2 YEAR 3

5.7 PREPARATION OF PRO-FORMA STATEMENT OF FINANCIAL POSITION The statement of financial position is a summary of the balances of assets and liabilities of the business at the end of a specific period. It shows the financial position of a business, what a business owns and what it owes and is often referred to as statement on financial position. What a business owns are the assets. What it owes are the various liabilities and the owner equity. In other words, the statement of financial position shows the assets of the business and how they have been financed. The financing is through borrowing and funds invested by the owner(s) of the business in share capital. The statement of financial position is so called because the total of the liabilities and owner(s) equity should always equal the total of the business assets; the financing equals the cost of the assets. The balance sheet therefore always balances. The statement of financial position are used to detail the assets required to support the projected level of operations and, through liabilities, show how these assets are to be financed. Investors and bankers look to the projected statement of financial position to determine whether debt-toequity ratios, working capital, current ratios, inventory turnover, and so forth are within the acceptable limits required to justify the future financings that are projected for the venture. Page 22 of 31

The balance sheet takes a snapshot of a business, providing owner(s) with an estimate of the firms worth on a given date. Its two major sections show the assets a business owns and the claims creditors and owners have against those assets. The statement of financial position is usually prepared on the last date of the month or year. The statement of financial position is prepared on this fundamental equation: Assets = Liabilities + Owners Equity (capital) Any decrease or increase on one side of the equation must be offset by an equal increase or decrease on the other side; hence, the name balance sheet. It provides a baseline from which to measure future changes in assets, liabilities and equity (or net worth). The first section of statement of financial position shows assets current assets consist of cash and items to be converted into cash within one year or within the normal operating cycle of the firm. Fixed assets are those acquired for long term use in the business. The second section the businesss liabilities: creditors claims against the firms assets. Current liabilities are those debts that must be paid within one year or within the normal operating cycle of the business. Long time liabilities are those that come due after one year. The final section of the balance sheet shows the owners equity, the value of the owners investment in the business. It is the balancing factor on the balance sheet, representing all the owners capital contributions to the business plus all accumulated earnings not distributed to the owner(s) 5.7.1 Preparation of Pro-forma Financial Position Statement Pro-Forma Statement of Financial Position for the Year End December 31, 20xx
ASSETS Current Assets: Cash Debtors Stock (of finished goods) Stock (of raw material) Total Current Assets Fixed Assets: Machinery & Equipment Accumulated depreciation Vehicle (cost) Accumulated depreciation Furniture and Fittings Other (specify) fixed assets (cost) Accumulated depreciation Total Fixed Assets TOTAL ASSETS Liabilities: Creditors Other (specify) Liabilities Total Current Liabilities Long Term Liabilities: Bank loan Other (specify) Owners Equity TOTAL LIABILITIES AND EQUITY YEAR 1 YEAR 2 YEAR 3

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5.8 CALCULATION OF BREAK-EVEN POINT Break-even point is that point where the business neither makes profits nor loss after meeting all its obligations or in other words after the business has paid what it owes others. It is above this point that the business starts to make profit and below this point that the business begins to make losses. The variables or factors used to establish the break-even point are the fixed costs variable costs and sales. Fixed costs are all those costs that do not change whether the business is in operation or not. Such as rent, salaries & wages, land rates etc. Variable costs are all those costs that change or vary depending on the intensity of business operations or production such as electricity, water, purchases, repairs etc. Sales are the revenues acquired after selling the end products or services to the market. 5.8.1 Summary of the Fixed Costs, Variable Costs and Sales Table
PARTICULARS Total Sales Fixed Costs Salaries and wages Rent Insurance License and permit Loan repayment Interest on loan Total Fixed Costs Variable Costs Pre-operational costs Electricity bill Water bill Telephone bill Advertisement Transport Stationary Maintenance and repair Postage General expenses Total Variable Costs YEAR 1 YEAR 2 YEAR 3

5.8.2 Break Even Point Calculation Table

ITEM Break-Even Point Total Fixed Costs 1- (Variable Costs / Sales) FORMULA YEAR 1 YEAR 2 YEAR 3

5.9 CALCULATION OF PROFITABILITY RATIOS Profitability calculations reflect the relationship between profit and sales and investments in relation to the competitors and the entire industry. Current Assets ratio =Current Assets/Current liabilities Page 24 of 31

Gross profit margin = gross profit /sales * 100 Net profit margin = Net profit /sales* 100 Return on owners equity =Net profit /owners equity *100 Return on capital employed = Net profit/capital employed*100 Acid ratio = current assets-stock/current liabilities Stock turn over ratio= sales/Average stock Asset turn over ratio = sales /net assets

5.9.1 Calculation of Profitability Ratios Table ITEM No. RATIO 1 2 3 Profitability ratio FORMULA YEAR 1 YEAR 2 YEAR 3

Net profit x 100 Sales Net profit x 100 Return on total assets Total assets Net profit x 100 Return owners equity Owners equity

5.10 DESIRED FINANCING Desired financing shows all the needed funds needed by an entrepreneur when starting a business to ensure that there is no under financing the business. 5.10.1 Desired Financing Table PARTICULARS Pre-operational Expenses Working Capital Fixed Assets TOTAL DESIRED FINANCING 5.11 PROPOSED CAPITALISATION Capitalization refers to the total capital structure of the business. 5.11.1 Proposed Capitalization Table PARTICULARS Total Investment Owners Contribution Borrowed Funds AMOUNT

AMOUNT

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A.

COVER

The cover page provides the basic but very important information about the business plan. The cover page must include the following: Business name (Name of business, addresses, phone numbers, e-mail etc) Business logo Project Title Name of Presenter Index number of presenter To whom its being Submitted

SAMPLE COVER PAGE

VUYANZI COMPUTER SERVICES P.O BOX 2994 20100 NAKURU TELEPHONE: 051 2212596 CELLPHONE 0725 56 58 56 E-MAIL: vuyanzi@yahoo.com

BUSINESS PLAN PAPER CODE: XXXX/307B

SUBMITTED BY: SOMEONE ELSE INDEX NO: XXXXXX/XXX

SUBMITTED TO: THE KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL FULFILLMENT FOR THE AWARD OF DIPLOMA IN COMPUTER STUDIES

MONTH YEAR (NOVEMBER 2011) UFUNDI INSTITUTE OF SCIENCE AND TECHNOLOGY P.O. BOX 2994 - 20100 NAKURU

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B.

DECLARATION

This page allows the student to declare the originality of the business. The student is also allowed to own the document. The declaration should read as follows: I declare that this business plan project is my original work and has not been submitted for examination or any award of Diploma in Computer studies or any other certificate in any Institution of higher learning or the Kenya National Examination Council. Signature: SOMEONE ELSE CANDIDATE DATE: UFUNDI INSTITUTE OF SCIENCE AND TECHNOLOGY This project has been submitted for examination to the Kenya National Examination Council with the approval of my supervisor. Signature: WAMBUGU NGATIAH WAMBUGU SUPERVISOR DATE: UFUNDI INSTITUTE OF SCIENCE AND TECHNOLOGY

C.

DEDICATION

In this section the candidate is required to bestow or consecrate or devote the work or the project to a special personality to the writer.

D.

ACKNOWLEDGEMENT

In this section the candidate is required to recognize the efforts of all those personalities of may in one way or another could have assisted or guided the candidate during the preparation period of the business plan.

E.

TABLE OF CONTENTS

The table of contents provides the navigation map to the entire document. The titles and their subsequent pages are provided in this section. Below is a sample of the table of contents. Illustrated below is a sample of a table of contents. The table of contents must be in tandem with your business plan. All your topic/titles, tables and figures must be reflected in the table of continents.

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TABLE OF CONTENTS EXECUTIVE SUMMARY CHAPTER ONE 1.0 BUSINESS DESCRIPTION 1.2 BUSINESS NAME, LOCATION, ADDRESS AND LOGO 1.3 FORM OF BUSINESS OWNERSHIP 1.4 TYPE OF BUSINESS 1.5 PRODUCTS/ SERVICES 1.6 JUSTIFICATION OF OPPORTUNITY 1.7 INDUSTRY 1.8 GOALS OF THE BUSINESS 1.9 ENTRY AND GROWTH STRATEGY CHAPTER TWO 2.0 MARKETING PLAN 2.1 MARKETING OBJECTIVES 2.2 CUSTOMERS 2.3 MARKET SHARE 2.4 COMPETITION 2.5 METHODS OF ADVERTISEMENT AND PROMOTION 2.6 PRICING STRATEGY 2.7 SALES TACTICS 2.8 DISTRIBUTION STRATEGY CHAPTER THREE 3.0 ORGANIZATION AND MANAGEMENT PLAN 3.1 ORGANIZATION AND MANAGEMENT OBJECTIVES 3.2 BUSINESS MANAGER AND QUALIFICATIONS 3.3 OTHER PERSONNEL 3.4 RECRUITMENT, TRAINING AND PROMOTION 3.5 REMUNERATION AND INCENTIVES 3.6 LICENSES, PERMITS AND BY LAWS 3.7 SUPPORT SERVICES 3.8 MANAGING CHANGE CHAPTER FOUR 4.0 OPERATIONAL/ PRODUCTION PLAN 4.1 OPERATIONAL/ PRODUCTION OBJECTIVES 4.2 PRODUCTION /OPERATIONAL FACILITIES AND CAPACITY 4.3 OPERATIONAL /PRODUCTION STRATEGY 4.4 OPERATIONAL / PRODUCTION PROCESS 4.5 REGULATIONS AFFECTING OPERATIONS CHAPTER FIVE 5.0 FINANCIAL PLAN 5.1 FINANCIAL OBJECTIVES 5.2 PRE OPERATIONAL COSTS 5.3 ESTIMATION OF WORKING CAPITAL 5.4 OPERATIONAL EXPENSES 5.5 PREPARATION OF PROFORMA CASH FLOW STATEMENTS Page 28 of 31

5.6 5.7 5.8 5.9 5.10 5.11

PREPARATION OF PROFORMA INCOME STATEMENT PREPARATION OF PROFORMA STATEMENT OF FINANCIAL POSITION CALCULATION OF BREAK EVEN POINT PROFITABILITY RATIOS DESIRED FINANCING PROPOSED CAPITALIZATION

F.

EXECUTIVE SUMMARY

The executive summary appears just before chapter one, however it is written last. The executive summary is a short description of the venture that the reader should encounter. It should be written in an interesting way with proper emphasis placed on the more important aspects of the business plan, such as the unique characteristics of the venture, the major marketing points, and the end results desired. Its purpose is to whet the readers appetite for more information. A good summary will guarantee that the rest of the plan will be read and taken seriously. The executive summary should be done under the following titles: 1.0 2.0 3.0 4.0 5.0 BUSINESS DESCRIPTION MARKET PLAN ORGANIZATION AND MANAGEMENT PLAN OPERATIONAL AND PRODUCTION PLAN FINANCIAL PLAN

G.

APPENDICES

Appendices are the annexure or affixtures or addendum, put at the end of a business plan or a document to support or illustrate the information provided in the main body of a business plan. These annexure should be done in respect to each chapter.

H.

REFERENCES / BIBLIOGRAPHY

These references or bibliography will include all the reading materials that the candidate may have used or referred to during the preparation of the business plan. The APA method of referencing is the mostly recommended method. Reference List Your reference list should appear at the end of your paper. It provides the information necessary for a reader to locate and retrieve any source of your information that aided you in developing your business plan. Each source of your information that assisted you in developing your business plan must appear in your reference list. Your references should begin on a separate page from the main text body of the business plan under the label References (with no quotation marks, underlining, etc.), centred at the top of the page. It should be double-spaced just like the rest of your text. Basic Rules Authors' names are reversed (last name first); give the last name and initials for all authors of a particular work unless the work has more than six authors. If the work has more than six authors, list the first six authors and then use et al. after the sixth author's name to indicate the rest of the authors.

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Reference list entries should be alphabetized by the last names of the first author of each work. If you have more than one article by the same author(s), single-author references or multiple-author references with the exact same authors in the exact same order are listed in order by the year of publication, starting with the earliest. Referencing of a non-periodical (e.g., book, report, brochure, or audiovisual media) Author, A. A. (Year of Publication). Title of work: Capital letter also for subtitle. Location: Publisher For example: Kuratko, D.F. & Hodgetts, R. M. (2004). Entrepreneurship: Theory, Process, and Practice, Sixth edition. Ohio USA: Thomson Learning. NOTE: For "Location," you should always list the city, but you should also include the state if the city is unfamiliar or if the city could be confused with one in another state. Spacing and Type The manuscript and abstract must be double-spaced except for footnotes or long quotations. New Times Roman Fonts is commonly used in preparation of academic write-ups. The same type must be used throughout the body of the text. The font size must be 12 point. Chapter, section, or other headings should be of a consistent font and size throughout the manuscript, as should labels for illustrations, charts, and figures. Margins The business plan must have a margin of 1 inches on the left side of the page - the binding side. The other three (3) sides of the page, top, right side and bottom, must have a one 1 inch margin. This requirement applies to all portions of text (including footnotes/endnotes), as well as to pages containing charts, graphs, tables, photographs and appendices. When landscaping page orientation for a chart or table, for example, the binding side must maintain the 1 inch margin. For landscape, that would be at the top of the page. Pages should be planned to maintain the required margins. If charts, graphs, or illustrative materials are too large to fit within the required margins, photo reduction may be used. No letter or symbol should be less than 2mm in size. Pagination Each page in the manuscript, including all blank pages must be assigned a number. Each page must be numbered within the margin. All numbers must be centred at the bottom of the page. For the front matter, (declaration page, dedication page, acknowledgments page, table of contents and executive summary.) use small Roman numerals (ii, iii, iv, etc.). The numbering begins with the declaration page as ii, the cover page counts as i, but the number does not appear. For the remainder of the manuscript, including text, illustrations, appendices, and bibliography, use Arabic numerals (1, 2, 3, etc.). The numbering begins with one (1) and runs consecutively to the end of the manuscript. Do not use suffixes to the Arabic numerals. If the description of an illustration or table is too long to be placed on the same page, it should be placed on the previous page and numbered accordingly. Pages containing charts, graphs, tables, or photographs must be numbered consecutively with the text. Use only one side of each page. Place front sides up. No facing pages are permitted in the business plan, either in the text or in charts, photographs, or other non-text contents.

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Charts, Graphs, Tables, Illustrations, and Photographs All charts, graphs, photographs, and tables must conform to the margins, font, size, and pagination rules as stated. When materials span more than one page, follow the style manual rules to denote continuation. Refer also to section above on Margins for landscape page orientation and section on Special Addenda if oversized pages cannot be legibly reduced. Corrections It is the students responsibility to find and correct errors before submitting the work. All corrections or changes should be made with the professional appearance of the final product in mind. When word processing is used, a corrected page should be substituted for any page on which an error has been found or a change required. If a typewriter is used, the page in question should be retyped unless a 6 virtually invisible correction can be made with lift-off tape. Cover Page The cover page should be written in all capital letters and centred within the left and right margins, double spaced, approximately two (2) inches from the top of the page. PLAGIARISM To submit a paper to an instructor that is not truly the product of your own mind and skill is to commit plagiarism. Bluntly put, plagiarism is the act of stealing ideas and/or the words of another and representing them as your own. It is a form of cheating and a kind of academic dishonesty which can incur severe penalties. Accurate and honest quotation and footnoting is the mark of a good writer. Professional writers always give credit where credit is due. Plagiarism. TCC English Department. If you plan for a year, sow a seed. If you plan for a decade, plant a tree. If you plan for a century, educate the people. (A Chinese proverb) For future enquiry contact: Wambugu Ngatiah Wambugu Senior Lecturer (Entrepreneurship Development) Kiambu Institute of Science and Technology Cell phone 0733/0725-56 58 56 E-mail:wnwambugu@yahoo.com or wnwambugu@kist.ac.ke GOD BLESS

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