Business Plan

This is a written document that highlights the objectives of the business and steps to be followed in order to achieve these objectives. It indicates where the business is, where it wants to move to, how and when.Contents of a good business plan

1. Name of the business
2. The product to be sold or produced
3. Personnel to manage the business
4. Amount of finance and other resources required
5. The market to be served (customers)
6. Types of employees required
7. Projection (level of achievement in future in terms of profit)
8. Summary of the plan.

Need for the business plan

i. A business plan is necessary to an entrepreneur for the following reasons:

ii.Avoiding mistakes

ln the process of drawing a plan; mistakes that would take place in the business are identified and corrected in the plan.

This helps in avoiding the occurrence of such mistakes in the business.

iii. Identifying strength and weaknesses

A business plan helps in identifying strengths or weaknesses and where weaknesses are detected, remedial actions may be taken early enough.

iv.Requirement by financiers

Financial institutions such as banks may require a business plan before they can accept to finance the activities of the business.

v. Allocation of resources

It helps to determine the resources required and plan on how and where to use them. This ensures that resources are neither underutilized nor used for the wrong purpose.

vi. Facilitates business evaluation

A business plan helps an entrepreneur to
assess the progress of the business and any deviation (difference) from the intended plan can be corrected in good time.

vii. It helps an entrepreneur outline competition

It helps the entrepreneur to be fully aware of the market she or he plans to operate in, understand important trends and know who her/his competitors are and their strengths and weaknesses.

This information aids the entrepreneur to develop products that are better than those of the competitors.

viii. A motivating factor

A business plan is communicated to all employees
in the business. This makes them aware of the direction to be taken by the business.

This motivates them to work towards that direction.

ix. Adaptability

Normally, not all events occur as predicted in the business plan. However, a well drawn business plan should give room to
accommodate any changes that might occur in the future.

x. Tool for control

Planning involves setting of standards against which performances can be assessed. In case of deviation corrective measures can be taken.
Factors that influence entrepreneurship practices
There are many conditions or factors which may encourage or discourage entrepreneurship. Some of these factors are:

i. Government policy

Some government policies are favourable to the
operations of the business and thus encourage people to go into business while other policies may be unfavourable and will discourage people
from going into business. E.g. higher taxes are unfavourable hence discouraging.

ii. Infrastructure

infrastructure includes transport and communication networks, water, security e.t.c. Availability of good infrastructure in an area tends to encourage people to set up businesses while poor infrastructure tends to discourage them

iii. Levels of education and skills

Relevant and appropriate knowledge and
skills are necessary if the business has to succeed. These are acquired through education, training or experience.

iv. Availability of markets

Adequate markets encourages existing
entrepreneurs to continue producing and also encourage/attract new ones to venture into business.

v. Availability of resources

Appropriate resources are necessary for starting and smooth running of a business. These resources include physical, human, capital and technology.

vi. Cultural and social beliefs and attitudes

These are norms, values and beliefs of a given community. Culture helps determine the kind of goods and services that people consume. this in turn, dictates the type of businesses to be established in such communities.e.g Muslims do not take pork therefore businesses selling pork will not do well in such communities.

vii. Competition

Businesses will do well if they are able to complete favourably. Others will avoid competition by establishing businesses where there is no competition.

viii. Political stability

political stability gives conducive atmosphere for businesses to start and thrive on the other hands, where there is no political instability, businesses may not do well and entrepreneurs may
close down businesses or new ones may not come up.

ix. Natural factors

Natural factors such as rainfall, temperatures,
earthquakes, pests, drought e.t.c. may influence the type of businesses that are carried out in an area, especially agricultural businesses.

x. Presence of role models in the society

The presence of successful entrepreneurs acts as an encouragement to aspiring entrepreneurs.

Causes of Business success

A business is considered as being successful if it makes consistent profit and experiences progressive growth in the scale of its operations.Some of the factors that lead to the success of business may include:

(i) Right choice of business

A good business opportunity needs to be evaluated on the basis of ability to capture many customers, make reasonable profit for the owner(s) and provide an opportunity for growth. Making the right choice of a business or product ultimately contributes to the success of a business.

(ii) Proper managerial skills

An entrepreneur should be able to carry out
management roles effectively.

A good manager will carry out roles such as;

a) Hiring staff The process of acquiring new employees to take up new positions or to replace employees who have left the business.

b)Assigning dutiesAllocating employees duties according to their qualifications.

c)Supervising Ensuring that employees carry out tasks that are assigned to them

d)Training Enabling employees to acquire knowledge and skills necessary to perform duties assigned to them.

)Motivating-giving employees inducement to perform their duties.

(iii) Proper location/availability of customers The business should be situated in a place convenient for its operations e.g. where customers are easily available.

(iv) Adequate finance/capital

Money is needed to acquire other resources that are required by the business. A business that has adequate capital is likely to do well as it is able to finance all its operations.

(v) Lack of competition

Most businesses are put out of operation by stiff competition. Therefore, a business operating in an area where there is little or no competition is likely to succeed.

(vi) Commitment to business

(vii) Proper financial management

Proper management of finances is necessary for the success of the business. It ensures that money is available and is used for the intended purpose.

Management of finances includes:

a) Acquisition of finances

This involves raising of the required amounts of money. This can be done through a variety of ways such as loans from financial institutions and owner’s contributions.

b) Managing cash

This ensures that the available money is only used for the activities that are beneficial to the well being of the business.

c) Proper record keeping

This involves having a record of finances raised and how they are used.

(viii) Proper debt management

Care should be taken to ensure that credit is only extended to credit worthy customers (credit worthy customers are those whose chances of paying are high).Debt collection should also be
carefully planned to ensure that they are collected when due.

(ix) Good public relations

This involves creating and improving a good relationship between the business and other people. Good relations are necessary for attracting and retention of customers.

(x) Being creative and innovative

This involves finding new uses of a product, new channels of communication and new ways of doing things.This enables the entrepreneur to be ahead of others.

(xi) Proper market research

The business environment usually changes at a
high rate. This makes it necessary for an entrepreneur to study his/her customer’s preferences, tastes, spending patterns, income levels, competitions, and behavior and substitute products.

(xii) Good/proper time management

Time management is the ability to carry out planned activities within the allocated period.

(xiii) Proper skills and attitudes of employees

Employing qualified staff results in work being done in a professional manner. This enhances the performance of the business.

(xiv)Proper pricing of goods and services

Pricing should be done appropriately. If the prices for the products are too high, the business will lose customers. Very low prices may attract customers but kill the business.

It is therefore important to create a balance between price to charge and the profit margin to realize.