Why we should Write A Business Plan For your Nigerian business Start-up. Like the saying goes He/she who fails to plan has already planed to fail and as some entrepreneurs would tell you starting a business venture is like going into a tropical forest on a treasure hunt; with rewards to be won, both in material wealth and in personal satisfaction, but there are dangers lurking and you can easily lose your way.
To avoid losing and possibly facing the dire consequences associated with losing, a lot of planning ought to be taken before dabbling into enterprise start up. One of such precautionary measures is to write a business plan. There is this popular saying – look before you leap, in setting up a business, preparing a business plan helps to serve the purpose of looking before leaping.
Our business plan and feasibility studies would help you scale through many questions about a proposed business project. According to Abrams (2009), a business plan is expected to answers the following question:
What is your business idea or what is your existing business?
Who are your existing and /or potential customers and what motivate them to buy from you?
How will you let your customer know about your business?
Who are your competitors and how are you different from them?
How will you carry out the basic functions of your business?
Is your management team capable of guiding your business to success?
What is the long – range future of your business?
What is your company’s financial picture?
How much money will it cost to set and run your business and how much money will you make?
How To Write A Business Plan in Nigeria
The structure of a business plan.
Ordinarily, a business plan is usually structured to contain the following major topics and sub-headings:
1.0 Executive summary
- Vision and mission statements
- Legal status
- Location and facilities,
- Production plan
- Business strategy
- Key success factors
- Nature and size
- Target market
- Key competitors and players
- Service delivery
- Quality assurance
- Demand/supply analysis
- Competitive edge
4.0 Marketing Plan
- Promotion and distribution strategy
- Market positioning
- Market positioning
- Service delivery strategy
- SWOT Analysis
5.0 Organization and Management
- Organizational structure
- Shareholders and directors
- Management team
- External support
- Personnel plan
- Value and norms of the company.
6.0 Legal, regulatory, social and environmental issues
- Legal issues
- Regulatory issues
- Social issues
- Environmental issues
7.0 Financial Plan
- Forecast of sales
- Estimate of costs
- Working capital projection
- Startup capital required
- Proposed financial structure
- Loan repayment and interest payment schedule
- Projected profit and loss account
- Cash flow projection
- Projected balance sheet
- Financial analysis
8.0 Risk Analysis, Contingency Plan and Exit Strategy
- Risk analysis and mitigants
- Contingency plan
- Exit strategy
9.0 Other considerations, conclusion, and recommendation,
- Economic justification
- Commercial viability
- Conclusion and recommendation.
- Photocopy of certificate of incorporation
- Assumptions behind the figures.
The above are discussed in the sections that follow.
How To Write A Business Plan in Nigeria
1.0 Executive summary.
The executive summary can easily pass as the most critical aspect of a business plan especially where outside funding is sought (Abrams, 2009). As the name implies, the executive summary presents a summary of the important facts in the business plan. It should be noted that although the executive summary is the first part of the business to be presented, it is usually the part to be prepared last.
As one prepares the executive summary, it is important to bear in mind that the plan is mainly going to be read by individuals who: are being asked to invest their resources in the business (angle investors); bankers, and other would be stakeholders who probably have other business plans to read. In fact, an ideal executive summary should be concise, but must have the important highlights that the investors, bankers and others who the plan is being prepared for are looking for. To make the executive summary appealing, the following tips have been suggested by Abrams (2009):
- Divide the summary into paragraphs that mirror the sections of the business plan.
- Keep each topic brief.
- Use bullets to highlight your most compelling information.
- Include a small chart or graph if it makes an important point clear.
- Use white space and informative subheads to break up text blocks and make pages seem less intimidating.
Ideally, the important issuer in the executive summary could be presented as shown below:
- Give the basic information about your business.
- In a very brief but clear way, the products and or services to be offered by the business are discussed.
- Individuals who are used to analyzing a business plan are interested to know your target market. Who are the customers? To be credible here, you can include a summary of the underlying market research results.
- It is very important for you to identify who the competitors are. If you know the relative market share of the competitors, you should state it. In a short and direct way, state what competitive edge your business has.
- Marketing plan gives a brief highlight, of the marketing and sales strategy. Essentially you need to say how you will market and sell your products and or services.
- Outline the operational features define your business and make it unique. You are to state the critical operational features of your business.
- State the key members of your management team and their qualifications – briefly stating the nature of the experience each brings into the business.
- Is there any legal or regulatory issue pertinent to the success of the business? This must be highlighted together with the accompanying environmental issues.
- Almost all stake holders would be interested to know the expected financial performance of the business. You are therefore expected to state the company’s expected gross sales and net profits. Stating the outcome of some ratio analysis will be of good help.
- You have to show the total required investment and the proposed financial structure.
How To Write A Business Plan
3.0 Company background.
In this part of this business plan – basic details about the business plan is provided. Unlike the executive summary which strives to persuade readers of the expected success of the business, the background or company description provides all necessary specific information about the business. Expectedly some Individuals spend more time than necessary trying to write this part, but this need not be so. All that is really needed is for you to provide the relevant background information about the name of the company, and other details like your company’s structure, ownership, and important milestones.
K is also in this section that you give a brief of sector and industrial developments relevant to your business. It is important to relate these industry/sector developments to your current and or expected business lance. Particularly the following points should be discussed:
- Vision Statement: This is a statement of how the owner of the business wants the public to see the business.
- Mission Statement: This is a statement of what the business entity essentially does in order to realize her vision.
- Ownership/Legal Status: Who owns the business? Is it registered? If registered, what is the ownership structure? Also state whether the business has trademarks, copyrights, or patents. What are the other legal issues relevant to the company? Particularly, state if there is any distribution or licensing agreements and whether there are regulatory issues relevant to the company.
- Key Milestones: This is mostly for existing businesses that are probably seeking expansion. Important milestones could include any of the following: incorporation; major changes in product design; target markets penetrated; strategic alliances; etc.
- Location and Facilities: Where is the business located and why is it located there? You need to state the specific address of the business. Alternatively the general area or city could be named if a particular location has not been chosen. Sometimes, the company might have more than one location from where it executes its locational addresses, and where this is not possible list the areas you plan to operate in.
- Products/Services: Clearly identify the products and or services the business would render (or is rendering). Describe the product (s) or service (s) you are going to offer. Discuss the branding, the packaging (where applicable), ongoing product development, etc. An analysis should be done of the features and their benefits and they should be compared to the major competitors. Sometimes the products might; be too many and listing all the products might make the business plan voluminous. In this case use of categories to present the products/services is advised. Also when discussing your products, you; should be cautious about divulging proprietary or technical information.
- Industry Trend: Since your business is part of a larger whole which is the industry, it would help issues if you could discuss industry trend In fact stating industry trends helps in providing facts that could used to buttress claims made for your company. In the industry trend, the following questions should be addressed: what industry does you company belongs; is the industry a growth industry; and what are the challenges of the industry? Particularly state the opportunities in the industry and how you would utilize them.
- Production Plan: There is no general agreement amongst scholars regarding which part of the business plan the operations production plan should be discussed. Some scholars create a separate section for this, and others discuss it where they judge it would contribute in making for more understanding, logical sequence and ease of presentation. Here our main consideration for discussing the operations here is due to the later.
In the production plan, we must consider the following issues: required facilities and why they are required; output target and the revenue base; the required inputs; production process; and quality control. Note however that the production plan (operations) section of the business plan is not intended to be a detailed operation manual. In some instances, especially where the business is small and the operations basic and simple, it could be skipped. In the operations pattern you adopted, you should highlight its advantages and particularly the edge it confers on your business. Also to be considered here is the issue of the operational challenges being experienced or expected.
- Business Strategy: The business strategy adopted is part of your success factors. Here you consider those things you need to do to distinguish your business and also make customers to consider you as an option of first choice. A business strategic could be any of the following: to be known as the company that produces the best quality product without endangering the environment; a reliable source of product supply at any point in time; the player with the best ethical standards; etc.
- Key Success Factors: Generally what are those factors that predispose your company to success? Is it location, product quality, etc? Specifically discuss them.
Whether the proposed business will succeed or not, depends on the market. In this section describe who will buy your products or services. Is the market growing or declining? What influences will affect the market? Are there seasonal trends? It is very important to consider whether your company’s products and services meet the needs and desires of the target market. In this section, you must be able to show that customers exist for your business, that you know these customers (i.e. who they are, what they Bee, what they want, and even where they live), that the number of the customers are enough to support your business, and that the customers are ready for your products and services and that they are willing to buy them. [The following hints will serve well here:
- Identify the geographic location and reach of your target market and where you consider it necessary state: Whether it is an urban suburban or rural area, and other details like climate and culture.
- Identify the demographic attributes of the market: What is the population characteristics of the target market, especially those highly associated with the probability of whether they will buy or not. Included here are; age; income; gender; hobbies; occupation; marital status; family size; etc.
- Customer motivations and purchasing patterns: Certain customer attributes are less physical, but formidable in making customers behave the way they do. Abrams (2009) suggested that in describing customer motivations the following questions should be considered:
- What concerns your customers most when making purchases? (Is it price? Quality? Convenience?)
- How quickly do they make their buying choices?
- Where do they usually buy their products or services?
- With what kinds of companies do they prefer to do business? (Large? Small? Socially responsible? Locally based?)
- How do your customers view themselves? (Do they see themselves as having a leading -edge? Technically savvy? Smart shoppers?)
Also when describing customer purchasing patterns, consider:
- Who makes the decision to purchase, if other than the end user?
- How often do they buy?
- How do they pay? (Cash? Credit? Purchase order? 30 – 60 -90 day terms).
- Market Size: By the market is meant all the people within a specific geographical area and are in need of a certain product or service and have the resources to buy it and also within reach to buy the product or service. This definition brings out certain dimension about the size of a market by implicitly considering:
- People within a geographic area – population area.
- Who need a product and or a service – have expressed interest.
- Able to buy the people who have both access and money. understand the issues involved in determining market size, the issues above are diagrammatically shown in exhibit I below: