1. Cover letter Cover letter is a letter that stating the general purpose of business plan.

Transcription

1 BUSINESS PLAN FORMAT 1. Cover letter Cover letter is a letter that stating the general purpose of business plan. 2. Front cover Title of Business plan Name and address of business Writer s name Date Example: ABS BUSINESS PLAN AISHA BEAUTY SALON (ABS) P.O Box. 211 Sri Gading, Batu Pahat, Johor Plan prepared by Sri Aisha Iskandar, General Manager Content page 4. Executive summary/synopsis An executive summary is an introductory part that gives snapshot of the idea. It discusses the following items. a. The overview of business idea and goal. b. The summary of marketing, operations and financial plan. Example: ABS Aisha Beauty Salon is a limited Partnership to be establishes in it is located in between of main city of Batu Pahat and Sri Gading Industrial area. The company is seeking business financing in the amount of RM45,000 for the purpose of start-up operations and to cover estimated operating expenses for a threemonth period. 5. Purpose of Business Plan The purpose of a business plan basically is to obtain financing help from the respective parties such as (Bank/Financial institutions/others) or for the other reasons. SK,FPT,UTHM July

2 Example; i. To apply loan from respective financial institutions. This Business plan is prepared by XXX Sdn Bhd for the purpose of applying business loan from SME Bank at a total amount of RM50,000 ii. As a guideline to handle the business. This Business plan is prepared by XXX Sdn Bhd for the purpose of a guideline to running a new business. 6. Background of the company i. Company s name ii. Address/phone number iii. Form of business iv. Main activity v. Date of business commencement vi. Business s number vii. Business s/ market prospect in the future 7. Company/owners profile i. Partners /Owners name ii. IC number iii. Address iv. Phone Number v. Marital status vi. Academic background vii. Skills/experience 8. Management and organizational plan i. Vision, Mission statement/goal Vision defines a long-term goal of a company. It is a short, succinct, and inspiring statement of what the organization intends to become at some point in the future. It is broad, all-inclusive and forward thinking. Mission is an organization's vision translated into written form. It makes concrete the top management's view of the direction and purpose of the organization. A mission statement should be a short and concise statement of goals and priorities SK,FPT,UTHM July

3 Company s goal and objectives Company s goals are specific objectives that relate to specific time periods and are stated in terms of facts. The primary goal of any business is to increase stakeholder/owner value ii. Organizational structure (refer to appendices) An Organization Chart is a diagram displaying the relationship between work Positions (or roles) in a Business. It starts at the top with the highest management position (usually the CEO) and progresses down through the management positions and on to the technical and administrative positions. Aisha Beauty Salon Manager Worker Worker Worker iii. iv. List of number of employees/workers and its job scope. - Administration tasks - Marketing tasks - Operation tasks - Financial tasks Salary/remuneration of each employees/workers Example, List of number of employees/workers No. Position Number of employees 1 Top Manager 1 2 Vice manager 2 3 Accountant 1 4 Marketing executive 1 5 Operation s manager 1 6 Administrative clerks 3 SK,FPT,UTHM July

4 Job scope 7 Direct labor 7 No. Position Number ofemployees 1 Manager To plan, organize, implement and control the overall operations. Responsible for the whole performance of the company To handle problems from the internal and outside of the company. 2 Accountant Responsible for the reporting the financial performance of the company to the top manager. Salary/remuneration No. Position No. Monthly salary (RM) EPF (13%) (RM) SOCSO (2%) (RM) Total (RM) 1 Manager 1 5, ,750 2 Vice manager 2 6, ,900 3 Accountant 1 3, ,450 4 TOTAL xx xx xx xx xx 9. Marketing plan/ strategies Marketing activities are all those associated with identifying the particular wants and needs of a target market, and try to give services better than the competitors. This involves by doing a market research on customers, analyzing their needs, and then making strategic decisions about product design, pricing, promotion and distribution. The goal of a market analysis is to determine the attractiveness of a market and to understand its opportunities and threats as they relate to the strengths and weaknesses of the firm. Components in the marketing plan are as following: i. The information of product/services Explain in detail the product/services that you are going to sell. Example: ABS Product Service Average Daily Monthly /Services Facial treatment Normal Facial Sauna Aromatherapy charge Average customer customers Monthly income , , TOTAL 6,500 SK,FPT,UTHM July

5 ii. Target market Target market is the market segment to which a particular good or service is marketed. It focuses on a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. Market segment a. Consumer market Consumer market can be segmented according to: 1. geographic (region, population, climate) 2. demographic (age, gender, income level, occupation, education, stage in the family cycle, and household size) 3. psychographic (interest, opinions, lifestyle, activities) 4. behavioural (price sensitivity, brand loyalty and usage rate) b. Business/corporate market Business market can be segmented according to: 1. geographic (customer concentration, industrial growth) 2. Customer type (size of the organization, its industry, etc) 3. Purchasing behaviour (loyalty to supplier, usage pattern and order size) Example: ABS Consumer market i. Area : Parit Raja to Batu Pahat ii. Age : iii. Gender : Female iv. Income level : RM1,000 and above (medium upper level) v. Occupation : College & University students, Industrial workers, professionals, teachers, business owners and households vi. Habit : Beauty and face treatment, style and fashion, and appearance vii. Behavioral : warm service, brand loyalty and quality. iii. Market Size (RM) The size of the market is the present sales and on potential sales of the product/services. It is represented in a form of RM. The following are some information source for determining the market size: Government data Trade association Financial data from major players SK,FPT,UTHM July

6 Customers survey Example: ABS The market size for the beauty industry in the area of Batu Pahat, is range from 2,000 customers to 3,000 customers (plus the repetitive customers). This equal to RM300,000 which is (3,000 customers * RM100/head) per year. These numbers include all the competitors sales. iv. Competitors Identify the existing competitors in the target market. It can be tabulated as following: Example: ABS Competitor s name Expected sales %Market share Estimated Sales Loss Because of You Shadira RM120,000 40% RM70,000 Felisa RM90,000 30% RM60,000 Others RM90,000 30% RM50,000 TOTAL RM300,000 Find out the strengths and weaknesses of each competitor and try to differentiate from them. v. Market share (%) Market share is proportion of the total market segment that is being serviced by a company. It can be computed as a company's sales revenue (from that market) divided by the total sales revenue available in that market. Example: ABS ABS is planning to grab 25% of total market share from the existing competitors. It can be shown as below: Proportion of market share ( Before market entry by ABS) Shadira: 40% RM120,000 Felisa: 30% RM90,000 Others : 30% RM90,000 Total 100% RM300,000 SK,FPT,UTHM July

7 Others 30% Shadira: 40% Felisa: 30% Shadira: Felisa: Others Before market entry by ABS Proportion of market share ( After market entry by ABS) Shadira 30% RM90,000 Felisa 20% RM60,000 Others 20% RM60,000 ABS 30% RM90,000 Total 100% RM300,000 ABS 30% Shadira Felisa Others 20% Felisa 20% Shadira 30% Others ABS After market entry by ABS RM90,000 expected sales of ABS is represented by 900 customers on average. (900 *RM100=90,000) SK,FPT,UTHM July

8 vi. Forecasted Sales ABS Enterprise Month Quantity Average price/ Total sales *Average Cost/ Total Cost Gross Profit (customer) (1) Quantity(RM)(2) (1)x(2) Quantity(RM) (1x4) (3-5) , ,560 1, , , , ,600 2, , ,640 3, , ,160 3, , ,680 4, , ,680 4, , ,680 4, , ,680 4, , ,680 4, , ,200 4, , ,200 4,800 TOTAL , ,800 43,200 *refer to the notes: calculation of cost of production. vii. Marketing Mix Strategy A good Business Plan will take account the aspects of products/services to be offered - prospects and customers, benefits and advantages, ease of availability, location, advertising & promotion and competition. 4 marketing mix are Product, Promotion, Price and Place.(4Ps). The goal is to make decisions that center the 4 Ps on the customers in the target market in order to create a perceived value and generate a desirable response. a. Product/Service Products refer to tangible product as well as services. Product decisions can be made on: Brand name Functionality Styling Safety Packaging Repairs and support/warranty Accessories and services SK,FPT,UTHM July

9 b. Price Some examples of price decisions to be made include: Pricing Strategy Suggested retail price Volume discounts and wholesale pricing Cash and early payment discounts Seasonal pricing Price flexibility There are many methods of establishing prices. Below are the examples of pricing methods. 1. Cost-plus pricing is pricing method whereby a standard profit margin is added to the estimated cost of the products. It is calculated by dividing a total cost of production (fixed and variable cost) to a total number of units to be produced per year. Once the cost per unit is determined the profit margin will be mark-up to obtain the selling price of a product. 2. Demand pricing: the price is determined based on demand. This may because the different type of cost and materials used for the product. 3. Competitive pricing. This method is used by companies that are entering a market where there is already an established price and it is difficult to differentiate one product from another. c. Distribution (Place) Distribution is about getting the products to the customer. Some of the more common distribution channels include: 1. Direct sales. Direct sales is a distribution channel where the product will be directly sold to the end-user. 2. Manufacturer s representatives. This channel will appoint salespeople who operate out of agencies that handle the selling of manufacturer s products. 3. Wholesale distributors. a manufacturer sells to a wholesaler, who in turn sells it to a retailer or other agent for further distribution through the channel until it reaches the end user. 4. Brokers: Third-party distributors who often buy directly from the distributor or wholesaler and sell to retailers or end users. SK,FPT,UTHM July

10 5. Retailers: the business can distribute their product to the retailers/business who will sell the products to the end users. It is important if the end user of a product is the general consuming public. 6. Direct mail: this channel is done by selling to the end user using a direct mail campaign. d. Promotion Promotion is the communication of information about the product with the goal of generating a positive customer response. Marketing communication decisions include: 1. Advertising. Advertising can be done via electronic media and non-electronic media. It delivers a creative message(s) and try to persuade potential customers to purchase a particular brand of product or service. 2. Packaging. Packaging includes labels, trademarks or service of a company. It protects a products for distribution, storage, sale, and use 3. Sales promotions: Establishes the strategies used to support the sales message. This includes a description of a schedule of planned promotional activities such as special sales, coupons, contests and premium awards. 4. Public relation and publicity: A complete account of the publicity strategy including a list of media that will be approached as well as a schedule of planned events. 5. Personal selling and sales force Promotional media Printing/Publication/Broadcasting (newspaper, TV, Radio) Out-of-home/Internet marketing Digital marketing Word of mouth SK,FPT,UTHM July

11 10. Operation plan The operational plan deals specifically with the internal operations and equipment necessary to produce a product or service. The following are selected areas that need to be addressed in this section. a. Location - space of the office, warehouse, or a combination (what square footage needed) - what is the advantage of your location - provide Office/factory layout ( in the appendice) b. Equipment - Outline the equipment needed including cost (purchase or lease) No. Items RM Financing type 1. Machineries and equipment 10,000 Bank loan 2. Furniture and fittings 10,000 Bank loan 3. Car 30,000 Hire purchase - Example: lorry, machines, tools, building, computers and so on. c. Labor - How many labors do you need? (Full time or part time) - Break them out by function, and hourly pay. d. Raw Material Monthly (Cost) Supplier No. Items Quantity RM 1. Facial Scrub 1 50 Nona Roguy 2. Collagen gel Sendayu Tinggi 3. Face cream 1 50 Others 4. Foundation Nona Roguy 5. Treatment set Sendayu Tinggi 6. Normal set Others Total 500 SK,FPT,UTHM July

12 e. Layout (refer to appendices) Layout refers to the arrangement of machineries, equipment, workers and other facilities used in the operation. The layout can be based on: 1. Product- according to the sequence of activity to produce the product 2. Process- based on production process. It is suitable for business that produces several products which need similar process. 3. Marketing- this layout is to utilise the available space to display products. Mainly for retail business, wholesale, bookshop and so on. f. Manufacturing & Services process Suppliers Identify the list of suppliers that will support your operations. Suppliers Address Materials Expected purchased volume Nona Nona Roguy HQ, SB. Beauty RM3,000 Roguy Cheras, Kuala Lumpur product Sendayu STSB HQ, SB. Petaling Beauty RM3,000 Tinggi Jaya, Selangor product Others Kuala Lumpur Beauty product RM5,000 Process flowchart Process flowchart starts from the production process of a product until its delivery to the store or to the customers. Company should develop a process flowchart or process chart to clearly visualize the operations process. A process flowchart symbol is shown in appendice. Transformation process Input Transformation Process Output g. Expected monthly overhead cost Overhead cost is a monthly cost that the business has to commit. It will affect to the cost of product per unit. Overhead expenses usually include the following travel, maintenance and repair, equipment leases, rent, advertising & promotion, supplies, utilities, packaging & shipping, payroll taxes and benefits, professional services, insurance, loan payments and depreciation. SK,FPT,UTHM July

13 Example; Operational Overhead Total Monthly Cost Raw materials 500 Utilities 100 Rent 500 Labor 2,400 Maintenance 100 Depreciation* 897 TOTAL 4,497 * refer to depreciation schedule in financial plan. Total of production per year Total production cost per year is a total operation cost incurred per year. For ABS the production cost RM41,100 (refer to Cash flow) + 6,095 (depreciation) = RM47,195 Cost of production per unit Unit Production Cost = Total production costs per year Production s Volume. ABS = RM47,195 /900 customers = RM52/customer h. Legal environment Your operations might need a license or permit from the local authority or from the relevant ministries. 11. Financial plan SK,FPT,UTHM July

14 Financial planning is the task of determining how a business will afford to achieve its business goals and objectives. It will determine the following items: a. Cost of project b. Working Capital Table c. Sources of financing d. Loan amortization schedule e. Depreciation schedule f. Forecasted financial statement g. Forecasted cash flow h. Forecasted Balance sheet. Cost of Project Cost of project or known as Project Implementation Cost (PIC) is an initial capital expenditure needed to start the business. 4 components that Hill be determined in cost of project are: i. Total Fixed Asset ii. Total Working Capital iii. Others Expenditure iv. Unexpected Expenditure 1.0 Cost of Project RM RM (I) Total Fixed Asset Machines and Equipments 10,000 Furniture and Fittings 10,000 Vehicles-car 25,000 Renovation 6,000 Signboard 2,000 53,000 (II) Total Working Capital Marketing Expenditure * 3,300 Operational Expenditure ** 10,600 Administrative Expenditure *** 4,800 18,700 (III) Others Expenditure Deposit-Rent 1,000 Deposit-Water & Electricity 300 Registration cost 200 2,100 TOTAL 73,800 (IV) Unexpected Expenditure (5%) 3,690 GRAND TOTAL 77,490 SK,FPT,UTHM July

15 2.0 Working Capital Table Type of Expenditure RM RM RM * Marketing expense Promotion (RM800* 3 months) 1,500 Traveling (RM300*3 months) 900 3,300 ** Operational expense Raw materials (500* 3 months) 1,500 Utilities (100*3 months) 300 Rent (500*3) 1,500 Labor (2,400* 3 months) 7,200 Maintenance ,600 *** Administrative expense Salaries (RM1500*3 months) 4,500 Utilities (100*3 months) 300 4,800 18, Financing Sources No. Item Total (RM) 1 Owners Equity - Working Capital 10,000 2 Debt: Account Payable (Working Capital) 1,500 3 Debt: Bank Loan -Fixed Assets (machines, furniture, renovation) 28,000 -Working Capital (Balance) 7,200 - Others expenditure 2,100 -Down payment- Car 2,500 -Unexpected expense 3,690 4 Debt: Hire Purchase - Car 22,500 77, Loan amortization schedule I SK,FPT,UTHM July

16 Total loan 45,000 Interest rate 5% Payback Years 5 years Year Interest Principal Total Current repayment Balance (RM) 0 45, ,250 9,000 11,250 36, ,250 9,000 11,250 27, ,250 9,000 11,250 18, ,250 9,000 11,250 9, ,250 9,000 11,250 - Total 11,250 45,000 56,250 Annual interest = 5%*45,000 2,250 Annual principal = 45,000/5 9,000 Total annual repayment 11,250 Total monthly repayment= 11,250/ Loan amortization schedule II Total loan RM22,500 Interest rate 4% Payback Years 5 years Year Interest Principal Total Current repayment Balance (RM) 0 22, ,500 5,400 18, ,500 5,400 13, ,500 5,400 9, ,500 5,400 4, ,500 5,400 - Total 4,500 22,500 27,000 Annual interest = 4%* Annual principal =225000/5 4,500 Total annual repayment 5,400 Total monthly repayment = 5,400/ SK,FPT,UTHM July

17 5.0 Depreciation schedule I Asset name Car Purchase cost RM25,000 Useful life 7 years (salvage value RM8,000) Year Annual Accumulated Book value depreciation depreciation 0 25, ,500 2,500 22, ,500 5,000 20, ,500 7,500 17, ,500 10,000 15, ,500 12,500 12, ,500 15,000 10, ,500 17,500 7,500 Annual depreciation =(30,000-8,000)/7 2,429 Monthly depreciation =2,429/ Depreciation schedule II Asset name Purchase cost Useful life Machines and equipment RM28,000 6 years salvage value:rm6,000) Year Annual Accumulated Book value depreciation depreciation 0 28, ,760 4,760 23, ,760 9,520 18, ,760 14,280 13, ,760 19,040 8, ,760 23,800 4, ,200 28,000 - Annual depreciation =28,000-6,000/6 3,667 Monthly depreciation =3,667/ FINANCIAL STATEMENT SK,FPT,UTHM July

18 Beauty Salon Enterprise Pro Forma Income Statement For the year ended 31 December 2009 RM RM Sales revenue * 90,000 Less: Cost of goods sold 46,800 Gross Profit 43,200 Less: Selling and administrative expense Administrative 19,200 Marketing 6,000 Others 2,100 Interest 3,150 Depreciation 6,095 36,545 Net profit 6,655 Beauty Salon Enterprise Pro Forma Balance sheet As at 31 December 2009 ASET Current asset Finished inventory 2,000 Cash 25,450 Total current asset 27,450 Fixed asset Machines/equipment/others 28,000 - accumulated depreciation 4,760 Book value of machineries/others 23,240 Car 25,000 - accumulated depreciation : car 2,429 Book value for car 22,571 Total fixed asset 45,811 TOTAL ASSET 73,261 LIABILITY SK,FPT,UTHM July

19 Current liability Account payable 2,607 Long term liability Bank loan 36,000 Hire purchase 18,000 Total Long Term liability 54,000 TOTAL LIABILITY 56,607 OWNER'S EQUITY Beginning capital 10,000 Net profit 6,655 ENDING CAPITAL 16,655 TOTAL LIABILITY AND EQUITY 73,262 SK,FPT,UTHM July

20 Pro Forma Cash Flow Statement AISHA BEAUTY SALON 31 DECEMBER 2009 SK,FPT,UTHM July ENGINEERING ENTREPRENEURSHIP Month TOTAL A B CASH INFLOW Beginning balance - 18,400 14,213 9,025 6,838 5,950 7,263 9,575 11,888 14,200 16,513 18,825 22,138 - Owner's capital 10,000 10,000 Cash sales - 3,000 2,000 5,000 7,000 8,000 9,000 9,000 9,000 9,000 9,000 10,000 10,000 90,000 Collection of account receivable TOTAL CASH INFLOW 10,000 21,400 16,213 14,025 13,838 13,950 16,263 18,575 20,888 23,200 25,513 28,825 32, ,000 CASH OUTFLOW - Operation expense - Labor 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 28,800 Raw material payment 1, ,900 Utilities ,200 Rent ,000 Maintenance ,200 Marketing expense - Advertising and promotion 1,100 1,100 1, ,000 Administrative expense - Salaries 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 Utilities ,200 Fixed asset purchase - Machine & equipment 10,000 10,000 Furniture &fitting 10,000 10,000 Signboard 2,000 2,000 Renovation 6, ,000 Down payment-car 2,500 2,500 Others - Deposit -rent 1,000 1,000 Deposit water& electricity Registration fees TOTAL CASH OUTFLOW 32,600 5,800 5,800 5,800 6,500 5,300 5,300 5,300 5,300 5,300 5,300 5,300 5,300 98,900 C SURPLUS/DEFICIT (22,600) 15,600 10,413 8,225 7,338 8,650 10,963 13,275 15,588 17,900 20,213 23,525 26,838 26,838 D Loan 43,500 Financial expense - Interest+ principal of hire purchase ,400 Interest+ principal of bank loan ,250 E Short term financing F ENDING CASH BALANCE 18,400 14,213 9,025 6,838 5,950 7,263 9,575 11,888 14,200 16,513 18,825 22,138 25,450 25,450

21 12. Attachment a. Agreement b. Reference c. Research finding d. Business registration certificate SK,FPT,UTHM July