Elements of a Bus. Plan, Feasibility Study & Sources of Inf

Elements of a Bus. Plan, Feasibility Study & Sources of Information

Principles of Business

4 Pool 6B

March 19, 2021

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Prepared By:

Andrew Oldacre

A typical outline of its components is as follows:

• Executive Summary

• Operational Plan

• The Business Opportunity 

• Marketing Plan

• Financial Forecast

General Objectives:

At the end of the lesson, students should:

• analyze the elements of a business plan

• evaluate the primary and secondary sources of information for conducting research

• appreciate the importance of a feasibility study

Specific Objectives:

At the end of the lesson, students will be able to:

• examine carefully three elements of the business plan after reading through that section of the PowerPoint prepared by the teacher 

• compare with understanding primary and secondary sources of information after conducting an internet research 

• justify with clear understanding two reasons why a feasibility study is important after having a discussion with the teacher 

Rules/Expectations

• Students should use the raise hand feature and wait to be identified before speaking.

• No two students should be speaking at the same time.

• Students should be respectful when their teacher or their classmate is speaking.

• There should be no unnecessary chatter in class chatroom.

The business opportunity

• Whereas the previous sections of the plan focused on broader aspects of the business, this section will focus on the specific products or services that the business offers.

• Readers of the business plan (such as those providing finance) need to have a clear picture of what the product or service has that makes it special and therefore worth financing. This section needs to explain what the product or service is and what makes it stand out. It needs to answer questions such as:

The business opportunity

• What were the origins of the product idea?

• How will it be packaged?

• What are the features of the product?

  
  

Marketing Plan

• The section will describe the market research that has been carried out and what it has revealed. It should also give details of prospective customers, such as how many there are, how much they would be prepared to pay, what distribution strategies will be used to reach them etc.

• Owners should also include details of the competition in this section (who they are, how their product offering compares, how their prices compare, how they distribute their products) a well as the pricing strategies that will be employed, demographic characteristics of the target market and a SWOT analysis of the competitors. 

Multiple Choice

What is the purpose of performing a SWOT Analysis?

• Identifies internal and external factors that may affect the business future performance.

• Evaluates whether the business venture is a good idea.

• Access a organization's performance

• Gives the management team a broader view on the potential opportunity

Financial Forecast 

•  The financial forecast should give an in-depth description of the finances predicted for business, including:

• Sources of finance: this should give details of how the finance for the business is going to be raised. How much will come from savings/from the owners? How much will need to be borrowed?

• Sales: What are the expected sales, both in terms of numbers of sales and revenues received from sales?

Cont’d

• Costings: what are the expected costs of producing the product or service?

• Profit and loss forecasts: comparing expected sales revenues and expected costs will make it possible to forecast profit and/or loss levels.

• Cash- flow forecasts: a cash-flow forecast shows the starting balance of cash, and receipts of cash (inflows), any payments of cash (outflows), and closing balances of cash. The cash-flow forecast helps to identify periods when the firm may need to borrow in order to mange cash-flow imbalances. 

Expansion

•  Finally, the business plan should give an indication of future plans. Does the owner want to keep on producing a steady output or is a dramatic expansion possible? Does the business intend to add to its product range? What kind of new competition is likely to emerge, and how will the business deal with it?

Sources of information for conducting research 

https://www.youtube.com/watch?v=nhFbNno9JqI

Hangman Game : D

Primary source & Secondary Sources

Primary Sources

Gathering information from primary sources involves using your own sources and carrying out your own research (first hand data, conducting your own research).

Poll

Which are types of Primary research?

• Questionnaires

• Published population and income data

• An interview

• Observation

What are some advantages of Primary research?

Advantages

• The entrepreneur is personally aware of the reasons for gathering the data, and has direct experience of the actual gathering of the data.

• The data is also likely to be fresh (very recently collected).

SECONDARY RESEARCH

Secondary research

Secondary information is taken from someone else's existing research. (An already established source- second hand research

Poll

Which of the following are types of Secondary research?

• Published market studies

• Questionnaire

• Analyst reports

What are the advantages of Secondary research?

Advantages

• Secondary research can be broader in extent, particularly if it has been collected by a large research company using large samples.

• Saves times.

• Cost effective.

Open Ended

Sonia has created a small enterprise providing sandwiches and cakes for special occasions. She is hoping to build her business into one that serves local functions and conferences in Kingston Jamaica. What types of primary research could Sonia use to explore the possibility of expanding her business in this way?

THE SIGNIFICANCE OF CONDUCTING A FEASIBILITY STUDY IN THE ESTABLISHMENT OF A BUSINESS

A feasibility study is a piece of research to find out whether a business or project will work. It aims to identify the strengths and weaknesses of a proposal to see if it should go ahead. Therefore, if you have have a business idea and a business plan, the next step is to carry out a feasibility study to establish whether your business is viable.

There are a number of reasons for carrying out a feasibility study, as will be discussed.

YouTube video

https://www.youtube.com/watch?v=nhFbNno9JqI

To ascertain viability

The feasibility study enable entrepreneurs to ascertain whether they should go ahead with launching a business, or in producing a product or service. If the study produces the result that a project is not viable at the current time, then it should not go ahead.

To ascertain viability

• It is the wrong time, for example because the economy or the market is in a bad state.

• The entrepreneur has insufficient experience to make the enterprise a success.

To identify the possible costs

• One reason why many projects fail is because insufficient attention has been paid to identifying the costs. There are many types of business costs, and most new entrepreneurs are not aware of all of these, including:

• costs of materials

• costs of equipment

• costs of transport

• costs of power

• costs of borrowing (interest charges)

• costs of marketing

To identify the possible costs

• seller costs

• costs of labour and other factors of production

• government costs (for example in the form of taxes).

To identify possible sources of finance

New entrepreneurs often assume that finance for their business will be easy to acquire, but this is not usually the case. Finance will only become available if financiers such as banks are able to see a detailed business plan which proves that repayment on loans can be made on time.

A feasibility study is therefore important because it clearly identifies proven sources of finance, how much finance will be available, when it will be available, and when repayments can be made. If any of these details are not viable then an entrepreneur will know that their business is not feasible.