Business Plan Format

Prepared by : Miss Norhazwani Mohamed Asri

Sem 3, 2010/2011

1) Cover Letter

LETTER HEAD

(Company Logo, Address, Phone No, & Website)

Manager,

(Bank’s Address) Date :

Sir/Madam

APPLICATION FOR BUSINESS LOAN FINANCING

(Introduction)

- State the purpose of this letter

- State the date to operate the business. (Make sure the date is after the letter’s date)

2. (Content)

- Specify the amount of loan that you need from this bank in order to operate the business.

3. (Conclusion)

- State the willingness to present business plan or additional materials to facilitate better understanding of the proposed project.

Thank you,

Your faithfully,

................................................

(name)

(position and company’s name)

2. Cover Page

Company’s Logo

Company’s Name

Company’s Address

Name of the Writers :

1)

2)

3)

4)

Date of Submission :

TABLE OF CONTENTTitle Page NoExecutive SummaryIntroductionPurpose and Company BackgroundPartners BackgroundLocation Description

Administrative Plan

i. Introduction to Organisationii. Organisation Chart

iii. Manpower Planningiv. Schedule of Tasks and Responsibilities v. Schedule of Remuneration

vi. List of Office Equipmentvii. Administrative Budget

Marketing Plan

i. Introduction to Marketing Planii. Product or Service Description

iii. Target Marketiv. Market Sizev. Competition

vi. Market Sharevii. Sales Forecast

viii. Marketing Strategyix. Marketing Budget

Operating Plan

i. Introduction to Operating Planii. Activity Chart

iii. Process Flow Chartiv. Production Schedule

v. Materials Requirements vi. Manpower Requirements

vii. Machine and Equipmentviii. Operations Layout Plan

ix. Locationx. Operations Budget

Financial Plan

i. Introduction to Financial Planii. Project Implementation Cost Schedule

iii. Sources of Funds Scheduleiv. Fixed Assets Depreciation Tablesv. Information on Term Loan and Hire Purchase

vi. Loan Amortisation Schedule vii. Hire Purchase Repayment Schedule

viii. Pro forma Cash Flow Statement (Monthly)ix. Pro forma Cash Flow Statement (Yearly) x. Pro forma Income Statement

xi. Pro forma Balance SheetConclusion Appendices (Put any item which relevant with the business and available only, it doesn’t mean that you must enclosed all this thing)

- Business Card- Member’s Card- Signboard- Banner- Promotion- Brochure- Any Relevant Form e.g.: registration form or loan

application form- Survey Question - Result of survey - Picture

Executive Summary

- Write about a business/project summary. Highlight important components of the plan such as the product or service being offered, market potential, project management, project cost, and expected returns.

Introduction

Name of the companyNature of Business - (write about the type of business/what is the business you plan.) Industry Profile - (Brief about the industry that you enter.

Write also the profile of your business.) Location of the BusinessFactors in selecting the - (Why you choose this business? Write the factor.)proposed businessFuture prospects of the - (What is your plan or hope from this business in future?) business

Purpose & Company Background

Purpose

Write like this;

“This business plan is prepared by (state your company’s name) for the purpose of obtaining working capital loan from (the name of bank which provide a loan) for the amount of (state the amount of loan). It is also as a guideline for managing the proposed venture.”

Company Background

a) Name of the businessb) Business Addressc) Correspondence Address (include website/email address)d) Telephone Numbere) Form of Business : Partnershipf) Main Activity/activities :Write your main business activity/activities g) Date of Commencement : When you want to start?

h) Date of registration : date before you start the businessi) Registration Number : (just create a number)j) Name of Bank : k) Bank Account Number : (just create a number)

Owner or Partners Background

- ( Write all the partners background, and put picture)

a) Name of the owner/partnersb) Identity card number c) Permanent addressd) Correspondence address (include website/email address)e) Telephone numberf) Date of Birthg) Ageh) Marital Statusi) Academic qualificationj) Courses attendedk) Skillsl) Experiencem) Present occupationn) Previous business experience

Location of the Business

Write :

- Physical location of the project/business (put the map)- Premises/building (type, structure, size)- Basic facilities in your area/premises.

Administration Plan

i) Introduction to the Organisation Vision : ( Long term goal, stated the value statement, about where the business

wants to go or what it aspires to be)Mission : (statement of purpose of organisation, establish the identity of the

business. Defines long term goal of the company but in a specified time frame; normally within 5-10 years)

Objective/ Business Goals: (support the achievement of a business mission and vision. More specific, stated in a shorter time and have a definite time frame)

ii) Organisation Chart

example :

GENERAL MANAGER

ADMINISTRATIVE MANAGER

FINANCE MANAGER

OPERATION MANAGER

MARKETING MANAGER

ASSISTANT OF FINANCE MANAGER

ASSISTANT OF OPERATION MANAGER

SUPERVISOR

CLERK CLERK

iii) Manpower PlanningExample:

Position Number of StaffGeneral Manager 1

Administrative Manager 1Finance Manager 1

Operation Manager 1Marketing Manager 1

Assistant of Finance Manager 1Assistant of Operation Manager 1

Supervisor 1Clerk 2

iv) Schedule of Tasks and ResponsibilitiesExample: (list all the main task for every position)

Position Main TasksGeneral Manager To plan, implement and control the overall

management of the business.To plan and monitor the strategic progress of the business

Administrative Manager To manage the administration and overall human resource of the businessTo monitor the entire administration task is done properly.

v) Schedule of remuneration Example : (List all the position which available in organisation)

Job Design

No Monthly Salary (RM)

EPF Contribution (RM)

SOCSO (RM) 2%

Nett Salary (RM)12% 11%

GeneralManager

1 8,000 960 880 160 6,960

Manager 4 4,000 480 440 80 3,480Assistant Manager

2 1,500 180 165 30 1,305

Total 7 1,620 1,485 270 11,745

vi) List of Office Equipment Example :

ITEMS QUANTITY PRICE/UNIT (RM)

TOTAL COST (RM)

Office Equipment:TableChair

Notice Board

451

300150100

1,200750100

Personal Computer

2 3,000 6,000

Office/Shop lot Renovation

- - 10,000

Total 18,050

vii) Administration BudgetExample

Item FIXED ASSETS

EXPENSES (RM)

MONTHLY EXPENSES

(RM)

OTHER EXPENSES

(RM)

Furniture and Fittings 8,050 - -Office/Shop lot Renovation

10,000 - -

Salaries - 11,745EPF contribution from employer (12%)

1,620

EPF of employee (11%) 1,485SOCSO 270Rental 3,000Utilities 1,000Rental Deposit 9,000Utilities Deposit 2,000Total 18,050 19,120 11,000

Marketing Plan

i) Introduction to Marketing Plan

ii) Product/Service Description

- Describe clearly the product or service that is offered to the customer

iii) Target Market1. Identify the market area and business location which marketers focused. 2. Collect information and data of customers in the market area selected. - Information can be based on personal details and attributes of the

population in that area. (also you can get the information about population in www.statistics.gov.my)

3. Segmenting the market (by compiling the geographic, demographic and psychographic factors of the market, the business can now divide the total market into smaller groups or market segments.

Example : The target market for ABC Printing Shop in Gombak area

TARGET MARKET POPULATIONStudents 100,000Lecturers and Teachers 10,000Others (for e.g. company and individual)

10,000

- Explain each the target market based on their location/geographic area with the business, demographic (for e.g.: education, occupation, social class, income, culture) and Psychographic (for e.g.: personal taste, preference, status)

iv) Market Size

- It is the total potential purchase that is expected from the target market.The potential purchase includes purchases of the competitor’s product within the same market.

For example: A survey of the 3 groups showed that the students paid for printing of

about RM25, 000 a week or RM100, 000 a month, while for lecturers and teachers about RM 10,000 and also for others are RM10, 000 a month. In this case, there is only 50% from each population of target will spend for printing service (average

cost for each printing is RM0.50). The rest of the population are more prefer to print their document at home. Therefore, the overall of the population for a month is about 60,000 people. (student : 50,000 + lecturer & teacher :5,000 + others : 5,000)

As a new business and based on the market share with other competitors, we estimate only 10% of population the market size will spent in our business. Therefore the total of the potential customer for the first year are; 72,000 (6000 x 12). The revenue will generated from this target market are; 36,000 (72,000 x 0.50)

v) Competition

List the major competitors for the businessCompetitors Strengths Weaknesses

State the competitor’s name, address, logo or pictures

List the competitor’s strengths

List the competitor’s weaknesses

vi) Market Share

- Refers to the portion of the market that the business can control after taking into consideration market size and the competitors’ position in the same market. For example :The business estimates the market size for printing shop are 60,000 a month or an estimated RM30,000 (60,000 x RM0.50)

ABC Printing Shop has identified 3 main competitors, which are Company D, F, and G. So, the market shares are;

Before ABC Printing Shop enter the market share:

Name of Printing Shop Percentage of Market Share

Price (RM)

Company D 55% 16,500Company F 27% 8,100Company G 18% 5,400

Total 100% 30,000After ABC Printing Shop enter the market share:

Name of Printing Shop Percentage of Market Share

Price (RM)

Company D 50% 15,000Company F 25% 7,500Company G 15% 4,500

Company ABC 10% 3,000100% 30,000

vii) Sales forecast

Example:Since ABC Company is confident it can achieve 10% market share which is equivalent to RM36, 000 per year, here is sales forecast for the whole year. We also identified some factors which can be influence the customer’s purchase, such as during examination period for college student in April, June and October.

Sales Forecast for ABC Company Year 2011

Month Sales CollectionJanuary 3,000February 3,000March 3,000April 4,000May 3,000June 4,000July 3,000

August 2,500September 2,500

October 4,000November 2,000December 2,000

Total RM36,000

viii) Marketing Strategy

Describe the effective marketing strategy based on 4 variables; Product, Price, Place (distribution) and Promotion.

Also can enclosed together The Gantt Chart or a schedule to facilitate the process of control and monitoring.

Example of Gantt Chart (optional) (refer to page 146, Entrepreneur text book)

ix) Marketing Budget

An entrepreneur has to allocate money for marketing activities. The marketing budget summarises all marketing expenses planned and is useful for financial planning

(Note : This budget is only for marketing activities, do not mix with other department activities such as administrative and operation)

Example:Items Fixed Assets

Expenses (RM)Monthly

Expenses (RM)Other

Expenses (RM)

Signboard 3,000 - -Marketing Personnel

- Salary- Commission- EPF/SOCSO- Travelling

----

5,0005,0001,0002,000

----

Promotion - - 10,000Grand Opening - - 5,000

Total 3,000 13,000 15,000

Operating Plan

i) Introduction to Operating Plan

ii) Activity Chart

example : activity chart for Pet’s Lover Hotel

iii) Process Flow Chart

example: Process flow chart for Pet’s Lover Hotel

(Refer to page 153 to 159 in entrepreneurship text book to get more examples)

iv) Production Schedule

Receptionist gets information from the client pets

Discuss with the client about package they want

Receives deposit and payment from client

Supervisor will be in charge in separating the pets

Staffs will treats and give services to the pets as required

Ready the pets at holding area on the check out day

Return the deposit to client when they come to fetch their pets

Gets information from client

Discuss with client

Receive payment from client

Separate the pets

Treat the pets

Ready the pets at holding area

Return deposit and pets to client

Example : If sales forecast of printing company is 6,000 copies per month, and working days per month is 25 days, the daily production rate is:

6,000/25 days = 240 copies per day.

- The effective working hours per days is 8 hours (after deducting one hour of rest period and idling time, the hourly production rate is:

240/8 hours = 30 copies per hour

(The example of calculation above is not compulsory for every business plan, it depends with the nature/type the business. However, in production schedule, you must show the unit of product/service and schedule that you need to produce product/service for everyday. To determine the production schedule, you must refer to the sales forecast in marketing plan.)

v) Materials Requirement

example: Materials requirement for ABC printing company.

Item Quantity Safety Stock

Price per unit

Total Purchase

Supplier

A4 Paper 5 boxes 15 boxes RM30 RM600 Ah Chai Paper Sdn Bhd

Ink 3 bottles 10 bottles RM10 RM130 Launun Sdn Bhd

vi) Manpower Requirement

Job Design No Monthly Salary/wages

(RM)

EPF Contribution (RM)

SOCSO (RM) 2%

Nett Salary/ wages (RM)

12% 11%

Supervisor 1 1,000 120 110 20 870Workers 2 (500*2) 1,000 (60*2)

120(55*2)

110(10*2)

20(370*2)

740Total 240 220 40 1610

(Ensure that manpower listed here in not listed in either administration or marketing plan to avoid double counting)

vii) Machine and Equipment

Example:

Item Price Per Unit No. Required Total Cost SupplierPhotocopy Machine

RM1,000 2 RM2,000 Seng Hup Sdn Bhd

Printer RM8,00 1 RM800 Alie Electronics Sdn Bhd.

Total RM2,800viii) Operation Layout Plan(Draw your operation layout plan. Refer page 167 in Entrepreneur text book)

ix) Location(It is for business which conducted in separate location, which is the operation, is located in different place with administration and marketing department. If all departments are in the same location, no need to write about this part again, because it’s already discussed in the earlier plan) x) Operation Budget

Item FIXED ASSETS

EXPENSES (RM)

MONTHLY EXPENSES

(RM)

OTHER EXPENSES

(RM)

Machine and Equipment RM2,800Salaries and Wages RM1,610EPF contribution from employer (12%)

RM240

EPF of employee (11%) RM220SOCSO RM40Paper RM600Ink RM130Insurance RM50Total RM2,800 RM2,840 RM50(Ensure that all expenses listed here is not listed either in administration and marketing budget to avoid double counting)

Financial Plan

i) Introduction to Financial Plan

ii) Project Implementation Cost Schedule

Example

A. Capital Expenditure RM RMLand & BuildingMachinery and EquipmentFurniture and FixturesVehicle – Van (hire purchase)Renovation Cost

xxxxxxxxxx

Sub-Total xx

B. Working Capital (6 months)MarketingProduction/OperationAdministrative

(1 month working

capital x 6 months)

Sub-Total xx

C. Other ExpenditurePre-operatingBusiness RegistrationInsuranceRoad taxSundries

Deposit Utilities (telephone/water/electricity)

xxxxxxxxxx

xxxx

Sub-Total xxGrand-Total xxx

D. Add: Contingency Cost (10% xx

TOTAL PROJECT IMPLEMENTATION COST XXXiii) Sources of Funds Schedule

Example

A. Equity Contribution RM RM

CashAsset (Land & Building)

xxxx

Sub-Total xx

B. External SourcesHire PurchaseTerm Loan (note: from bank, and must same which stated in cover letter)

xxxx

Sub-Total xx

C. Others xx

TOTAL SOURCES OF FUNDS XXXiv) Fixed Asset Depreciation Table

Example : Type of Asset : VanOriginal cost : RM25,000Economic Life : 5 yearsScrap Value : RM0Method : Straight Line

Year Annual Depreciation (RM)

Accumulated Depreciation RM)

Book Value (RM)

0 0 0 25,0001 5,000 5,000 20,0002 5,000 10,000 15,0003 5,000 15,000 10,0004 5,000 20,000 5,0005 5,000 25,000 0

v) Information on Term Loan and Hire Purchaseexample

Term Loan Hire PurchaseLoan amount : RM170,000Loan period : 5 yearsInterest rate : 4.00%Method : Annual rest

Loan Amount : RM40,000Loan Period : 8 yearsInterest rate : 3.50%Method : Flat rate

Term Loan Hire Purchase

Annual payment of principal :

RM170,000/5 years = RM34,000

Interest Payment :

Year 1: RM170,000 x 4% = RM 6,800Year 2: RM136,000 x 4% = RM 5,440Year 3: RM102,000 x 4% = RM 4,080Year 4: RM 68,000 x 4% = RM 2,720Year 5: RM 34,000 x 4% = RM 1,360

Annual payment of principal :

RM40,000/8years = RM8,000

Interest Payment :

Year 1: RM4,000 x 3.50% = RM1,400Year 2: RM4,000 x 3.50% = RM1,400Year 3: RM4,000 x 3.50% = RM1,400Year 4: RM4,000 x 3.50% = RM1,400Year 5: RM4,000 x 3.50% = RM1,400Year 6: RM4,000 x 3.50% = RM1,400Year 7: RM4,000 x 3.50% = RM1,400Year 8: RM4,000 x 3.50% = RM1,400

vi) Loan Amortisation ScheduleLoan amount : RM170,000Loan period : 5 yearsInterest rate : 4.00%Method : Annual restYear Interest (RM) Principal (RM) Payment (RM) Balance (RM)

0 0 0 0 170,0001 6,800 34,000 40,800 136,0002 5,440 34,000 39,440 102,0003 4,080 34,000 38,080 68,0004 2,720 34,000 36,720 34,0005 1,360 34,000 35,360 0

vii) Hire Purchase Repayment ScheduleType of asset : VanCost of asset : RM45,000Down of payment : RM5,000Loan of amount : RM40,000Interest rate : 3.50%Loan period : 8 yearsMethod : Flat rate

Year Interest (RM) Principal (RM) Payment (RM) Balance (RM)0 1,400 5,000 6,400 40,0001 1,400 5,000 6,400 35,0002 1,400 5,000 6,400 30,0003 1,400 5,000 6,400 25,0004 1,400 5,000 6,400 20,0005 1,400 5,000 6,400 15,0006 1,400 5,000 6,400 10,0007 1,400 5,000 6,400 5,0008 1,400 5,000 6,400 0

viii) Pro forma Cash Flow Statement (Monthly)

Month Pre-Operation Jan Feb Mar - Dec Year 1A Cash Inflow:

Equity – CashTerm loanCash Sales

xxxxxx

xx xx xx

xxxxxxxxx

B Total Cash Inflow xx xx xx xx xxC Cash Outflow

Operational Expenditure:Raw materialsDirect labourOperational overheads

Marketing Expenditure:Sales commissionEntertainment allowance

Administrative Expenditure: Salaries & wages EPF & SOCSO

xxxxxx

xxxx

xxxx

xxxxxx

xxxx

xxxx

xxxxxx

xxxx

xxxx

xxxxxx

xxxx

xxxx

Other Administrative overheads

Loan Repayment:PrincipalInterest

Hire Purchase Repayment:Down PaymentPrincipalInterest

Capital Expenditure:Machinery & EquipmentFurniture & FixturesRenovationPre-operational expenditure

xx

xxxxxxxx

xx

xxxx

xxxx

xx

xxxx

xxxx

xx

xxxx

xxxx

xx

xxxx

xxxxxx

xxxxxxxx

Deposits xx xxD Total Cash Outflows xx xx xx xx xxE Cash Surplus/(Deficit) xx xx xx xx xxF Beginning Cash Balance 0 xx xx xx 0G Ending Cash Balance xx xx xx xx xx

ix) Pro forma Cash Flow Statement (Yearly)Year Year 1 Year 2 Year 3

(Same format as pro forma cash flow statement (monthly))

x) Pro Forma Income Statement

Sales

Less : Operating ExpensesAdministrativeMarketingOperation/Production

Interest:Term LoanHire PurchaseDepreciation chargesMiscellaneousTotal operating expenses

Net Profit Before Tax

RM

xxxxxx

xxxxxxxx

RMxxx

xxx

xxx

xi) Pro Forma Balance Sheet

FIXED ASSETSLand & BuildingMachinery & EquipmentFurniture and fixturesRenovationVan

CURRENT ASSETSCashClosing stock for raw materials (if any)Closing stock for finished goods (if any)

OTHER ASSETSDeposits

TOTAL ASSETS

RM

xxxxxxxxxx

xxxxxx

RM

xxx

xxx

__xx__

xxxx

EQUITYCapitalAccumulated profit

CURRENT LIABILITIES

LONG-TERM LIABILITIESTerm loanHire purchase

TOTAL EQUITY AND LIABILITIES

xxxx

xxxx

xx

0

xx

xxxx

Conclusion

Appendices