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Business Plan Instruction for Small Enterprises The Business plan for micro and small enterprises is similar to the busines plan for start-ups. Difference is that the small business plan is based on existing experiences of previous production periods. Instruction to 1: Write down the type of business/activity in which the business operator is engaged. In this section the following issues have to be addressed: the legal form of the business, the business type / merchandizing, manufacturing or service/, the type of products or services. The location of the business can play a decisive role in its success or failure. Explain the work premises and other utilities at the operator’s disposal and describe the specific working premise problems, the space needed for the business , the desirable features of the location and its accessibility to the market. If there is anything in the location that is of special interest for your business you can stress it, too. Instruction to 2: The key issue in sales performance or marketing as a whole is to know better the likes, dislikes and expectations of customers. The yearly sales should be planned based on certain market surveys or past experience, if any is available. The market surveys will indicate the different customer segments (e.g. age, social status or region). Focus has to be given to those customers who are likely to purchase the product/service of the enterprise. Planning the yearly sales enables to find out about the desired production amount (it makes no sense to produce more than you can sell) and the yearly income. Describe the months during which sales are expected to be high, in order to make the necessary preparations ahead of time and exploit the advantage. For defining the unit price per product/service you should first know the unit costs (see production costs) as well as the prices of your direct competitors. In addition there is a need to identify the strength and weaknesses of competitors in their product quality/quantity and identify how their product/services differ from yours, their pricing and advertising techniques. The supply market should also be analysed. Identify the main suppliers for your equipments and raw materials, make price and quality comparison and a final ranking of price and performance of suppliers. Instruction to 3: The production plan includes the estimated production and sales per year based on the previous experience. Capacity/utilisation means the percentage on how you are at the limit of your production and sales capacity with the respective product. In 3.2 put the value of the machinery and equipment and the maintenance costs. Depreciation costs will be highligthed under 4.1 Cost calculation - fixed capital. Under 3.3 raw material required for the projected production (3.2). Utilities and costs of infrastructure such as electricity, water, rent to run the projected production plan including maintenance costs. 3.5 Labour categories required and salaires as well as further trainings required. 3.6 administrative costs to run the projected production plan. Instruction to 4: Under cost calculation it will be important to include depreciation costs of the fixed capital. Depreciation is the estimated price to the use of an asset. You need to know it to calculate the costs of your product/service. One of the various methods of defining yearly depreciation, and the simplest one, is to divide the purchasing price of the asset by the number of years of usage. Working capital should be detailed in different categories including utilities and administrative expenses and calculated for a one-year production plan. Instruction to 5: Financing will be calculated on the basis of the preceding cost calculation and the availability of own funds. Own funds are important to convince the financial institution to grant loan because own funds show the capability of the business owner of organized savings and business management. Instruction to 6: The Profit and Loss Statement (PLS) is one of the financial analysis tools employed by business enterprises to track the performance of their enterprises. The PLS is the difference between sales and expenses of an enterprise over a given period of time, often one year. If this difference is positive, it is termed profit, while if it is negative, it is then termed loss. The PLS is important for business operators/managers in checking the efficiency of their business strategies and taking proper actions. The statement is also important for bankers to check business profitability before extending credit. The statement can only be drawn up based on certain source documents such as the cashbook, otherwise it would be very difficult to apply, especially for micro enterprises. For the statement to be applied in a given enterprise a certain level of accounting system is needed to be in place. The P+L statement has the following components:
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