Business Planning and the Business Plan
Domain 4: Business Planning and the Business Plan. Tests the purpose and users of a business plan, its standard sections, and whether a written plan is realistic and internally consistent.
Purpose and audiences
The plan is an internal roadmap (targets, budgets, responsibilities) and an external sales document for lenders, investors, landlords and grant schemes. Each audience reads differently: a bank wants repayment capacity and collateral, an investor wants growth and exit, a landlord wants viability.
Standard sections
Executive summary (written last, one page); business description and legal form; product or service; market analysis with research evidence; marketing plan (mix and targets); operations plan (location, capacity, suppliers); management and staffing; financial plan (start-up capital, projected income statement, cash flow, balance sheet, break-even); risk assessment; appendices.
Worked example
A Windhoek bakery projects monthly sales of N$60 000, cost of sales N$36 000 and fixed costs N$18 000. Reasoning: gross profit is N$24 000; less N$18 000 leaves N$6 000 net, a 10% net margin that a lender will stress-test against a 20% sales shortfall. If the plan shows loan instalments of N$5 000, the buffer is only N$1 000, so the owner must revise (lower drawings, stage the equipment purchase) or expect rejection. That internal consistency is what examiners reward.
Traps
- Writing the plan only to satisfy a lender and never using it to manage.
- Over-optimistic sales with no research evidence behind them.
- Omitting the cash flow statement, so profit appears while cash runs out.
- Forgetting the risk section, competitor analysis or the owner's own salary.
- Never reviewing the plan when prices or demand change.