GDE/ Business Studies Business plan Chapter 13

BUSINESS STUDIES

GRADE 10
TERM THREE
CHAPTER 13
NOTES ON BUSINESS PLAN
Revised notes according to the 2023 ATP

TABLE OF CONTENTS

TOPICS PAGES
Terms and definitions 2
Exam guidelines for a business plan 2
The meaning of a business plan 3
Importance of a business plan 3
The components of a business plan 3-4
Purpose of the executive summary 5
Aspects that must be included in the executive summary 5
The vision, mission statements, goals, and objectives 5
The relationship between the structure of the business and forms of 5-6
ownership
Types of legal requirements of a business 6
Importance of a marketing plan and market research 6
Importance of a marketing plan and market research 6
Meaning of marketing mix with specific reference to the 7p’s 7-9
Strategies to overcome competition in the market 9
Financial plan including a balance sheet 9

This chapter consists of 9 pages.

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CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT

PURPOSES

Learners must be able to:

 Explain the importance of a business plan.
 Analyse the challenges of the macro environment using pestle analysis.
 Outline the components of a business plan.
 Explain the purpose of the executive summary and outline aspects that must be included
in the executive summary.
 Formulate the vision/mission statements and goals of the envisaged business.
 Explain the relationship between the structure of the business and forms of ownership.
 Outline/mention different types of legal requirements of a business.
 Compile a swot analysis for the envisaged business.
 Explain the importance of a marketing plan and market research.
 Explain the meaning of a marketing mix with specific reference to the 7p’s.
 Identify the 7p’s from given case studies/scenarios/statements/cartoon.
 Identify competitors from doing market research and explain the strategies that you will
use to overcome competition in the market.
 Formulate a financial plan including a balance sheet.

TERMS AND DEFINITIONS

TERMS DEFINITIONS

Business Plan A document that outlines all the important facts, processes, and
procedure of the business.
Cover Page Indicates the name of the entrepreneur, name of the business, the
logo, address, and contact details of the business.

Index page The list of all sections of the business plan and page numbers of
each section.
Executive Summary The summary of the entire business plan
Description of the The description of the product/service and the unique features of the
business business
Vision The long -term future goal of the business

Mission Statement The activities the business will do in order to achieve its goal
Legal Requirements Legal documentation such as licenses, permits and tax regulations
that must be complied with before the business can start operating.

SWOT Analysis The analysis of the strengths, weaknesses, opportunities and threats
of the business.
Marketing Plan A strategy /plan of how the business is going to sell its
product/service
Market Research The action of gathering information about consumers’ needs and
preferences.

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1 The meaning of a business plan

 A business plan is a written description of a prospective business.
 It explains how the prospective business owner will obtain funding.
 Analysis potential strength, weaknesses, opportunities, and threats
 Describes how the business will deal with threats and market its goods/service.
 It is prepared for presentation to any interested stakeholder e.g. the bank manager
usually requests a business plan when the entrepreneur applies for finance and
refers to the business plan before granting him/her a loan.
 The business plan includes, among others, the marketing and financial plans.
 It is a good idea to show data in tables and graphs to make the plan easier to
understand.

2 Importance of a business plan

 A business plan helps entrepreneurs to set goals and objectives.
 Can be used to attract investors and prospective employees.
 Helps stakeholders to understand the role they play in the business and
encourages them to contribute effectively.
 Guides the entrepreneur on the viability of his/her business idea.
 Helps the entrepreneur to identify problems that may arise and helps management
to take steps to avoid these problems.
 Improves business operations processes and practices.
 Evaluates the success of the business.
 It is essential when applying for financial assistance from investors or lenders.
 Compels an entrepreneur to arrange his/her thoughts in a logical order.
 Gives direction once the business is operating.
 Helps the entrepreneur to face threats head-on and deal with them.

3 Challenges of the macro environment using PESTLE analysis

 Entrepreneurs should look at the factors that could have a negative impact on their
businesses.
 Businesses do not have control over the elements/features of the macro-
environment.
 Businesses use A PESTLE analysis scan the environment.
 A PESTLE analysis enables business to identify challenges that are posed by the
following external factors: physical, economic, social, technological, legal and
environmental factors.

4 Components of a business plan

 Cover page
 Contents page/Index
 Executive summary
 Description of the business/Overview
 SWOT analysis
 Legal requirements of business

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 Marketing plan
 Operational plan
 Financial plan
 Management plan
 Competitor analysis

Explanation of the components of a business plan

COMPONENT CONTENTS AND FEATURES
Cover page  It contains the following information:
o The name of the business
o Contact details of the owner(s)and address
o The logo
o Type of the business
 A copyright disclaimer to protect the contents of the plan
Contents  It gives a title and page number of each subsection of the plan.
page/Index  Allows the reader to find the information in the document
Executive  Detailed summary of the entire business plan
summary  It is written after the business plan has been completed, but appears
at the front to provide users with a brief overview before reading the
details
Description of the  Describes the product/service and unique features of a product.
business/Overview  Discusses the long-term objectives/mission/vision of the business.
 Indicates the form of ownership.
 Description of the product /service which the business offer
 Includes the legal requirements of the business
Legal  Provides legal requirements that the business need to comply with
Requirements before it can start operating.
NOTE: Refer to types of legal requirements below
SWOT analysis  Major strengths and weaknesses of the business
 Opportunities and threats in the external environment
 A SWOT analysis is an indication that research was conducted to
support the establishment of a business.
Marketing plan  This is the most important component of the business plan.
 It gives details of the seven Ps of marketing
Operational plan  Includes where the business will be located.
 Describes the daily operation of the business.
 Includes a description of a product, how and where it will be
manufactured.
 Provides details of the equipment and suppliers
Financial plan  Records details of how much capital is required and how it will be
raised.
 Contains projected statements of profit, loss and cash flow
Management plan  Outlines who will oversee running the business as well as skills of the
entrepreneur and other in the business.
 Discusses the hierarchy and roles of the employees
Competitor  Description of competitors in the market and their products
analysis  Details of competitors’ marketing strategy and its effect on a proposed
business

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5 Executive summary
5.1 Purpose of the executive summary
It is included to satisfy those who do not have time to go through the entire plan in
detail.
Most lenders and investors read it first before the entire business plan.
It gives readers an idea of what is contained in the business plan.

5.2 Aspects that must be included in the executive summary.

• The form of business enterprise
• The main business activity
• Information about the owner of the businesses
• They way in which capital will be obtained

6 The vision/mission statements/goals and objectives

6.1 The vision statement
 A statement which describes how the business will achieve its purpose.
 The vision statement is the long-term goal of how entrepreneurs see their business in
future and how they want to grow.
 It addresses profit, growth, purpose and stability

6.2 The mission statement

 A statement which describes the purpose of the business and explains why the
business exists.
 The mission statement addresses how entrepreneurs hope to achieve their vision.
 It focuses on a business operation and it also specific and measurable
 The short-term objectives are more specific stepping stones to reach short term
goals in order to achieve the long term goals.

6.3 Goals and objectives

 The long-term objectives is to provide direction for the company to achieve the vision.
 It is also specific and measurable just like the mission statement.

7 The relationship between the structure of the business and

forms of ownership
 The business structure should have a description of the following aspects:
o How many people the business intends to employ.
o Management and staff e.g. their qualifications, experience, job description
and remuneration
o Administration and record keeping
o Staff policy regarding working hours, fringe benefits, overtime, sick leave and
medical aid.

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 The structure of the business should include the type of ownership such as sole
trader/partnership/close corporation/ private company/public company.
 The form of ownership will determine the following:
o The reason for the form of ownership
o Legal requirements of the business
o Products and services offered.
o Size of the business
o Number of owners required.
o How much control the owners want.
o Legal protection

8 Different types of legal requirements of a business

 A business needs to be registered before it can obtain finance or start doing
transactions.
 A business needs to comply with the following types of legal requirements:
o Trading Licenses and permits to operate legally.
o Taxation regulations
o International trading /Exporting & Importing requirements/ Exchange rates.
o Registration fees.
o Registration.
o Basic conditions of Employment Act.
o Labour Relations Act.
o National Credit Act.
o Environmental Conservation Act.
o Patents and copyrights

9 Importance of a marketing plan and market research

9.1 Importance of a marketing plan
 It is a description of the market analysis including the target market.
 It includes the analysis of the target market, customer, and competition.
 Explains the marketing mix and provides the marketing strategy of the business.
 Guides businesses on how to advertise their products/services.
 Describes the proposed prices of goods and services.

9.2 Importance of a market research

 It is a process to understand more about customers’ needs.
 The target market refers to the people who are likely to buy the product or service
offered by the business.
 The business must conduct market research to know about the following factors of
the target market: age group, gender, personality, income, and education.
 The methods of conducting market research include surveys, interview, and
questionnaires.
 The results of the market research is important as it will indicate whether the target
market shows interest in the goods and services the proposed business aims to offer.

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10 The Meaning of marketing mix with specific reference to the

7P’s
 The marketing plan can be explained by using seven elements.
 There are four main elements and three additional elements.
 A marketing mix is a combination of product, price, place, people, promotion,
process, and physical environment.
 The above-mentioned aspects are usually referred to as 7ps.
 The reason for extending the 4ps to the 7ps is because of the growth of the service
industry.
 Once the target market has been identified, the business must work out the
marketing mix that best satisfies the needs of the target market.

10.1 Product/Service
 It is a description of the product, appearance, and usage.
 It can be a picture, drawing or photograph of what the product look like
 The manufacturing process used to make the product.
 The product/services must be different from competitors’ products.
 The packaging of the product

10.2 Price
 The price of a product refers to the amount of money that must be paid by the
consumer to obtain the product.
 The proposed business must include its pricing policy in the business plan.
 The pricing policy describes the way in which the price is used to attract customers.
 The price needs to cover all costs and must appeal to the target market.
 It must be affordable for the consumers.
 Good access to the product/service will increase sales.
 Cash or credit facilities may affect the customer’s attitude to the price.
 Customers may be aware of other sellers who are selling the same products for less.

10.3 Place/Distribution
 The location where goods and services are sold.
 Place where consumers can access the goods or service.
 The business can sell the product directly to customers itself or can market the
product through other businesses.
 Businesses may use the following channels of distribution:
o Direct selling: manufacturer sell directly to consumers.
o Door to door selling businesses employ salespeople to sell door to door and they
carry few stocks with them.
o Mail Order: Large businesses print catalogues that can be used by consumers to
order of their choice. Small businesses advertise in local paper inviting
consumers to buy direct from the business.

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o Telephone selling: the business employ people who phone members of the
public and try to persuade them to buy their goods.
o Internet: businesses use systems on the internet to allow customers to order
their shopping online and have it delivered to the door

10.4 Promotion
 Refers to how the business is going to make its target market aware of its product or
service.
 The proposed business must include detail about its promotion policy.
 The promotion policy must describe how sales of products will be promoted.
 Outlines the following methods of advertisements:
o Advertising through the radio, magazines, press, television etc.
o Special offers
o Trial products such as free sample for testing
o Free gifts
o Direct mailing
o Online marketing
o Social media
o Public relations
o Brand awareness

10.5 People
 Refer to employees, management, directors, and shareholder/All people involved in
selling the products.
 The business plan must include detailed information of people that will be involved in
the proposed business and in making a business.
 They can affect the business with their knowledge, skills, and attitudes.

10.6 Process
 Refers to processes that are designed and implemented to ensure a pleasant
shopping experience.
 Describes the way in which the marketing and sales processes are carried out.
 The process of giving a service and the behavior of those delivering the service are
important for customer approval of staff to customers keep customers happy.
 Examples of systems and processes that will ensure a good customer experience:
o Systems and processes to ensure that consumers do not wait long in cues/for
goods delivered.
o Systems and processes to make sure telephonic messages are dealt with and
delivered to the right person.
o Systems and processes to ensure that e-mailed messages are read.

10.7 Physical environment

 Refers to the environment where goods and services are sold/service rendered.
 It includes the appearance of the building and the uniforms of employees.

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 The physical environment must be appropriate and make the customer feel
comfortable.
 Clean and functional facilities attract and retain customers.
 Well decorated reception also helps to reassure customers that the business offers
best services and values their customers.

11 Strategies to overcome competition in the market.

 The business should use the following strategies to overcome competition in the
market:
o Sell quality products and services.
o Offer after-sales services.
o Charge reasonable prices.
o Conduct intensive marketing campaigns.
o Make use of clever advertising slogans
o Make your product unique.
o Provide attractive product displays.

12 Financial plan including a balance sheet.

 It is a detailed description of the entrepreneur’s financial contribution, the funding
requirements, projected cash flow statements for a three-year period.
 The purpose of financial analysis is to project/predict the profitability of the proposed
business and also to project how long it will take before the business starts to show a
profit.
 A Financial plan includes the following elements.

ELEMENTS DESCRIPTION
Budget  Monthly indication of projected flow of cash in and out of the
business
 Helps the owner to control the spending money by comparing the
actual income and expenditure.
Cash flow  Refers to cash flowing in and out of the business.
statements over a  Helps the owner to identify operational difficulties the business is
three-year period going to experience and any need for more finance
Income statement  A monthly account of sales and expense
 Shows profit and loss.
Break-even point  A point at which profits are equal to expenses/ A business does
not show profit nor loss.
 Shows how much the business sold to cover all expenses before
making a profit
Balance sheet  A list of all business assets, liabilities, and owners ‘Equity at a
specific point in time
 Assets include land, buildings, equipment, vehicles, money in
bank account.
 Liabilities are monies owed to other people or businesses such
as bank loans, buying on credit, bank overdrafts etc.
 Owners’ equity-is the difference between the total liabilities and
total assets.

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