FORMAT OF BUSINESS PLAN

A complete business plan is arranged in the following manner: Cover letter;

Cover page;

Executive summary/abstract;

Table of contents, and

Main body.

1. Cover letter

The cover letter is often enclosed with a business plan as an introduction to the purpose and contents of the attached plan. This letter specifies what the entrepreneur hopes to obtain from the submitted business plan which will subsequently be evaluated by the relevant recipient. It is best to end the cover letter by stating the willingness of the entrepreneur to furnish the recipient with additional materials to facilitate the understanding and approval of the proposed project.

2. Cover Page

The cover page presents basic introductory information which are as follows: Title of the business plan;

Logo, name, and address of the business;

Name of the writer(s);

Date of submission, and

The company's mission.

3. Executive Summary / Abstract

The Executive Summary or Abstract is the most important section in the business plan. It is the first section that will be looked at and is able to tell readers the position of the company and its direction. This section summarises the business plan in a clear and concise manner that will enable readers to understand the overall purpose and the desired outcome of the business. The Executive Summary includes several aspects which are as follows:

Objectives of the company;

Products or services being offered;

Market potential;

Project management;

Project costs, and Expected returns.4. Table of Contents

This page lists the main headings, tables, schedules, and appendices according to the page numbers. This list will facilitate readers in identifying the appropriate pages for easy reference.5. Main Body

The main body is the central and most vital section in creating a complete business plan. It contains information related to various aspects of the proposed venture, mainly on the administrative, marketing, operational, and financial plans as illustrated in chart below.

i) Introduction

This section introduces the proposed business venture. Items that need to be covered in this section include: Name of the company;

Nature of business;

Industry profile;

Location of business;

Date of commencement, that is the date the business starts its operations;

Factors in selecting the proposed venture, and

Future prospects of the business.

ii) Purpose of Preparing a Business Plan

A business plan is more than a tool to obtain financial resources. Preparing a business plan helps clarify the company's direction and creates a corporate philosophy. It provides a blueprint of the company which describes the company's products or services, the business l1wdel, the management team, the competitors and the business risks faced by the company. However there are five main objectives of preparing a business plan which are as follows:(a) View and evaluate the proposed business venture in an objective, critical, and practical manner

The entrepreneur can view and evaluate the proposed business venture inan objective, critical, and practical manner through strengths, "weaknesses,

opportunities, and threat analysis (SWOT).(b) Analyse and evaluate the viability a proposed venture

The business plan is prepared to assist investors' in evaluating viability and growth potential.(c) Convince relevant parties of the investment potential in the project

The business plan enables an entrepreneur to apply for loans or financing facilities from relevant financial institutions. The plan clearly states the required amount and purpose of the loan, facilitating the entrepreneur to convince the relevant parties of the project's investment potential. As such, the business plan helps financial institutions to evaluate the viability of a proposed project and make decisions on financing facilities.(d) Provide guidance in managing the businessA business plan helps an entrepreneur to track, monitor, and evaluate the company's progress. It is a living document that can be modified as he gains more knowledge and experience. By using the business plan to establish timelines and milestones, the entrepreneur would be able to gauge the company's progress and compare his business projections to actual accomplishments.(e) Allocate business resources effectivelyA business plan is used to attract capital investment, secure loans, and assist in attracting strategic business partners. The development of a comprehensive business plan illustrates whether the business has a potential to generate profits. Preparation of a business plan requires a realistic look at every phase of a business and allows an entrepreneur to show that he has worked out all the problems and has decided on the potential alternatives before actually launching his business.iii) Business/Company Background

This section gives details on the company's background. The basic information that will be included in this section are as follows: Name of the company;

Addresses (both business and correspondence addresses);

Telephone number/fax number/e-mail address;

Form of business ownership (sole proprietorship, partnership, or company);

Main business activities;

Date of commencement (the date when the business- starts its operations);

Date of registration and registration number-If the business is still in the process of registration, then it should be stated so)

Equity contribution (the contribution of owners towards the proposed business) -Contribution can be in the form of cash or assets, and

Name of the company's bank and bank account number.

iv) Background of Owner/Partners/Directors

This section focuses on two aspects, that is the personal particulars of the owner, partners, or directors, and the partnership agreement, which is made and signed by all the partners in the company. Personal particulars include: Name of the owner/partners/directors;

Identity card number;

Permanent address;

Correspondence address (includes website/e-mail address);

Telephone number;

Date of birth;

Age;

Marital status;

Academic qualification;

Courses attended;

Skills;

Present occupation, and

Experience.

v) Location of the Business

In this section, the physical location of the proposed venture is discussed in detail. Items to be included in this section are as follows: Physical location;

Location of building, and

Basic amenities.

vi) Organization/Management! Administration Plan

This section includes the company's mission, vision, objectives, organizational structure, details about the ownership of the company, management profile, qualification of members in the Board of Directors, remuneration plan, and administrative budget.

(a) Company's mission, vision, and objectives

The business is introduced by stating its vision, mission, and objectives. Vision is the long-term goal of the business. It is the result of the entrepreneur's dream of something that does not exist and his ability to create his dream so that the society is able to view it. A clearly defined vision provides direction, determines decisions, and motivates employees.Business mission is a statement of purpose or reason for the company's existence, the company's products or services, the clients or customers of the company, the marketing aspects, the geographical area, and the advantages of offering competitive products or services. It is a written expression of how the company will reflect the entrepreneur's values, beliefs, and vision.Objectives or goals of the company are more specific and must support the business vision and mission. Ideally, business objectives involve a shorter time period and have a definite time frame. In short, objectives should be Smart, Measurable, Attainable, Realistic and Timely (S.M.A.R.T).(b) Organizational chart/structureThe organizational chart presents the structure of the company. It shows how the lines of authority and responsibility flow within the company. The organizational chart is important as it shows the network or relationship between departments and sections in the company. Employees are able to know how the business operates. It also facilitates management to divide the jobs by categories and outline the responsibilities of each employee in the company.(c) Manpower planningThis section lists the personnel in the administration of the company, i.e. the relevant positions and the number of employees for each position.(d) Schedule of tasks and responsibilities

Here, the main tasks and responsibilities for each position are discussed in detail.(e) Remuneration plan

The remuneration plan comprises the remuneration scheme for each position within the company. The list includes the employees' monthly salaries or contractual wages based on their position in the company. It also incorporates the relevant contributions made by the company such as Employees Provident Fund (EPF) and Social Security Organization (SOCSO). The contribution of the employer to EPF is 12% of the basic salary and is subject to regulatory changes from time to time. Contribution made by the company to SOCSO is on an average of 2.5% for employees with a monthly salary of below RM2000.(f) List of office equipments and supplies

This section lists the office furniture, equipments, and office supplies necessary for the administration of the company.(g) Administrative budget

The administrative budget consists of all administrative expenses under the following categories: Capital expenditure/fixed asset cost;

Working capital/monthly expenses, and

Other expenses. vii) Marketing Plan/Analysis

Marketing is a process of creating and attracting customers to the company. The entrepreneur should realize that customers are the lifeblood of a business venture.(a) Description of products or services

This section describes the products or services offered by the company in detail. The proposed products or services should be related to the needs and wants of the target customers.(b) Target marketHere, the customers' profile in the target market area is explained. The entrepreneur should identify the different market segments that exist in the same market. Demographic factors are often used by marketers to segment a target market, such as age, occupation, gender, education level, social class of income, family, race, and sub-culture.(c) Market sizeThe market size is usually estimated in unit of goods or sales (which would be in RM) or both.(d) CompetitorsIn this section, the entrepreneur should list at least three competitors in the same target market, together with their strengths and weaknesses.(e) Market shareThe market share is computed as a percentage of the market size. Information on the products or services, customer needs and wants, as well as competition within the market must be explained.(f) Sales forecast

The sales forecast is done on a monthly basis for the first year of business and extended to cover sales for the second and third year on a yearly basis.(g) Marketing strategy

The marketing strategy is a stage to determine whether the business is able to enter the market or compete with other competitors in the market and in the same business sectors. This strategy should be part of an ongoing self-evaluation process. It must be unique to the company and involve the following marketing mix: Product or service strategy such as brand, quality, packaging, protection ease of use, product differentiation, attractiveness, safety, labelling, design, and after sales services.

Pricing strategy which consists of cost-based pricing, value-based pricing, competition-based pricing, and factors affecting price.

Distribution strategy which are direct to customers or sales through retailers, wholesalers, or agents.

Promotion strategy which are through advertising, sales promotion, and publicity through flyers, pamphlets, or distribution of business cards.(h) Manpower planningThis section lists the employees in the marketing department in terms of their positions and the number of employees in each position.

(i) Schedule of tasks and responsibilitiesThis section discusses the main tasks and responsibilities for each position in the marketing department.

(j) Remuneration planThe remuneration scheme for each position in the marketing department is stated in this section. This list includes monthly salaries or contractual wages and all relevant contributions made by the company. Normally, the contribution of the employer to EPF is 12% of the basic salary and is subject to regulatory changes from time to time. Contribution made by the company to SOCSO is on an average of 2.5% for employees with a monthly salary of below RM2000.(k) Marketing budget

This section lists all the administrative expenses under the following categories:

Capital expenditure xed asset expenses;

Working capital/monthly expenses, and

Other expenses.viii) Operational Plan/Production Strategy

This section describes the uniqueness of the company's products or services and its benefit to potential and current customers. The entrepreneur should focus on areas where a distinct advantage exists.(a) Operational/innovation process

This section states the key steps or phases in the operational process towards producing the products or services of the company.(b) Process flow chart

The operational process of the company is depicted in the form of a flow chart.(c) Production schedule/capacity planning

The production schedule specifies the operational output in units of product or hours of operation that is relevant to the type of the business. The operational output should commensurate with the sales forecast stated in the marketing plan.(d) Material requirements

This section lists the raw materials or inventory needed in the operational process which includes the quantity required, price, and the name of suppliers. The list comprises the mode of payment which will be used to purchase the raw material and the ending stock that can be estimated as a portion of the monthly or yearly purchase.(e) Manpower planning

All the employees under the operation section of the business are listed according to the relevant position and the number of employees in each position.(f) Schedule of tasks and responsibilities

This section lists the main tasks and responsibilities of each position.

(g) Remuneration plan

The remuneration scheme for each position in the operations department is stated in this section. This list includes monthly salaries or contractual wages and all relevant contributions made by the company. Normally, the contribution of the employer to EPF is 12% of the basic salary and is subject to regulatory changes from time to time. Contribution made by the company to SOCSO is on an average of 2.5% for employees with a monthly salary of below RM2000.(h) Machines and equipment

All machines and equipment must be listed together with the estimated price, number of units, and the suppliers' names.(i) Operational layout plan

The entrepreneur should draw the floor plan of the operational space.

(j) Location of operations

This section specifies the site of business operations. The entrepreneur should state whether the building are rented, built by owners of the business, or purchased as a ready-built premise. If the premise is rented, the rental deposit as well as any renovation costs that have incurred should be reported. Some businesses have their operations, administration, and marketing sections under one roof or at one location while other businesses may have their operations factory in a separate location from

the administrative and marketing sections.(k) Operational overheads

Operational overheads consist of water, electricity, telephone, and gas facilities as well as other basic utilities that are essential to business operations.(l) Operational budget

The operational budget lists the administrative expenses under the following categories:

Capital expenditure/fixed asset expenses;

Working capital/monthly expenses, and

Other expenses.ix) Financial Plan/Strategy/Analysis

The financial plan or also known as financial strategy or funding request should be developed after analyzing the administrative, marketing, and operational plans. It gives an overall picture of the total costs that is needed to run the entire business venture.(a) Project implementation cost schedule

This section shows the initial amount of investment that is needed to launch a new project. It covers both long-term and short-term expenditure. Basically, the project implementation cost schedule is categorized into four components which are as follows: Capital expenditure/investment in fixed assets

All the fixed assets required by the project is stated. Information on these assets can be extracted from the operating budget under administration, marketing, and operations. Working capital/monthly expensesWorking capital includes monthly administrative, marketing, and operating expenses. The initial amount of working capital that is tobe allocated depends on the nature of the business and the length of the time required by the firm to generate its first sales. The minimum amount allocated should be sufficient to cover the first month's operating expenses. Other expenses

Other expenses refer to other costs that are required of implementing the proposed venture. Examples include business registration fees, road tax, stamp duties, deposit for rental and utilities, training fees, and other business licences. Such expenditure are considered one-off costs or costs that are paid on an annual basis. Contingency allowance

Contingency allowance refers to additional funds set aside for items that may emerge during the implementation of the project. Contingency allowance is normally allocated to cover unexpected costs. As a guideline, the amount of funds allocated is between five percent and ten percent of the total project implementation costs.(b) Schedule of financial sources

This section lists the sources of funds available to finance the project implementation cost. It is divided into two parts:(a) internal sources which consists of equity contribution in the form of cash or

assets, and

(b) external sources which consists of term loans, hire purchase, and other

sources(a) Internal sources Own capital/owner's equity contribution or cash and assets Owner's equity refers to the amount of funds contributed by the owner or partners in the business, which comprises cash and personal assets.(b) External sources Loans

Loans refer to long and short-term funds obtained from financial institutions.

Hire purchase

Hire purchase refers to a form of financing often used to purchase fixed assets such as vehicles, machinery, and furniture. The amount of financing depends on the type of assets and terms specified by the finance company. As a guideline, financial institutions may finance up to 80 percent of the asset's value. The balance has to be borrowed by the owner. Others sources

Other sources of finance may include government grants and personal

borrowings from individuals and companies.(c) Pro forma cash flows statement

Pro forma cash flows statement refers to the projected statement of cash inflows and outflows throughout the planned period. Cash inflows is the projected amount of cash flowing into the company whereas cash outflows is the projected amount of cash flowing out of the company. Pro forma cash flows statement is prepared on a monthly basis for the first year. For subsequent years, cash flows projections can be done on a yearly basis.(d) Pro forma profit and loss account/Pro forma income statement

The pro forma income statement shows the financial performance which is the expected profit or loss of the company for the planned period, usually for three consecutive years. This account is prepared for manufacturing, trading, and service-based businesses. The net profit obtained is the net profit before tax. The pro forma income statement is prepared for the first, second, and third year of the business. Generally, it is divided into three main accounts which are as follows:1) pro forma manufacturing account;

2) pro forma trading account, and

3) pro forma service account.1) Pro forma manufacturing account

This account is prepared for manufacturing or production-based businesses only. The cost of goods manufactured from this account is transferred to the trading and profit and loss account. Pro forma manufacturing account is prepared for the first, second, and third year of the business.2) Pro forma trading account

Pro forma trading account is prepared in trading companies. The calculated gross profit is transferred to the profit and loss account. This account is prepared for the first, second, and third year of the business.3) Pro forma service account

This account is prepared in service companies.(e) Pro forma balance sheet

The pro forma balance sheet is prepared to show the financial position of the company at a specific point in time in terms of are acquired and how the sources of funds are used to This account is prepared for the first, second, and third.The general elements of the pro forma balance sheet ill equity, and liabilities.x) Conclusion/Summary and Recommendation

This section concludes and justifies the purpose of preparing the business plan for the proposed business venture. The entrepreneur should highlight the viability and potential of the proposed project by highlighting its content and purpose.xi) Appendices

The appendices contain supporting documents that may be relevant to the proposed business venture but cannot be effectively fitted into the main body of the business plan. Items in the appendices include the credit history, resumes of key managers, pictures of the company's products, details on market studies, relevant magazine articles, licences, permits, legal documents, copies of leases, building permits, contracts, and a list of business consultants including attorneys and accountants.

INTRODUCTION

PURPOSE OF PREPARING BUSINESS PLAN

BUSINESS / COMPANY BACKGROUND

BACKGROUND OF OWNERS / PARTNERS / DIRECTORS

LOCATION OF BUSINESS

ORGANIZATION /MANAGEMENT / ADMINISTRATION PLAN

MARKETING PLAN / ANALYSIS

OPERATIONAL PLAN /PRODUCTION STRATEGY

FINANCIAL PLAN /STRATEGY/ANALYSIS

CONCLUSION/SUMMARY/RECOMMENDATION

APPENDICES