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MNE3701 NOTES
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Lecture notes of 10 pages for the course MNE3701 - Entrepreneurship And Small Business Management at University of South Africa (MNE3701 NOTES)
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MNE 3701Small Business Management
Chapter 6
Business Plan – is a document that outlines the basic concept underlying a business – specifically which problems the
business will solve and describe how you will execute your business plan to solve the problem.
Three key elements in every business plan
1. A logical statement of a problem and its solution.
2. A significant amount of cold, hard evidence.
3. Candour about the risks, gaps and assumptions that might be proved wrong
Reasons for drawing up a business plan
1. Internal stakeholders – should help sharpen the focus of those involved in the start-up. Carefully thought out
Objectives.
Each objective is collectively agreed upon in a joint discussion designed to plan and map out the future of the business,
The plan should scope out future scenarios and provide guidance about them and should analyse the likelihood of
success.
2. Reduce Failure – Thinking your plan through carefully will help you identify areas of risk and ways of avoiding these
areas where possible.
An entrepreneur must think through each facet of the business.
A business plan can thus provide a template for comparing actual with forecasted results.
Both failure and success should be comparably measured against what is expected
3. Attracting Finance - Here you need to think of a number of options. Who would be interested in investing? What
would they want in return? Do they want equity?
A business plan is a tool used by business insiders for direction and to aid in the development of relationships with
outsiders who could help businesses achieve their goals.
Entrepreneurs have two choices when it comes to writing a business plan:
The Short Plan
Only addresses the most important issues in a business’s success
The problem that needs to be solved for customers.
The strategy that will be developed to solve this problem.
The business model.
Measures used to gauge success.
Millstones to be met.
Tasks and responsibilities of the team.
The Comprehensive Plan
Provides an in-depth analysis of the critical factors that will determine a business success or failure..
Such a plan is beneficial when you are describing a new opportunity, facing significant change in the business
environment
Business Model
A business model explains in a systematic and clear way how a business will generate profits and cash flows, given its
revenue resources, its cost structures, the size of the investments and sources of risk.
Four key elements that make up a business model:
1. The Revenue Model
2. Cost Structures
3. Required Resources to Grow
4. Business Model Risk
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