Question

1. 2. CASE STUDY As a business plan expert, you are required to advise a group of prospective entrepreneurs to prepare a business plan for an upcoming enterprise. The business plan represents a combination of various sub-plans covering the broad areas of activities in a business operation. The group has realised that they need an amount of R200 000 to start the business, however, the group managed to raise R120 000 and they need R80 000 more. Their effort to raise the balance through family and friends has proved difficult, yet they do not want to forego their fantastic business idea. A friend of the group has advised them to go to bank and borrow the amount needed. After visiting several banks and talking to the respective managers, the group settled for ABSA Bank whose manager seemed to have been impressed by their business ideas. While the bank manager was very willing to advance the group the money they required, she requested the group to furnish her with a business plan. The group has approached you as an expert in the business planning. In this view, advise the group on how to prepare a business plan in order to present to ABSA bank in fifteen days, by answering the following questions. As a Business Plan expert, explain to the group of prospective entrepreneurs what a business plan is and detail why it is important to have a business plan. (5) The entrepreneurs are confused as to which elements of a business plan are to be taken into consideration when drafting a business plan, advise them accordingly (5) 3. Upon receiving the start-up capital, they will need to purchase a number of tangible assets, but they are not clear as to what does "tangible asset" mean. Explain the term and make three examples of tangible assets. They were told by the bank to ensure in their business plan they include essential components but are not sure which components to include. Advise them which five components to include in the drafted plan. (5) 5. The group is unsure of the steps they need to follow when drafting a business plan and whether it is important to include sales and marketing strategy in the plan. Advise them accordingly of the steps to follow and detail the importance of sales and marketing strategy (10) 6. The bank also requested that the group details all their liabilities and they were confused as there are two types of liabilities, which are current and long-term liabilities. Explain the terms to the group of entrepreneurs. (02) The group also asked if you could explain the difference between a balance sheet and income statement 4P's of marketing are essential in helping a company to make necessary decisions in order to launch a successful product. Explain in detail to the group the 4P's of marketing. 4. 7. (02) 8. (08) 9. Lastly, a SWOT analysis is vital in the success of a business, explain what does the acronym stand for and its importance. (08)

Answer 1

Answer 1:

A business plan is a written document, generally a blueprint that proposes what business will do and how will it proceed in the market for earning the profits and revenues. It also determines the various strategies of the business including the functional strategies such as financial strategy, marketing strategy, HR strategy and operation strategy and the business strategies.

It is very important to write a business plan as it provides a short term and long term vision of the organisation and the milestones through which the organisation will be achieving its business strategies.

Answer 2:

Entrepreneurs should take into consideration the element of business strategy while focusing on the business plan. Business strategy provides the overall aim of the business and presents the strategies through which the aim of the business will be achieved. This helps the reader in assessing the overall plan of the business and provides a confidence to the other party for the performance and the future of the business.

Answer 3:

Tangible assets are the one that are present in the physical form and that can be viewed as an entity and can be felt and touched. The tangible assets that the entrepreneurs are required to acquire are land, setting up a factory, machineries, equipments, computers, devices, etc.

Answer 4:

Entrepreneurs should include following five components of the business plan:

1. Description of the company.

2. Market analysis

3. Competitive analysis

4. Description of Management and Organization

5. Breakdown of Your Products and Services