TOPIC 7: BUSINESS PLANNING PREPARATION AND POLICY DOCUMENTS

A business plan is written document that summaries the operational and financial objectives of a
business and contains the detailed plans and budget showing how the objectives are to be realized

Steps involved in preparing a business plan

 Selecting a business opportunity or type of business to engage in. this involves scanning the
environment to generate many business ideas to choose from.
 Conducting market survey for the selected type of business. This involves checking whether
the entrepreneur’s chosen business idea can be developed into a profitable business in terms of
fulfilling the market needs.
 Collecting all the relevant data concerning the different aspects of business and establish the
costs of different items like machinery and equipment, raw materials, transport etc.
 Drafting the business plan to be discussed with experienced people. This business plan enables
the entrepreneur to know how the business will be organized, establish the amount of money
needed to start and run the business before starting it.
 Discussing the drafted business plan with technical / knowledgeable or experienced people in
similar business.
 Making a final business planning after having discussion with knowledgeable people.
 Finalizing the business planning process by preparing an action plan for implementation of the
planned activities

ELEMENTS / COMPONENTS OF A BUSINESS PLAN

 Executive summary
 1. General description of the business
 2. Statement of mission, goals and objectives
 3. The marketing plan
 4. The production plan
 5. The Organizational plan/ administrative/ management plan
 6. The financial plan
 7. The action plan

EXECUTIVE SUMMARY
This is an over view which summaries the key points of the business plan.
Example
You have mobilized savings and establish business making gift bags. Develop its executive
summary.

1
 TRACY GIFT BAG BUSINESS ENTERPRISE
P.O BOX 1010, KYENGERA
TEL: 0413676767
THE EXECUTIVE SUMMARY OF TRACY GIFT BAG BUSINESS ENTERPRISE

 Back ground of the business. It started 2 years back as a small business

but is growing steadily. It is located in Kasubi trading center opposite shell
Petro station and it is owned as a sole proprietorship business.
 Objectives of the business. It is aiming at maximizing profits at 50% of
sales every year.
 Products it offers. It offers gift bags and paper bags
 Overview of the market of the products. The market of the business
products is expanding steadily.
 Competitive advantages. The business makes high quality gift bags which
are cheaply charged compared to other business competitors.
 Projected growth. It is planning to open up other branches as a strategy
to expand the market share.
 Key members of the business. They include Tracy Namutebi assisted by
her sister.
 Funding requirements of the business. The following requirements
needed to be financed.
Fixed capital requirement
Land 3,000,000
Furniture 1,000,000
Startup expenses
Market survey expenses 500,000
Obtaining trading license 200,000
Working capital requirements
Administrative expenses 400,000
Raw material costs 3,000,000
Total 9,100,000
Prepared by ………………………………………………

2
 BUSINESS PROFILE
Example
You are the general manager of Zam Zam hardware.
Draft a profile of the business
ZAMZAM HARD WARE
P.O BOX 910 KYENGERA
TEL: 0704911227

BUSINESS PROFILE
i. Name of the business. The business name is ZAMZAM hardware located in Kyengera
trading center opposite shell station
ii. It deals in all construction materials and equipments like cement, iron sheets etc.
iii. Back ground of the business. It has been in existence for the last 10 years. It started
as a small business but it is growing steadily.
iv. Marketing strategies. It markets its products through issuing business cards, fliers and
brochures to customers. It also offers its products at a reduced price compared to other
business competitors.
v. Mode of ownership. It is a sole proprietorship business owned by Sempala Mark
assisted by his wife and other family members.
vi. Business vision. To be the most reliable and preferred Hardware providing the best
Hardware products in Uganda through offering high quality products / services and at
affordable rates”
vii. Business mission. “To distributed the best hardware products at affordable prices”.

Assignment
In your senior six vocation you have mobilized small savings and set up a business making
gift bags
a) Present its profile
b) Present an organizational chart for the business
c) Present its production plan.

3
Example
You have mobilized savings and set up a small bakery prepare
i. General description
ii. Business mission and vision statement
KJS BAKERY
PO BOX 2223, KAMPALA
TEL: 0752818204
General description of the business
 Business name. KJS BAKERY
 Address and contact. P.0 box 2223, Kampala Tel: 0752818204
 Business location. It is located along Entebbe Road, Gangu village,
Busabala parish, Makindye Sabagabo Sub parish, Wakiso District
 Vision ; To be the leading producer and supplier of quality bakery products
in Uganda through offering quality product at affordable rates.
 Mission statement; To produce and distribute quality bakery products at
affordable prices to meet customers’ needs to the country
 Objectives of the business
o To expand the market share after 2 months of operation
o To improve on the distribution channel within one year of operation
 Goods offered. It offers bakery products like breads, bans, cookies,
daddies, cakes among others
 Customers served by the business. These are mainly supermarkets,
restaurants, wholesalers, small scale retailers, schools and households
across the country.
 What makes the business unique? It offers high quality products at a
price which is pocket friendly. In addition to that there is good customer
care given by workers.
SWOT ANALYSIS
Strength of the business
 Skilled workers
 Strong market base
 Quality , durable and long lasting products
 Strong financial base
Weaknesses
 Limited skilled labour e.g. machine operators
 Poor customers services
Opportunities
 Introduction of low cost products
 Increasing number of population in the area
Threats
 Stiff competition i.e. growing number of bakeries like Kiddawalime, M
products bakery etc
 Increasing growing bargaining power of customers
 Entry of low cost bakery companies

4
VISION STATEMENT.

This outlines the dream of a company. It streamlines what the business is aiming to a achieve in
future.

Vision statement

KJS BAKERY (U) LIMITED

P.O BOX 2223, KAMPALA
Email: kjsbakery@yahoo.com
Tel: 0756990077
Vision statement

“To be the leading producer and supplier of quality bakery products in Uganda through offering
quality product at affordable rates”

Mission statement
Mission statement, this is a brief statement that indicates the purpose of the business.
Mission statement for KJS mineral water bottling company
KJS BAKERY (U) LIMITED
P.O BOX 2223, KAMPALA
Email: kjsbakery@yahoo.com
Tel: 0756990077
Mission statement

“To produce and distribute quality bakery products at affordable prices to meet customers’ needs
to the country”

Goals. A goal is something (target) that one intends to achieve in a given period of time using a
given amount of resources. They are achieved with in a year and above

KJS BAKERY (U) LIMITED

P.O BOX 2223, KAMPALA
Email: kjsbakery@yahoo.com
Tel: 0756990077
Goals statement

 To control 60% of the market share in five years

 To increase sales by 30% in two years
 To realize an increase in profit of 20% within two years of operation.
 To open another branch in six years

5
OBJECTIVES STATEMENT. Objectives are specific targets that must be achieved in a specific
period of time. They happen within a year
KJS BAKERY (U) LIMITED
P.O BOX 2223, KAMPALA
Email: kjsbakeryl@yahoo.com
Tel: 0756990077
OBJECTIVES STATEMENT

o To increase output levels by 20% in six months

o To increase sales by 10% in six moths
o To expand the market share after 2 months of operation
o To improve on the distribution channel within one year of operation
o To reduce cost of production by 5% in nine months
Marketing plan
This is an analysis of the possible position and opportunities of a business being planned in the
present market situation
Example. You are the general manager of one of the fast growing bakeries. Prepare
i. A marketing plan
ii. Production plan
iii. Organizational plan

KJS BAKERY (U) LIMITED

P.O BOX 2223, KAMPALA
Email: kjsbakery@yahoo.com
Tel: 0756990077

MARKETING PLAN
Target customers: the main customers are super markets, restaurants, wholesalers, small scale
retailers, schools and households across the country
Product offered: Products dealt in are breads, bans, cookies, doughnuts, daddies etc.
Position of business competitors: The direct competitors of KJS Bakery are M products,
Kiddawalime, Denovo bakery. Their strength lies in having large capital base and their weakness
are poor products distribution and high price.
Expected sales: The business aims at selling products not less than 200,000,000 shillings by the end
of every accounting period of the year.
Pricing of products. The retail prices for the different products of KJS bakery compared to those of
the competitors are as follows
Product Our price (shs) Competitors price (shs) Difference (shs)
Breads (family) 4,500 5,000 500
Doughnuts 3,500 4,500 1,000
Daddies 2,000 3,000 1,000
Cakes 5,000 4,500 500

Distribution strategy: Products are directly sold to customers from the business premises using
motor vehicles to reach most customers directly and through intermediate where they are readily
available especially wholesalers and retailers.

6
 Promotion and advertising strategy: The business products are promoted and advertised through
selling high quality bakery products, and advertising on television for example NTV.

Projected marketing expenses: The business sales for the shop and snacks shs 200,000,000,
expenses shs 40,000,000, expenses for adverts, sign post, business cards, commission on sales men
shs 80,000,000

Pricing strategies. Products are priced basing on competitors price and demand.

Terms and conditions for selling products. The bakery products are usually sold on cash basis to
avoid bad debts. However those who buy in large quantities have credit worthy i.e. supermarkets
and some wholesalers are given credit facilities with a cash discount of 5% on payment.

ASSIGNMENT.
You have mobilized some savings and opened up a restaurant ,prepare its marketing plan.

PRODUCTION PLAN.
It is an analysis of the projected need for producing (manufacturing) the proposed goods or services
(product).
KJS Bakery
Tel: P.O BOX 2223, KAMPALA
Email: kjsbakery@yahoo.com
Tel: 0756990077

PRODUCTION PLAN
i. Business premises and location. The business is located in Gangu Wakiso district near the
tax park. The site is accessible and it is near the taxi park therefore there is a ready market. The
premises are rented at a cost of shs 1,000,000 per year with dimensions 120 meters length by
70 meters width
ii. Products offered: Products dealt in are breads, bans, cookies, doughnuts, daddies etc.
iii. Manufacturing process and flow and layout. KJS Bakery produces high quality breads and
doughnuts nuts. Basing on projected demand it produces 5000 small breads of 200 shillings,
medium breads of shs 500, 1500 breads of 500g each of shs 1800 and 1000 breads of 1 kg of
shs 3600.
The process flow is as below

Mixing ingredients Baking Slicing

Selling and distribution Packaging

7
iv. Choice of machinery and equipment. The business uses both power driven and hand driven
machines and they are purchased from local suppliers of Katwe trading centre and others are
imported from UK and UAE.
Summary costs for machinery and equipment

No. Details of Description Unit cost (shs) Total (shs)

1 Generator 1,000,000 1,000,000
2 Micro wave 5,000,000 5,000,000
3 Slicing machine 500,000 500,000
4 Baking machine 2,500,000 2,500,000
Total cost 9,000,000

v. Raw materials and consumables. The main raw materials include wheat, salt, sugar, yeast,
fats and water. These are estimated at shs 72,600,000 for the first month of operation and are
purchased from Kikubo shopping centre at reduced prices

Type of raw materials quality Unit cost (shs) Total (shs)

Wheat 10,000 kg 4,000 40,000,000
Salt 5,000kg 800 4,000,000
Sugar 8,000kg 3,000 24,000,000
Yeast 3,000kg 1,200 3,600,000
Fats 1,000kg 1,000 1,000,000
Total 72,600,000

vi. Production standards and quality objectives to be maintained during production process, the
business follows its limit of deviation from set standards and the prescribed quality standards
of Uganda National Bureau of Standards to as to minimize deviations from the required
production and quality standards.
vii. Labour requirements. The bakery employs 2 technicians with bachelor degree of food
science and technology, 2 technical assistances with Diploma in pastry and bakery and 4 casual
workers with A level certificate.

8
 Position /post No. Wages /salaries (shs) Total amount (shs)
Technicians 2 500,000 1,000,000
Assistant technicians 2 300,000 600,000
casual 4 100,000 400,000
Total labour cost 2,000,000

viii. Power and utilities. The bakery uses electricity, diesel for a stand by generator and water for
deigning purpose. Electricity charge per month is estimated at shs 600,000. Diesel at shs
350,000 and water at shs 200,000 per month.
ix. Transport requirement. The factory hires a vehicle to move the raw materials from source
of supply and finished products to the market. The monthly transport cost on raw material is
estimated at shs 600,000 and finished goods at shs 120,000.

x. Purchasing and re-order level plans. The factory buys raw materials in bulk so as to obtain
discounts arising from bulk purchases and reduce transportation costs. The re – order level for
wheat flour is 1500kg, salt 1200kg, sugar 1300kg, yeast 100kg, fats 50g
xi. Waste disposal. The bakery has waste products like burnt breads. These are sold to piggery
farmers to feed their pigs
xii. Production control requirement. The business uses two tanks for storing water, office
equipment like office chairs for seating on by workers and relaxation, tables, computers for
storing data and lockers for storing written information.
xiii. Packaging. The products are packaged in polythene bags and boxes

Packaging material cost (per month)

Type of material required Quantity Unit cost (shs) Total amount (shs)
Boxes 10,000 100 1,000,000
Polythene bags 250,000 30 750,000
Total 1,750,000

ASSIGNMENT.

You are the production manager of Ice Soft Drinks. Develop its production plan.

ORGINISATION PLAN.

This a frame work around which machines and labour are put together to have a moving
organization.

9
 An example of an organization chart.

ORGANISATIONAL PLAN / ADMINISTRATION PLAN

KJS BAKERY (U) LIMITED

P.O BOX 2223, KAMPALA
Email: kjsbakeryl@yahoo.com
Tel: 0756990077

ORGANIZATIONAL PLAN / ADMINISTRATIVE PLAN

i. Nature of workers employed. It employees both skilled and semi-skilled workers .Five (5)
workers are employed in the packing section, five (5) workers are employed in the labeling
section and ten (10) workers are employed in packaging section, six (6) are employed in the
dispatch section. These are semi-skilled. Each section is headed by a departmental manager
who supervises all the workers under his / her chain of command and these are skilled ones.

ii. Workers qualification, Skilled and knowledge. The five directors of the company are
holders of degrees in business administration while the departmental managers are holders of
bachelor’s degrees in their respective fields. Their assistants are diploma holders while the
casual workers are just semi-skilled with O level certificates.
iii. Tasks, duties and responsibilities of workers. The general manager oversees the work of
other departmental managers. The Human resource manager is in charge of inspection of
production for quality, the marketing manager is in charge of recruiting, training and
development of workers. The causal worker package, carry the products to the store or truck
for selling and distribution.
iv. Worker’s remuneration / pay and other benefits. Payments are made on every 30th day of
each current month of work through individual bank accounts of workers. Each category of
workers is paid differently as illustrated.

s/No Position Number of workers Salary (shs) Amount (shs)

1. Directors 5 1,200,000 6,000,000
2. General managers 1 900,000 900,000
3. Departmental managers 4 700,000 2,800,000
4. Assistant heads 4 500,000 2,000,000
5. Casual workers 21 200,000 4,200,000
Total 35 15,900,000

In addition to salary, all workers are entitled to free breakfast, lunch and medical care. The general
manager gets all the above as well as free accommodation and airtime.

10
v. Hierarchy of authority.
An organizational chart for the business
Share holders
(Owners of the company)

Managing directors
Responsible for controlling the
implementation of company’s goals

General Manager
The overall controller of their
departments

Production Marketing Purchasing Human

Financial manager manager manager resource
manager manager

Assistant Assistant Assistant Assistant

Assistant production marketing purchasing Human
financial manager manager manager Resource
manager manager

Supporting staff

Assignment
You own a small restaurant in one of the city suburbs.
a) Develop its general description
b) Prepare its (i) Production plan

11
 (ii) Marketing plan
(iii) Organizational plan

FINANCIAL PLAN
This covers the financial requirements of the proposed business.
FINANCIAL NEEDS OF A POTENTIAL BUSINESS
The success of every business depends on proper identification of business needs. Like human
beings have needs such as food security is the same case with business. The business needs include;
INVESTMENT NEEDS
These are need that an entrepreneur invests in order to get a return. These needs are either capital
investment need or working capital needs. Capital investment needs include
 Acquisition of land
 Site preparation
 Buildings
 Machinery and equipment
 Installation of fixtures and fittings
 Furniture
WORKING CAPITAL NEEDS
This refers items needed to facilitate day to day activities of the business. These include;
 Purchase of raw materials
 Payments of labour
 Payment of utilities(water, power, telephone)
 Transport costs
 Packaging materials
 Payment of tax
 Machinery repairs
 Stationery and postage
 Payment of Interest on loans

PRE OPERATING NEEDS

These are business needs that the entrepreneur meets before commencement of business. They
include;
 Business registration
 Trading license
 Market research
 Installation expenses
 Advertising
 Administrative costs
 Legal fees
 Supervision expenses
 Initial rent

12
 An illustration of a financial plan
Example one
You own a juice processing company and you have obtained funds worth 4,000,000 from
Stanbic Bank. Prepare a financial plan.
STAR JUICE PARKERS
PO BOX 3342, KAMPALA UGANDA
TEL: +2564317889900
FINANCIAL PLAN
Requirements Unit cost (shs) Amount (shs)
i. Fixed capital requirements
 Purchase of land 1,000,000
 Construction of building 200,000
 Purchase of business vehicle 500,000
 Purchase of tools and equipment 200,000
 Purchase of computers 100,000
 Purchase of furniture 80,000 2,080,000
Total fixed capital requirements
ii. Startup expenses 20,000
 Registering the business 30,000
 Trading license expenses 20,000
 Recruiting employees 10,000
 Carrying out market research survey 10,000
 Promotional expenses 30,000 120,000
 Installation of utilities
Total startup expenses 400,000
iii. Working capital requirements 500,000
 Payment of labour 50,000
 Raw material costs 40,000
 Advertisement expenses 1,800,000
 Transport expenses 4,000,000
Total working capital requirements
Total financial requirements
iv. Financing of the business

Source of funds Amount (shs) Cost implication % interest

Loan from Stanbic Bank 4,000,000 400,000
Total 4,000,000 400,000
v. Expected sales: Star juice packers expect sales revenue of shs 5,000,000 in one year’s time.
vi. Profitability of the business. Star juice packers expect a rate of return on investment of shs
1,000,000 at the end of the first year.

13
vii. Break even sale of the business. Star juice packers expects a break even sales of 5,000 bottles
of juice at shs 100 each bottle.
Prepared by Approved by
Sign…………………
Kato Sam Name………………..
ENTREPRENEUR Tittle …………………
N.B
 Fixed capital requirements should consume more amount than others

Types of budgets
1. Fixed capital budget
TOOTO DECORATORS
P o 170 mbale
Fixed capital budget
Fixed capital requirements shs
Acquisition 100,000
Purchase of machines tools 100,000
Construction of business premises 400,000
Purchase of furniture 500,000
Truck 200,000
Total 1,300,000

Pre operating budget

METHA HONEY MILLERS

P o box 120 mbale
Pre-operating budget
Requirements shs
Business requisition 1,000,000
Trading license 1,000,000
Market research 1,000,000
Installations expenses 3,000,000
Advertising 1,000,000
Administrative costs 2,000,000
Initial rent 1,000,000
Total 10,000,000

14
 Working capital budget
METHAT MEAT PROCESSOR
P. o.box120 mbale
Working capital budget
Requirement shs
Purchase of materials 1000,000
Payment of labour 1000,000
Payment of utilities water power telephone 1000,000
Transport costs 1000,000
Packaging materials 1000,000
Payment of tax 1000,000
Total 6000,000

OTHER BUDGETS
Marketing budget
Production budget
Organizational budget

ACTION PLAN / IMPLEMENTATION PLAN

This is a layout of the sequenced steps towards achieving a business goal. It helps in implementing
the business plan.
An action plan is very important business component because it will guide an entrepreneur on the
different activities to be undertaken, one after another and the duration that each activity will take,
sometimes plus the responsible parties or personnel to pioneer each activity.

15
Example one
You have obtained enough funds from Stanbic Bank (loan) to run a plastic manufacturing business.
You are required to prepare / draft a one year action plan for your firm.
No Activity Time frame

01 Carrying out market research / market survey January

02 loan/ trade credit application February
03 selection of business site and other formalities March
acquiring work premises / construction
04 ordering for fixed assets April
05 selection of the required personnel May
06 installation of machinery and equipment June
07 application / acquiring of utilities July
08 acquisition of raw materials August
09 carrying out production trial September
10 carrying out market assessment October
11 training and development November
12 publicity and inauguration / launching December
13 mass production December

16
Example two
Your bakery has taken off and would like to establish a new branch. Prepare an Action plan for
implementing the planned business activities.
Action plan or implementation plan
Name of the business and address

Activity Time Persons Resources needed Indicators of

frame responsible success
(2016)
4th-10thoct Tonny Juma  Money Availability of
 This column money
must be filled in
stationery
Preliminary market
survey
Mobilizing financial
resources
Acquisition of land
Construction of building

Acquisition of machines,
tools and equipment
Installation of machinery,
tools and equipment
Installation of utilities ie
water and electricity
Recruiting of staff
Registration of the
business

Purchase of raw materials

e.g wheat flour

Production trial
Carrying out publicity

Starting commercial
production
Official opening /
launching

17
NB.
 Activities should be presented in present continuous tense
 Chronological order should be observed when presenting the work

18