new business module

INTRODUCTION TO BUSINESS 27
The difficulty for starting entrepreneurs is that they have to
establish their business plans based on a business idea, initial
market estimates and financial projections instead of existing
business data. This makes establishing a business plan more
difficult.
3.3 What needs to be planned?
As mentioned earlier, every business conducts three basic
activities: buying, producing and selling. It is these basic activities
that need to be planned, along with all the ensuing business
relations, notably relations with suppliers, employees and
customers (see Diagrams 1 and 2).
The list below presents a selection of aspects that typically need
to be considered when planning a new business. 4 Addressing
these questions systematically and sequentially is called planning,
and the final answers to the questions become the business
plan. A good business plan helps entrepreneurs to:
• obtain a good understanding of their business
• solve problems before they actually occur
• reduce the risk of loss
• prepare for possible difficulties
• develop self-confidence.
A business plan is an essential document for starting a business
and making it successful. It provides information on the
type of business, the market the business is going to operate
in, the way in which the business is going to produce its goods
or services, the costs of operating the business, the way the
business is financed, and the profit the business is expected
to generate. 5
4 The following is adapted from BDS (2008d).
5 See, for example, CISP (2011, p. 70), CARE (2010, p. 51), ILO (2009b), and BDS
(2008a, p. 26; 2008d, p. 8).