BUSINESTWO
CHAPTER S
PLANNING
Introduction
To start or expand exiting business needs:
to work on opportunity identification and
evaluation
To develop Business ideas
Preparing a business plan is indispensable
Otherwise the business will fail.
Opportunity Identification and
Evaluation
The first step in entrepreneurship is opportunity
identification.
Opportunity identification can be divided in to:
Scanning the environment
Identifying the opportunity
Developing the opportunity
Evaluating the opportunity and
Evaluating the team
Scanning the Environment or
getting an idea
Scanning environment results in:
Getting an idea – thought, intention, scheme,
initiative.
Opportunity – favorable set of conditions for
doing something.
• The environment imposes both opportunities and
challenges.
Opportunity
Identification
Opportunity identification is ability to see,
discover and exploit opportunities that others miss.
It is the process of seeking out better ways of
competing.
Includes:
Scanning the informational environment
Being able to capture.
Opportunity Development
Recognize and make effective use of abstract
Problems can be changed into business opportunities
Opportunity Development - is the process of
combining resources to pursue a market opportunity
identified.
Involves a systematic research to refine the idea to
the most promising high potential opportunity that can
be transformed into marketable items.
Opportunity Evaluation
Considers:
Risk
Capital
Cost
Returns/profitability
Values of goods/services
Competitive advantage
Assessment of the
Entrepreneurial team
Strong team skills are key for successful business.
Team focus i.e. experience, working under pressure,
creation of goods or services.
Sales i.e. persuasion
Management –i.e. Technical, Human relational,
motivation.
Ownership i.e. decision making, commitment,
finance
Business idea Development
A business idea is a short and precise description of
the basic operation of an intended business.
Three types of business ideas
1. Old Idea – Here an individual copies an existing
business idea from someone.
2. Old Idea with Modification – the person accepts an
old idea from someone and then modifies it in some way
to fit a potential customer’s demand.
Business idea identification
3. A New Idea – This one involves the invention of
something new for the first time.
All business ideas are not equally worth.
This involves Identifying promising business ideas
among others.
Selection may depend upon:
Goods or service to sell
Cont’d…
Customers
Strategies i.e. how to sell goods or service
Relation between business and the environment
Ideas vs. Opportunities
Opportunity No opportunity
Idea A venture with A venture without
potential is potential is
conceived conceived
No idea Missed opportunity Correct rejection of
an idea
Entrep Lecture Slide, 2022
Methods of Generating Business
Ideas
Approaches to generating business ideas:
[Link] from successful business owners
2. Experience survey (i.e own experience, other
people’s experience).
3. Survey local business area
4. Scanning the environment including:
natural resources,
skill of local community
Methods Cont’d…
Import substitution
Waste products
Publications
trade fairs and exhibitions
5. Brainstorming - means opening up your mind and
thinking about many different ideas.
consists of participants & moderator in which people
are stimulated to greater creativity by meeting with
others.
Methods Cont’d…
Participants should be in similar experience &
profession.
Rules
No criticism is allowed-no negative comments
Free wheeling is encouraged – the wild the idea the
better
Methods Cont’d…
Quantity of idea is desired – the greater the number
the more likelihood of useful ideas emerging.
Combinations and improvements of ideas are
encouraged.
6. Structured Brainstorming - when you think of the
different processes that are involved in the operation of
a particular business and the goods/services.
Methods Cont’d…
Try to think of all the businesses that are related to
different aspects of a product:
Those involved in production,
Those involved in the selling process,
Those involved in recycling or re-using materials,
7. Focus Group - is a group of individuals providing
information on a structured format which is led by
moderators.
Methods Cont’d…
characterized by an open and in depth discussion.
8. Problem Inventory Analysis - consumers are
provided with a list of problems in general product
category.
9. Free Association - a word or phrase related to the
problem is written down, then another and another, with
each new word attempting to add something new to the
ongoing thought processes,
Methods Cont’d…
thereby creating a chain of ideas ending with a new
product/service idea emerging.
10. Forced Relationships - the process of forcing
relationships among some product combinations.
Business idea screening
Idea screening is the process to spot good ideas and
eliminate poor one.
Business idea screening
to screen the business idea generated, three
approaches are discussed as follow:
i. Macro-screening i.e. availability of finance,
demand.
ii. Micro-screening i.e. solvent demand, availability
of raw materials, skilled labor, financial resources
iii. Scoring the suitability of business idea i.e.
rating factors.
Business idea screening …
Screening can be done by talking to:
Customers
Competitors, suppliers,
Financial institutions
Key informants and opinion leaders i.e.
experienced peoples.
BUSINESS
PLANNING
Your Road Map to Success
07/09/2025 Entrepreneurship Development 22
Centre Ethiopia
Rational
The world of small business is not something to
be entered into haphazardly. To increase your
chances of business success, you must do your
homework.
Starting or running a business without a proper
planning is like taking a trip to a destination
for the very first time, without a road map.
What is planning?
“If you don’t know where you are going, any road
will take you -there." Think about that!
Planning will show you your destination and the best
road to get there.
Workable business plan is your road map which will
increase your chances of succeeding in business.
Planning Cont’d..
Planning means thinking and working out what to do
about something before it happens.
For your business, planning means thinking about and
working out what to do in the future to improve your
business.
Concept of business plan
Business plan - a carefully prepared document that
outlines the nature of the business, the objectives of the
entrepreneur, and the proposed actions that will enable
the entrepreneur to reach those objectives.
a written document describing all relevant internal
and external elements and strategies for starting a
new venture.
Business Plan Cont’d…
the blueprint of the step-by-step procedure that
would be followed to convert a business idea into a
successful business venture.
A well-designed plan helps:
To identify opportunities.
Scan external and internal environments
Allocates resources
Business Plan Cont’d…
Provide important information about marketing,
finance, operation, HR etc.,
Objectives of business plan
Give directions to the vision formulated by
entrepreneur.
Objectively evaluate the prospects of business.
Monitor the progress after implementing the plan.
Business Plan Cont’d…
Persuade others to join the business.
Seek loans from financial institutions.
Visualize the concept in terms of market availability,
organizational, operational and financial feasibility.
Guide the entrepreneur in the actual implementation
of the plan.
Identify the strengths and weakness of the plan.
Business Plan Cont’d…
Clarify ideas and identify gaps in management
information about their business, competitors and the
market.
Identify the resources that would be required to
implement the plan.
Document ownership arrangements, future prospects
and projected growths of the business venture.
Identify challenges in terms of opportunities and
threats.
Developing a business plan
Business planning process
Business plan requires continuous review and updating
so that the plan remains viable even in changing
business situation.
Steps of Business Planning Process
1. Preliminary investigation
Review available business plans (if any).
Draw key business assumptions on which the plans
will be based (e.g. inflation, exchange rates, market
growth, competitive pressures, etc.).
Scan the external environment and internal
environment to assess the SWOT.
Steps Cont’d…
Seek professional advice from a friend/relative or a
person who is already into similar business (if any).
2. Opportunity identification and idea generation
Opportunity identification and business idea
generation is the first stage of business planning
process.
It involves generation of new concepts, ideas,
products or services to satisfy demand.
Steps Cont’d…
3. Environmental scanning - carried out to analyze
the prospective SWOT/C of the business enterprise.
4. Feasibility analysis - carried out to analyze the
prospective SWOT of the business enterprise.
Prerequisite for demarcating environmental scanning
and feasibility study.
Steps Cont’d…
Environmental scanning is carried out to assess the
external and internal environment of the geographical
area/areas where, entrepreneur intends to set up his
business enterprise, whereas
Feasibility study is carried out to assess the feasibility
of the project itself in a particular environment in
greater detail.
Major Feasibility Analysis
Areas
[Link] Analysis
[Link] Analysis
[Link] Analysis
[Link] and Administrative Analysis
[Link] Analysis
6. Economic Analysis
Feasibility Analysis
Feasibility analysis requires both primary and
secondary research.
5. Report preparation
Once environmental scanning and feasibility study are
carried out then, a business plan report is prepared.
Business plan is written document that describes
step-by step, the strategies involved in starting and
running a business.
Components of Business
Plan
[Link] sheet
Name of the project
Address i.e. HQ
Name and address of the promoters
2. Executive summary
The first impression about the business proposal
Often < 3 pages
Components Cont’d…
Highlighting core elements of the business
proposal.
3. The business
Detail concept about the business concept
Describes:
Objective
History
Formation etc.
Components Cont’d…
4. Funding requirement
Fund utilization
Source i.e. debt equity ratio
Should convince examiners i.e. investors and FIs
5. The product or service – brief description of the
Product or Service i.e. Features, range, etc.
Components Cont’d…
6. The plan
Marketing plan - marketing mix strategies,
marketing research.
Operational plan - location, MRP, budget
Organizational plan - chart, manpower
composition.
Financial plan - projected sales, IS, BEP, BS, CF.
Components Cont’d…
7. Critical risks - Political, economical, market, etc.
8. Exit strategy – provide details about how the
organization would be dissolved.
Share of stakeholders in case of winding-up
