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Help to the Ambo Business Plan for Micro and Small Enterprises General Help to 3: Write down the type of business/activity in which the operator is engaged /would like to be engaged. Help to 4: Fill the starting and termination date of the planning period, specifying the date, month and year. Help to 5: Explain the work premises and other utilities at the operator’s disposal and describe the specific working premise problems, if any. If there is anything in the location that is of special interest for your business you can stress it, too. Help to 6: The yearly sales should be planned based on certain market surveys or past experience, if any is available. Planning the yearly sales enables to find out about the desired production amount (it makes no sense to produce more than you can sell) and the yearly income. Describe the months during which sales are expected to be high, in order to make the necessary preparations ahead of time and exploit the advantage. For defining the unit price per product/service you should first know the unit costs (see production costs) as well as the prices of your competitors. So probably you will at first fill only columns I-III, to define the possible production amount and after counting the costs per unit you can define the price per unit. Help to 7: Knowing the possible amount of products/services you can sell, you are now able to plan your desired production capacity, hence the machinery you will need for this amount. If you have already some equipment, then describe it here. Multiplying the quantity of the specific equipment by its unit cost will give you the total cost of the equipment. Depreciation is the theoretical price to the use of an asset. You need to know it to count later the costs of your product/service. One of the various methods of defining yearly depreciation, and the simplest one, is to divide the purchasing price of the asset by the number of years of usage. Help to 8: List down the equipment of production/service planned to be bought by the operator. Multiplying the quantity of the specific equipment to be bought by its unit price will give you the total costs of the equipment. Help to 9: Describe the yearly required raw material specifying the type of raw material, the quantity needed, unit and total costs. Indicate the source of raw material, whether it is self owned, obtained from the local market or imported from abroad. Help to 10: The general yearly operating expenses should be explained in order to know production costs and determine the price of the product or service. Unit costs are composed of material, labour, production overheads, administration and marketing costs, if the production of one product is in place. For several products: divide the production costs by the number of products. Help to 11: If logically planned, then columns I-III are the same as the yearly planned sales plan chart (see 6). If you multiply the quantity of production/service planned by its unit cost you will obtain the total cost of production or service. To define the unit costs you have to add the fixed costs per unit and variable costs per unit. Fixed costs are usually: administration expenses (tel, fax), stationery, rent, electricity, water, transport, public services, maintenance, advertisement, depreciation, entrepreneur’s salary/ wages and salaries (not piece wage!). Variable costs usually include: raw material, salary per produced piece (hint: for more details about counting the unit costs refer to the booklet on "Accounting and Cost Calculation” published by the same editor).
Help to 12: The yearly working capital
may be estimated on the basis of a three-month calculation of costs.
Working capital is mainly required to cover costs related to raw material,
salaries, simple hand tools of temporary nature and other operational as
well as administrative expenses. In addition, costs related to marketing
activities such as sales promotion and advertisement are also covered by
the working capital.
Help to 13: In order to determine the yearly gross profit, subtract all the appropriate yearly expenses from the yearly sales revenue. If the yearly tax expenses are subtracted from gross profit, the net profit will be obtained.
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