Here is a guide on how you can prepare your business proposal. This business proposal guide will help you develop a clear picture of the framework of your existing or potential business.
The first step is to make a brief description of the project. You should be able to describe your business project in clear and simple terms. The most common way of describing a project is by mentioning its output, for instance, soap manufacturing projects, palm kernel oil manufacturing projects, garri processing projects, etc.
The next step is to provide information about the sponsors of the project. In what line of business have they been, and for how many years? How is their past experience related to the proposed venture, and how will it contribute to the success of the project? Assurance as to effective management is very important in all business proposals, so the proposed management arrangements should be detailed in all the functional areas of management, viz: production, marketing, finance, and personnel management. The curricula vitae of the managers should be provided if they have been recruited. Other technical arrangements related to the effective execution of the project should be clearly presented in this step.
In the marketing profile, the basic market orientation should be defined. Is your product for the local, regional, or foreign market? The marketing and sales analysis should consider the potential users of the product. What are the present sources of supply, and to what extent is the present demand satisfied by the present suppliers? What gap is your product going to fill in the market? The following critical factors should help you determine the market potential: the population figures, the income level of the target consumers, and the number of uses to which your product is applied. There should be analysis of the present and future competition together with the impact of substitute products.
A presentation of technical features of the project will form the next step in the proposal. This will include a description of the manufacturing process. This should be presented in a flowchart format showing how the raw materials flow from one process to the other. Special technical complexities should be clearly explained. Also, the source, cost, and quality of raw materials should be stated. Are the raw materials locally produced? What percentage is imported? Is there any import restriction on the importation of the raw materials?
Another important consideration is the project location. This should be analyzed in relation to available infrastructure, manpower, market, and raw materials. Do not forget to contact many possible suppliers of the specified machinery and equipment so as to secure the best technology. You should then compute the rated and installed production capacity per hour, per day, and per annum, giving allowance for work-free days.
An estimate of total project cost should include the cost of land and building, machinery and equipment, furniture and fittings, motor vehicles, and the working capital requirements. The working capital is usually computed by applying a percentage of the labour cost, the raw materials cost, and the overhead cost. A provision is always made to cover contingency requirements. The foreign component of the total project cost should be isolated for easy reference.
The proposed financial structure of the project will now be stated, intimating the expected sources and the terms of equity and debt financing. What percentage of the total project cost will be promoters finance, and what is the desired ratio of debt to equity? Where there are foreign technical partners or investors, efforts should be made to comply with the provisions of the Nigerian Investment Promotions Commission.
The projected financial statements, profit and loss account, and the cash flow projection will be built on information from the body of the project and other financial assumptions. However, overhead cost is always expected to increase per annum with a particular percentage, while prices may remain constant. It will be wise to conclude your business proposal by highlighting its economic, social, cultural, and technical justifications.