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Business Guidelines


A business plan is a working document that is maintained by a business containing the strategy going forward, in order to ensure sustainability and growth of the business. The document should be maintained by all businesses and updated continuously to reflect any changes which may potentially affect the business. A business plan should also be drafted for a start-up business and then updated when necessary thereafter. When submitting a business plan to a financier as part of the funding application process (either for an existing or start-up business), the business plan should provide sufficient information to convince a financier or potential investor of the success of the business venture.

It is crucial that the foundations of the business plan are based predominantly on facts and market research, as opposed to opinion and belief. The more facts in the business plan, the easier it is to make a decision on whether or not to invest in a business.

The plan should demonstrate that the business venture is viable and that all those involved in the project, from management to employees and consultants, are able to deliver on the plan.

All commitments should be formally put in writing, as far as possible. These would include contracts with customers for the supply of goods and services, letters of intent from customers, lease agreements, offers to purchase and so on.

A good business plan should consist of the following minimum content:

Executive summary

General overview of the business:

  •  Background/history of the business.
  •  Products/services being offered.
  •  Outline of expansion plan/start-up.
  •  Other material issues such as new business secured, change in market forces affecting the business, key risks, mitigating factors, etc.

Legal entity

Copies of:

  •  Registration documents (CM1, CM22, CK1, CK2 etc.).
  •  Income Tax and VAT documents (if applicable).
  •  Registered proof of address of the company.
  •  Tax Clearance Certificate (existing business).
  •  FICA documents for all shareholders and the company.

Shareholders and management

  • Detailed CVs of all shareholders/members, directors, senior management and key personnel (include ID numbers, contact details, education and work experience).
  • Details of shareholders’ involvement in the business.
  • Motivation that management has the necessary experience to successfully manage all aspects of the business, including manufacturing, operations, administration, human resources, finance and marketing.
  • Signed (or at least draft) shareholders agreement.
  • Signed (or at least draft) shareholders agreement.
  • Amount of funds that shareholders will be injecting into the project as their own contribution and the source of these funds.
  • Balance sheets of all shareholders (including individuals, companies or trusts, etc.).
  • Other business interests of shareholders and directors.
  • Details of any other professionals assisting management, such as auditors or lawyers.

Broad-Based Black Economic Empowerment

BBBEE ratings certificate:

  •  If you are an existing business with a turnover of more than R5 million.
  •  If you do not have a rating, please do a self-assessment at http://bee.thedti.gov.za
  •  Remember that your BBBEE rating is not necessarily dependent on ownership alone.


  • Group structure (if there is more than one company).
  • Hierarchy of staff.

Land and buildings

  • Lease agreement or Offer to Purchase/Purchase and Sale agreement. The IDC does not generally fund the acquisition of and/or construction of buildings. If you have very specialised building requirements, please contact the IDC for more information regarding the information required for construction projects.
  • Proof that all necessary regulatory approvals have been obtained or at least applied for i.e. Environmental Impact Assessments (EIA), rezoning of property if required, etc. If these have not been obtained, please provide indicative timing for such approvals.
  • Motivation of the site in terms of logistics regarding raw material supply, target market etc.
  • Availability of bulk services to the site such as water, electricity etc.
  • For land and buildings to be purchased, a recent valuation is necessary. This will need to be performed by a registered valuator.
  • Current quotations for all building work to be performed. This should preferably be approved by a quantity surveyor or another suitable person in the construction industry.
  • Technical drawings for all building work to be performed - this should be done by a qualified architect and the necessary municipal approval obtained.

Capital expenditure

  • Quotations from suppliers for all fixed assets to be purchased (not older than 3 months).
  • Terms and conditions of payment for machinery to be purchased (deposits, progress payments etc.).
  • Ensure that the fixed assets to be purchased are sufficient to meet production forecasts from a capacity point of view.
  • Be sure to budget adequately for other ‘soft assets’ such as office furniture, photocopy and fax machine as well as other equipment which are not directly related to the production process.
  • Copies of all warranties and guarantees, repairs and maintenance agreements relating to the assets to be acquired.


  • Production process description and process flow diagram.
  • A copy of the factory/building layout.
  • A detailed bill of materials, together with recent quotations for all raw material input costs.
  • Details of any registered processes (patents, trademarks etc.) if applicable.


  • Cost-to-company breakdown of all salaried, waged, part-time and contract employees, historical and going forward:
    • Number of staff and their cost-to-company by occupational level.
    • Please include details of all staff, from part-time to director level.
    • Ensure that staff numbers are adequate and in line with production capacity and forecasts.
    • Ensure that salaries and wages are preferably market-related and not below minimum wage guidelines for the industry
    • Details of any key and/or specialist skills and transfer of skills programme.
    • Bargaining council compliance certificates where applicable.

Marketing analysis

  • Sales forecasts.
    • Projected turnover levels need to be based on secured contracts, letters of intent and/or detailed market research.
    • Copies of all contracts with customers (these may still be in draft form), letters of intent from potential customers and market research to be provided.
    • Turnover levels projected without any marketing backup or based purely on verbal agreements will be significantly discounted, which could result in the business forecasts being non-viable.
  • For existing businesses, full details of existing contracts being serviced and remaining periods on these contracts.
  • For existing businesses, full details of major customers and non-contract based work done over the past 12 months.
  • A detailed marketing strategy and market research:
  • Over and above general market research, it is vital that there is a specific marketing strategy in place that encompasses how the business is going to attract market share and achieve projected turnover levels.
  • Some of the areas that the marketing research should focus on are:
  • Competitor analysis;
  • Competitive edge of the business;
  • Demand vs. supply;
  • Sustainability of demand;
  • Future developments (technological, new market entrants, alternate products etc.);
  • Contracts with customers;
  • Letters of intent from potential customers;
  • Other networks and relationships created; and
  • Strategic location of the business.

Financial information and forecasts

  • Historical financial statements for two years (audited/draft where applicable) and latest management accounts (not older than three months).
    • Detailed five-year income statement, balance sheet and cash flow forecasts. Show monthly forecasts for the first 12 months.
  • Amount of funding applied for and the application of these funds.
  • Copies of agreements with other financiers for existing loans, including security offered for these loans.
  • Details of overdraft facilities in place and security offered for these.


Balance sheet

  • Include all existing assets and liabilities as well as those that will be brought into the company as per the current application for finance.
  • For new loans, budget on realistic payback periods (usually five years for IDC purposes, but will depend on the company’s cash flow forecasts and may vary based on the industry).
  • Working capital levels (debtors and creditors) to be budgeted for in terms of company’s payment policies or as negotiated with debtors and creditors.
  • Stock to be budgeted for based on anticipated stock levels to be held (include raw materials, work in progress and finished goods).
  • Owners’ contribution towards the business to be included as shareholders’/members’ loans. This needs to be unencumbered, interest-free and with no fixed repayment terms.
  • Non-distributable reserves must be based on valuations performed by a registered valuator.
  • Details on value and nature of goodwill to be provided.

Income statement

  • Sales projections should tie in closely with any contracts and letters of intent obtained from potential customers and marketing research performed. Sales should be conservatively phased into expected levels over a reasonable period to allow for the time it will take to penetrate the market.
  • Cost of sales to be accurately costed and budgeted for per product item.
  • Take all possible expenses into account. Expenses frequently omitted include:
    • Depreciation;
    • Security costs;
    • Insurance costs;
    • Bank, audit, legal and IT related charges;
    • Interest costs; and
    • Royalties and commissions.
  • All expenses in the income statement should be adequate for the size of the business and its operations. For example, the salaries and wages bill should be directly linked to the number of staff (including directors) to be hired, multiplied by their total cost-to-company.
  • Interest rates on all new loans should be budgeted for at a minimum of prime.
  • Normal company tax to be factored into the income statement.

For acquisitions

  • Target company’s past three years’ historical financial statements and latest management accounts (not older than three months).
  • Offer to purchase agreement or draft purchase and sale agreement, including exclusivity periods.
  • Company valuation.
  • Include details of your due diligence on the target company, including a discounted cash flow valuation to confirm the company value.
  • For IDC purposes, the following will apply:
    • The purchaser must be a historically disadvantaged person or majority black-owned business.
    • At least 50% of the total IDC funding required is to be reinvested into the company for growth and expansion.
    • There must be an expansion phase which forms part of the acquisition, i.e. an increase in the industrial capacity base and potentially an increase in employment.
    • The selling price needs to be to the satisfaction of the IDC as determined by the discounted cash flow method of valuing a business.
    • The selling price may be paid to the seller over a period of 2-3 years, subject to pre-determined targets of profitability being achieved.

Please take note:

The financing requirements in this document are designed to ensure the smooth operation and sustainability of the business post-financing. The above is not an exhaustive list of requirements, and further information may be required based on the specifics of the application and the industry in which the business operates in.


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