STOCKPORT CREDIT UNION BUSINESS PLAN Version 2.0

Transcription

1 STOCKPORT CREDIT UNION BUSINESS PLAN Version 2.0 Table of Contents Executive Summary Introduction Vision and Objectives Review of Stockport Credit Union Development Plans Financial Projections Risks and Opportunities Managing this Plan...9 APPENDIX A - Detailed financial schedule of 10

2 Executive Summary Stockport Credit Union s vision is secure savings and affordable loans for everyone living or working in Stockport. To deliver this vision, the credit union has determined a growth strategy to become more sustainable. This strategy aims to deliver an improved offer to members, an increased ability to be financially self-supporting and reduced risks to the business. This Business Plan for the financial years summarises the intentions of the credit union, developmental priorities and performance targets. Growth will be based on recruitment of new members, steady enhancements of products and services and development of effective partnerships. The credit union has taken steps to secure its relationships with Stockport Homes and Stockport Council, who have both made generous financial and non-financial commitments. The credit union is seeking to make short-term improvements in its capacity and resilience to Get Fit, starting with the appointment of a Development Manager, funded by Stockport Homes, in November Wider development of products, services and operational strength are planned for the medium term. This Plan includes a financial projection for KPIs. It is owned by the Board and will be reviewed and updated appropriately. 1. Introduction A Business Plan for sustainability This Business Plan aims to provide a summary of Stockport Credit Union s (SCU) ambitions for the future, based on a realistic but positive view of its current position. The Plan includes a financial projection that reflects its objectives. Following a consideration of its options in the early part of 2013, the Board has agreed a key objective of achieving sustainability and independence through growth. The strategy is to expand its membership across the Stockport community, supported by updated products and more efficient operations, and supported by key partners. The credit union has created a new role of Development Manager, funded by Stockport Homes. The role-holder starts in November SCU B Business Plan Version 2.0.doc 2 of 10

3 This is a critical resource that will enable the directors to focus on the strategic leadership of the organisation, while the Development Manager leads the staff and volunteer team to implement the initiatives set out in this Plan. The Plan covers the period October 2013 September 2016 in terms of financial planning and overall strategy, but the focus of activities is for 2013/14. In this period, while the Development Manager funding is guaranteed, the credit union hopes that several important steps will be taken towards future sustainability. A focused review of progress should be undertaken in April 2014, with a full review after 12 months. The credit union s immediate priorities are: Creating capacity for growth Implementing new loan pricing to improve income to cover service costs and bad debts Growing membership to increase savings, loans and net income Confirming partnerships / external resources Putting staff employment and management on a more robust footing. The medium term objective is to achieve sustainability through: Improving the offer for existing and potential new members Improving the efficiency and capacity in the operation Strengthening governance. 2. Vision and Objectives Vision Secure savings and affordable loans for everyone living or working in Stockport Objectives for the credit union Members and the community Visible and present in Stockport communities, including physical presence (e.g. a shop, outreach) Ensuring the community understands the credit union Developing a diversity of members that reflects the community, including corporate members Working in partnership with like-minded organisation SCU B Business Plan Version 2.0.doc 3 of 10

4 Operations An optimal blend of employees and involved volunteers, providing the right resource to meet expanding member needs More / easier ways to pay in and withdraw (cards, internet and telephone services) More efficient back office systems and processes, including fit-for-purpose IT infrastructure Healthy environment for staff and volunteers Fit for purpose offices Business-minded in approach and operations Finances Over 50% self-funded Diversity of funding Maximised income Unique selling points Membership and community Sustainable and independent Range of products and service that meet members needs By 2016, SCU aims to have: Reduced financial risks Significantly improved its services to its members Created a strong platform for future sustainability Consistently paid a dividend to its members. 3. Review of Stockport Credit Union A community finance co-operative with great potential Profile SCU was formed in 2005, from a merger of several community credit unions that had been in place since It is a member-led community organisation, with two part-time paid staff funded mainly through a three-yearly grant from Stockport Council and a large number of volunteers. Membership is just over 1,600, and most transactional activity takes place within its 12 local collection points located across the Stockport area. Low cost affordable loans and convenient saving are the two core services currently offered. SCU B Business Plan Version 2.0.doc 4 of 10

5 Additional funding from external sources is secured from time-to-time to support operational activities, such as a favourable office rental arrangement from Stockport Council and in kind support from Stockport Homes and other key partners. Environment There is potential demand across the community: Stockport has relatively well-off residents with pockets of deprivation the third most-polarised borough in the country. The welfare reform agenda means there is a need for credit union services. In addition, high street providers are not trusted and there are no other credit unions active in the community. In recent years, as it has grown, the credit union has struggled to make a volunteer-based operating model work sustainably, and the availability of grant-funding to support this model is much-decreased. However, there are opportunities to develop partnerships with like-minded organisations. For example, various advice services are referring to credit unions, and while it is under significant funding pressure, the local authority sees a role for a credit union in Stockport. A concrete example is already in place with Stockport Homes, where following the credit union has identified shared objectives with a partner with longstanding and long term commitment and willing to provide medium term funding. There is a strong challenge to the credit union from payday lenders, cash generators and weekly payment stores. Summary SCU has achieved a great deal to reach its current level of membership, and the value it is offering to so many members. SCU B Business Plan Version 2.0.doc 5 of 10

6 The current position of the credit union is fragile in terms of finances and personnel, but it provides a platform with considerable opportunities to explore. 4. Development Plans There are two key themes to the development of SCU: Get Fit and Development (respectively strengthening and growing the credit union). Priorities are summarised below. Get fit and keep fit: Address bad debt risks Strengthen governance Increase income Address employer obligations Getting fit for the future and developing Development: Improve the member offer and grow membership Improve efficiency Develop professional, active partnerships The following opportunities are expected to be relevant to plans from mid-2014 onwards: Extension of web and phone services Physical presence in shopping and / or population centres (e.g. a shop, outreach) Current account. Action Plan SCU will develop an Action Plan to support its progress. This Plan will cover the main tasks required to deliver the Business Plan, but not the day-to-day operational activities required to run successfully the service for members. The Development Manager will advise on alignment of resources and activities; it will also require regular review and updating by the Board. For this reason, the Action Plan is not appended to the Business Plan. SCU B Business Plan Version 2.0.doc 6 of 10

7 Capacity It will be critical to the success of the Plan for SCU to increase its capacity: staff and volunteers are already very stretched. There are a number of short and medium term opportunities to increase capacity. These include: Short term - reviewing processes to work smarter, e.g. electronic transfers for share withdrawals rather than cheque issuance; reviewing allocation of staff and volunteer resource to tasks and processes Medium term introducing new facilities, such as debit card payments for loan repayments; review of collection points. The Development Manager brings considerable experience of alternative approaches. Capacity will need to be released in parallel with building new products and income, in order that progress towards sustainability is made as fast as possible. 5. Financial Projections Growing, without undue risk A three-year financial projection has been prepared that reflects these plans. The financial schedule is set out in Appendix A. The key assumptions are: Growth continues at the recent historic rate of 10% annually for members, 15% for loans (net of bad debts) and 13% for shares. Growth is supported by marketing campaigns, in particular in areas where payroll deduction is most straightforward Trading income builds in new pricing, although the impact is of recent changes is yet to be fully examined Grant income assumes the Council funding endures throughout the Plan period, but Stockport Homes funding reduces by 50% in 2014/15 and 50% again in 2015/16 Operating costs are lifted significantly by the Development Manager role (funded by Stockport Homes). Otherwise costs grow by inflation of 2.5% where relevant Marketing expenditure has not been included and would be treated as a investment Bad debts and provisions reduce on average by 5% annually and from 5% of loans currently to 3% of loans Reserves are c.8% of total assets. SCU B Business Plan Version 2.0.doc 7 of 10

8 Key Performance Indicators Indicator Sep-13 Sep-14 Sep-15 Sep-16 1 Members (adults) 1,922 2,114 2,326 2,558 2 Loans (, net of bad debts) 422, , , ,126 3 Shares / savings ( ) 727, , ,404 1,043,752 4 Surplus before dividend ( ) 6,703 18,581 10,375 2,820 5 Bad debts to loans 5.1% 3.2% 3.2% 2.6% 6 Reserves: total assets 8.1% 8.3% 7.9% 7.1% Dividend policy This Business Plan aims to describe a strategy to build the long-term sustainability of the credit union. A modest target of 1% for dividends is built into the Plan. 6. Risks and Opportunities Keeping an eye beyond the Plan These are the key risks and opportunities to this Plan. Risk Mitigation Impact Probability Risk Level 01 Lending growth is not sustained 02 Significant local employer closes, driving bad debt upwards 03 No additional material support forthcoming from partners Invest in marketing Reduce costs Monitor loan applications and performance; review credit policy Only secured funding included in plans; relationship development 04 Net loss of directors Recruitment of directors; management of workload High Low Medium Medium Medium Medium Low Medium Low High Low Medium SCU B Business Plan Version 2.0.doc 8 of 10

9 Opportunity Taking advantage Impact Probability Potential 01 Successful external grant funding bid 02 CUEP becomes an option, offering additional support Frequent review of opportunities; quality submissions Regular review of CUEP opportunities High Low Medium Medium Low Low 7. Managing this Plan Implementation is a collective effort The Board is accountable and responsible for the shape and implementation of the Business Plan, and for guiding and supporting the Development Manager, staff and volunteers to complete the actions. The Development Manager will provide progress reports to the Board at each meeting. The Board will determine any changes to the Plan, provide guidance on priorities and ensure that the necessary resources are available to the Development Manager. SCU B Business Plan Version 2.0.doc 9 of 10

10 APPENDIX A - Detailed financial schedule Source: SCU_BP Projection_base model_jan14update.xlsx SCU B Business Plan Version 2.0.doc 10 of 10