INTRODUCTION TO BUSINESS PLANNING. June 2011

INTRODUCTION TO BUSINESS PLANNING. June 2011 1

CONTENTS 1 Intrductin... 4 1.1 Why D Yu Need a Business Plan?... 4 1.2 What can a Business Plan d fr yu?... 4 1.3 Hw will this handbk help yu?... 4 1.4 The Business Plan belngs t yu... 4 2 The Malta Enterprise Business Planning Philsphy... 5 2.1 What a Business Plan is nt... 5 2.2 What a Business Plan is... 5 2.3 Identifying yur needs... 5 2.4 The thinking prcess... 5 2.5 SUCCESS OR FAILURE... 6 3 The Business Plan Frmat... 7 3.1 The Cntents... 7 3.2 Useful pints... 7 3.3 A simple frmat... 7 3.4 Table A - Essential cntents f a Business Plan... 7 3.5 KEEPING IT SIMPLE... 12 4 The Business Plan... 13 4.1 EXECUTIVE SUMMARY... 13 4.2 ENTERPRISE DESCRIPTION... 14 4.3 PRODUCT OR SERV1CE DESCRIPTION... 14 4.4 INDUSTRY ANALYSIS... 15 4.5 COMPETITION ANALYSIS... 15 4.6 SWOT ANALYSIS... 16 2

4.7 MARKETING AND SALES SUB-PLAN... 17 4.7.1 THE PRODUCT OR SERVICE (WHAT yu want t sell)... 17 4.7.2 THE CUSTOMER (WHOM yu wish t sell t)... 17 4.7.3 THE PLACE (WHERE yu sell yur prduct)... 17 4.7.4 THE METHOD (HOW yu advertise and sell yur prduct)... 18 4.8 OPERATIONS SUB-PLAN... 18 4.9 HUMAN RESOURCES SUB-PLAN... 20 4.10 FINANCIAL SUB-PLAN... 21 4.11 SELECTED OPTIONS AND CRITICAL MEASURES... 22 4.12 MILESTONE SCHEDULE... 22 3

1 INTRODUCTION. The Business Plan is a useful and versatile tl. It is a guide that can als be described as the businessman s best friend. In tday s glbal and highly cmpetitive business envirnment, enterprises, whether large r small, cannt hpe t cmpete and grw withut prper planning. 1.1 W HY DO Y O U N EED A B US INE S S P LA N? N Yu may need a Business Plan fr a number f reasns. Here are the mst imprtant: If yu are starting a new prject r venture If yu are lking fr a business partner If yu require finance, gvernment r EU grants and incentives T manage yur business better T measure actual perfrmance cmpared t what was planned 1.2 W HAT C A N A B US IN ES S P L A N DO F OR YO U? U A gd Business Plan can be useful t yu in a number f ways. It can: Help highlight aspects f the business that need special cnsideratin Help identify yur cre cmpetencies (what yu can d best) and weaknesses Help identify weaknesses and threats t the business Open yur eyes t new pprtunities Help yu understand yur cmpetitrs Help yu plan yur peratinal setup better Help yu use yur financial resurces mre efficiently and ultimately mre prfitably Assist yur management capabilities in relatin t specific tasks and functins as well as bring awareness t human resurces and capacity needs 1.3 H O W W ILL T HIS H A ND BO O K HEL P YO U? U This Handbk is intended t answer the fllwing basic questins in a simple and practical manner: What is a Business Plan? Hw des it help yu t achieve yur gals? What are the thinking prcesses yu have t g thrugh? What value des it have fr yu as a manager r as an entrepreneur starting up a new business? Hw is it prepared? 1.4 T HE B US INE S S P L A N BE LO NG S TO YO U Remember, nbdy knws yur business as well as yu d. Knwing what yu are capable f, and where yu want t be in the future, is the essence f a gd Business Plan. With these tw pints in mind, all yu need t d is develp the right strategies t achieve yur gals. 4

2 THE MALTA ENTERPRISE BUSINESS PLANNING PHILOSOPHY. Business Planning is fundamental t Malta Enterprise s missin in assisting Maltese enterprises t start up, restructure and grw t becme mre cmpetitive in line with Malta s ecnmic plicy. Befre we prceed t explain what a business plan is, it wuld be useful t eliminate sme cmmn miscnceptins and explain what a business plan is nt. 2.1 W HAT A B US INE S S P L A N IS NO T Cntrary t what sme may think, a business plan is nt: A set f financial prjectins An applicatin fr financial assistance A guaranteed frmula fr success 2.2 W HAT A B US INE S S P L A N IS Malta Enterprise sees the Business Plan as a thinking prcess perfrmed by the enterprise fr the enterprise itself. Every start-up enterprise needs t g thrugh a thrugh thinking prcess in rder t cme up with viable ptins and strategies that will strengthen its present psitin and facilitate its future develpment. Finally, the thinking prcess shuld culminate in a set f measures fr the implementatin f these strategies. This implementatin plan is generally referred t as the milestne schedule. 2.3 I DENT IF YING YO UR NE EDS The milestne schedule referred t in 2.2 abve shuld frm bth the starting and cncluding pint f yur planning prcess. In the first instance, well befre yu start writing the plan, yu shuld make a list f all the things that yu culd pssibly need in rder t make yur business a success. Once yu have gne thrugh the business planning prcess yu will be in a much better psitin t identify and priritize yur needs in line with the realities f yur business venture. 2.4 T HE THINKING P RO C ESS S All entrepreneurs think abut their business. In fact, mst businessmen d nthing else but brd and wrry abut prblems and challenges that are the daily cmpanins f every entrepreneur. T think abut yur business is nt enugh. It is imprtant t think in a lgical and structured manner, lking at every aspect f yur business (bth internal and external) in a SYSTEMATIC, OBJECTIVE and ANALYTICAL way. This is what we mean by the thinking prcess. 5

A gd thinking prcess shuld lead t gd Business Planning where sensible decisins are based n reliable infrmatin and nt n gut feeling. This handbk is intended t guide yu thrugh yur thinking prcess in a structured manner putting all the issues that yu need t cnsider in a lgical rder. 2.5 SUCCESS OR FA ILURE Often, the cause f failure is that entrepreneurs d nt anticipate simple factrs that culd easily have been freseen had they taken the time and truble t g thrugh a lgical thinking prcess. The prcess f frmulating a business plan helps scrutinize, in a frmal way, basic matters that need clarificatin, such as: Gut feelings and ideas Assumptins that have nt been verified Calculatins made withut full knwledge f underlying principles e.g. tax rates and bank interest charges Regulatins and legislatin that culd affect yu External dynamics such as plitical changes and new technlgy that culd have implicatins fr yur business Scrutiny within a brader plan can help identify weak pints early enugh t make psitive changes and / r adapt plans accrdingly. 6

3 THE BUSINESS PLAN FORMAT ORMAT. In reality there is n standard frmat fr the presentatin f a gd business plan. Business plans vary in cntent and size accrding t the nature and size f the business cncerned and n the emphasis that is placed n certain critical areas as ppsed t thers. 3.1 T HE C O NT ENT S Every business plan shuld address a number f fundamental issues withut which it wuld nt be cmplete. These issues can be gruped under six majr areas that are the pillars f every business activity whether large r small. The six majr areas are: Sales and Marketing Operatins Human resurces Finance Technlgy and ITC Management Infrmatin 3.2 U S E F UL S E F UL PO INTS Table A lists the imprtant elements f a business plan and ffers sme simple pints that need t be taken int cnsideratin in regard t each sectin. It is wrth nting that these pints are by n means exhaustive and are meant t serve nly as examples. The table is intended t prvide yu with a simple framewrk/frmat upn which t base yur business plan. 3.3 A S IMPL E F O R M A T The frmat prvides yu with a framewrk fr presenting yur thughts, ideas and strategies in a lgical, cnsistent and cherent manner. In ther wrds the business plan frmat helps yu t clarify yur wn ideas and present them clearly t thers. 3.4 T A BLE A - E S S E NTIA L C O NT ENTS OF A B US IN ES S P LA N The varius sectins are explained in detail in sectin 4 f this manual. CONTENTS USEFUL POINTS 1. EXECUTIVE SUMMARY This sectin is a brief verview f the whle Business Plan. 2. ENTERPRISE DESCRIPTION Highlight the attractins f yur business. Shw that yur plan is well researched with figures t back up yur frecasts. Demnstrate yur management ability. Shw that yur prduct has a market. Prvide an verview f yur business idea. State why yu chse t g int this particular 7

It is imprtant that yu demnstrate a clear understanding f the business yu wuld like t be in. Yu shuld als explain yur business cncept and the reasns why yu think it will be a success. business. Shw any persnal skills and/r experience that will help yu in yur business. State why yu believe the business will be a success. 3. PRODUCT OR SERVICE DESCRIPTION This sectin helps yu t think abut yur prduct r service which reflects n yur ability t understand and cater fr yur clients expectatins. 4. INDUSTRY ANALYSIS This sectin helps yu t understand the industrial envirnment yu intend t be wrking in and thrugh it yu can identify imprtant changes that are likely t take place in yur market. Describe yur range f prducts r services. Mentin plans fr new additins t yur range. Speak abut innvative ideas. What value wuld the clients place n yur prducts? What will yur clients expect frm yur prduct? Example: Quality, Design, Reliability, Innvatin, Reasnable Price, Custmer Care Hw big is yur sectr? Hw many cmpanies perate this sectr? What are the general trends? Hw is yur industry changing? Hw will these changes affect yu? Are yu aware f legislatin and/r regulatins that culd affect yur business? Have yu thught abut any ther changes - plitical, ecnmical r technlgical - that culd affect yur business? 5. COMPETITION ANALYSIS In rder t cmpete successfully in any business yu need t knw yur cmpetitrs. It is useful t study hw and why they achieve success. Als yu need t be aware f their failures t avid cmmitting the same errrs. Wh are yur cmpetitrs?(lcal and freign) What are their strengths and weaknesses? Hw can yu be different? Hw can yu becme mre cmpetitive? 6. SWOT ANALYSIS INTERNAL S = Strengths W = Weaknesses What are yur strengths? 8

O = Opprtunities T = Threats This sectin enables yu t lk clsely at the internal strengths and weaknesses f yur business, and t identify external threats and ptential pprtunities. What are yur weaknesses? EXTERNAL What are the pprtunities? What are the threats? 7. MARKETING SUB-PLAN It is n use having the greatest prduct in the wrld if yu cannt sell it. Is the market STATIC, GROWING r DECLINING? What market segment/s d yu wish t perate in? This sectin fcuses n yur ptential custmers and allws yu t see whether yur prducts can satisfy their needs. 8. OPERATIONS SUB-PLAN This sectin helps yu t lk at yur internal peratins in detail t see if yur business can be run efficiently and effectively. It draws attentin t yur team and allws yu t develp strategies fr gd and effective management. 9. HUMAN RESOURCES SUB-PLAN Peple are the greatest resurce f any business Wh are yur target clients? D yu have niche r mass market prducts? What is yur pricing plicy? Hw d yu cmpare with the cmpetitin? Hw d yu intend t sell yur prduct? Where d yu intend t sell yur prduct? Hw strng are yur management systems? general management marketing management financial management Hw will yu ensure an efficient prductin system? Have yu thught abut quality certificatin? Hw imprtant are health & safety standards fr yur prduct? D yu intend t invest in prduct develpment? Will yu invest in new r secnd hand equipment? Has cnsideratin been given t whether the equipment is manufactured in the EU r nn EU? Describe yur management structure 9

venture. This sectin fcuses yur attentin n yur wrk frce, their training needs as well as their material needs in terms f health & safety, prfessinal develpment, jb satisfactin and remuneratin. 10. THE BUDGET What technical skills will yur emplyees have? D yu need t invest in training? Hw will yu mtivate yur wrkfrce? Hw will yu mnitr their perfrmance? The budget prvides the financial planning detail fr every aspect f the business e.g. emplyee csts, rent, IT investments, machinery csts, sales value, direct material csts, shipping and freight charges, etc. The ultimate target that shuld result frm the budget is the budgeted net prfit. It is a key tl fr perating the business, and by facilitating cmparisn f actual perfrmance versus budgeted perfrmance, it highlights the perating VARIANCES t management. The budgeted net prfit, after taxatin, when expressed as a percentage f the net investment in the business, gives the Return On Investment - ROI - the single mst imprtant piece f financial data and the reasn fr being in business in the first place. Hw will yu g abut setting up the budget? Hw ften will yu review actual perfrmance against budget? Hw will yu carry ut the task f lking int the reasns fr the variances and taking crrective actin? On what basis will yu set the ROI that yu wish the business t give yu? 11. LIQUIDITY Liquidity is fundamental t every business in relatin t being able t trade and meet bligatins. Management mnitrs the risks in liquidity by tracking cash mvements with a Cash Flw Frecast ensuring adequate cash r facilities t raise mney t carry ut the business. Hw will yu keep cntrl f yur cash flw? Hw will yu finance the changes yu may need t make in yur business? 10

12. FINANCIAL SUB-PLAN Business is all abut the management f prducts, services and mney. T enable management t d their jb, the tl they need is management infrmatin. Infrmatin relating t business perfrmance is transmitted via management accunts. These are therefre a very pwerful and essential reprting mechanism requiring high pririty attentin. Successful businessmen understand hw mney wrks but need t have the infrmatin t supprt the decisin making. Keep management accunts and prduce them with regular frequency. Will yu prvide the resurce t develp the cntents f the management accunts t prvide quality infrmatin, bth within the business and with external infrmatin that wuld best assist and supprt management t d their jb efficiently? 13. SELECTED OPTIONS AND CRITICAL MEASURES Fllwing a careful analysis f yur business yu shuld nw be in a psitin t make a list f lgical ptins pen t yu. Once the ptins have been identified, yu shuld be in a psitin t list a number f critical measures that need t be implemented in line with the ptins yu have selected. As a result f the analysis carried ut in the preceding sectins make a list f the critical measures yu need t carry ut. Example: Lk int energy savings efficiencies n machinery Apply fr ISO certificatin Invest in training fr management Invest in training fr emplyees Emply new staff Carry ut market research Invest in Infrmatin Technlgy Systems Seek new premises Seek freign partners Lk fr new market segments Others 14. MILESTONE SCHEDULE This is a list f all the critical measures that are mentined in the Business Plan. When implemented, the measures in the milestne schedule will help yur enterprise becme mre efficient Once yu have identified the critical measures, yu shuld plan their implementatin. List all the imprtant critical measures. List the time frames fr the implementatin f each critical measure. Estimate the cst f implementatin f each critical measure. 11

3.5 KEE PING IT SIMPLE The Malta Enterprise Business Plan frmat is simple and easy t fllw. It is designed as a guide t help yu understand yur business better. It helps yu t analyse yur strengths and weaknesses, and makes yu think abut yur gals. It als helps yu t develp the right strategies in rder t achieve yur gals. Remember: Business planning invlves a thinking prcess. It is nt hw much yu write but what yu write that matters. Each sectin f the business plan is directly linked t the thers and cannt be viewed in islatin. Thus, fr example, yu cannt speak f marketing strategies withut cnsidering their implicatins n yur human resurces, peratinal and financial requirements. Every decisin yu take in ne area f yur business has a direct bearing n all thers. 12

4 THE BUSINESS PLAN. Business planning can be a highly beneficial exercise fr the entrepreneur. In rder t derive the desired benefits frm business planning it is imprtant t take full wnership f the prcess, and make it yur wn frm beginning t end. While this des nt mean that yu shuld nt seek prfessinal advice when needed, yu shuld be careful, nt t cmmit the cmmn mistake f asking thers t write the plan fr yu r being influenced by unqualified pinins even if well intentined. 4.1 EXECUTIVE SUMMAR Y The Executive Summary is a brief verview f the whle business plan. Here are sme simple hints t help yu build yur Executive Summary: Descriptin f Business: Prvide sme infrmatin abut the prduct r service yu wish t ffer. The Market: What markets d yu intend t target? Grwth Ptential: What is the ptential fr yur business? (What d yu hpe t achieve in ne t three years time?) Sales & Prfit Frecast: Give a summary f the sales and prfit frecast figures (fr the next three years). Financial Requirements: Hw much mney wuld yu require: T start the business. T sustain yur business during the first three years. Utilisatin f Finances: What will the lan/verdraft/investment be used fr? Where will yu surce yur funding frm: Lan, Bank Overdraft, Persnal funds? Repayment f Lans: Hw lng d yu expect the lan repayment perid t be? List f Critical Issues fr the Success f the Prject: Present a list f the critical success factrs mst likely t affect yur prject. Assistance required: What assistance wuld yu require t help yu launch yur prject? Remember: T highlight the attractins f yur business (yu have t get the reader s interest). T shw that yur plan is well researched with figures t back up yur frecasts. T demnstrate yur management ability. T shw that yur prduct has a market. 13

4.2 ENT ERPRISE DESCRIPTION Here are sme simple hints t help yu in this sectin: Prvide an verview f yur business idea What inspired yu t chse this line f business? What persnal qualities and experience will yu invest in the business? In what way is yur cncept innvative? What are yu ffering that ther businesses d nt ffer already? D yu believe there is a real need fr yur prduct r service? Where d yu see yur business in the medium and lng term? Remember: Shw a clear understanding f the business yu want t be in Describe what market needs yur business will be fulfilling Explain why yu believe yur business will prve successful 4.3 PRODUCT OR SER V1CE DESCRIPTION Here are sme simple hints t help yu in this sectin: Prvide a detailed descriptin f yur prduct r service. What innvative features des yur prduct r service ffer? Hw des yur prduct r service distinguish itself frm ther prducts r services already existing n the market? Can yu list three unique selling pints ffered by yur prduct r service? Hw will yur prduct r service satisfy client needs and expectatins? Remember: Bring ut what is special abut yur prduct/service Shw hw yur prduct r service satisfies client needs and expectatins 14

4.4 INDUSTR Y ANALYSIS Here are sme simple hints t help yu in this sectin: Hw big is the sectr yu will be perating in? Hw many cmpanies already perate in this sectr? What are the general sectr trends? Is it grwing, static r slwing dwn? Can yu perceive any imprtant changes in this sectr? Hw can these changes affect yur business? Are yu aware f any plitical, regulatry, scial, envirnmental r technlgical changes that culd seriusly affect yur business in the medium r lng term? Hw desirable d yu cnsider this sectr t be fr new, lcal entrants and frm ther EU areas? Remember: Befre yu embark n any prject it is imprtant that yu understand the envirnment yu will be wrking in and can identify any imprtant changes that are taking place, r that are likely t happen in the near future. A clear understanding f yur industrial envirnment culd make all the difference between success and failure fr yur business. 4.5 COMPETITION ANALYSIS Here are sme simple hints t help yu in this sectin: Wh are yur mst imprtant cmpetitrs? What are their main strengths and weaknesses? Hw can yu be different? Hw can yur prduct r service be mre cmpetitive? What are yur cmpetitrs pricing plicies? Hw d these affect yur sales strategies? Can yu list yur main cmpetitrs and their estimated market share? Example: COMPETITORS MARKET SHARE % A B C 15

Remember: In rder t cmpete successfully in business it is imprtant fr yu t knw abut yur cmpetitrs, their strengths and their weaknesses and t learn frm these bservatins. Yu als need t be aware f failures s that yu can avid cmmitting the same errrs. 4.6 SWOT ANALYSIS STRENGTHS Prvide a list f yur cre cmpetencies that give yur prduct r service certain advantages. Example: High quality Cmpetitive pricing Custmer Care WEAKNESSES Given the necessary resurces, which areas f yur business wuld yu need t imprve? OPPORTUNITIES Given the right cnditins, which business pprtunities can yu identify fr grwth and greater prfitability? Example: New markets Exprt ptential Jint Venture prpsal THREATS Think abut pssible factrs which culd adversely affect yur business in the future. Example: Lack f funds Lack f management skills Unskilled wrkfrce Example: Imprted prducts New entrants Plitical I Ecnmic changes Remember: The SWOT analysis is a very imprtant element f yur Business Plan. It enables yu t lk at yur internal strengths and weaknesses and at yur external pprtunities and threats. It is sufficient if yu list these in pint frm; but it wuld be helpful fr yu if yu culd analyze each pint in further detail. 16

4.7 MARKETING AND SALES SUB-PLAN The fllwing questins are designed t guide yur thinking and planning prcess. 4.7.1 THE PRODUCT OR SERVICE (WHAT YOU WANT TO SELL) List three imprtant features that make yur prduct r service wrth having. Example: design, functinality, reliability. List three features where yu think yur prduct r service culd be imprved. Can yu list three majr cmpetitrs that ffer similar prducts r services t yurs? Can yu identify differences between yur prduct and theirs? In what aspects can yur prduct r service be described as innvative? What image d yu want t prject with yur prduct r service? D yu have any plans t add mre prducts r services t yur current prtfli? Remember: If yu cannt sell yur prduct yu have n business. Shw that yu have a thrugh understanding f yur clients and market. The marketing sub-plan is all abut understanding what yu want t sell and planning t whm, where and hw t sell it. 4.7.2 THE CUSTOMER (WHOM YOU WISH TO SELL TO) Will yur business depend n ne main custmer r will yu sell t a wide variety f custmers? If yu plan t sell t a wide variety f custmers, list five types f custmers that are likely t buy yur prduct r service. D yu plan t have a unifrm apprach t all custmer grups r will yu vary yur strategies accrdingly? What measures will yu emply t identify custmer requirements with regard t yur prduct r service? Hw d yu plan t cllect custmer feedback in rder t ensure that yur prduct r service has a high degree f custmer satisfactin? 4.7.3 THE PLACE (WHERE YOU SELL YOUR PRODUCT) Where d yu plan t sell yur prduct r service? Directly frm the factry Frm a shwrm E-Cmmerce Other (give details) 17

Hw easy will it be fr yur custmers t gain access t yur prducts r services? Give details. If yu feel that custmers will find it difficult t access yur prducts, can yu suggest ways f imprving the situatin? Mentin three ways in which yur cmpetitrs facilitate access t their prducts r services fr their custmers. Hw d yu plan t get the prduct t the market? Distribute the prduct yurself? Emply full/part-time salesmen? Enter int a distributin agreement with third parties? Online sales 4.7.4 THE METHOD (HOW YOU ADVERTISE AND SELL YOUR PRODUCT) What methds f advertising d yu intend t use fr yur prduct r service? Newspapers and magazines Televisin Radi Spnsrships Internet (websites, e-newsletters, search engine ptimizatin) Other (please specify) If yu intend t use any f the media mentined abve, which d yu rate as the mst effective and why? Hw d yur cmpetitrs advertise their prducts? D yu think their methds are effective? Hw will yu price yur prducts? Explain the reasns behind yur pricing strategies. Hw will yur prices cmpare with thse f yur cmpetitrs? D yu intend t give yur custmers credit? Explain the reasns behind yur decisin. 4.8 OPERATIONS SUB- PLAN Here are sme simple hints t help yu in this sectin: D yu already have business premises r are yu planning t buy/lease/rent them in the near future? Give details f yur business lcatin and premises (if any). Example: Address: Area in sq. m.: Plan: 18

Hw lng and hw well will the present premises (if any) meet yur business needs? Are the business premises yu have identified easily accessible t yur clients? Give details f equipment/machinery/vehicles yu will require t perate yur business. Example: Item and Purpse: Current Value/Current Cst: Replacement Date: Give details f equipment/ther items which yu plan t acquire r lease in the near future. Example: Item and Purpse: Cst f Purchase/Rental: Supplier Credit Term in Days: Remember: Give details f yur business lcatin and say whether it is suitable r nt fr yur prduct r service. Shw hw yu plan t cpe with the peratinal side f change and grwth in yur business. Make up a list f yur main suppliers and their credit terms. Example: Suppliers Credit Terms A B 19

Have yu thught f ther suppliers in case f emergencies? D yu intend t perate a quality management system f any srt? Are yu planning t apply fr quality certificatin? What type f quality system? Wh will take charge f implementing it? What are the timings fr its intrductin? Hw cnscius are yu f Health and Safety and/r Envirnmental regulatins in yur business? 4.9 HUMAN RE SOURCES S SUB- PLAN Here are sme simple hints t help yu in this sectin: Describe yur Management Structure (If yu d nt have a management structure, list thse peple wh can assist yu with the running f the business). Hw many peple d yu plan t emply? (Full Time / Part Time) What types f skills and/r experience are yu lking fr? What training will yur wrk frce require t be able t meet yur future plans? What measures d yu plan t adpt t ensure emplyee lyalty? Hw sn d yu think yu will need t expand yur wrk frce? Have yu thught f yur wn develpment and that f yur management team as yur business cntinues t expand? D yu believe this is necessary? Remember: This is a crucial sectin. The success r failure f yur business is dependent n the managerial capabilities f the peple running it as well as n the best perfrmance f the wrkers. If yu are a sle peratr list yur qualificatins, skills and experience and achievements (if any) in the business yu have chsen t perate in. If yu are ging t have ther members n yur management team, list their qualificatins, skills, experience and achievements t date. D nt hesitate t list weaknesses in yur management team. Shw hw yu prpse t vercme them. If there are ther key peple in the business yu are prpsing, give a summary f their qualificatins and experience 20

4.10 FINANCIAL SUB- PLAN Here are sme simple hints t help yu in this sectin: What is the break-even pint f yur business? Hw sn can yu reach it? NOTE: T calculate the break- even pint fr the whle business r fr each prduct r service, yu will need t fully understand the csts f the business. There are tw main grups f csts: Direct Csts are generally straight frward t identify as they relate specifically t a prduct: e.g. labur, material and shipping csts. Indirect csts, fr example rent and service charges, will need t be included in the general verheads and a prprtin f thse general verheads will need t be added t the cst f each prduct t arrive at its true cst. The principle is that verheads als need t be cvered and therefre the verhead recupment cst is an imprtant financial that needs t be kept up t date t make sure that yur sales prices cver all the csts f running the business. Give amunt f verdraft / funds needed as shwn in cash flw frecast. Can yu ffer any security t supprt yur financial requirements? Over what perid will lan/verdraft be repaid and are these repayments included in the cash flw frecast? Hw much d yu and yur partners plan t invest in the business? D yu have access t ther surces f funds? Give details if any. D yu have any cntingency plans if yur sales turn ut t be lwer r the csts higher than yur frecast? Have yu taken accunt f tax cnsideratin in yur calculatins? Remember: Fr the purpse f raising a bank lan, banks will generally require a business plan and prjectins fr three years: Cash Flw Frecast Prfit and Lss Balance Sheets 21

4.11 SEL ECTE D O PTIONS AND CRITICAL MEASURES Nw that yu have carried ut a systematic analysis f yur prject, yu shuld be in a psitin t lk at yur ptins in a mre frmal manner. If yu have dubts as t hw t prceed at this stage, d nt wrry, this is a natural part f the prcess. In fact it is cnsidered a very healthy thing t have dubts after having gne thrugh a thrugh thinking prcess abut yur prject. This is the time when yu shuld cnsider yur ptins very carefully and seek advice befre yu jump in at the deep end. Once yu have cnsidered yur ptins, yu shuld be in a psitin t draw up a list f critical measures yu need t implement in rder t launch yur prject. These measures shuld als indicate what kind f assistance (technical and financial) yu require t get started. 4.12 MILESTONE SCHEDULE In the beginning f this manual, yu were advised t make a list f all the things that yu think wuld make yur business a success, including any ideas that may seem far-fetched. These shuld frm the basis f yur Business Planning Prcess. At this stage, after having gne thrugh the Business Planning Prcess, yu shuld be in a much better psitin t identify and priritize yur needs in line with the realities f yur business venture. Once yu have identified the critical measures, yu shuld plan their implementatin ver a three year perid. Base yur decisins n the infrmatin prvided by yur Business Plan. When implemented, the critical measures in the milestne schedule will help yur enterprise becme mre cmpetitive. The table belw is an example f what infrmatin culd be included in a Milestne Schedule. The infrmatin given within is by n means exhaustive and it is nly meant t serve as an example. It is imprtant hwever t: State the type f assistance required (critical measures mentined abve) State the date f implementatin f these measures State the cst f implementing such measures Remember: List all the imprtant critical measures t be implemented List the time frames fr the implementatin f each critical measure Estimate the cst f implementatin f each critical measure If there are ther key peple in the business yu are prpsing, give a summary f their qualificatins and experience 22

Milestne Schedule (Example) ASSISTANCE REQUIRED DATE OF IMPLEMENTATION COST ( ) OPERATIONS ISO Certificatin Health & Safety Standards IT Systems Payrll System New Machinery January - May February March April May January 10,000 3,000 8,000 3,000 11,000 HUMAN RESOURCES Cnsultancy Emply New Staff Management Training Overseas Training January - May March - May September February April February Nvember 5,000 1,000 800 1,500 2,000 1,500 EXPORT MARKETING Market Survey Enhance Prduct fr Exprt Prmte Prduct (Abrad) Participate in Fairs (Abrad) March - July July - Octber Nvember May 4,000 4,500 6,000 2,500 23

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