Greener Business Bureau

Archive for the ‘Business Planning’ Category

To many managers, the term “business planning” is a buzzword to describe what 30 years ago was conceived as the financial budget, and therefore the restricted realm of the accountant. To others it may represent a document required to obtain an overdraft or a loan from their bankers. A business plan may prove to be the most important document that may be compiled in any business. This paper aims to eliminate such taboos and simplify what the strategic business planning process is all about, and how its benefits could be maximised by the management of a business.

THE TERM “STRATEGIC BUSINESS PLANNING”

When we speak about a strategic business plan, the message to be conveyed is about the strategies and tactics to be adopted by an organisation to reach its missions and goals. An integral part of the plan is financial in nature, but the strategic business plan is no plan at all if it does not address marketing, human resources, ICT and all other resources needed to integrate and fuse the organisational efforts to achieve targets, in terms of maximisation of profits. Thus, an effective business plan should serve FOUR underlying purposes:

oIt is a tool for management to convey both within and outside the organisation the goals for the business plan period;

oIt provides the strategic framework for holistically managing the business;

oIt allows the identification of objectives and how the attainment of these objectives could be achieved and, most importantly, closely monitored

oBy demonstrating that proper controls and achievement of objectives are happening, it provides an effective means of attracting new capital to finance the business objectives.

WHAT IS REQUIRED?
Many have compared the marketing of a strategic business plan to a candidate’s CV, when applying for a job. What must be ensured is that the plan is not just figures and numbers, but also shows a good understanding of all those essential determinants in reaching the stated targets. Thus, we should first and foremost ask ourselves questions such as:

Who are we?

What do we do?

Who are our customers and what are their expectations?

What and where will our business be in one, two, three, five years?

What are we doing NOW to get where we want to be?

How should we get there?

Do we have the resources in terms of machines, people, finances, technology and so on?

Do we need to obtain external financing and what type/extent is convenient to us?

We could keep going on asking questions as much as we would like our plan to be detailed. Probably the answers to some would need more effort in terms of time and resources than others. The most important factors which determine this preliminary stage of planning is to ensure that we are asking ourselves the right questions, that they are leading our business in the direction we want it to go. On the other hand, a manager must be aware of asking too many questions that lead nowhere. The objective of this process is to enable the manager to grasp what the target is and then plan on how to achieve that target.

EFFECTIVENESS AND FLEXIBILITY

What are the nuts and bolts of an effective and sound strategic business plan that truly delivers the business targets? The mission, objectives and overall strategy must be determined. Particular attention must be focused on the implementation and evaluation stages that follow the setting of objectives and strategies. It is here that a business will succeed or fail. Experience has shown that at times, a business plan needs to be radically changed after one year, to conform with the ever-changing and volatile business environment. Do not be surprised! This is a healthy experience. As every manager knows, rigidly sticking to a particular plan, where the business encloses itself in a cocoon, can bring about those looming black clouds of ensuing business failure. Exhibit A presents the Critical Success Factors (CSFs) of good strategic business planning, whilst Exhibit B illustrates the benefits accruing from a properly organised plan that distinguishes one business from another. These benefits ensure that the organisation is homogeneously geared and glued towards the ultimate objective of maximising profits.

THE ESSENTIALS

We must remember that even the best of business plans, which takes many hours to compile, will only take a few minutes of the reader’s time. Perhaps, a cursory glance at the executive summary and the conclusion will be the main determinants for the success or otherwise of the plan. It is true that great business ideas backed by superior management techniques will probably succeed without any written presentation. But, that minute possibility of failure necessitates extra effort for that slight edge over the chances of success. In plain words, this means that a strategic business plan MUST itself be planned! Exhibit C provides a practical guide, showing the essential requirements for the success of a strategic business plan. Managers must put themselves in the shoes of those who will read the strategic business plan and who will then subsequently take the decision, be it the board of directors, the bank manager or a creditor. Thus, what the reader wants or does not want to know, determines the structure and flow of the plan.

THE PLANNING TEAM

Before embarking on writing the plan, the business must ensure that it is written by someone or a team to whom it really matters, because of the enthusiasm and commitment that they put into it. Besides, such a team would in all probability be in possession of a substantial amount of information to determine the goals, targets and resources needed by the organisation. Of paramount importance is perhaps the message to be conveyed to the compilers of the plan. The team has to clearly and effectively show that it satisfies the following criteria:

oIt has the necessary experience in compiling good plans. The various disciplines in the organisation have to come together, thus ensuring a holistic approach.
. It can realise successfully the targets set, meaning that the compilers of the plan should also possibly be or include those same managers who will actually implement and monitor the plan’s performance;

oIt has already done what is being proposed – this means there is enough competence and experience to link to past plans, in terms of objectives and achievements; . It fully understands all the risks and pitfalls. Contingency planning is an integral part of a strategic business plan, where realistic risks are carefully planned for;

o It can relate the business plan to current and anticipated resource levels. Generally, each organisation has an element, large or small, of un utilised resources. The strategic business plan is the tool that identifies and effectively uses such dormant resources.

BUSINESS PLANNING TOOLS

Once the team has been identified and given the necessary powers and responsibilities, what remains is the identification and provision of the necessary tools to produce the strategic business plan. Each and every organisation should choose its tools for good planning, considering such issues as structures, staff competencies, organisational cultures, current resources, etc. However, the following list of commonly-used tools is neither exhaustive nor binding, but is an extremely efficient checklist, which is a valuable form of reference:

oClear and concise planning forms and guidelines

oA set of planning definitions

.Internal and external surveys

.Financial modelling packages ‘Organisation-wide availability and sharing of information

.Identification of standards to assess whether the targets are achieved

.Training programmes for planning staff

.Task force/Focus groups

Of course, the adoption of such tools depends on the size of the business. For example, in the case of Task Force/Focus Group, these approaches are used where the organisation tends to be rather large in size. This also applies for Internal/External Surveys, where the cost and time of collecting such information has to be viewed in terms of the accruing benefits to the quality of the plan itself.

AN EFFECTIVE PLAN

What remains is therefore the organisation of all the data collected and the composition of the strategic business plan itself. The executive summary itself is built up after the rigorous exercise of establishing the comments, figures and messages contained in the plan. The summary must be seen as conveying to its readers, in a short but effective message, where the business is to-day, and what future scenarios the plan is proposing.

It is the norm for Executive Summaries to be limited to one page of prose, but the most important element, be it one or two pages long, or even three, is that the summary, when read must immediately provide the reader with what to expect in the plan itself and what the plan’s conclusions are, the targets to be achieved, how they will be attained and what monitoring systems will assure their delivery. Exhibit D is a good example of an effective executive summary.

Another important issue for a successful strategic business plan is the way that data is applied and the manner in which it is communicated through the plan. Top management is interested in the specific targets to be achieved and will not tolerate statements with inadequate information, or which give rise to ambiguities or worse still are very generic in approach. Exhibit E compares and contrasts two different statements, illustrating what quality of data conveys in an effective manner, the message of the plan. Notice how the first statement is full of generic fluff, which does not mean a thing, and worse still, leaves the reader completely more perplexed than when he/she started.

But perhaps, the focus of the business plan user should be directed on the financial analysis and projections that support the scenarios being proposed by the plan. The financial analysis provides the effects of the strategic business plan into numbers that could be crunched. What should form part of this integral and important financial section of the plan?

-Only a Summary

-Historical performance and how it relates to the proposed scenarios

-Comments on the accuracy of previous plans, profit/loss trends, fixed costs patterns, cash flows

-An exercise in sensitivity analysis of possible scenarios

-Justification of assumptions

-Risk guarantees to investors

Other data demonstrating that the proposed plan is financially sound, cost effective and a profit motivator.

Besides the above elements, we must not over assess the other parts of the plan, especially the marketing, management and operational aspects. The team must ensure that they are able to produce a cohesive, well structured plan that will definitely deliver the message. The need for good business planning is therefore evidenced by the need for the organisation to maintain a truly effective thrust in the treacherous business environment it operates in. Business planning is a highly specialised and skilled form of determining the strategic direction, which demands and deserves some good quality effort. Without a business plan, the organisation, like an armoured tank without any ammunition, will flounder in the face of any weak opposition. Adherence to strategic business planning disciplines is not a bad indicator of those businesses likely to survive and those destined for the scrap heap.

EXHIBIT A

The Critical Success Factors

SENIOR SUPPORT

The top people should “walk the talk”. The board of directors and the senior managers should present the concept of business planning to all levels, in all programmes, to all functional support units, to financial officers, personnel officers and operational managers

ACCOUNTABILITY

Ultimate accountability for the strategic business plan being developed, carried out and evaluated lies with top management. The maxim is to ensure that each person is responsible for achieving each goal stated by the business

OWNERSHIP

In simple language this means that the managers should be responsible and accountable for the content, time frames and deliverables for the specific area they supervise

MECHANISMS

It is important that the strategic planning process is seen as a “hierarchical” process that links the higher to the lower levels of the business structure. It begins with the long-term business objectives and moves down into individual performance objectives and targets

FEEDBACK

Strategic business planning must be INTERACTIVE – it can only improve through trial, evaluation and feedback. Important milestones are periodic meetings at top management levels to assess and, if necessary correct the plan

REWARD/RECOGNITION PROGRAMME

Employees need to be motivated and encouraged to ensure an efficient cost/benefit approach. Recipients of rewards/recognition will signify to their colleagues that this kind of behaviour is what the organisation wants

EXHIBIT B

The Benefits Of Business Planning

Provides guidance and direction to the business itself

Promotes cross fertilisation opportunities, for example sharing of resources/knowledge and cost ascertainment initiatives

Enhances managerial alertness to change and opportunities

Creates, fosters and energises a results-oriented climate

Provides managers with a rationale for evaluating competing interests regarding budget requests, staffing allocations, critical proposals

Steers resources where they are most needed

Helps to unify the myriad of decisions made throughout the business, by providing horizontal and vertical links

Co-ordinates disparate and diverse activities

Encourages pro-active thinking and responsive programme delivery

Provides a business culture throughout the organisation which facilitates the flow of information up and down its hierarchy

EXHIBIT C

The 8 Rules of Business Planning

Open with a summary

Should be no longer than a page and ensure reader’s attention. It enumerates the key points; gives some facts for the overall case.

Focus on the audience and the final result

It must arouse the reader’s interest, leaving out details which may be relevant only to yourself.

Avoid ambiguity

Use plain language. Organise your message through references, clear figures and illustrations and make good use of graphs and tables.

Project your achievements

A business plan backed by good, solid management is what the reader looks for. Highlight important achievements of management.

Use clear narrative and figures

The reading must be interesting, logical and provide clear flow through to the end.

Do not forget the underlying evidence

The data (both external and internal) should be of high quality, relevant and easily communicated to the reader.

Provide for feedback

Involve the active participation of the reader through his/her comments, enquires and explanations.

Ensure senior support

Most business plans originate at the bottom echelons of the management structure. The champion of the plan must be supported by a mentor on the board of directors.

EXHIBIT D

An Effective Executive Summary

o Booboo Ltd is a family-owned confectionery business established 50 years ago by the father of the present owner. Turnover has grown rapidly over the past five years to $750,000 and pre-tax profits to $150,000. A new outlet has been opened this year, to make up for the increased demand. This has also reduced operating costs by 10%.

o Present market analysis indicates that there is demand to increase the number of outlets by another two. These will be serviced and controlled by the Main Area Outlet. Management believes that they could win business from local competitors who cannot compete on neither price nor quality.

o The investment cost involved in setting up the two units is $300,000, whilst average running costs at to-day’s prices will amount to around $85,000 annually. The funds required will be financed as to 30% from the additional funds invested by the owner and the rest by means of an assets-secured 10-year bank loan.

o This investment together with a projected increase of 8% on present day turnover would boost up the pre-tax return from the present 19.6% to 25% of turnover.

EXIDBIT E

Good Quality Data

Not…This rapidly growing massive market will soon become absolutely vast and once we have conquered it in a few years time we will also start on the even enormous international market, where there is even more potential and no competition. And in any case, nobody can copy our unique product.

But…The local market is estimated to be worth around $4.5 million per annum and to be growing at about 12% per annum. If development follows the course for neighbouring states, the potential market size is around $7.6 million, which provides considerable room for growth. Trade sources suggest that current market players are finding difficulty meeting demand, with the current demand/supply ratio running at 1.15. This supports our sales forecasts.

We believe there are further opportunities for expansion in the international arena, where the market is approximately at a similar stage of development as it was two years ago. Our plans show a modest entry into other international markets within 18 months…

Our products have minor improvements compared with competitors, which are protected by both local and international registrations.

A detailed description of a new or existing business, including the company’s product or service, marketing plan, financial statements and projections and management principles, require a plan to be implemented. A document that spells out a company’s expected course of action for a specified period usually includes a detailed listing and analysis of risks and uncertainties. For the small business, it should examine the proposed products, the market, the industry, the management policies, the marketing policies, production needs and financial needs. Frequently, it is used as a prospectus for potential investors and lenders.

Think of it as a production line. What’s go in the start are raw materials and unfinished assemblies. Here, the raw materials include:

-Talent and initiative from employees

-Capital -Market position

-The company’s creditworthiness

-The firm’s earning capacity

-Assessment of changes in the marketplace.

It should have four major aspects:

- Its contribution to purpose and objectives

- Its primacy among the manager’s tasks

- Its pervasiveness

- The efficiency of resulting plans.

The Contribution of Planning to Purpose and Objectives: Every plan and all its supporting plans should contribute to the accomplishment of the purpose and objectives of the enterprise.

The Primacy of Planning Manager must plan in such a way that it leads to proper organizing, staffing, leading and controlling which support the accomplishment of enterprise objectives. Planning and controlling are inseparable. Any attempt to control without a plan is meaningless, since there is no way for people to tell whether they are going where they want to go. Plans thus furnish the standards of control.

The Pervasiveness of Planning: Planning is a function of all managers, which vary with each manager’s authority and with the nature of the policies and plans assigned by superiors. If managers are not allowed to a certain degree of discretion and planning responsibility, they are not truly managers.

The Efficiency of Plans: The effectiveness of plan refers to its contribution to the purpose and objectives. Plan is efficient if it achieves its purpose at a reasonable cost, when cost is measured not only in terms of time or money or production but also in the degree of individual and group satisfaction.

Procedures: Procedures are plans that establish a required method of handling future activities. They are chronological sequences of required actions. They are guides to action rather than to thinking and they detail the exact manner in which certain activities must be accomplished.

Rules: Rules are unlike procedures in that they guide action without specifying a time sequence. In fact, a procedure might be looked upon as a sequence of rules. Rule may be a part of procedure.

Programs: Programs are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed and other elements necessary to carry out a given course of action; further supported by budgets.

Budgets: Budget is a statement of expected results expressed in numerical terms. Financial operating budget is often called a “profit plan”. This budget can be expressed in financial terms, in terms of labor- hours, units of product or machine hours or in any other numerically measurable term.

Steps in Planning: Being aware of opportunities, a manager should take a preliminary look at possible future opportunities and see them clearly and completely know where they stand in light of their strengths and weaknesses, understand what problems they wish to solve, and why and know what they expect to gain. Planning requires a realistic diagnosis of the opportunity situation.

Establishing objectives: This is to be done for the long term as well as for the short term. Objectives specify the expected results and indicate the end points of what is to be done, where the primary emphasis is to be placed and what is to be accomplished by the network of strategies, policies, procedures, rules, budgets and programs. Objectives form a hierarchy.

Developing premises: There are assumptions about the environment in which the plan is to be carried out. It is important for all managers involved in planning to agree on the premises. Forecasting is important in premising: what kind of markets will there be? What volume of sales? What prices? What products? What technical developments? What costs? What wage rates? What tax rates and policies? What new plans? How will expansion be financed? What are the long-term trends? Because the future is so complex, it would not be profitable or realistic to make assumption about every detail of the future environment of a plan.

Determining alternative courses: The more common problem is not finding alternatives but reducing the number of alternatives so that the most promising may be analyzed. The planner must usually make a preliminary examination to discover the most fruitful possibilities.

Evaluating alternative courses: From the various alternatives available proper evaluation should be done which may involve ash flow.

Selecting a course: The best alternative should be selected.

Numbering plans by budgeting Final step is giving them meaning by converting them into budgets. The overall budgets of an enterprise represent the sum total of income and expenses, with resultant profit or surplus and the budgets of major balance sheet items such as cash and capital expenditures.

The first step in opening a successful restaurant business is writing a comprehensive restaurant business plan. Almost everybody has a rough idea of what basically constitutes a restaurant business plan sample. But there are many things which you need to pay attention to, as most people often miss to include them.

So here’s a head start on crafting your restaurant business sample-

In general there are five things that all restaurant business plans should have. They are Executive Summary, Market Research, History and Position to Date, Operations and Business Strategy.

Speaking about executive summary it should address some vital issues like mission and objective of the company, description of the company, products and services offered, finance requirements as well as financial forecasts. An executive summary is often regarded as the foundation of any business. All the information that you will provide in the plan will be like a guiding path as to what your restaurant will do and how they will do it.

History and position to date is the second vital thing in a business plan sample. This part of the business plan will take you a step further in running your restaurant business. Here you require to include some vital things- such as, the key personnel and the management team of your business, history of your restaurant and also the structure of your restaurant business.

Market research is the most important part of the business plan sample. Efficient market research will only depict how much successful your restaurant business is going to be in the long run. A market research should be inclusive of the following factors – social and economic factors, long-term opportunities, competitive environment, customer description, geographic area, market definition, competitive analysis, market opportunities, competitive advantages and also potential future competition.

The answers that you would get to these things should be analyzed carefully. The information received through market research is invaluable for the success of any business.

Business strategy is another important component of a restaurant business plan sample. Here you should exactly explain how you plan to attract customers to your restaurant. You not only require to attract but also to retain that attraction so as the customers can keep coming back to your restaurant. Thus the topics that should be addressed in this part of the plan are advertising and promotion, incentives or special offers to customers, marketing and sales and commission.

After this comes the fifth most important part of a restaurant business plan sample is Operations. Here you need to explain clearly as to how you will run your business on a daily basis. This part should include things like number of employees you have, type of employees, the daily menu, particular food on a particular day and more. Basically this part of the restaurant business plan should address the daily operations of your restaurant business.

If you’re thinking about starting a business, or helping an existing one to grow, then you’re probably already aware of the importance of planning. If you want to maximize your income then you really need to make sure that you plan to succeed.

But business planning doesn’t come naturally to all entrepreneurs. You may have some great ideas, but the practicalities involved in writing them all down, carrying out cash-flow forecasts, balance sheets and thinking about potential risks may seem far too daunting.

It might help you to know that there are plenty of people who feel the same way. Fortunately, there are some approaches that you can take that will make things easier. A great move that you can make right now is to find some online business plan software.

The brilliant advantage in making use of web-based planning software is that it makes things so much easier. You will be provided with a range of templates, examples and shortcuts. These will offer you important prompts, helping to ensure that you remember to include all of the most vital information.

They also allow you to see a standard way of setting out your plan structure (template). This is perfect if you’re looking to approach a bank manager, a venture capitalist or other professionals. They’ll be impressed that you’ve produced a document that includes a sound strategy, operation plan, financial projections, performance ratios, business valuation – everything that they need to see. What they may not realize is that you’ve been able to produce such a comprehensive set of data as a result of the online software application that you’ve used.

But a business plan isn’t simply something that should be used to impress a bank manager, or that should be filed away in a dusty cupboard. The best plans are those that are updated regularly, reflecting ongoing changes to the enterprise. They can provide you with the necessary focus to put your ideas into action.

By maintaining your project online, you, and your team members have easy access to it. This means that it will be a set of information that will be integral to your company, rather than something that’s seen as being peripheral.

As a result, your team will be able to constantly add new pieces of information to the project database. If your sales are better than expected, for instance, then you can immediately update your financial projections and see what impact the changing situation will have on the cash-flow or profitability. Such information can quickly prove to be invaluable. You will no longer be relying purely on estimates and hasty calculations.

Having a good business plan in place is all about securing the future of your enterprise. It’s a useful way of helping to ensure that you have a more secure future too. Modern on-line software is one way to make your business planning so much easier and more efficient. Make good use of web-based application for your planning and forecasting needs and you’ll be set for success.

In today’s highly competitive and dynamic environment, organisations need to continuously change their tactics to survive and maintain their competitive advantage. Advanced technological developments and globalization are constantly presenting organisations with new products, markets and challenges. As a result, your organisation need to be forward looking when formulating your business strategies. There is need to embrace change and not resist it.

The first stage in implementing successful continuous improvement is understanding the basic concepts behind it and also the benefits to the organisation. Continuous improvement is based on quality, process improvements and teamwork. Your organisation needs to identify the needs of your customers first and then produce products that meet those needs. Also, there is need to leverage on technology. For example you could use IT for sending out electronic invoices as opposed to paper invoices. This will save time as well as postage money. As there is instant delivery of the invoice, there are higher chances that payment will be received early from your customer.

Also, you can collaborate with your business partners to improve processes. One of the advantages of collaborating with partners is that the process allows sharing of ideas when it comes to problem-solving. Teamwork is also essential for continuous improvement to work. Remember, “Two heads are better than one”.

By promoting a culture of continuous improvement, the benefits to your organisation are many. Some of the benefits are:

o More efficient business planning: Because the organisation is focused on reducing waste, appropriate measures that monitor performance can be established.

o Improvements in customer satisfaction: When customers are satisfied, they become loyal to your business and will want to continue doing business with you. They can also refer their friends, family and other colleagues to your business.

o Reduced waste because of better use of resources: The saved resources e.g. time and money can then be channelled to other projects.

o Increased profits through a reduction in costs and an increase in revenues. Happy customers will always come back and buy more. They are also prepared to pay a premium for quality products.

o Employees are motivated as they feel they have to be innovative and creative to solve problems and improve business processes. Since continuous improvement is an ongoing process, employees feel challenged as they have to constantly come up with better ideas. This increases morale as there is a sense of ownership of the project.

The second stage in implementing continuous improvement is ensuring that all the essential factors for its implementation are in place. These include:

o Understanding your businesses’ environment: This will help establish what your business does and what processes you employ to achieve your goals. An evaluation of these processes will allow for continuous improvements.

o Commitment from senior management: Senior managers need not just do the talking, but they should walk the journey too. This is necessary for motivating employees.

o Ongoing monitoring of performance and contribution of employees: Are the employees meeting the targets set or they are missing them? If they are missing targets, are they missing narrowly or not? The extent of the miss will allow for improvements to take place.

o Good communications throughout the organisation: Everyone should be aware of what the organisation is trying to achieve and their role in achieving the organisation’s strategy.

o Since continuous improvement is also about quality, there is need to have recognised quality management systems: You could have a group of employees from different functions of the organisation meeting up regularly to discuss quality and quality control issues. This will help in improving quality.

By regularly monitoring the above factors and ensuring that they are in place, your organisation will always focus on the right priorities, improve performance and maintain your business advantage.

Promoting a tax planning service business can be a challenge to promote as these services can be difficult to showcase in traditional marketing materials. One type of marketing material though that can be used to market these services is brochures. Brochure marketing can serve as an efficient tool for targeting, branding, sourcing, and, tracking clients. The following are tips on the use of brochures as promotional tools for these services.

Come Up With an Attractive Front Cover – When working with brochures, it’s advisable to create an eye-catching or interesting design for the first page or front cover. Incorporate attractive colors, powerful graphics, illustrative images, or, a teaser to a great service deal. Another way to attract attention is to feature a tagline that answers a client’s needs.

Outline Your Service and Its Benefits – Brochures can be used as efficient tools for presenting information. Brochure pages can be printed with a descriptive outline of the company’s services and its benefits to clients. At the same time, it would be best not to overload clients with too much information. Text should appear in an uncluttered, visually appealing format.

Use an Approachable and Encouraging Tone – There’s no need for the brochure to sound aloof or formal. An approachable and encouraging tone shows that a tax planning company has concern for clients’ ease and convenience. It establishes an approachable tone but at the same time encourages the urgency and important benefits of acquiring tax planning services.

Brochure marketing for tax planning services is a promotional tool that not only provides information about services but it can also be used as handy references for future use. The use of attractive images and personalized messages can deliver useful information in an open and trustworthy tone.