Archive for April, 2011

Small Business Plan – Key Factors

A business plan is the backbone of every business, whether it is a small family run business or a big corporate house. Proper planning is very much essential to ensure survival and growth of any business.

So, if you are going to setup your own small business, your first step is to make a business plan. If you plan well ahead ,chance of success will be more. A business plan includes various dimensions. I’ll list each of them. So, let us start. My assumption is that you are the owner of your business and your business is a one-man show or atmost supported by your family members.

  • Business Objective:

Write down a small single sentence stating clearly your business objective, it is the very starting point of all the business plans. I can give you one good example of this one. A renowned brand before opening their new retail stores all over India stated their objective is to provide fresh vegetables to the end users and make them happy. This is their basic plan. Very simple indeed but it transpires the basic business objective. Similarly, you have to write your business objective, it must be simple, unambiguous and realistic.

  • Describe your product or services:

This is the second major step for development of a business plan. You must write in full details what are the products or services that you are going to offer. Write down the salient feature of each product, including pricing, taxes, shipping and delivery charges and time involved.

  • Set up your financial goal:

First of all a word of caution. Never setup any unrealistic goal, otherwise, you may be frustrated quite soon. Setup your goals that you think is achievable. If you have just started your business and really do not have much idea about how much it can yield, then atleast try to run your business at break-even point within three to six months of starting. Most of the small business venture experiences a premature death because they aim at too high in a very short span of time.

  • List all available resources:

Resources include manpower, machinery, raw material or finished product , your knowledge or expertise in a domain. Whatever you have or you know, and if that is somehow related to your present business, include them under the head available resources. Try to use each of the available resources in the most effective way. This will reduce your business overheads. For example if you already have some free space, you can use it for office purpose instead of hiring a new office premises in the very beginning.

  • Identify the market

This is one major part of your business plan. You must know where the market is, how much big is the market. After all it is where you are going to get revenues from. The better knowledge you have about the market, the better will your products/services sell. Stay-at-home Moms are usually successful in cosmetic/jewelry business for their access to the end users. I have seen a lot of them selling garments, bed-sheets and bed-covers and earning a lot. The key ingredient for their success is that they know the market. May be, they have access to a very small section of that market, but, still that is enough for them to run their business in profit.

  • Marketing plan

Once you have identified the market, you need to setup a marketing plan. You can promote your products and services in varieties of ways. Most of them involve certain cost. So, if you want to make a cost-effective campaign, use leaflets, posters and banners; publish classified advertisements in newspapers also word of mouth is the free but the most effective mode of campaign. So, try to tell about your products and services to as many person as you can each day. I have seen a renowned holiday resort company started its marketing campaign based on word of mouth alone. And it worked.

  • Financial plan

This is the most important part of every business plan. Every business needs certain amount of investment in the form of fixed and running capital. So, after completing all other plans, calculate how much capital you require to start your business and how much capital you need to run your business on a monthly basis. In any case , you must keep in reserve atleast six months running capital before starting any business. And now estimate the revenues that you may generate. If you have no previous data, take the break-even point as your staring sales target. Your financial plan should reflect achieving break-even point within three to six months and generating profits thereafter. It should take into account all sorts of expenses and probable income from your business.

  • Strategic planning and implementation

Be very specific to prepare a strategic plan of how to run your business. It involves management responsibilities, daily work schedule, marketing and promotional schedule, progress monitoring and reviewing schedule.

  • A final summary

After covering all the aspects, start a survey campaign. Discuss about your new business and its various dimensions with your friends and family members. Take their feedback. Modify your plan, if required. But stick to the plan once you have finalised it, atleast, for a period of two years.

How to Write the Perfect Business Plan

“A franchise is more likely to succeed with a projected plan for all eventualities: If you fail to plan, you plan to fail…”

The old adage “If you fail to plan, you plan to fail” is especially important for first time franchisees. Those who understand the benefits of business planning are more likely to be successful and pro-active to management decisions, than are those who react to day-to-day operational issues. Franchisees who fail to plan strategically end up confronting problems head on and may be unable to manage the business effectively on a daily basis.

This type of business management can have a negative impact on the franchise, staff and other individuals involved in the operation. It can also leave very little time for any other business management concerns. Therefore it is necessary for franchisees to construct an effective business plan for their franchise system.

Your business plan will be the “sales document” for you and your business and its preparation should project the image of what you want for your business. The following is a useful guideline on how best to approach drawing up a business plan and the key terms it should contain.

1. Introduction

  • Purpose of the business and business concept;
  • Overall business objectives;
  • Legal status of the business stated; benefits and shortcomings of this business system.

2. The Product and Service

  • Product or service your business will offer; include relevant history of the franchise product or service;
  • List the Unique Selling Point (USP) of your business product or service; the key feature that makes your product stand out from the rest in the market place;
  • How the product or service can be developed with the help of the franchisor.

3. The PersonnelInclude details of anyone who will be involved in making your business a success. These people are very important to your business success. Include in this section:

  • Brief summary of each person’s skills and knowledge of the particular sector, including their personal assessment of attributes, strengths, weaknesses as well as your own assessment of each person;
  • Relevant experience, commitment and reasons for involvement; Don’t forget to include yourself in this assessment of key personnel- you are the driving force behind the business operation.
  • Include a detailed CV for each person in the “Appendix” at the end of your plan.

4. The Market

This is probably the most important section of the business plan. Without a clearly defined market, your business will not succeed. If you can show that you have “done your homework”, you will gain credibility for the whole business plan. Your franchisor will also have research in this area you can avail of.

Describe the current conditions in the market place for your product or service;

Detail any relevant facts and figures relating to the market sector(s) that you will be targeting, and the type(s) of potential customers for your product or service.

Details of competitors should be included with reasons why potential customers will choose your product/service over your competitors.

5. The Marketing Plan

Include your marketing objectives; i.e. number of sales.

Where your product or service will be positioned within the market place in terms of image, price and quality. You can avail of franchisor assistance in determining the marketing strategy.

Planned marketing, PR campaigns and advertising;

Customer service policy is planned and how it will work.

6. The Operation

Include sources of supply, labor and materials;

Detail resources required to operate your business; what you already have and what you will need to acquire;

Identify any crucial procedures or sensitive issues and outline possible solutions;

State where you intend to operate from- your current premises and future requirements;

Outline your projected Health and Safety policies.

7. The Premises

· Location;

· Future business growth;

· Running costs and Uniform Business Rates, rent, etc.

· Insurance

· Planning Consent, planning issues.

8. Financial Information

(a) Introduction: Start with the key facts; the forecast profit (or loss) for the year;

Whether additional financing will be required and what for;

Break even sales for the business should be calculated and shown as a % of your anticipated sales;

Details of the money you need to take out of the business to live on – required income.

(b) Profit and Loss Forecast

Your forecast profit (or loss) should be based on your anticipated sales, minus your direct costs and overheads. The assumptions made should include:

Justify anticipated sales as best you can;

Any direct costs (materials, etc) should be detailed;

Don’t’ forget overheads;

(c) Cash Flow Forecast

To anticipate how much cash your business will require, you should convert your profit and loss forecast. List the following assumptions:

When will you get the money from sales;

When you will have to pay suppliers;

The timing of specific overheads;

How much capital equipment that you require for the business. Differentiate between existing equipment and expenditure still to be made- how much and when.

9. The Appendix

This is the final section of the BP. It should include the detailed information mentioned earlier and the following:

Details of premises;

Insurance Details;

Product brochure, photographs, letterhead.

Anything else that you believe will enhance the credibility of you or enhance the credibility of your business.