Plans Archives - BOLLYWOOD SURKHIYAN

Solve Funding Issues to Finance SME’s Growth Plans

SME’s are developing rapidly and flourishing enormously worldwide. Since its initiation and establishment, there some extremely important and basic requirements to be met and adopted. These requirements include; infrastructure and employment requirements, a developed information technology infrastructure along with funding sources, which is the most important aspect of the sustainability of these SME’s.

Funding sources are the strengthening pillars for such small and medium-sized enterprises.

SME (small to medium enterprise) is a convenient term for categorizing businesses and other organizations that are somewhere between “small office-home office” (SOHO) size and the larger enterprise.

Unavailability of timely and adequate funds has an immense adverse effect on the growth of these SME’s which in turn affects the growth of the Indian economy. Such insufficient funding sources serve as the crucial barrier in the development and sustenance of SME’s.

The economic development in India is hugely dependent on the performance of small or micro and medium enterprises. They are the powerhouse of innovation, entrepreneurial spirit and enormous talent, which is required for the nation’s development in the economic sector.

Indian SME sector:

This sector contributes to the industrial output, provides employment to masses. They also contribute widely in exports. These organizations produce quality products for national and international markets.

The presence of SME’s is greatly acknowledged. The manufacturing sector is rapidly advancing because of the contribution of these organizations.

Undoubtedly, these SME’s are performing their best, despite their limited sources. Still, there are multiple cases of these organizations facing funding issues.

The solution for funding issues faced by SME’s:

The government has been taking initiatives like setting up the National Manufacturing Competitiveness Council, announcing National Manufacturing Policy (NMP) and much more to energize and boost the manufacturing sector.

Banks have made stable strides to support SME’s. However, such approaches by banks for funding are limited and restricted because by controlling and managing risk, they ultimately create value. Thus, banks are not always a rightful solution as a funding source.Access to capital markets is rare, in the case of SME’s. Therefore, such organizations hugely depend on borrowed funds from some financial institutions and banks.

Mostly commercial banks provide extended working capital and financial institutions provide investment credits. Universal banking services, working capital, and term loans are becoming available for SME’s for funding.Meanwhile, the traditional requirements of finance are still actively in use, for creating the asset and working capital.Globalization is generating a demand for introduction and development new financial and support services.

The RBI should issue necessary guidelines to all banks on credit flow. Moreover, the Government should work rigorously to create an environment conducive for growth for the SMEs that restrains the need for capital and debt.

Setting up SME-targeted banks that provide priority to lending to the SME sector.

Financing schemes for SMEs can be formulated and be beneficial. These might be highly risky, but promises great returns. There is also a need for a reduction in the interest rates. SMEs has been paying high-interest rates for bank loans. The loan structure should restructure, on an urgent basis as lower interest rates are an extremely important need for SME’s.

Delayed payments are yet another major area of concern for SME’s that lead to reduced working capital.

Recycling of funds and various business operations are majorly affected due to delay in dues settlement. Defaulting customers are mostly large enterprises and the SMEs due to fear of losing business are not able to report against them.

An automated portal could be established by the government, wherein SMEs makes available their customer detailings.The government can also send automated reminders to defaulting organizations, in the cases of payment defaults.

As it is well known all over that, for the government, the Budget is an occasion to set up new financial goals and economic goals, allocate financial resources and provide policy directions. During Budget presentations, the Finance Minister announces new policies, schemes, projects and allocates finance for the development of several sectors of the economy, to meet the overall goals of socioeconomic growth.

For SMEs, the potential sources of finance are very limited. However, their usefulness is limited because of mostly practical problems. Crowdfunding also supplies chain financing are some funding sources.

Some more funding sources for SME’s

The owner, family, and friends of SME

An excellent source of finance. Mostly, such investors, invest not just for financial gains and are willing to accept lower returns than other investors. However, the key limitation, for most of these organizations, is that, that the finance they can build personally, from friends and family, is limited.

Trade credit

SMEs can take credit from their respective suppliers. It is however just short-term and, if the suppliers are big companies who have identified and categorized them as potentially risky SME, the possibility to extend may be limited, for the credit period.

The business angel

A wealthy individual who is willing to take the risk of investing in SMEs. However, they are just found in rarity. Once such an individual is interested they can become useful to the SME, as they have great business plans and contacts.

Factoring and invoice discounting

These sources help the organizations to raise finance. It is only short-term and is mostly more costly than an overdraft. However, with the SME growth rate, their receivables will grow thereby the amount they can borrow from invoice discounting will also rapidly growing.

Leasing

Leasing assets is a better option rather than buying.them, as it avoids to raise the capital cost. However, leasing is mostly possible on tangible assets.

Listing

An SME can become quoted by acquiring a listing on the stock exchange. Thus, raising finance would become less of an issue. But before listing can be considered the organization must grow to the considerable size that a listing is feasible.

Supply chain financing

SCF is new and is somehow different than the methods of traditional working capital financing, such as offering settlement discounts, as it promotes collaboration between the buyers and sellers in the supply chain.

The venture capitalist

A venture capitalist organization is mostly a subsidiary of a company that has worthy cash holdings and might need to be invested. Such subsidiaries are at high-risk, potentially high-return part of their investment portfolio. To attract venture capital funding, such organization has to have a business strategy and idea, that may help to create, high returns that the venture capitalist is seeking. Thus, operating in regular business, venture capitalist financing may be impossible for many SME’s.

The above mentioned are the various solutions for SME’s to deal with the issue insufficient funding sources.

Business Plans – Your Roadway To Success

Experts say that a strong business plan is one sure step in the direction of success. So, what is a business plan in the first place? It is defined as a document that outlines the functional and financial objectives of a business. It also contains details of the budget involved and the goals to be achieved.

Everything on earth is tending to become compact. Gone are those days when a sea beach was described in a thousand words. Today, a similar description is possible with a powerful visual and a string of strong adjectives in only a few words. A mobile phone today is slightly bigger than your thumb. Similarly, a business plan is no longer a document of a hundred pages. Nobody wants to know your business. They want to know your views, your goals, your objectives and your plan of action.

How Well Can A Business Plan Be Implemented?

o Simplicity of a business plan – is it understood by one and all? Are its views and objectives clear?

o Specificity of a business plan – are the contents measurable? Are all the activities dated (initiation to completion)? Are all the actions distributed among personnel clearly?

o Real nature of a business plan – are the objectives and targets real? Are the goals set within a specified time achievable?

o Totality of a business plan – is the plan complete? Does it have all the necessary elements to outline your business goals?

A business plan has multiple uses. It can be used to start a new business enterprise, take a loan or to find good investors. There are many other reasons for which you need a business plan. You should first find out why you need a business plan.

Why Do You Need A Business Plan?

o Outline objectives and set goals to achieve them

o Prepare regular business review outlines

o Start a new business enterprise

o Decide on a value on a business for sale and legal issues

o Outline agreements between business partners

If business plans are conceived for different purposes, there must be different business plans for different kinds of ventures. Business plans are also known as growth plans, internal plans, investment plans and so on and so forth.

If your business plan is for internal study and revision, there is no need of background details of your organization because you are already aware of them. You need to add that only if your business plans are meant for banks and other institutions.

What Are The Different Types Of Business Plans?

– The most basic of business plans are the start-up plans that clearly outline the steps for a new business venture. They include details of service provided or product offered, market value of the same, implementation strategies, market and financial analysis. The basic structure consists of a summary of the company, ending with details of financial transactions and expectations for the first year.

– An operational business plan contains details of dates, deadlines and milestones. It is often referred to as an internal business plan.

– A strategic business plan aims at higher levels of target and does not deal much with dates and deadlines. This business plan is more of future and growth oriented and focuses less on facts of the company.

– A growth or expansion business plan focuses more on one or more subset of the business. There are variations of this kind of business plan. If it is meant for a new investment, it will obviously include the background of the company.

– A feasibility business plan is your entire business in bulleted form. It includes the summary, the mission and the vision of the company, the USP of the business enterprise, expected financial outcomes etc. The main purpose of this business plan is to test whether this business is worth a venture at all.

The Seven Points Of Business Plans

Business plans usually cover the following 7 points. Of course, they will vary in detail, depending on the purpose of the business plan.

– Mission Statement – your business plan must explain clearly why you want to start a particular kind of business in the first place. It doesn’t have to be long, but it needs to convey the message clearly.

– Business Description – this is the place where you talk about your business. What is it that you are trying to sell or provide? What is the USP of your business?

– Goals in view – here, you describe both your short term and long term goals. Short term goals may include your plan to acquire office space, provide a proper business name, apply for a business license etc. Long term goals include answers to where you see your business ten years down the line, opening new stores etc.

– Prospective Customers – who is your target audience? Why will they need your service or product? How well do you understand their needs?

– Competition Analysis – this helps you rank your business venture in the market. Who are your competitors? If their focus area is too competitive, try for a niche market that is comparatively less competitive.

– Financial Considerations – be realistic and optimistic about your finances. Make sure to spend only that much with which you are sure to receive returns. Or else, go in for a small business loan till your business can take care of its own expenses.

– Marketing – sell your ideas before you sell your products. Advertise your products everywhere you can think of. Don’t miss out on both offline and online publicity. If you get a chance, exhibit your product or service at local communities and organizations.

Do’s And Don’ts Of Business Plans

Your business plan should:

a) Set concrete goals and deadlines

b) Distribute work among people and departments and set deadlines to achieve the goals

c) Maintain a steady ratio of implementation to strategy to 10:1

d) Provide a platform for regular review and discussion

Your business plan should not:

a) Display your knowledge about your field of expertise

b) Be too lengthy – people lose interest easily

Not all businessmen and women are good planners. It has often been seen that a business fails because of the lack of a good business plan. That is one of the cardinal mistakes for an entrepreneur.

Business Plan Mistakes

Experts have identified some common mistakes regarding business plans. They are:

– No business plan – many business ventures begin without any plan. Plans are written out in a rush only if the clients or banks or investors ask for the same. It is often seen as unnecessary because the business is more important. Imagine the condition of a house without a plan. You will get lost midway in heaps of concrete and steel. Similarly, you will get lost in ideas and desire to implement them.

– Cash is more important than profits – business is not the same as profits. Cash is the main player. Only if you have cash to spend in the beginning, will you get profits at the end of the day.

– Ideas don’t sell – your business sells because of hard work, perseverance, cash and a lot of common sense. Your idea does not have to brand new. Old wine is better than new ones. Why? People trust age and experience.

– Fear factor – a business plan is as necessary and as routine as making a travel plan. You don’t need to be Einstein to chalk out a business plan. You just need to think straight and pen your thoughts.

– Specificity wins – focus on tangible results, instead of trying to be the best. Results matter and they tell you everything.

– Fit all business plans – your business plan should work for bankers and investors as well as internal review and corrections. Don’t make individual business plans for individual purposes. Rather, concentrate on your business.

– Everything cannot be important – you can have only a few priorities. 20 priorities are vague and they clearly show lack of strategy and of goals.

A business plan is the first step of starting a business. It is neither easy nor difficult. What is a business plan about? How do you implement a business plan? What do you include in a business plan? What are the ‘must have’s’ and ‘have not’s’ of business plans?

Whether it is travel, study, cooking or any other activity involving a process, planning is usually the first step. The same holds true for business. Business plans are probably more important than the business itself. For example, the plan for a house is more important than the house itself, though it is the house that people remember and not the plan. But the house wouldn’t stand without the plan, would it?

The Best Laid Strategic Plans

The goal of long – term planning is not to strategize but; to prepare key minds to make sound decisions.

Background.

Most companies invest a significant amount of time and effort in a formal annual strategic planning process but, many executives see little benefit from the investment. One manager told us, “our planning process is like a primitive tribal ritual; there is a lot of dancing, waving of feathers and beating of drums. No one is exactly sure why we do it but, there is an almost mystical hope that something good will come out of it.” Another said, “it’s like the old communist system. We pretend to make strategy and they

pretend to follow it.”

Management thinker Henry Mintzberg has gone so far as to label the phrase Strategic Planning an oxymoron. He notes that real strategy is made informally, in hallway conversations, in working groups and in quiet moments of reflection on long plane flights, even on the golf course but, rarely in the panelled conference rooms where formal planning meetings are held.

Our research on strategic planning supports Mr. Mintzberg’s observation. We found that few truly strategic decisions are made in the context of a formal process. We also found that when approached with the right

goal in mind, formal planning need not be a waste of time and can in fact, be a real source of competitive advantage. Companies that achieved success used strategic planning not to generate strategic plans but as a learning tool to create “prepared minds” within their management teams.

A former senior executive at GE Capital explained the logic of such thinking. Business is often unpredictable. Two competitors merge, another develops a new technology, the government issues new regulations and market demand swings in a different direction. It is often during these real time developments that a company’s most important strategic decisions are made. Too often however, companies react poorly under the pressure because they are not well prepared for these unpredictable events. Discussions among top managers are often based more on opinion than fact, and the subsequent decisions end up being based on gut instinct rather than thoughtful analysis. GE Capital however, believes it gains a competitive advantage by following a disciplined strategy process that focuses on preparing it for the uncertainties ahead.

As our analysis makes clear, real strategy is made in real time. It follows then the goal of a formal strategic planning process is to make sure that key decision makers have a solid understanding of the business, share a common fact base and agree on important assumptions. These elements of the prepared mind serve as a foundation upon which good strategic decisions can be made throughout the year. One of the most important ways of building that foundation is by getting the central elements of the process right.

How to create prepared minds?

Most strategic planning processes are built around a set of annual or other time period meetings in which the chief executive officer and senior corporate team review the strategies of the company’s business units or divisions. The chief executive and top team typically meet separately to discuss corporate strategy as well.

We found the key to transforming these review meetings from “dog and pony” shows into effective vehicles for learning was to view them not as reviews by the chief executive but as conversations. The difference is that a conversation is a two way street in which participants learn from and challenge on another. The goal is for everyone to leave the room much better informed than when they went in. Achieving that outcome requires a lot of preparation by all the participants.

Who should attend reviews?

At the E.D. Smith Company in Canada, they believe real conversations take place in groups of three to ten people, no more. E.D. Smith simply do not believe that effective results will be achieved in large groups for both logistical and political reasons. Llewellyn Smith, the former President and Chairman of the E.D. Smith board believes that once the group grows, it is difficult to ensure that everyone can participate meaningfully so hierarchical forces are more likely to come into play. Rather than frank discussion, in larger groups one is more likely to see posturing and politicking. Some companies in our study tempted by the values of inclusion, brought in groups of thirty or more to their strategy reviews. These discussions were inhibited and people came away feeling the exercise had been more of a show than a real dialogue about critical business issues.

In reality, there are only two essential participants in a business unit strategy review; the chief executive officer and the business unit leader. Everyone else is discretionary and should be included only if he or she is truly a decision maker. The number of decision makers varies from company to company but typically includes the corporate chief financial officer, the group executive that the business unit reports to, the head of human resources, one or two senior corporate executives and two to three senior members of the business unit team. The corporate head of strategy also usually attends as the person responsible for making sure the conversation is effective. Thus, the total number of participants can be kept to between five and ten, with twelve as the maximum. People will fight to be included in these meetings but, other forums can be set up to keep them informed and get their buy in.

How long should reviews be?

It’s not possible to have an in depth strategy discussion about a significant business in less than a day. There are simply too many topics to cover such as customers, competitors, technology, regulation, risks, investments, market segmentation, resources and more. Spending less time in these areas prevents the careful poking and prodding of issues required to get the full benefit from the effort. It may sound like a lot to commit a full day to each major business unit, but most chief executives we interviewed said they wanted to spend about a third of their time on strategy.

Given two hundred and forty working days in a year, that leaves eighty days to devote to strategy. In that context, it seems reasonable to expect the chief executive to spend ten to thirty days in intensive, well – prepared strategy discussions. As one Emerson Electric executive told us, “At first I resented the Emerson process because it was such a large commitment of time, but then after a few cycles I realized it was making me and my team better managers. The process of preparing for it and the meetings themselves made us realize things about our business we wouldn’t have found out in any other way.” Former chief executive Charles F. Knight said that “more than half my time each year is blocked out strictly for planning,” a commitment to strategy that has been carried on by his successor, David Farr.

Where should planning meetings be held?

It is best to hold planning meetings off site. Holding the meetings off site will minimise the distractions of day – to – day business at corporate headquarters, allow participants to focus on the task at hand and allow for free time for participants to caucus in an environment free of the daily challenges.

What should be discussed?

Many companies combine their strategy reviews with a discussion of budgets and financial targets. That is a big mistake. When the two are combined, the discussion is dominated by a focus on the numbers and short-term issues; long term strategy questions receive only cursory attention. Likewise, if there is no other forum in which to discuss the financials, they will inevitably come up in the strategy meetings. Ideally, companies should have two clearly demarcated meetings: one full day on business – unit strategy and another meeting at a different time of the year to set financial targets. The two should then be linked with a common, rolling three to five year financial plan that ties together strategic initiatives with budgets and financial targets. Such strategic linking is crucial.

Focus on long term trends, opportunities, challenges and decisions are crucial. In businesses where decisions have a long lifetime and are difficult to reverse, such as aerospace or telecommunications, long term might mean five to ten years. In those where commitments have a shorter life, such as software or consumer goods, it might mean two to four years.

The discussion should focus on questions over the appropriate time horizon such as: What are our aspirations? What are the critical trends regarding customers, competitors, technology and regulation? How is our business model performing and how will it likely evolve? What are the key challenges and opportunities we face? What capabilities do we need to build for the future? What are the key risks and uncertainties we face? What can we do to ensure our adaptability, flexibility and profitability?

How should the conversation be conducted?

The main purpose of the discussions is to challenge the strategy by testing assumptions about the market, checking that a full range of strategic choices is considered, exploring potential opportunities and risks, and forcing an honest assessment of the business’s strengths and weaknesses.

An organizations culture will dictate the tone of the discussions, and there is no one right culture for planning. Good strategic planning can emerge from the in – your – face culture of Emerson Electric or the more genteel culture of Hewlett – Packard. There are however, certainly some wrong ways to conduct strategic planning conversations. Sometimes business – unit heads, resentful of what they see as “interference from corporate,” try to reveal as little information as possible; on the other side, senior corporate leaders at times turn the meetings into a game of “gotcha,” seeking all the skeletons in the business unit’s closets.

Exploring the strategy’s boundaries and pushing the business team to explore worst case scenarios.

The conversations can be hardnosed, but it is important to create an environment that does not become an “us verses them.” In a firm such as Emerson, where staff are able to challenge one another, it is done by exploring the boundaries of the strategy – pushing the business team to explore worst – case scenarios and understand what might make them come true. Testing to see if aspirations could be ratcheted upward; or investigating the competitive implications of a radical cost reduction or product performance improvement are a given.

It is also fine to create an collegial atmosphere, as long as it does not devolve to the point where uncomfortable issues are glossed over or buried. One company we studied never made an effective strategic plan because it was so consensus oriented. Tough issues simply were postponed until another meeting because the members of the management team were not able to confront one another and an empathetic management relationship evolved.

How much preparation is necessary for these meetings?

Preparation by the principals is the key to making a full day strategy discussion pay off. The tasks should not be outsourced to staff people. A document detailing the strategy should be sent out at least a week before the meeting, allowing participants the time they will need to study it. That will prevent people from having to take the time to read and understand the slides for the first time. Instead, participants will come ready to ask questions and debate the issues.

The corporation should provide the business units with a template that serves as a guideline for analysis. Templates should define the company’s current position in terms of customers, products or services and market segments; assess the future direction of industry, including customer trends, competitor actions, technology changes and globalization; and determine major opportunities and threats facing the business. It is also helpful to share with units the best plan of the previous year to create a gold standard of what is expected.

Each unit should be given a lot of latitude. Every business unit is different, and one size does not fit all because, in some cases templates can obscure more than they reveal. Also, strategy reviews are a great way for a chief executive to check out the quality of the company’s managers. If there is too much corporate guidance, it becomes harder to tell the real strategists from those who are merely good at filling out templates.

What follow – up is needed?

Disciplined follow up is essential. Long term strategic goals should be tied to shorter-term budgets, financial targets, operating plans and human resource strategies. In companies that had a good process, the chief executive personally took detailed notes; wrote a three to four page memo to the business unit of division management summarizing the main themes, implications and commitments; and used the notes as a starting point for the next review. The goals should also be incorporated into the compensation plans of the unit management team. Follow – up assures the strategic plans do not lie ignored on the executive bookshelf. Rather, they are living documents that drive actions and performance.

Prepared minds in action.

How does one judge the success or failure of the strategic planning process? Not by whether the written plans are good, or whether everyone felt good afterward, or even whether any big decisions were made during the meetings. The ultimate criterion is whether all the participants came out of the process better prepared for the real job of strategic decision making. In our research, we saw many examples in which the right process led to that result.

Consider how rigorous planning helped a multi – business industrial goods firms expand internationally. Unexpectedly, its automotive parts division faced the opportunity to acquire two large businesses in Germany, where it had not been a significant player. Because the company was new to the market and would need to commit significant resources in order to succeed in it, the decision was risky.

Fortunately, the chief executive, the corporate team and business unit team members had engaged in extensive strategy discussions and therefore already had a point of view on the German market and the strategic fit presented by the opportunity. As well, a thorough understanding of the economics of the product area in question was solidified. The company was able to make a decision quite quickly and out negotiate a slower rival that was not as well prepared. The acquisitions were critical to the success of the company’s growth strategy.

Similarly, Stryker Canada a medical device company used its strategic planning efforts to focus on a new growth area. The strategy review revealed the divisions core business, while enjoying a large market share and excellent profitability, was slowly becoming commoditized. Looking at demographic factors, company executives realized orthopaedics applications would be increasingly important. More weekend athlete Baby Boomers were blowing out their knees and hips. Over the course of a few years, the company engaged in various activities as a result of that insight. It generated material breakthroughs in the lab that suggested innovative ways of creating orthopaedics devices, acquired a business that could be a home for further sports -medicine activities, and pursued licensing opportunities to extend the product offering. The management team was bale to put the pieces of the puzzle together because it was clear on the scope of the growth opportunity and the need to act in the face of potential declines in its existing business.

Diligence is key to prepared minds in action.

The reverse of the two above scenarios are clearly illustrated in the E.D. Smith, Canada acquisition of GEM, Mississippi. Senior management officials at E.D. Smith were told by reliable food industry sources that they had to expand to the United States in order to stay abreast with customers as they expanded their market and became more global in their strategic challenges. Llewellyn Smith, then President and Chairman of the Board for E.D. Smith left the task to one man to make all decisions as it related to expansion. Not well prepared for the task (through no fault of his own), the person committed E. D. Smith to purchase GEM Industries in Byhalia, Mississippi from a Toronto business man.

Few, if any business unit team members were engaged in strategy discussions. Strategic acquisition analysis was none existent and a thorough understanding of the economics of products, technology, market for labour resources and geographic cultural was not evaluated. As a result, after spending approximately ten million dollars and various corporate resources in a two year period, E.D. Smith sold all of its interest in the company and went back to Canada.

Although E. D. Smith did solidify the WalMart, Sams Choice and HEB. jam business for the Southern United States, Llewellyn Smith later stated that this could have been accomplished by using the Canadian resources at the existing plant in Winona. The company eventually recovered and managed to return to profitability but, at a significant cost.

Prepared minds can also help companies reject moves that do not make sense. A company with a large aerospace and defence division invested a lot of time in its strategy reviews to ensure top managers understood the economic implications of consolidation in its industry. Instead of accepting the standard line from the industry press and pundits, the participants looked in detail at what it meant for their specific subsectors of the industry and their own future economics.

They were not gullible when their investment bankers came to town arguing that the company needed greater economies of scale to survive and proposing a specific acquisition target that would soon be for sale. Armed with an appreciation of the business and aware of the strengths and weaknesses of competitors, top management chose not to do the deal – which in hindsight proved to be the right decision. Their preparation enabled them to sort out sensible deals from foolish ones and avoid a potentially costly and distracting mistake.

Contrast that outcome with events at an agrochemical firm where poorly prepared leaders were required to respond to market challenges. Growth in the company’s industry had come primarily from the development and sale of genetically modified seeds (GMS).

At one point, the company’s seed division held a brainstorming session to talk about new growth opportunities. European colleagues raised the possibility of a backlash in their home countries against food grown from GMS but, a corporate senior executive who had joined the discussion was unhappy with this negative view of the business and took the topic off the table.

Later, European consumers did indeed object to GMS foods and the company was blindsided by the rapid decline of its European seed business. That outcome might have been avoided if the company had a formal process for fact based, open minded discussions of business unit risks among senior corporate and business unit leaders. In the absence of such a process, the whim of one senior executive overrode the concerns of the business unit.

Summary.

As these examples suggest, there is no reason strategic planning should be the butt of cynical jokes. It is one of the most important tasks for corporate and business unit executives.

Companies whose processes look more like tribal rituals waste valuable executive time at a minimum and more seriously, they may leave corporate leaders unprepared to respond properly when the inevitable moments of truth arise. When repositioned as a learning process, formal strategic planning can help managers make solidly grounded strategic decisions in a world of turbulence and uncertainty.

Winning Business Plans – Market Manage and Grow

Writing a business plan is not the means to an end. Your objective should be writing one that wins investor interest, penetrates the market, makes money and grows your business. That said, it is essential to know what key elements, including marketing methods and business processes that are paramount to succeeding in any given market.

One of the best ways to start is by researching, examining and cross-examining every bit of information you can possibly find regarding your competitors methods of doing business. But keep this in mind. While there are many competitors out there, not all of them are truly succeeding in the market. Some are just staying afloat on a shallow stream of cash-flow. Others are slowing down, burdened from debt and about to sink. While a few may actually be on shore, well grounded, in the green and growing.

While there is something to be learned from each company your focus should primarily be on those who are actually successful. Study businesses that have a proven tract record for generating target income streams and revenue. Now the big question – How do you access another company’s business plan?

The Reliability Of Public Data

Once companies have gone public they must publish data analysis to investors and make them available through other public venues. Admittedly much of this information is fettered with generalities and inaccuracies. Relying on public data may not give you a true inside view of the company’s business process model or a real grasp of what makes it tick. But it is a start. There are four additional methods to getting to know the internals of a successful company’s business process:

1. Work for them

2. Work with them

3. Know someone who does one of the above

4. Get your hands on their initial business plan as well as any revisions.

Accessing The Plan

While the latter would seem to be the easier approach of the four, there is still the question of how to get access to the plan. Companies document, revise and share their business plans with staff, the media and in press releases. Parts of the plan appear in sales copy and human resource materials. That said, the data ends of readily available to the person who knows how to access it. There are business plan archives that take the time to gather business plan data from companies that have released data over time. The aim is to produce a complete business plan that is a mirror image of the company’s success, revealing proven methods that helped the company penetrate the market, win business and grow.

Learning Competitors Strategic Growth Techniques

The value of studying a pre-written and executed business plan that wins business is simple. You’re stepping into the shoes of business pros and successful competitors who know the marketing strategies that grow a business. You’re learning their strategy, technique and business process from the ground floor up.

Once you have the plan in hand read the mission statement and objectives. Familiarize yourself with the positioning of the company. Learn how the competitor strategizes in order to penetrate the market. Consider the established business process including the various departments, staff demographics, methods of documenting and communicating procedure, the cascade of information between departments and maintaining quality employee relations. Take time to examine the background, education, experience and other credentials of those on the team. Find out what makes that team tick and why the teams efforts work.

Seeing The Market Through The Eagle’s Eye

With your competitors business plans you get an eagle’s eye view of the market and a clear plan to both penetrate and capture various segments and niches. With an insider’s view of the business process you can examine the scale and dimensions of a working business model from which to engineer your own blue print. Designing your own business model becomes less abstract, less complex and much more comprehensive. In addition, understanding the inner-workings of the business process makes it that much more manageable.

So, before you write a business plan to help you market, manage and grow your business, take the time to access your most successful competitors winning business plan and learn the key elements that have lead to its success. In time you yourself will have a plan that wins investor interest, penetrates the market, makes money and grows your business.

Are Business Plans a Waste of Time?

I recently attended a national entrepreneurship conference along with a number of other college instructors and well-known entrepreneurs. I found it interesting that two concurrent sessions offered conflicting points of view on business plans. One session featured a panel of successful entrepreneurs questioning the real world relevance of business plans. The other session focused on teaching students to quickly and correctly develop business plans.

I was intrigued by the panel discussion so that’s the session I attended. None of the entrepreneurs on the panel had ever written a business plan-at least to launch a business-yet they were all extremely successful. The revelation that they did not use written plans is not surprising, most entrepreneurs don’t. One reason given by the panel for forgoing a formal business plan is the natural tendency for entrepreneurs to cling to a business plan they wrote due to the investment in time and effort. The reality, they said, is that things change so much in the real world of business that the assumptions underpinning a business plan must often be altered or even abandoned to allow the business the flexibility necessary to survive. In addition, the entrepreneurs were adamant that a good plan will not make a bad idea work and a great idea probably will not be hampered by a poorly written plan-or no plan. Another concept discussed in the session was that what the entrepreneur is really selling to the venture capitalist or angel investor is the entrepreneur. One of the panelist remarked that, “If the investors believe in you, they will invest in your business.” The consensus from the panelists was that investors look for passion and vision in addition to the idea. They must be convinced that the entrepreneur is capable of persevering and making good decisions and adjustments to keep the business moving forward. Since there were college instructors in attendance, and most entrepreneurship programs require written plans, all entrepreneurs on the panel diplomatically agreed that requiring a business plan as part of a course or program of study was not a waste of time. They concurred that the process itself could offer valuable insight.

As a college entrepreneurship instructor I try to convey as realistically as I can the realities that entrepreneurs face. After attending this conference I realized that students may have difficulty reconciling the two seemingly conflicting points of view presented in the workshops. Certainly my students are aware of the statistics which suggest that most entrepreneurs enter a business without a written plan. To attempt to convince them otherwise would be disingenuous. If the panel was right why bother with a business plan at all? I believe that the answer can be found in the last nugget offered by the panel of entrepreneurs; it is the process that is most beneficial.

The planning process does not begin with the business plan. In fact, it is a mistake to write a plan too early. A feasibility analysis should be conducted prior to writing the plan so that the key assumptions underlying the plan are properly vetted. The research conducted as part of a feasibility analysis can also lead the entrepreneur to better understand their business. For example, if a focus group is used to better understand the target market, new insights can be gained which can lead to the development of a more competitive business model. The results of the feasibility study and the articulation of a compelling and competitive business model are the most critical components of a business plan. Coupled with a cash flow analysis these facts can be critical when procuring the necessary resources to launch a new enterprise.

Another point I like to make with my students is that the importance of a business plan depends on the type of business. A retail store with large capital requirement, inventory, payroll, etc. is completely different than a new venture in a technology driven industry that is rapidly changing and evolving. A business similar to Facebook, for example, has much less need for a formal business plan than the owner of a new sporting goods store.

In addition, the amount of borrowed capital required to launch a business will impact the need for a formal plan. Venture capitalist typically will want to review at least certain sections of a formal plan as part of their due diligence.

I believe that the entrepreneurs had a valid point regarding the tendency for business owners to become too attached to a formal plan. A critical time occurs when the business is launched and the entrepreneur begins receiving real feedback from customers. The decisions made at this juncture can make the difference between the success and failure of the venture. Should the entrepreneur hold to the assumptions of the plan or should minor or major adjustments be made? The entrepreneur needs to remember that the business is not on autopilot just because a polished business plan is in place. Adjustments must be made as conditions warrant.

The panel was not wrong when questioning the necessity of a formal business plan, but the planning process is distinct from the plan. A business plan, whether required or not, will enable the entrepreneur to better articulate their vision which may make writing a plan well worthwhile.

Executive Summary for Business Plans of Franchisees

Writing a business plan for a franchised outlet of a larger company to get funding or find investors is difficult because the franchisor already has a plan which is working, but until you are privy to it upon purchase you actually know relatively few details. The franchisor must keep this information proprietary to insure competitors do not steal the information, but the franchise buyer needs the information to prepare a business plan to get a loan from a bank. Thus a catch 22 exists and is further exacerbated by the fact there are laws against some types of disclosures, which many franchisors due to the litigious nature of franchising do not wish to disclose based on advice from their attorneys. So what do you do? Well, you do the best you can using the UFOC, uniform franchise offering circular or ask the franchisor to send in a business plan directly to your banker who, signs a waiver of non-disclosure and you cannot see it until purchase.

Yet if you are seeking private investors they will want to see a business plan and therefore you will have to try to put one together. I have bought 12 books on how to write a business plan with hundreds of complete business plans inside; none of the samples have anything to do with a franchised business. So, below please find a sample of an executive summary, which is the most important part of any business plan and probably for the most part all a banker will read. Some entrepreneurs accuse bankers of not being able to read and I am in that group. I recommend you read this and use it as a model to develop your own executive summary for your franchised business outlet business plan. This particular example was written for a mobile car wash franchise outlet, but serves as a fairly good example for you.

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The Car Wash Guys of Fairfax, VA is an owner/operator service firm. This will be a franchised business of Car Wash Guys International, Inc. This sole-proprietorship company is in the mobile car wash business.

Our mission is to achieve a minimum of 2.5% and a maximum of 10% market penetration while simultaneously uniting the entire community. To reach this goal we will use unique local and regional marketing tools provided by our franchisor who has much experience in this field.

Our franchisor has over twenty years of experience in the mobile washing industry. We will purchase from Car Wash Guys International, Inc. a turnkey business for $65,380. This purchase will include:

· Truck With Custom Built Truck Body

· Portable Car Washing Equipment

· Computer, Printer, Business Software

· List Of Clientele, Route and Customer Base

· Down Payment of Liability Insurance

· Down Payment of Medical and Health Insurance

· Licensing and Training (80 Hours Total)

· Complete Operations Guide Loaned For Franchise Term

· Start-Up Supplies (Wax, Soap, Etc.)

· Portable Cellular Phone With Credit Card Machine

· Uniform Supply for an Entire Crew

· Personal Planner with Computer Software Backup

· Exclusive Territory

· Initial In Depth Marketing Blitz

There is a $20,000 franchise fee for joining The Car Wash Guys team that is also provided for in the $65,380 cost.

Our target market is anyone owning a dirty car. Our other markets are:

· Aircraft Washing

· Boat Washing

· Fleet Washing

· Graffiti Removal

· Concrete Cleaning

· Industrial High Pressure Washing

We will charge $5.00 for a basic exterior wash, $10.00 for an in and out and $37.50 for a mini-detail on cars. Most of our customers will be office workers. Fifteen percent of our business will be small and medium sized fleets with five to one hundred cars, trucks, vans, etc. Twenty percent of our business will be industrial type cleaning.

We will market with other local businesses in a co-op situation. Other marketing will be by doing car wash fundraisers for kids groups.

Our car wash crews will wear matching yellow uniforms. They will be clean cut, well spoken, knowledgeable and friendly.

We will purchase our products from the franchisor via modem and credit cards for next day U.P.S. delivery.

We plan to eventually expand to up to five mobile car wash trucks, each averaging $6,000-$8,000 of gross revenue per month, in the next five years. Our royalties to the franchisor will be $35.00 per day times 21 working days per month ($735.00 per month). Each additional truck will pay $20.00 per day royalties or $420.00 per month. Car Wash Guys International, Inc. will provide the following on going support:

·Training of Managers for Each Truck

·Regional Directors for Trouble Shooting

·Spare Trucks in Case of Break Downs

·Combating Competition (Intensive Program)

·Assistance in Community Support Events

·Free Advise (On Any Operational Matters)

·Updating of Manuals and Computer Programs

·Periodic Newsletter

·Upkeep on Major Contract Bidder’s Lists

·Sales Leads (From Their Direct Mail Program)

·Compilation of Financial Reports

·Assistance in Finding Funding for Additional Mobile Car Wash Trucks and Personal Items (Homes, Cars, Etc.)

There are a couple of small time mobile detailers operating in our exclusive territory. Our service, quality and price are much more attractive to our target market. Our operating methods are far superior to that of our current competition. Generally all of the competition listed in the yellow pages as well as those we’ve talked with and observed admit that they have only been in the business a couple of years are not planning on making it a career. Further observations indicate that there is far more than enough business for everyone.

Our long-term goal is to wash cars for one out of every ten owners in our town. Ten percent market penetration can be achieved if we follow our franchisor’s system perfectly. We want to be the #1 franchise in the entire system. We plan on renewing our Franchise Agreement every five years at no charge to us. We will remain in good standing with our franchisor and follow their proven methods of operations in order to do this.

Advantages of Drafting Business Plans for the Success of Your Business

It is important to define the goals of your organization before you want to make it successful and writing business plans is the best way to create a roadmap to identify the goals and the steps required to grow your organization. An organization plan also acts as the financial blueprint for starting and profitable running of your organization.

The plans will distinctively explain how your organization is going to function and, how it will be managed, capitalized and marketed. An organization plan includes the executive summary and financial projection supported by relevant documents. Rather than starting your organization right away, relying upon business plans gives you a better understanding of your new organization in the marketplace, allowing you to compare it with the competitors and gives distinctive benefits in that sense.

For most of the independent organization start-ups, money may be scarce and knowledge is available to them in abundance and it is their key strength. Even when you are not going to market your venture, creating plans is going to help you sell your ideas successfully to the investors. For example, if someone asks you the market for your idea, you would be will prepared in advance.

In its simplest form, your plans will clearly define your organizational goals, identify your organizational goals and also acts as the resume to your company. The plan will help you allocate all the available resources efficiently, manage all the unforeseen problems and make correct decisions in regard to every aspect of your organization.

Your business plans are also important when you are considering going for a loan. Your business plan will provide organized and particular information on your company and this is crucial to your loan application. In addition, your business plan will also extend the scope of information offered to your employees, especially sales staff, to your suppliers and partners. The crucial part of this information is your organizational goals and operations.

When you venture into the marketplace, it would be required to present your plans to different people. Your plan is going to be your professional document so make sure that it is detailed as well as concise. It is this document that is going to generate the trust of your investors in your idea and it will help you present your sales pitch. If raising money for your organization is a priority, you cannot think of proceeding without well drafted business plans.

Floor Plans For Nightclubs – Great Business Ideas For Your Night Club

Nightclubs are well-known for their hot dance floors and cool bars. When deciding on nightclub floor plans, there are a lot of decisions to be made regarding the placement of specific locations within the nightclub itself. There are certain elements that must be included in those plans no matter what type of nightclub is being built.

Nightclubs Need a Bar Area

Nightclubs must have a bar area for patrons to enjoy. Plans for a new nightclub must include plenty of space for a bar and seating for the bar’s patrons. The bar should be in close proximity to the dance floor so that thirsty dancers won’t have far to go to enjoy refreshing alcoholic beverages. This needs to be taken into account when deciding on the placement of the bar in the plans.

Nightclubs Must Have a Dance Floor

Every nightclub must have a dance floor. The nightclub floor plans should include square footage for the dance floor area. This area needs to be large enough to accommodate dancers, dance contests, or any other event that could possibly take place inside the nightclub.

Nightclubs Need Smoking Areas

Many of today’s nightclubs do not allow smoking in certain areas such as on the dance floor. In that case, the floor plans should include a space for smokers to use. Some nightclubs have an outside porch or terrace for smokers while others designate a small space inside the club for smoking patrons.

Some Nightclubs Have Restaurants

Some nightclubs also have restaurants inside their doors. If that is the case, the nightclub floor plans will need to include space for a kitchen area as well as seating for the restaurant’s patrons. The plans will need to separate the spaces used for the restaurant, bar, and dance floor.

Nightclub Themes

The theme of the nightclub being built will also determine the type of plans needed. For instance, a nightclub with a Vegas theme in Las Vegas might need to have extra square footage in the plans to accommodate slot machines or poker tables. An exclusive nightclub may want to find floor plans that include private rooms for VIP guests or private parties.

Leasing or Building a New Club

Depending on whether the nightclub building is being built according to new plans or using an existing space, nightclub plans may have to be altered. If the nightclub is being housed in a new building, any plan may be followed and built to the correct specifications. If a nightclub is being housed in a leased space or in an existing building, the floor plans may have to be altered to suit the existing building.

Nightclub floor plans need to meet specific requirements depending upon the theme of the nightclub and the requirements its owner sets. Different plans will suggest varying locations for the placement of the bar, restaurant, dance floor, and smoking area. Plans will also vary based on square footage needs. There are a lot of choices when it comes to planning for a new nightclub.

How Do Investors Read Business Plans

There are hundreds of thousands of business plans floating around and attempting to find a funding home. I receive hundreds of business plans annually myself, and can definitely state that 99% of these documents are laughable as presentations of an exciting investment opportunity. I am not referring to the value of the product being described, rather the presentation that purports to describe an exciting investment situation.

One of the reasons that so many plans are so poorly written, and there are many, many additional reasons, is that the writers do not understand how plans are read. Investment banks, venture capital firms, family offices, angel firms, banks and blind investment pools receive a stack of plans for consideration every day. Typically a junior reader, often a recent MBA, is assigned to read and screen the plans editing out all of the obvious losers. The remaining business plans are then marked up after sections are read in the following order: Executive Summary, Financials, Management, and Exit Strategy.

Why is the order in which a business plan is read important to recognize? Because, these are the areas that must be powerfully and compellingly addressed in order to have the business plan placed in front of decision- makers. The writing and construction of these sections dictate the level of interest that the original screening reader will express in the synopsis they will attach to the business plan copy as it begins it’s route through the project analysis process.

The Executive Summary is read first. This should be a two page vivid snap shot of the enterprise, and touch on each aspect of the opportunity. The Executive Summary needs to paint an exciting word picture that leaves the reader wanting to know more. Unfortunately, most plans are not read beyond the first paragraph or two.

Why? I have discussed this with investors on many occasions. I have asked the question, “aren’t you worried that you might be missing out on a great product opportunity just because the document has a weakly written Executive Summary”? The universal answer, “if there is no more passion or ability to excite us than we see in a poor Executive Summary, we have never had to look back at a missed opportunity. If you can’t make a great first impression for us, you won’t for anybody else either”?

You only get one chance to make a great first impression. The business plan is your projects first impression. It is the superstructure of your opportunity, the skeleton, and a foundation. If a house has a weak foundation it will not stand up for long. Why entrepreneurs submit documents that do not properly reflect the excitement they believe inherent in their invention is a sad mystery. A poorly executed Executive Summary negates all of the time, energy, investment and innovation built into a new offering.

Assuming the newly submitted Business Plan has an exemplary Executive Summary, and passes the initial screening read, Financials are read next.

Why Financials? Well, the Executive Summary is the skeleton of a project, while the Financials are the muscle.

Financials are based on a set of assumptions that are key to presenting a realistic, justifiable cash flow, balance sheet and income statement. Investors have certain Return on Investment parameters that they must seek to achieve before they can consider any investment commitment. The assumptions upon which the Financials are based must be from thorough research, current market conditions and historical means.

The principal reason Financials lead to project death is that the assumptions are based on dreams, hope and pie in the sky. A rule of thumb for successfully leaping the Financials section hurdle is this: investors need to realistically see that they will receive a mid-30’s per cent return on investment commencing between month 24 and 36 (year 3) after an investment is made. This rate and speed of return must be able to stand aggressive scrutiny. Believe me, investors are manic about analyzing, poking, prodding and tearing apart the assumptions upon which the Financials are constructed.

Good News! Your Business Plan has successfully passed through the Executive Summary and Financials doors. Next up, Management!

The Management section represents the brains of the new enterprise being considered for investment. An experienced (industry specific) management team must be either on hand, or readily available for successful placement.

The downfall in this area for so many prospective entrepreneurs is a complete lack of direct management experience. I recently reviewed a terrific safety product that had immense appeal. An exciting product, great margins, consumer need and obvious benefits, however, the group seeking funding had no executive management experience in any area the project required. They are candidates for a sale or license, but no funding round ever occurs without strong management. Remember: the investment is being made in people, people capable of driving an exciting opportunity to success.

Do not dream about running your own company, with someone else’s money, if you are a warehouse manager by trade but need production and marketing experience to succeed at the new business. It just will not happen, unless the investment comes from Aunt Hazel.

However, if you have strong and direct management experience and the Management section indicates a rounded team, the plan will move on through door three and to the last initial barrier to be overcome. What is your Harvest Goal (exit strategy)?

The Exit Strategy is crucial for investors and the effective management of their money pools. The Exit Strategy is the brain, intellect and emotional component of the deal. Venture capital is a high risk/high reward game. Investors know that the successful investment must pay out large, and relatively quickly, in order for them to cover the losers that greatly outnumber the home runs they hit.

Some entrepreneurs are unrealistic about harvesting gains from their business. This scares investment and venture money. An agreed plan to depart, take profits, sell or exercise myriad other harvest mechanisms at maximized points in the business cycle will be demanded before investment will be considered. It is best for the entrepreneur to be highly flexible when negotiating the harvest. The Exit Strategy is best summarized as an area where the entrepreneur is open, flexible, wishing to maximize profits and make a deal fair to all parties.

Inflexibility is a mortal sin for those seeking investment. I can not overstate how many deals never happen, products linger and die, opportunities are lost because an owner is unrealistic in framing his requirements for his enrichment when potential success is achieved. Leave something on the plate for all parties in a deal.

The other sections of a customized business plan are now important, but only after the pre-eminent Executive Summary, Financials, Management and Exit Strategy areas have passed muster. If your business plan has all four in good order you will be in rare company. Too many entrepreneurs dream about securing investment. This is anything but a dreamy exercise. It is tough, competitive, demanding, hard work. If you put the necessary effort into your project you will greatly enhance your chance for success!

Do not take shortcuts! Do not guess at details and assumptions! Do not fill in the blanks on a store bought template! Do not offer your opportunity for review until you have a professional, exciting presentation! Your Business Plan represents you, your family and your partner’s future!

Top 3 Reasons For Writing Business Plans

Whether you are a start up or established business, and whether you are a non-profit organization, writing a business plan can be one of the most useful things you can do for your business. Obviously there are different types of business plans depending on the nature of your company or organization. It’s not enough that you have a “hunch” your new start up will be a roaring success, or you believe your latest web. 2.0 idea a surefire “ten bagger” success for the lucky venture capitalist. There are people who need to take a close look at your business plan; whether it’s you, internal management or external investors. In this article, we will look at the top three reasons for writing business plans.

First to answer the question: “Is the business feasible?”

Before you actually commit funds, manpower and time on starting a business, it helps to actually have a “dry run” to see if the venture you have in mind has a good chance of success. The business planning process forces you to look at what your competitors are doing and to ask yourself how you can differentiate your product or service. Typically we call this a SWOT analysis – Strengths, Weaknesses, Opportunities and Threats. At the same time you want to identify, as clearly as possible your unique selling proposition. This can be a special feature or something unique about your branding. Just be different and attractive in the eyes of your target market. Going through this process will give you a better idea of you chances for success in the marketplace.

Then look at your projected financials – do you have the required funds to start your business? Where are you going to raise the capital? How soon will the business break even? All of them are pertinent questions.

Secondly, a business plan is used to help secure loans from banks or financing from outside investors. Typically if you are a start up, you will find it very hard to get any financing from your local bank unless you have landed collateral, regardless if you have a plan written or not. If your business is established for several years and have healthy cash flow, then the bank will definitely want to see your financials before given you any loans or bridge financing.

If you are looking for angels or venture capital investment, then a business plan, particularly the executive summary is what they will require. What’s more important to these investors, more than the plan itself, is the entrepreneur’s track record and the strength of your management team. Be sure to include these important points in your bplan.

Last but not least, a written business plan should be constantly evolving. It acts as a blue print to guide management in the execution of business strategy and to meet goals. By constantly reviewing and updating the plan, it is used as a useful communication tool within the company to guide business growth.

We’ve looked at some good reasons from writing business plans. Now, if you don’t think you know how to write one, help is available. Look for a template online, such as at the site given below. Or better still get business plan software. The good ones, such as Business Plan Pro 2007, are easy to use and will guide you to input the necessary text and numbers and come out with a complete plan for you. There’s absolutely no reason why any business person should not have a business plan blueprint.