Mini Business Plan

As long-time readers know, I am a believer in the value of
planning. I am convinced that any plan is better than no
plan, and that most small businesses do not spend enough
time deciding where they want to go, or grow.

Sometimes, I am told people "don't know how" to write a
business plan! And, from a banker's perspective, that
might be true. But these same people know how to plan a
vacation, a celebration or a party. You can do this!

Begin planning for next year by reviewing this year. Start
with what you earned, and how many customers you served.
Examine your data for patterns and ask questions. The data
may be in your accounting program, in your files, or in
your appointment book, but you do have what you need to
begin planning for next year. Use that data!

Next, dream a little. How much money would you like to
make next year? How much do you want to work? Considering
your clients this year, do you want more of the same, or do
you want to make some changes? Simply decide what you want
for next year.

Then, the part that terrifies most of us. Decide how you
will make it happen. Do you need to raise your fees, do
more marketing, or learn new skills? Do you need to hire
an assistant, or up-grade equipment? Do you need a coach
to mentor you?

Planning is a three-part exercise. Start with what you
have, choose some targets for next year, and devise a plan
for getting there. Yes, you'll make mistakes, and of
course nothing will go exactly as you planned. That's
called life. It is NOT an excuse to avoid planning.

A plan will focus your time and energy. Any plan, even
notes on a scrap of paper, will give you a sense of
direction. Before the year gets away from you, write a
plan! A year from now, you'll be glad you did.

Compiling a Bullet Proof Business Plan

Compiling a Bullet Proof Business Plan. So many business plan consultants today will promise you the earth and deliver disappointment. Just this week we were approached by a distraught entrepreneur who have experienced the frustration of working with a in experienced business school graduate trying his hand at business planning, only to deliver disappointment. So what does it take to compile a hard hitting, Bullet Proof Business Plan that will address all the questions your bank or potential investor may have?

The importance of a well written business plan can be summarised very quickly by looking at how much finance it is that you require. Money talks as they say and nothing talks better to the focus and dedication you need when composing your plan.

Be clear and concise!

The purpose of your business plan should be very clear to you. Are you writing your plan to win funding form a bank r VC? Are you looking to impress a future partner? Are you writing the plan to ensure that you have thought through all tea various areas of you business before you start? The answer to these questions are important as he purpose of the plan will decide the structure, tome and content of your business plan.

Is your business plan is a sales document?

If you are trying to convince annoyer party to take action as a result of your plan then yes, of course it’s a sales document. The key thing here is that although it is a sales document it needs to be based in truth, with well researched forecasts and realistic predictions of sales, your target market and the competition.

A commonly used tool used by people writing sales letters, is the AIDA principle. Grab the reader's Attention, create Interest, provoke Desire in the reader, the desire to act. And lastly move the reader to Action (i.e. to write the cheque!)

A business plan can be compared to a unique finger print of the business. For the informed investor or banker it is very easy to see whether a template or copy of another business plan has been used. If you want to stand out to investors, if you want t be the business who winds the cash or investment then reflect this uniqueness in your plan.

Always focus on your audience. Who will be your audience?

Once again depending on the purpose of the business plan the audience will be different and hence the tone, content and structure of the plan needs to be different.

The Bank Manager

Bank manager have one interest, they want you to pay the money back in time with the interest that you agreed on. So a business plan written for a bank manager needs to reflect stability and the ability to make regular re-payments.

Investors

Whether a Venture Capital Firm, individual or business angel investors will always be thinking WIFM. WHAT’S IN IT FOR ME? Remember these words and write your plan in such a way that the answer to this question will be positively clear to the investor. Investors are interested in high growth, high returns businesses. If you fall into this category remember that the investor has probably a target of how much money he needs to invest in companies per month. I was fascinated when speaking to a group of investors at a recent conference, when they seem to agree that there are simply just not enough businesses needing high amounts of investment. The problem is often that businesses aim to low, both with their business ideas, growth strategies and required investment.

The Government Agency and Grant providers

Your Local Enterprise agency, Business Link or other department of trade and industry falls into this category. You could be applying for a financial grant or other forms of assistance. The criteria here once again going to be very different and often very broad. These organisations are often either government created or sponsored and hence they will be interested in government related issues such as job creation, education, the possibility of foreign investment and of course tax income in the future. As with the previous two categories you need to address the issues important to your target audience.

Once you are clear on your audience, follow some of the other blogs here at UK Business Planning Blog and write a killer business plan. Alternatively contact us at www.sabusinessplans.co.za and we will support you in the process.

Increasing demand for business funding in South Africa

The recent trend regarding the strong demand for business funding in South Africa showed few signs of losing pace according to a recent research study conducted by the Industrial Development Corporation (IDC). The IDC who is the government body responsible for amongst other issues for injecting venture capital into viable new businesses ideas in South Africa.

The good news is that with the demand for business funding increasing, research suggest that the availability of business funding is following suit.

Christo Fourie, head of venture capital special business unit (SBU) at the Industrial Development Corporation (IDC), said prior to the formation of the SBU in April last year, the IDC conducted research to determine likely activity levels.

“The unit was formed to fill a funding gap and its mandate is to provide funding to businesses in their seed and start-up phases of development. We will fund the development of new and innovative technologies in any industry and not just the typical areas such as information and communications technology,” Fourie said.

However, since the IDC became active in the venture capital arena several new entrants have come into the field.

“There is a lot more interest in investing in new companies. However, there is still room for more players and we welcome additional competition because there is only so much that one team can do,” Fourie said.

It seems that venture capital firms are keen to invest in the right ideas. Business owners often make the mistake of thinking that funding is difficult to come by, when in actual fact there is plenty of funding to go round, provided that you have a viable business idea, clearly outlined in a succinct business plan.

In a recent visit to a business funding and venture capital conference in London I was astonished at the levels of funding actually available. In conversations with a range of venture funders it became clear that venture capital firms need to invest money in new ideas for their business models to work. These companies are often frustrated by the number of investable business plans they receive, especially at higher levels of funding required.

Acquiring funding for your business does not have to be the large obstacle entrepreneurs make it out to be and help is now at hand with aquiring the right venture capital firm for you through SA Business Plans venture capital research service. The real challenges lies in the next phase of your business when putting the strategies laid out in your business plan into place and being flexible and innovative enough to turn the idea into profit and to grow the business to fulfill your vision.

Remember that it may often be worth it to ask for guidance or support, and may find that obstacles are there to be overcome especially with the right support.

Success Factors for South African Small Business

Entrepreneurs around the world share one common and crucial question, what will make my business successful? What do I need to do or how do I need to be of for this business to succeed? Is the business idea that will set me aside from the competition, it my leadership or management skills, or perhaps that of the team involved? Perhaps it may be the extent to which the company did market research and feasibility studies to understand the market and competition, the effectiveness of the companies’ business plan, business plans or business growth strategies, or is the ability to raise start-up capital?

Despite the wide range of books and speakers who claim to have answers to all these questions, the most reliable answers are guaranteed to come from entrepreneurs and business owners themselves. A recent research study conducted by Research Markets, looked at what more than 2000 South African SMEs had to say about the issue.

There is no clear set of rules for success and the specifics of what will work and what will not changes from business to business. However, SMEs can 'throw the dice' in their favour:
The Survey has revealed that there is a statistically significant correlation between resources used and the likelihood of being highly competitive. The implication is that business decision-makers stand to make their companies more capable of competing by taking advantage of the same resources.

Only 42% of SMEs in South Africa regard themselves as highly competitive. Therefore any resource that is associated with significantly more than 42% of respondents being highly competitive (more than 2% is statistically significant in this sample size) can be seen as having a strong correlation with being highly competitive.

The key findings of SME Survey 2007 reveal a range of resources that give small businesses a competitive advantage. Ranked among these are the smart application of available tools such as those from the technology and financial services sectors - but business owners still have to add a certain X-factor for business success.

Simply the use of computers in the business is immediately related to heightened competitiveness, since there is a direct relationship between the number of computers used and the level of high competitiveness among SMEs. Of those using more than ten machines in their environment, more than 46% are competitive; with more than 50 machines, the level of being highly competitiveness increases to 54%.
Affordable, high speed connectivity is next. 45% of ADSL users are highly competitive; of users of Mac and Linux software (which indicates a more mature technology consumer) 48% are competitive, while the use of any IT support services (end-user training, hardware and software sales support, Web development and strategic consulting) and Internet services (e-mail excluded) has a high correlation with competitiveness.

Danny de Beer, business development director at Fujitsu Siemens Computers, believes most SME owners are eager to find technologies and services to improve their efficiency but don't get around to it. "Many SME owners spend too much time on relatively arbitrary functions instead of paying a specialist to handle it for them. However, the problem is twofold: one is that the business owner may not trust the available service providers or know how to find them, and the other is one of cash flow," he says.

While de Beer says he can understand the business owner getting bogged down in peripheral tasks, he says SME Survey has shown the value of taking the time to establish supplier relationships to free up one's time to focus on strategic or revenue generating activity.

The use of professional business consulting services and financial instruments delivers further advantage, notably the engagement of a mentor. While only 10% of SMEs consult a mentor, 50% of these regard themselves as highly competitive.

Melt van der Spuy, director of business banking at Standard Bank, says those using professional and mentoring services are likely to have a more strategic, rather than operational focus. "These services are strategic by nature. The business owner who has recognised the need for specialised strategic support has moved beyond an operational focus. He is working on the business, as opposed to working in the business."

Van der Spuy adds that despite the findings of SME Survey, any successful entrepreneur is one who will see opportunity where there are challenges. This is the X-factor which he believes is essential for sustained success.

What keeps you up at night?
Small business owners are generally not kept awake at night by concerns about business strategy and rather focus their deepest concerns on operational matters. This has emerged from the results of SME Survey 2007, which has indicated that the most worrying issue for the small business owner, after crime, is cash flow-related. As a result, most business owners look to their accountant or bank for business expertise - but the few who make use of specialist mentors tend to feel more confident and more competitive than those who do not.

According to Arthur Goldstuck, SME Survey principal researcher, it is primarily crime that keeps the SME business owner tossing and turning at night. "That 27% cited crime as the most worrying factor came as something of a surprise," he says. Less surprising, however, was cash flow at 19% and the related issue of debtors next at 13%. "This was out of a 'laundry list' of woes that included options such as traffic and the threat of competition," Goldstuck says.

He says that with competition ranked fourth in the list - only 12% of respondents were deeply worried about what their rivals were up to - he believes most SMEs are not benchmarking themselves against others. "When competition keeps you awake, you're concerned about market share. This doesn't seem to be a bother for South African entrepreneurs, and is more a factor of the corporate environment."
Melt Van der Spuy, director of business banking at Standard Bank, says this finding demonstrates that the average SME owner is concerned about money and margin, return on equity and the future. "Most salaried people don't have these concerns as they have predictability of income and assurance of pension funds or other such structures," he says. "These are questions of operational efficiency; while essential, this focus must be balanced with due attention to strategic development of the business."

Van der Spuy believes the tendency to obsess around operational issues may be a limiting factor for the growth of the business and even a possible contributor to the high rate of failure for new businesses.
"This is both the scourge and the beauty of the smaller business. If you don't worry about cash flow, who will? It is a function of that which is most pressing to the business, but this has to be balanced with strategic insight and direction," he states.

In terms of the ports of call for the SME owner looking for business advice and business planning advice, Goldstuck says the accountant is turned to by 72% of respondents, with the bank second at 59% followed by legal advisors at 53% with just 33% of SMEs relying on business consultants. "What is of particular interest," he says, "Is that those companies which make use of mentoring or coaching are in the minority (9%), yet this is the biggest differentiator in this category in terms of high levels of competitiveness. 50% of those using these services regard themselves as highly competitive versus 41% of the rest, so it appears that such services are highly advantageous."

Van der Spuy believes the accountant is a good choice for independent business advice. "Even the banker is not independent and almost every business owner will not have a relationship of full disclosure with the bank. The accountant is likely to have the clearest picture of the business, certainly from a financial point of view," he says.

In terms of mentoring, Van der Spuy is a firm believer in the value of such services. "A mentor is analogous to a non-executive director who can provide independent advice and guidance. However, mentoring is not well understood or trusted, it is expensive and finding the right coach can be a challenge," he adds.

Finally, a surprise finding which Goldstuck says is very encouraging is the significant growth in satisfaction with government support. "This metric was first tested in 2004, with just 12% of respondents indicating satisfaction. This has grown to 34%, a dramatic turnaround which shows that while there is yet work to be done, government is moving in the right direction to support the emergence of entrepreneurial businesses."

SME Survey 2007 is sponsored by Standard Bank and Fujitsu Siemens Computers. It is in its fifth year and tracks trends and opinions of over 2000 South African SMEs.
Key Topics Covered:
- Introduction
- Executive Summary
- The blueprint for a successful SME
- What keeps SME decision-makers awake at night?
- Methodology
- SME Survey Research Methodology
- Sample frame
- Geographic representation and other filters
- Definition of an SME
- Sector representation
- The findings
- Demographic data
For more information visit http://www.researchandmarkets.com/research/6809e9/sme_survey_2007
SOURCE: Research and Markets