1.1 The business plan is the tangible end result of undertaking the business planning process, which is defined as follows:
Business planning is a process whereby an organisation performs a structured appraisal of its objectives; analyses its current position with regard to its activities, resources and the environment in which it operates; and develops actions in order to achieve its objectives.
1.2 The business plan may be used for the following purposes.
(a) As a management tool used in the day to day management of the organisation. The plan will identify the short and long-term objectives of the organisation and the actions that have to be taken to achieve those objectives.
(b) As a fundraising document to support applications for funds from a variety of sources.
1. 3 The planning process should be seen as part of an organisations development. It should identify strategies that will be followed by the organisation over a defined time horizon, say three to ten years. It gives an opportunity for organisations to reflect on their mission statement and ensure that their objectives are consistent with this mission
2. CONTENTS OF A BUSINESS PLAN
2.1 The content of the plan may vary depending on the requirements of the individual organisation, and the purposes for which the business plan is being developed.
The main areas to be included are:
Introduction Mission Vision Aims and Objectives Description Management and Organisational Structure Market Assessment, Competition, and Marketing Strategy Physical Resources and Personnel Critical Analysis Detailed Action Plan Financial Requirements Financial Forecasts Appendices
2.2 All contents of a business plan can be expanded as follows:-
Introduction This sets out the purpose of the business plan, the framework in which it has been written and the readership to whom it should apply. This section should also be used as an opportunity to explain the report structure.
Aims and Objectives This section states the primary goals of the organisation, i.e. its mission, or reason for being, and sets out the objectives that should be achieved over the short and long term.
Description This is where the organisation describes its activities. This will include a description of the services provided or the products that are produced. It will look historically at the track record of the organisation to date, and may give some information of the historical financial performance.
Management and Organisational Structure This gives details of the management structure of the organisation along with reporting lines And lines of authority. It identifies the decision making process and the levels of accountability.
Market Assessment Competition, and Marketing Strategy
The market assessment reflects the market research that the organisation has undertaken and its assessment of the current market place in which they are operating. This assessment identifies whom the client groups are for the services that are being provided. Competition relates to any organisation offering similar services or working with the same client group. This process helps the organisation to identify what makes it different and why its services are needed/demanded, and helps to identify the areas of competitive advantage that the organisation may have. These can then be used as unique selling points (USPS) which can form a basis for the marketing strategy. The marketing strategy sets out all aspects, which are important in bringing the services being supplied to the market place, i.e. price, product/ service, place and promotion.
Physical Resources and Personnel This sets out all the physical and human resources that are required to deliver the organisations services.
Critical Analysis This is where all aspects of the organisation are examined in light of their:
Strengths Weaknesses Opportunities Threats.
This may sometimes be referred to as a SWOT analysis.
The process involves looking at the organisations current strengths and weaknesses, and identifying the opportunities and threats facing the organisation. The result of this analysis should be taken into account when developing the strategic plans required fulfilling the organisation's objectives.
Detailed Action Plan A detailed Action Plan should show what actions need to be taken. A named person and a time scale are also essential to enable progress to be monitored.
Financial Requirements
This identifies how much is required to run the organisation.
Financial Forecasts Like the budget, this is a detailed financial plan showing how the business plan will be achieved in financial terms. It is usual to produce monthly income and expenditure and cash flow forecasts, which can then be used for monitoring purposes. The key to financial forecasting is the assumptions upon which the forecasts are based. Only by using realistic assumptions will the actual figures be realistic.
3. WHAT MAKES A GOOD BUSINESS PLAN
3.1 A good business plan should possess the following qualities:
(a) It should be informative, concise and well presented. (b) It should cover all the criteria that the reader requires to know. (c) It should be usable as a working document for management.
3.2 If a plan is to be used for fundraising purposes the funders win be assessing the following key aspects. (i) The type of activity, and whether it is consistent with their funding criteria. (ii) The organisational structure and the management team. (iii) The accounting systems, financial procedures and controls that are currently in operation. (iv) The historic track record of the organisation. (v) The potential for the future development of the organisation. (VI) The method by which the potential will be realised. (vii) The reliability of forecast information.
These are examined in more detail below:
3.3 Activity
This will be initially described in the first sections of the business plan mainly in the business description section. The description should allow someone with no idea of the type of work being undertaken by the organisation, to gain a clear understanding of what is done by the organisation and the reason for its existence. If the activity is not well described the reader of the business plan may not continue on to other sections.
3.4 Organisational Structure and Management Team
The management team is one of the most important features of the organisation. Where funds are to be given to an organisation, the funding bodies need to be sure that the organisation can manage those funds properly and put them to full effect in accordance with whatever terms and conditions are attached to those funds.
3.5 Accounting Systems, Procedures and Control
Accountability will be a factor considered by funders when considering whether or not to advance funds to an organisation. It will often be a requirement to produce some kind 'Of accounting information to the funding body on a regular basis. It will also be necessary for management, to show that they are controlling the organisation, by meeting both activity criteria and financial criteria.
3.6 Track record
The organisation's track record should be used to show the following attributes where possible:
(1) Experience and expertise. (2) The depth and knowledge of produce and activity or service and the appropriate associated markets. (3) Historic financial data showing the ability of the organisation to manage funds. (4) A basis for future forecasts. (5) Strong objectives and historic demonstration of their fulfilment. (6) Reasons for the current objectives.
3.7 Potential for future development
The objectives will indicate the areas of future development and the funding bodies will require information as to how the objectives can realistically be realised. The information in relation to the areas covered in 2.3 will have assisted the funding body in the assessment of that potential.
3.8 Method by which potential is to be realised
Given that there is a potential for development the funding bodies will seek clear demonstration as to how the potential can be realised in the plan. This will involve detailed information on the marketing strategy, which will incorporate:
product/service/activity (changes needed to aid marketability, if appropriate)
Most funding bodies will require information by way of performance measurement. Performance indicators should relate to the objectives that need to be achieved, for example:
Theatre attendances No. of performances No. of videos made, seen, lent, sold etc. The plan should reflect how performance will be measured and how the developments in the activity will be demonstrated.
3.10 Reliability of Forecasts
Readers of the plan will assess the reliability of the forecast information based on the assumptions given.
4. PRESENTING AND DISSEMINATING THE BUSINESS PLAN
4.1 The business plan should be presented and disseminated to all staff, particularly those who did not have a direct input into its development, to ensure everyone is committed to it.
4.2 There may also be a need to present the business plan to people outside of the organisation, i.e. chief executives, outside sponsors and funders. This requires a very good working knowledge of all aspects of the plan to enable you to answer questions confidently.
5. FINANCIAL FORECASTING
5.1 Financial forecasts form an integral part of a business plan and consist primarily of a cash flow forecast and in some cases an income and expenditure forecast. The forecasts may be produced for a minimum of one year, but several years projections are usually advisable.
5.2 A cash flow forecast is used for two principal purposes:
(a) it identifies the level of financial requirement which an organisation may require, and
(b) it identifies the financial targets in terms of expenditure and income which the organisation has to achieve in order to meet its aims and objectives. This requires careful monitoring to ensure objectives are being met.
Any cash flow forecast produced should be accompanied by a full set of assumptions which identify the basis on which each figure in the forecast has been arrived at. If a change in the forecast has to be made, then it means that there is a change in the assumptions underlying the figure.
6. PREPARING A CASH FLOW FORECAST
6.1 Set out below is a pro-forma for a standard cash flow forecast:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
What they are doing
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Messrs G Owen & Co : 2004
