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Writing a business plan Why, how ……..
What types of businesses relate to tree domestication? • Farm- and family-based (horticulture, nurseries, basket-making, small plantation) • Village or town-based (shop, store, market stall, kiosk, ambulant trader in fruit, processing, fuelwood, charcoal, seed, etc.) • Urban small-scale business (fruit vendor, middleman, artisan, jua kali) • Manufacturer, bulker (furniture makers, fruit wholesalers, larger nurseries, paper mills)
Feedback into research & domestication process • What qualities and quantities are needed by small and large businesses? • How can input costs be reduced? • How can new business opportunities/niche markets be created and enhanced? • How can the poorer, more marginalized and isolated benefit (small business, niche markets, adding value)?
What is a business plan? • A blue print of the enterprise • Road map for the direction to take
Why a business plan? • A communication tool • A management tool • A planning tool • A performance tool
What goes into a business plan? • The description of the business • The business objectives • Current performance analysis • A marketing strategy/plan • A production plan • Financial plan
Description of business • History • Size • Products • Nature • Turnover • location
Objectives of the business?? (Good to write it down anyways) • What are the targets? (sale, customer base, amount of profit) • Time taken to achieve them
Current performance analysis • strengths, in terms of what is doing well and why; • weaknesses, in terms of what is going wrong and why; • opportunities, in terms of what possibilities exist for improvement and • threats, in terms what should you be careful about
Marketing plan/strategy The 4 P’s of marketing : • Products (what, how many, services, branding) • Prices (price taker, price maker ) • Promotion (Unique selling proposition, advertising) • Placement (target population, geographical area)
How to arrive at a marketing strategy? By carrying out : • consumer analysis • competitive analysis • location analysis • market trends analysis
Consumer analysis • Your current customer base • How do they come to your enterprise, transport the product back • How your customers learn about your product or service • Patterns or habits your customers and potential customers share • Qualities your customers value most about your product or service
Consumer analysis (2) • Qualities your customers like least about your product or service • Are you offering the kinds of goods or services they want • Are your prices consistent with what buyers view as the product's value? • Are your promotional programs working? • Factors which limit or influence their demand
Competitive analysis • Who are your five nearest direct competitors? • Who are your indirect competitors? • Is their business growing, steady, or declining? • What can you learn from their operations or from their advertising? • What are their strengths and weaknesses? • How does their product or service differ from yours?
Location analysis • Are you located close to a good access road? • Are you located in a community market? • Are you close to your strongest competitor? • What is the profile of the people who stay around your business site? • Are your suppliers located near by? • What are commercial activities carried out in the area? • What kind of access to infrastructure exists in the area?
Market trends analysis • Is the industry growing or shrinking? • Are more enterprises/businesses entering the market? • Are sales going up or down? • Are there any new products in the market? • Are prices going up or down? • Is there any new govt. policy (fiscal or monetary) that has been introduced for the sector?
How to use the analyses to make a marketing plan? • define your business plan • forecast market demand • pricing of the product • workable promotional strategy • target specific type of customers
How to use the analyses to make a marketing plan? • Calculate quality and quantity • understand seasonality of demand • product diversification • plan resource requirements • define a competitive edge
Production plan What: • What are the raw materials required, from where and from whom • Time taken to produce, amount of resource required, cost of resource • How much can be produced at a time, how often can it be produced • How does seasonality affect your production and procurement of raw material
Production plan(2) Why: • to keep good inventory control, • feed the demand of a product, • get a new product for which demand is perceived and • ensure that there is enough supply of products to meet the market demand.
Financial plan What: • Amount costs to be incurred • Types of costs • When will the costs come up? • What will be the mode of payments • The current savings • Exchange rate fluctuations expected (in case of overseas trade)
Financial plan (2) Why: • assessing credit needs for the planned period, in terms of amounts, time when required, • pricing of the product, • planning expansion and diversification, • executing the business plan
Cost Analysis • cost of raw material, labour, infrastructure • cost of transport, both of supply to and from • cost of training in the production process • costs of taxes incurred or to be incurred and • profit margins
Cost for a Prunus Africana trader from Cameroon Particulars Amount 16.5 tonswet bark @ 70 FCFA/kg1,155,000 Collection costs 2 laborers (for 1 month) @ 500 FCFA/day 30, 000 Collection transport (500 km @ 200 FCFA/km) 100,000 Transport Banso-Bamenda (50,000/11 tons) 75,000 Drying costs(1 month, 1 laborer @ 500 FCFA/day) 15,000 Transport Bamenda-Mutengene (250,000/11 tons) 250,000 Tax (2shs/kg) 22,000 Miscellaneous (@ 10 %) 165,000 Interest on capital ( @ 10 % for 3 months) 181,000 TOTAL1,993,000
Reasons why businesses fail • Lack of experience • Insufficient capital (money) • Poor location • Poor inventory management • Over-investment in fixed assets • Poor credit arrangements • Personal use of business funds • Unexpected growth • Competition