Without Planning, Businesses Fail
In order to make a business successful, there needs to be an outline or plan in place to create a focus and direction for the business. This helps the business to formulate what it is that is to be achieved, as well as making a future goal of how to operate. It also allows employees or lending institutions to see where the business is going, and how you plan to have goals realized.
There are 11 lessons as follows:
- Introduction to Business Planning – The business plan, strategic and operational planning, feasibility studies, the executive summary.
- Focus and Direction – Deciding on direction, visualising future business directions, vision and mission statements
- Legal and Administrative Requirements – Legal structure of a business, business names, taxation, regulations, licenses and permits, types of business ownership
- Developing Objectives and Strategies – Setting goals and objectives, SWOT and GAP analyses, strategies for achieving objectives
- Planning for Growth – Planned as opposed to runaway growth, subcontracting, franchising, licensing, the growth plan
- Risk Management and Contingencies – Approaches to risk management, identifying business risks
- Systems – System components, the quality audit, benchmarking, business plans as a mechanism of control
- Marketing Plans – The definition of marketing, marketing requirements, the marketing process, market research, implications of unplanned marketing
- Operation Plans – Control of business operations, writing an operation plan
- Human Resource Plans – The value of human resources, occupational health and safety, skills and competencies of different staff
- Financial Plans – The importance of financial planning, establishment costs and start up capital, cash flow forecasts, profit and loss statements
Each lesson culminates in an assignment which is submitted to the school, marked by the school's tutors and returned to you with any relevant suggestions, comments, and if necessary, extra reading.
On successful completion of the course you should be able to do the following:
- Describe what a business plan is, and it main components
- Differentiate between a vision statement and a mission statement
- Discuss legal and administrative requirements of a business
- Explain the importance of a business name
- Explain the importance of setting goals and objectives in a business setting
- Describe strategies for coping with growth
- Describe different types of business risks
- Explain marketing process
- Explain operations planning
- Explain the importance of human resources
- Explain the purpose of financial planning
WHAT THE COURSE COVERS
Here are just some of the things you will be doing:
- Interview a business owner regarding their business plan
- Visualise the state of a current business in 12 months time
- Contact a Government Department to determine the relevant licenses, permits, approvals and registrations necessary to set up a business
- Interview current business owners to determine their strategies and objectives for the next year
- Identify aspects of a business that would need attention in high growth periods
- Identify risks to a proposed business
- Investigate mechanisms for protection of intellectual copyright
- Investigate the potential of a business currently for sale
- Evaluate the operations of a current business
- Develop an operations plan for a newly conceived business proposal
- Identify potential hazards of a proposed business
- Identify expenses relevant to setting up a proposed business
Start with a Mission Statement and Build from there
The Mission Statement is about what does the business do, what is it about, and what sets it aside from others. The mission statement gives the reader a clear indication of what the business is about and where they are heading. One or two paragraphs are sufficient, because the purpose of the mission statement is to capture the essence of your business; its purpose, values and activities. In writing a mission statement, consider:
- What does your business value most of all? eg. Creativity, innovation, quality, trust, integrity, customer service, excellence.
- What activity will your business undertake to achieve these values. (What is the nature of your business activity). eg. What is the business about and what does it do?
- What is the purpose of the business? What makes the business special and differentiates it from others? eg. The purpose of a high end boutique; An accountancy business might aim to provide innovative financial solutions to our clients.
The following is an article from a book by our business faculty tutors at ACS Distance Education. Our books can be seen in the school's bookshop at www.acsbookshop.com
A feasibility study identifies the risks and the complexities of a project and evaluates/analyses the impact its implementation may have on an organization. It allows a business to determine a project’s worth.
After the formation of a business case - a feasibility study is the next step in the process. It refines the business case because it examines possibilities and options; alternatively it may justify the business case. A feasibility study should be conducted very early in the project’s life cycle.
There are all sorts of ways to conduct a feasibility study and the methodology chosen should relate to the complexity of the project it may sound obvious but usually:
- Simple projects require a simple study.
- Complex projects require a complex study.
The tangible actions (methodology) of a feasibility study may include:
1. Conducting research or gathering information, and compiling information.
2. Documenting information, thoughts and analysis.
3. Meetings (formal or informal).
4. Formulating recommendations.
It might not necessarily involve all of those components. A very simple project, for example, may be to organize a party. The feasibility study may well be little more than a meeting for a couple of hours, between a party planner and client. A much more complex feasibility study might involve the construction of a significant building, where the study could involve thousands of man hours and the production of a written report of hundreds of pages.
Components of a complex feasibility study – example:
- Formulating the scope and goals of the project.
- Identifying assumptions.
- Gathering existing information.
- Outlining strategy (who will be involved, what will be done, when, where and how.
- Analysing financial factors (sources of funding, budgeting, cash flow etc.).
- Considering return on investment.
- Identifying, listing and assessing risks.
- Considering technological factors (what technologies are accessible, what will be used).
- Consider political factors (support, opposition, legal restrictions, implications of political change).
- Environmental and social Impacts (sometimes legally required, potential for disruption even if operating legally).
- Determining resources (both what is needed and when it is needed –money, manpower, equipment, materials).
- Determining management structure and staff organization.
- Write a report.
- Submit report.
Some Other Considerations of a Feasibility Study:
- Once a project is planned should it move forward in its original planned form?
- Should the project be changed/modified to something that is achievable e.g. should the goals be reset, compromised or limited in some way?
- Does the project need to be expanded? Sometimes identifying positive risks (or greater opportunities) can lead to a need for a larger project.
- Should the project be split is to several smaller projects?
- Should the project be abandoned?
Who should do the Feasibility Study?
There is a strong argument to have a feasibility study conducted by a manager who is later, going to be working on the project - whoever does it will be gathering valuable knowledge of the project, which might not all be committed to documentation. This person may be valuable once the project commences.
There is also an argument that someone who is independent should conduct the feasibility study; a person who is going to become part of the management team later on, will have a bias to see the feasibility study give a recommendation to proceed. If it proceeds they get more work.
In the real world, a feasibility study for a large project may often be conducted by a team, headed by a middle level manager.
Whoever conducts the study they must be objective, fair and neutral and not opinionated on the outcomes. They should have experience in conducting a feasibility study to ensure that all the necessary data and information is gathered and considered judgments can be made based on this information.
WRITING A FEASIBILITY STUDY REPORT
A feasibility report is a comprehensive report that formally documents what was discovered during the feasibility study. It allows management to decide whether or not a project is worth pursuing and allows them to make important decisions in relation to budgets and investment planning. A feasibility study report should:
- Summarise the results of the analyses conducted.
- Outline the evaluations that were conducted to review proposed solutions and alternatives including their economic and practical feasibility.
- Describes and supports with evidence the most feasible solutions.
- Will identify whether the project has purpose, is meaningful and sustainable.
Example: Steps in Writing the Feasibility Study Report
- Introduction: give a brief description of the overall objectives and purpose of the feasibility study and its desired outcomes. It should identity the intended recipients of the report.
- Justification: give a brief description of the project – i.e. the problem the project is trying to solve i.e. problem statement. Provide a more detailed assessment of the drivers for undertaking the feasibility study: Outline of the way the way the problem studied impacts on the organisation and on the organisation’s business environment and business processes. Describe the benefits and costs of the proposed solution.
- Define the evaluation criteria used in the feasibility study: this could have included - design specifications, schedules and time frames, audits, a cost benefit analysis.
- Outline the most feasible solution: the best solution will have been identified by using the evaluation criteria; it should have identified the most cost effective approach, the best use of resources, the most profitable and the most practical methods. Describe the functionality and features of the solution. Describe the way in which the solution benefits the organisation. Describe its impacts: positive and possible negatives.
- Outline alternative solutions: a feasibility study will always come up with more than one solution. This section of the report will outline possible alternatives that were analysed and compared (to the proposed solution) and found to have similar outcomes. It will compare each solution and analyse the benefits and the drawbacks and highlight areas that made these solutions less favourable (to the proposed solution) in terms of cost, time, resources and impact on the organisation. A graph or matrix could be used for this purpose.
- Conclusion: this summarises the aim of the project and states the most feasible solution. It will include a description of how a cost benefit analysis was performed – the tools and approach used to conduct the analysis. It allows the readers to clearly identify the cost benefit ratio (CBR) – it compares the value of a project (solution) to a business against its initial cost and its potential future returns.