- IAN ALLEN/STAFF PHOTOGRAPHER
Aubyn Hill (left), managing partner, Corporate Strategies Ltd., conducting the seminar on 'Essentials of Writing a Winning Business Plan' held at GraceKennedy and Company headquarters in downtown Kingston, and sponsored by First Global Bank.
Dennise Williams, Staff Reporter
TIME AND again, bank managers lament the reluctance of entrepreneurs to create business plans to support their loan applications and the validity of their ideas.
This is a distressing fact as Sunday Business understands that low interest (even single digit) business loans 'go a begging' according to informal surveys of bank managers.
Why? Because entrepreneurs want to keep their business information close to their chests; the plans are never put to pen and paper for professional scrutiny.
So, First Global Bank (FGB), a subsidiary of GraceKennedy (GK) decided to take a proactive approach and teach entrepreneurs the fundamentals of creating a business plan.
'ENTREPRENUERS ARE WAY FORWARD'
According to Wayne Wray, president of FGB: "We want to get closer to our clients and address their needs. We know that most employment is now being done by small businesses."
And small businesses created by energetic entrepreneurs are the lifeblood of any economy, especially economies experiencing jobless economic growth.
Douglas Orane, chairman and chief executive officer of GK, said, "Business plans create a benchmark and force a business to stay focused."
He made a sombre announcement: "If corporate Jamaica is to move up on the productivity ladder, they have to cut costs - staff is the biggest one. So entrepreneurs are the way forward."
PREPARING THE PLAN
And to teach the way forward, they enlisted Aubyn Hill, the former head of National Commercial Bank and now head of Corporate Strategies.
To write a successful business proposal, the following are key, said Mr. Hill:
1.Your business idea must be market-driven. It is not about what you like, but what the market needs.
"For example, I like mahogany furniture. If I am going sell expensive mahogany furniture to university students, guess what? The business will fail because they cannot afford it. And you must constantly check the market place because if tastes shift, you will have inventory that cannot sell."
2.Develop a business model. What drives the business and what services will I provide?
3.Then develop a business plan. This requires a lot of thinking and research because a sound business plan helps identify risks early and reduces the risk of failure.
4. Decide on the idea you want to convey, even if you have 60 thoughts in your head; condense your plan into something workable.
5. Gather information through formal and informal research on your business idea.
6. Get assistance of a friend with good business experience to be a sounding board for the plan. Or, if necessary, get professional help.
Mr. Hill then presented the components of the business plan.
Executive summary
A brief description of all areas of the business plan.
Company background or business data
A description of the location, age, services to be provided and the ownership and legal establishment of the company.
Company mission and core values
The long-term vision on the business and how it will be achieved.
Industry and competitive review
Explains the target market and why the company is focusing on this market. Also evaluates the existing businesses and their market share.
Business opportunity
States the reasons your business will succeed and even surpass existing similar businesses.
Financial summary
Shows the profit & loss, balance sheet and cash flows of the operations over a five-year period.
Short, medium and long term strategy
Details the operational, marketing and promotional strategies that will be used along with milestones and short through long term directions.
Financial requirements and funding sources (if needed).
This section of the document will clearly state the amount and type of funding required.
Business team
This describes the business acumen of all the persons who will be running the business.
Conclusion and request
This section will take the reader through a number of key points and make final appeals and statements.
Now, once you have prepared your document, Mr. Hill gives further advice. "If you want to be wealthy, the secret is negative inventory. Create a distribution system where orders will be taken and supplied with little or no warehousing is involved. For example, if you are going to be in the food delivery business, let GK be your warehouse. You collect from clients and then purchase their orders for delivery. Don't carry somebody's inventory."
Another simple idea is to be a copycat. Mr. Hill says, "Go around and look for the richest business around and investigate how they became rich. Then find a way to do the same thing cheaper."
And of course, there is always innovation. In fact, Mr. Hill says Jamaicans suffer from "me too." Instead of doing something better, they try to do the same thing in the same way that everybody else is doing. Simply, "Start something new."
