'.

Insurance ie .• public liability, personal liability, workmen's compensation (iv)

I Guarantee Insurance (v) Engineering insurance (vi) Life insurance (vii) Social
I!
Insurance.

Birth

This is the process of implementing the business plan. It involves the actual business

operations in which products/services are produced and marketed in accordance to the

business plan.

( c)1~Business Survival Phase

V~ ;\
>\ This is the stage in which the business has demonstrated that it is a workable business entity. It
"':~
....~,
fis widely accepted that three out of five businesses cease to trade in the first five years. Therefore
f,~to avoid failure, this stage should be considered as a period of learning even when the business
f~
f;lhas enough customers and satisfies them sufficiently. This can be done by assessing important
~:~

;{business issues. These include:

:~~
~~Idea
------. -

_- ..~ .. Whether product/service meet customers' needs by checking what they. buy
Customer feedback on the product/service by checking for complaints/ praises
Whether customers are sufficient or not
Whether product /service is the same as that of established competitors
'.;:, Inconsistency in quality and service
The easiness or difficulty of reaching the market
.Whether customers are able to pay the price set

. \
~ this case it is important to (i) keep a data- base on customers (ii) improve business by
,... :
providing better, cheaper and faster services (iii) and search for new markets for
';'

products/services .
.''':

- --.
'.,
»,
-.- -

12 .4

..
 :;-

,:J Resources : .
!]
~:~
e Adequacy of the stocking levels
:,,:.,
<~-

>
• Reliability of the suppliers
<'.
;'
~~•
,.'
-;,-;
Whether working capital requirements are sufficient or not •
~',.-
.~r.. 0
~'. Whether work in progress is adequate -or excessive
?:-,
II) Whether wastage is excessive or not
LI .,.:
...1-

?: •
Quality maintenance
~_1I

;~

:;.~
:!; This involves keeping staff records on their performance & productivity and putting in place a
".
;~system to control utilization, efficiency, wastage and quality stand~ds.
"i

-r-

t\Finance
~.:
"'i

CD Whether Cash flow projection was adequate or not

• . Whether cash generated is enough to break-even and cover repair or replacement of
capital assets as they wear out
• Whether t09 much cash is taken out of the business too early or not
.~ ~
f.'
_,;.
Controlling debtor/creditor relationship
• Whether there is under-pricing or not _- - -------- ------.
----"-. -

;~ e Whether cash flow generated is enough to 'stay in business and finance growth that is
'i'
sufficiently large in that industry to earn an economic return on assets and labour.

!herefore it is important to plan for a good cash flow management and develop appropriate
trading, profit and loss forecast and budget systems,

Attitudes towards decision making

Strengths! 'Weaknesses in personal /technical managerial skills critical to business
success

Adequacy/inadequacy of management control

- --0-
,- _-. -

13

...
l _
.a
I
1

j
.t~ Furthermore it is crucial to monitor changes in family circumstances, key ··personnel in the
~,~

;;~ external environment (bankers and suppliers), regulatory environment and also political,
I !!, economic and technological changes. This is required for development of contingency plans for
,~:
:'~::
!;", unforeseen problems that can occur in the business due to these changes. It is also important to
.. %~select and use professional advisers who can give co~nseling/advice in financial, legal, technical,

I .~.
J'..
-:~;marketing issues.
·c~
.

'i~
(g') !. Business Growth Phase
~ ~~:~
Ii
I:"

\ ;~Framework for Growth

~';:
,'-:'

~~
~. Business growth is in terms of increasing in size, profitability, turnover, capital etc. Businesses
~;~
;::grow by developing profitable products or markets; by improving t~e processes ie. becoming
more efficientor by combination of the above.

Fig 1:Diagrammatic Representation of Business Growth

2. Objective: Where do you want the business to be

_ .. - - .. -

4. How to get there

(The project)

_,
)
,:;
.,';:

."'.

1,., Current state of the business: Where is the business now?

c,

.'
v'

'.::"
-c

14
 , •.
.
~ There are a number of factors .that influence the capacity of small business to grow. These .
~ \.; include the three P's of growth which are:
.~

t:
t·;
(~ 1. The Performance- Past and present: How good is the business performance in the market,
in its operations and in financial terms.
The Potential- Capacity of the business to grow: How strong is the business potential for
growth in te!TI).Sof resources, experience, control, ideas and leadership.
iii:

j. Ill. The Project-The specific growth plan: How sound is the specific growth project in terms
:¥:
of objectives, the scale of resources requirement, management ability & commitment
and financial projections.

Evaluating the Project

Market

• Proposed product/service
• Evidence of customer acceptability at the price, ability to manufacture/service, enough
customers, ability to enter market, ability to match competition.or better, how to reach
customers

• Market potential trends

__ .---. -~
Competitive advantage
;~;

\~:
~I:
1-'.'

;~esource Requirements

~~\
.,
• Scale of operations planned
~~
:'. • e Additional physical resources requirements: land, premises, machinery
~
~.:

• Additional financial resource requirements and how to acquire them

"; • .Additional people/skills required
r .
i~~

~Ianagement Ability and Commitment

.< • Specific new abilities required

• How existing .abilities rnatch new requirements

-----.
-----.
15 ..
--_-~---
 , •.
.
~ There are a number of factors .that influence the capacity of small business to grow. These .
~ \.; include the three P's of growth which are:
.~

t:
t·;
(~ 1. The Performance- Past and present: How good is the business performance in the market,
in its operations and in financial terms.
The Potential- Capacity of the business to grow: How strong is the business potential for
growth in te!TI).Sof resources, experience, control, ideas and leadership.
iii:

j. Ill. The Project-The specific growth plan: How sound is the specific growth project in terms
:¥:
of objectives, the scale of resources requirement, management ability & commitment
and financial projections.

Evaluating the Project

Market

• Proposed product/service
• Evidence of customer acceptability at the price, ability to manufacture/service, enough
customers, ability to enter market, ability to match competition.or better, how to reach
customers

• Market potential trends

__ .---. -~
Competitive advantage
;~;

\~:
~I:
1-'.'

;~esource Requirements

~~\
.,
• Scale of operations planned
~~
:'. • e Additional physical resources requirements: land, premises, machinery
~
~.:

• Additional financial resource requirements and how to acquire them

"; • .Additional people/skills required
r .
i~~

~Ianagement Ability and Commitment

.< • Specific new abilities required

• How existing .abilities rnatch new requirements

-----.
-----.
15 ..
--_-~---