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by Nilooka Dissanayake

These are good times for planning. Even if you are extremely pessimistic about economic conditions both local and international, you must admit that these are good times for thinking and planning. But unlike in good times, thinking and planning has now become priority number one. The quality of your decisions during hard times determine whether you survive or perish. In good times, it is so easy for even the most superficially thought out business idea to flourish and grow. But, these are times when the Darwinian law of survival of the fittest is played out clearly and visibly in the business world. If you are already in business, it is now time to rethink your business plan to ensure your survival. That is how you can make your business resilient enough to see you through hard times. If you are thinking of starting a business, and count yourself among the faint-hearted, don't go into business yet. Use these hard times to think up ways to make your business resilient. But, if there are opportunities you do not wish to miss - and there are bound to be even in difficult times - think before you leap.

Starting with this article we will help Mr. Silva get started on his business plan. Mr. Silva is imaginary entrepreneur whom we have been helping with his business idea of a school uniforms supply business. Mr. S. feels that despite hard times kids will need school uniforms. Over the past few weeks we have helped Mr. S narrow down potential customer base of over 4 million students in Sri Lanka to a few schools in the Colombo District. Here are the facts about his target customer base.

Mr. S has spoken to a number of national and international schools in the Colombo District. His experience has shown that he will be able to market the idea of school uniforms successfully in a number of places. His informal chats with students and parents have shown that providing quality school uniforms at a reasonable cost is a most welcome idea.

Now, since Mr. Silva has "established proof of market potential" (In his opinion, not mine), should he go ahead and get ready to meet the demand for the next years school term one? Most people would say yes. But, it is necessary to establish a solid market and define specific numbers and volumes. Of course if he has money, there is nothing to stop him going and renting out a place, buying machines and recruiting people. Nothing that is, except wisdom. Those who do not have sufficient capital may need to get a business partner or obtain financial support of some sort and will most likely have no choice but to write up a business plan for their new business.

Whether an entrepreneur has money or not, it is necessary to draw up a business plan because a business plan requires you to put things in writing. Putting things in writing requires clarity of thinking; it requires hard facts in order to make it a solid business plan as opposed to a work of fiction. So, we recommend Mr. S. and all spring entrepreneurs who have picked up a solid business idea - to think about the following aspects which are required to compile a business plan:

Background information: This requires Mr. S. to talk about his business and his own background. If he has any experience in management, marketing or in production and manufacture of garments, these aspects will definitely add to the value of his business plan. Alternately, he may have some contact with the potential customer segments. For instance, if he has friends who are running a network of school canteens and similar contacts in a related field these too will be of value. If members of his family or close friends have exposure to the garments industry or the tailoring business and are actually willing to help out or advice him in his business that too should be mentioned. What all these things do is establish Mr. S's firm hold in the chosen trade and also demonstrate his ability to make a success out of the proposed venture.

If on the other hand Mr. S has none of those, he will have to think of any personal qualities and attributes which will enable him to make a success out of his proposed venture. And if he cannot think of anything postivie which will help him convince a potential business partner or a bank manager, it is high time he did a self analysis and developed characteristics which are useful to succeed in business.

Mr. S also needs to define his product. In this case it is school uniforms. But is it sufficient to say that? Uniforms for boys or girls or both? Is it for all age groups from year one to year thirteen? can he establish the production capacity or the competence to cater to all these segments? Can he market to all these segments? Does he have money and resources to do what he wants?

Obviously Mr. S. cannot answer such questions without having a solid idea about it himself. This is precisely why business plans require you to spell it out and why potential investors and lenders look at your answer. So, while we advice Mr. S to clarify his "product" definition, I invite all of you to also give some thought to your own business ideas. This will enable you to answer these "tricky" questions about your product or service definition. Anyway, it is not possible to go ahead with he business plan unless you have defined what your business will be.

In fact, the introduction part of the business plan also requires you to talk about how the project will be managed. In this case it is acceptable for Mr. S. to be the chairman and chief executive officer, the marketing manager and the administration manager. But, unless he has some expertise in production related areas, anyone can see that he will need support at production management. If such is the case, he will have to say how and where he will get such a person and how much that costs etc.

The business plan also requires you to specify the resources, the assets such as land and building, production facilities and staffing which will enable the project to get off ground. So you need to find answers to these questions of market size and volumes before you can finish even the introductory chapter of your little business plan.

The other key areas which are addressed in a business plan are related to finances, markets including surveys, potential and the outline of the marketing plan and the risk assessment together with the assumptions you have used in the planning process. You also need to include various other attachments and supporting details to establish validity of information given in the body of the business plan.

Let us discuss next week how Mr. Silva actually draws up his business plan and then proceed onto his marketing and financial plans. Although we take one by one, these plans are all interrelated.

If you have any questions and comments, please send them to P.O. Box 8, Borelasgamuwa or call me on 074-302110 My e-mail address is: [email protected].

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