The importance of having a business plan and the factors that can affect it.
Business Plan A01- task1
Introduction - Why is a business plan created?
A business plan is on the whole a calculation of what the business intends to do and what will happen when they do this. It is a word document which explains the business and sets goals for the business to complete as well as the reasons why they are seen as achievable and how to achieve these goals.
Business plans don't necessarily have to be simply for profit, they can also be made to set service goals as well as growth goals. Each part of a business plan has an individual purpose to complete and can tell stakeholders in the company what the business needs to do, to complete the objectives.
For example the financial section is the section of the business plan that works out the required funds for the start-up of the business with an idea of whether or not it is financially viable.
A Business plan covers many points such as, Is there a gap in the market, if not there is a possibility that you could open your business which is not already out yet. How big is the gap in the market?, is there any competitors or competitions in your area that you are opening in. What service/good will your company produce? What sort of products or service will your business produce? How will this make a profit? How are you going to make money from your product or service? What is the competition? Is there much business like your business.How does your business compare with this competition? Even though you may have similar business with each other how is your business better. Who are your most important customers? Who are the people you are particularly targeted at who will buy the product more? How will you convince them to buy services/goods from you? How are you going to make your customers buy your product or service? How much money finance is needed to start/grow? How much money will an investor make? And finally when and how will they get this money back?
A business plan may be written for any number of reasons, but all should be considered when staring up or increasing a business, as all are very valid reasons and all are is important as the next.
It is very likely that an investor or any other source of finance may want to see a business plan, to know what they are investing in, and more importantly how much money is predicted in return as they are not about to give a company a vast amount of money if there is a risk they may not get it back without knowing exactly where this money is going.
There are two points which a business must look at before they open it, these are externally (outside the business) and internally (inside the business).
Externally
. The business may look to people outside the business to raise finance from a bank loan or an investor.
2. The business need To analyse the market.
3. To make sure that there actually is a gap in the market to make sure that the company's good/service is financially viable.
4. To find out the amount of demand for this product/service
5. To Determine the amount of competition and if there is anything that your company can do to stay ahead of the competition.
Internally
. To set goals and objectives
For this, the business needs a clear idea as to where the business is heading, furthermore, this enables a clear strategy to shape the decisions by mission statement, Aims, Objectives. The objectives need to be SMART. However, the short term objectives may not be about profit maximization.
2. Help gain an understanding of how the business needs to be setup and run.
3. Determine what adjustments, if any, need to be made.
4. Can also identify if there are any expenses that can be avoided.
Reasons for constructing a business plan
To Map the Future
A business plan is not just necessary to secure funding at the start-up stage, but is a vital aid to help manage a business more effectively. By committing your opinions to paper, you can be aware of your business better and also chart particular courses of action that need to be taken to improve your business. A plan can point alternative future prospect scenarios and set detailed objectives and goals along with the resources required to achieve these goals.
By understanding your business and the market a little better and planning how best to operate within this environment, you will be well located to ensure your long-term success.
To Support Growth and Secure Funding
The majority of businesses face investment decisions during the course of their lifetime. Often, these opportunities cannot be funded by free cash flows alone, and the business must seek external funding. However, regardless of the fact that the market for funding is highly competitive, all prospective lenders will require access to the company's recent Income Statements/Profit and Loss Statements, along with an up-to-date business plan.
Develop and Communicate a Course of Action
A business plan helps a company assess future opportunities and commit to a particular course of action. By committing the plan to paper, all other alternative are effectively narrowed and the company is allied to focus on key activities. The plan can allocate milestones to specific individuals and ultimately help management to monitor progress. Once written, a plan can be disseminated quickly and will also prompt further questions and feedback by the readers helping to ensure a more collaborative plan is produced.
To Help Manage Cash flow
The delicate management of cash flow is a basic requirement for all businesses. The reason is quite simple--many businesses fail, not because they are unprofitable, but because they ultimately become bankrupt (i.e., are unable to pay their debts as they fall due). While the break-even point--where total revenue equals total costs--is a highly important figure for start-ups, once a business is up and running profitably, it becomes less important.
Cash flow management then becomes more very significant when businesses pursue investment opportunities where there are significant cash out flows, in advance of the cash flows coming in. These opportunities need to be assessed against any seasonal variation in the business and the timing of the flows. However if you are a cash only business, you can bank the income right away; however, if you sell on credit, you receive the cash in the future and that's why you may need to pay some of your own payment before that income changes your account. This will put a more tension on the business solvency and therefore a well structured business plan will help you manage funding needs in advance.
.To Support a Strategic Exit
A last, at some period the owners of the firm will decide it is time to exit. Considering the possible exit plan in advance can help tell and direct present day decisions. The aim is to liquidate the investment, so the owner/current investors have the option of cashing out when they want.
Strategies include;
. Acquisition by competitors- buying of one company by another competition.
2. Mergers- a combination of two companies into one larger company.
3. Family succession- continuing the business after parents.
4. Management buy-outs - form of acquisition where a company's existing managers acquire a large part or all of the company
Investment decisions can be taken in the present with an idea on the future by a well-thought-out business plan. For example, if the most attractive exit route appeared to be selling to a competitor, present day management and investment decisions could spotlight on activities that would boost the company's attractiveness to that competitor.
Other reasons for constructing a business plan are listed below,
. Giving business a clear picture of the various stages they need to go through to be successful
There are many business ideas that remain because of a need to analyse whether an idea is viable before risking finance etc. Also assess level of external assistance required. The identify possible constraints which will have to be dealt with the business.
2. Ensuring the monitoring & reviewing of progress is made more straightforward.
The business must monitor its progress against the objectives. It also needs to take correction where it is necessary before it is too late. However, if your business goals are unrealistic then you have to reset your goals. The stake holders of the business will want reassurance that the business is doing well so that they know there job is safe. Finally all of the objectives should be measurable.
3. Persuading stakeholders to get involved.
A good business plan is the most important way to demonstrate and from there you can demonstrate your ideas into practise. You would also have to show your plan is workable to get people to invest. If financers choose to invest in the business they would want to get their money back or get more back from what they invested. You would need to reassure stakeholders of the management capacity. Also a good plan enables the stakeholders to monitor the process.
Different parts of a business plan
Marketing plan
To help make marketing decisions a business must plan successfully. MARKETING PLANNING is the procedure by which potential marketing activity are methodically planned. Not all businesses have a marketing plan. Some smaller businesses, for example, may make marketing decisions on a short term basis or in response to changing conditions. For example, the Rank Group plc will have an overall corporate strategy. This will influence the plans of its leisure division. A business can only plan where it is going if it knows where it is starting from. Finding out where a business is at the moment involves a marketing audit. This analyses the internal and external factors which affect a business's performance.
Primary Research
The first decision is the plan to be used to carry out the research needed to establish the size of the market for your product, talking to people and assessing their views to your proposals may give you an initial feel for the market. But in some cases this is not exact planning, they may not follow though with purchases once they see the item.
Also this will point towards potential customers, no matter how enthusiastic at the outset. Consumers need to see the actual product before buying it.
Primary data can also be collected though interviews, telephones, directly face-to-face and travelling of door-to-door questionnaires and surveys.
Secondary data
Secondary data is where information is provided by other resources, it has been used by someone else, and in other word secondary data is a second hand based source of information. Such as Internet, books, magazines.
Target Marketing involves breaking a market into segments and then focussed your marketing efforts on one or a few key segments. Target marketing can be the key to a small business's success. The key of target marketing is that it makes the promotion, pricing and distribution of your products or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities.
SWOT
SWOT Analysis is a influential technique for understanding your Strengths and Weaknesses, and for looking at the Opportunities and Threats your business faces.
Strengths:
What ...
This is a preview of the whole essay
Target Marketing involves breaking a market into segments and then focussed your marketing efforts on one or a few key segments. Target marketing can be the key to a small business's success. The key of target marketing is that it makes the promotion, pricing and distribution of your products or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities.
SWOT
SWOT Analysis is a influential technique for understanding your Strengths and Weaknesses, and for looking at the Opportunities and Threats your business faces.
Strengths:
What advantages does your company have, what have you got that that your competitors haven't., what do you do better than anyone else of your competitors,
What unique or lowest-cost resources do you have access to, what do people in your market see as your strengths, what are the best bits of your business. Strength of your business might be what things you and your staff do together. Strength of your business may be how much money you make.Futhermore, if you had enough profit received from goods you could expand your business so it is bigger than your competitors.
Weaknesses:
This is the weak points of your business, Things which the business is not good at. What could you improve on your business in order to make it better, what should you avoid? What are people in your market likely to see as weaknesses? Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be realistic.
Opportunities:
Opportunities are everywhere, such as the changes in technology, government policy, social patterns, and so on. An opportunity is major situations in a firm's environment.Where are the good opportunities facing you? What are the interesting trends you are aware of? Useful opportunities can come from such things as:
Changes in technology and markets on both a broad and narrow scale, Changes in government policy related to your field, Changes in social patterns, population profiles, lifestyle changes, etc. A useful approach to looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.
Threats:
Nobody one likes to consider about threats, but we still have to face them, regardless of the fact that they are external factors that are out of our control, for example, the recent economic slump in Asia Threats of your business may be due to the following points, the credit crunch, the general availability of loans or a sudden increase in the cost of obtaining loans from the banks. The whather or environment may damage the threaten the business, for example you may not sell as much products as you will in Christmas. Fallen profits could lead to bankruptcy and downfall of the business. What obstacles do you face? What is your competition doing?
Are the required specifications for your job, products or services changing?
Is changing technology threatening your position? Do you have bad debt or cash-flow problems? Could any of your weaknesses seriously threaten your business?
Carrying out this analysis will often be helpful - both in terms of pointing out what needs to be done, and in putting problems into perspective.
Strengths and weaknesses are internal to your organization. Opportunities and threats relate to external factors.
The objectives provide goals and targets for the business to aim at. They may include such goals as a growth in sales or gaining a certain market share in future.
How will a business achieve its objectives? A business must make a decision how to get where it wants to go. It will have advertising strategies which it will use to achieve its objectives. For example, if it wishes to boost its market share at the expense of a market leader then it may use market challenger strategies. So a company wishing to gain a 10 per cent increase in market share must make sure that it has the the right product, at the right price, with an effective promotion and distribution policy.
Factors influencing the market plan
A marketing audit should recognize the internal and external factors which affect a business. There are a number of possible factors that may fall into each
Internal factors- inside the business
• The marketing mix. A marketing plan looks at the competition and the business environment making sure that your business can stay ahead of the rest, as well as constructing a way for the business to market its new service or good to the public. This is done by creating a marketing mix which should cover all of the four P's:
• Product
• Place
• Price
• Promotion
Price
There are many ways that a business can price a product or service.
Premium Pricing.
This means using a high price where there is rareness about the product or service. This approach is used where a large competitive advantage exists. Such high prices are charge for luxuries such as, Savoy Hotel rooms, and Concorde flights.
Penetration Pricing.
The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV.
Economy Pricing.
This is a no added extras to low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.
Price Skimming.
Business may Charge a high price because of large competitive advantage. However, the advantage is not sustainable. The high price tends to create a centre of attention for new competitors into the market, and the price without doubt falls due to increased supply.
Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They structure the bases for the exercise. However there are other important approaches to pricing.
Psychological Pricing.
This method is used by business when the marketer wants the customer to respond on an emotional, rather than reasonable basis.
Product Line Pricing.
Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be $2, wash and wax $4, and the whole package $6.
Optional Product Pricing.
Companies will effort to increase the amount purchaser spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.
Product Bundle Pricing.
This method states that sellers join several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.
Promotional Pricing.
Business will try to promote a product in a very common function. There are many examples of promotional pricing including BOGOF (Buy One Get One Free).
Geographical Pricing.
The method Geographical pricing is obvious where there are in price in different parts of the world. For example shortage value, or where shipping costs increase price.
Value Pricing.
This approach is used by businesses where external factors such as recession or increased competition force companies to supply 'value' products and services to retain sales.
Product
Product For many businesses is that it is simply the real, physical unit that they may be buying or selling. You buy a new motorbike and that's the product. Or maybe not. When you buy a motor bike, is the product more compound than you first thought? The Three Levels of a Product are the CORE product, the ACTUAL product, and the AUGMENTED product.
The core product is not the touchable, physical product. You can't touch it. That's because the core product is the benefit of the product that makes it valuable to you. So with the motor bike example, the benefit is convenience i.e. the easiness at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly.
The actual product is the touchable, physical product. You can get some use out of it. Again with the motorbike example, it is the motor bike that you test drive, buy and then bring together.
The Augmented product is the non-physical part of the product. It usually includes of lots of added value, for which you may or may not pay a premium. So when you buy a motor, part of the augmented product would be the guarantee, the customer service support offered by the motor manufacture, and any after-sales service.
The Product Life Cycle is based upon the natural life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an grown-up (maturity); after a long period as an adult the plant begins to shrink and die out (decline).
In assumption it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; finally the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually solitary.
On the other hand, most products fail in the introduction stage. Others have very recurring maturity stage where declines see the manufactured goods promoted to get back to customers.
Strategies for the differing stages of the Product Life Cycle.
Introduction.
The need for instant profit is not a force. The product is promoted to create consciousness. If the product has no or few competitors, a skimming price strategy is in use. Limited numbers of product are available in few channels of distribution.
Growth.
Competitors are involved into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to steady.
Maturity.
Those products that stay alive the earlier stages tend to spend longest in this phase. Sales grow at a falling rate and then steady. Producers attempt to tell between products and brands are key to this. Price wars and intense competition occur. At this point the market reaches diffusion. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and uses a greater variety of media.
Decline.
At this point there is a slump in the market. For example more ground-breaking products are introduced or consumer tastes have changed. There is strong price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.
Problems with Product Life Cycle.
In reality very few products follow such a narrow cycle. The length of each stage varies extremely. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in.
Place is the area in which the product will sell, the marketing mix is all about selling in the right place. Place represents the area where a product can be purchased. It is often referred to as the distribution chain. It can include any physical store as well as virtual stores on the Internet. Price is where you compare to your competitors; it is vital part of marketing.
Promotion represents all of the communications that a marketer may use in the marketplace. Promotion has four separate elements - advertising, public relations, word of mouth and point of sale. A certain quantity of intersect occurs when promotion uses the four principle elements together, which is common in film promotion.
Advertising covers any communication that is paid for, from television and cinema commercials, radio and Internet adverts through print media and board signs. Everyone of the four Ps can be changed to market the product in a different way. The approach seems to be basic and has recently made bigger to include three more Ps. These Ps are people, process and physical evidence.
This marketing plan should be based on in-depth research of the market, customer's needs and competitors.
The significance to the internal audit will be an assessment of the effectiveness of the marketing mix. This will include an analysis of each element of the marketing mix. For example, projection regarding the life span and future profitability of each of the firm's products may be carried out. It should also include an analysis of how well the elements of the marketing mix fit together, for example, the extent to which distribution channels are well-matched with the promotions may be considered.
• People. A huge range of people will be involved in plan and execute marketing plans. The objectives of these people will decide the targets set in the plan. Also the skills and abilities of those people working for a firm will determine whether targets can be met. . As a result of this, they must be appropriately trained, well encouraged and the right type of person. The process is how the product its self or service is actually delivered to the consumer. The quality controls which are built in to try to ensure the product or service consistently reach the standards consumer demands. It is involved in providing a service and the performance of people, which can be key to customer satisfaction. Physical evidence is the conditions which required of the physical environment for selling to end users and other businesses for example, leisure and retail outlets. Unlike a product, a service cannot be experienced before it is delivered, which makes it intangible. This, therefore, means that likely customers could notice greater risk when deciding whether to use a service. To reduce the feeling of risk, therefore improving the chance for success, it is often crucial to offer probable customers the chance to see what a service would be like.
• Production processes. Any marketing plan must take into account whether the firm can create the product. There is little point in planning to increase market share unless enough of the product can be produced to achieve this. Similarly, a firm cannot plan to launch a new product if it cannot manufacture it.
Businesses should be wary to consider how each of the above factors affects consumers and their buying behaviour. Changes in outside factors can cause changes in the wants and needs of consumers. An effective plan should expect these changes as well as any other issues affecting consumers' needs.
• The main benefit of marketing planning is that it ensures a business takes time to reveal upon its marketing activities. In today's competitive environment it is not enough for businesses to carry on doing what they have done successfully in the past. They must constantly evaluate and develop their marketing policies. The marketing plan allows them to do this and can be seen as a means of ensuring the survival of the business.
• The marketing plan organizes the various aspects of marketing. It takes a view of a business's marketing activities. This should lead to better organization and integration of the similar elements of marketing. It should also allow all employees and all areas of the business to be aware of marketing objectives, helping to ensure that they `pull in the same direction:
• The marketing plan makes sure that human and financial resources are used where they are most needed. It will also make sure resources will not be wasted on not making money activities.
• Businesses will set marketing objectives and targets in their marketing plan. Management, as a result, will have a clear set of criteria against which they can evaluate the success of products.
• Marketing plans may support greater employee motivation. Employees are likely to be more ready for changes in company policy and in the climate of trading. They should therefore be able to act in a more certain and informed manner. They are also likely to feel safer in the knowledge that the business has planned for the future.
• A marketing plan should make banks feel more certain about offering loans to a firm. Shareholders may also be more confident about buying shares in a business.
Problems with marketing planning
Many businesses main dilemma with marketing plans lies in their confusion as to what marketing actually is. Marketing plans often focus upon issues such as product growth or increasing sales, but ignore customers' needs. Satisfying consumers' needs should be at the front position of any marketing plan. A plan which centres round the expected success of a new advertising campaign, for example, is unlikely to be successful unless consumers' needs are satisfied. British Airways, Tescos, and Woolworths are all companies which have won awards for advertising campaigns in the past. It is open to question whether these campaigns directly led to any improvement in sales. Many businesses in the UK are organised into personnel, finance, production, and marketing departments. The success of the marketing plan will depend upon each of these areas being ready to put aside their own goals to please consumers' needs. This can be hard, particularly in a large business, where faithfulness to the department can override more important goals. One suggested way of solving this problem is for businesses to be prepared around customer groups rather than `functions' Marketing plans often consist of too much information for them to be useful to managers. In order to overcome this problem, plans should be brief and think upon key factors.
Evaluating marketing plans
It is necessary that businesses assess the triumph of their marketing plans. This will give them with information on which to base future plans. Businesses also need to know whether or not planned activities were carried out in the manner which was planned.
The assessment of marketing plans can take place both during the period of time in which the plan is being carried out and at the end of the time period (often one year) that the plan covers. Assessment which takes place during the period of functioning may allow managers and directors to better control marketing activities.
It is important that marketing plans are evaluated against clear, measurable criteria. Such performance targets are often time specific. This means that they are expected to be achieved by a certain date during the functioning of the plan. For example, a plan may require a 5 per cent growth in market share by the end of the first six months. A business may use a figure of methods to evaluate a marketing plan
There are many marketing models that are includes in the marketing plan.
These are, SWOT Analysis which is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats occupied in a business project.
A SLEPT analysis, i.e. an investigation of the Social, Legal, Economic, Political, and Technological influences on a business. PEST analysis which stands for "Political, Economic, Social, and Technological analysis" and describes a framework of environmental factors. The Ansoff Growth matrix is a tool that helps businesses decides their product and market growth strategy.
The Boston Matrix is a well known tool for the marketing manager. Boston Matrix is a method of examining the product portfolio of a business This model was developed by a group of management consultants called the Boston Consulting Group, and it divides the products that are produced by a business into 4 categories, according to their market share and the level of market growth. Dogs. These are products with a low share of a low growth market. They do not generate cash for the company, they tend to take it in.
Cash Cows.
These are products with a high share of a time-consuming growth market. Cash Cows generate more than is invested in them.
Problem Children.
These are products with a low share of a high growth market. They consume resources and generate little in return. They take in most money as you attempt to increase market share.
Stars.
These are products that are in high growth markets with a relatively high share of that market. Stars tend to generate high amounts of income.
Production Plan
The production plan is the part of the business plan that concentrates a lot more on the actual product or service, talking about what is needed to produce the product and how much it is going to cost. It also looks at how much should be created of this product, so as to be able to meet the demand with out being under or over stocked. The production plan needs to ensure that the quality of your service or product is checked. By doing this, they could ask for customer feedback, and get customers to see how there product or service is being distributed right. Also the customers might want to do repeat booking for their service, buy in bulk pay less. At the start of the your business, you have to make requirements to your equipment or machinery, for example if you are a piano instructor you will need a piano, for this you need to have cash to spend on this equipment, also books, chairs also have to be considered. Before setting up your business you need to plan on what you are going to buy.
Financial Plan
This just looks at all the financial suggestions of the whole business, setting budgets and creating breakeven cash flow predictions, overall making sure that the business is financially workable and worth setting up. It is the job of this section to make sure that all the finance works out and that there is nothing blamed for as this could cause a loss in profits. Organisations in the private sector are split into four types of ownership structures, these are a sole trader, partnership, private limited company and a public limited company these businesses basically need finance for many different reasons, these may be for long term or short term uses. The main types of financial backup that is needed for businesses are for starting a business up, expansion and development or maybe the business has just run out of money that is needed for it to be successful. There are many sources of financial help an business can turn to for financial support and can be dissimilar depending upon the business ownership and structure as some are more appropriate for the need of the business than others. These are categorised as the providing of the financial fund can be obtained within the business and out side the business.
Internal sources-These are the main types of financial help that most businesses can get access to freely. Limited companies use these more than other business ownerships.
. • Personal savings
2. • Sale of assets
3. • Retained profit
4. • Working Capital
External sources
* Ownership capital
• Shareholders
Non ownership capital, financial sources that are not shareholders.
? Loans e.g. debentures
• Overdraft
• Hire purchase
• Grants
• Venture capital
• Leasing
Good points
Bank Loan:
The good thing about a bank loan is that you don't have to pay back the money straight away. You can agree with the bank manager of what type of payment you could choose like a weekly payment or a monthly payment. Another good thing is that the bank can pay out large sums and you can normally get a great deal of money.
Savings:
The good thing about using my savings is that its my money and only I can touch my savings. Another good thing about savings is that if I am in need of some people to pay out bills or something, I can use my savings as a plan b just in case the business isn't making any money at all.
Overdraft:
The handy about an overdraft is that you can agree with the bank of a certain amount that you will be able to go over. This is good because then you have a budget and can agree a fixed fee of when to pay them back.
Retained Profit:
The good thing about retained profit is that the rest of the profit comes back into the business after tax and you give some to shareholders. This means the money left over came be re-invested into the business and gives the business more money to buy new supplies, pay off bills and recruit more staff.
Investments:
The good thing about investments is that the business not only has more money being invested into it but also has another investor who can share some advice. Investors normally invest in businesses that can be profitable and may also know more people who can give you more cash investments.
Sell Assets:
The good thing about selling some of your assets could be that the asset is getting old and you are planning on re-placing the asset with a more update technology. This could not only be could for more money but at the same time, you can have more updated technology.
Leasing:
The advantage to leasing of property to other people is that you can charge people a reasonable rate to people for using it. Also, you are getting rid of property that you may not need for now but you still own it.
Shareholders:
The great thing about getting more shareholders to invest into your business is that you can get more money to be invested into your business and they may know experts to help you with certain parts of the business that you may not know about.
Bad points
Bank Loan:
The bad thing about bank loans is the interest they come with actually makes you pay more then the actual amount you've paid. Different banks have different interest rates and you also could end up either being blacklisted, taken to court or losing whatever you put up for the costs.
Savings:
The bad things about using your savings is that you might not have a lot of savings and that the savings for only for an emergency. This would then lower your savings given you very little money.
Overdraft:
The worse case scenario in using an overdraft is that you could end up owing the bank a lot of money. This could put you in debt and could stop you from taking out future loans or overdrafts in the near future.
Retained Profit:
The bad thing about retained profit is that it's the companies profit being put back into the company and also that the shareholders keep a certain percentage of the profits so not all the money is being re-invested.
Investments:
The disadvantage to investments is that if your company is failing or has failed then the investors will demand the money back that they invested into your business. Or they can choose to not invest money into your business anymore.
Sell Assets:
The disadvantage to selling your assets is that you may only get a small price for them and you could end up regretting selling the asset because you could need it later on.
Leasing:
The bad thing that is behind leasing is that you are losing a piece of property and even though it is still yours, you are probably not getting a good price for it. The person could end up harming it and could cost you a lot of money to fix it.
Shareholders:
The thing that is bad about shareholders is that if the business looks like it could fail, then the shareholders could stop investing money into your business and choose to sell of their shares to either another person.
The budget is, in effect, the financial symbol of the organisation's mission and strategic goals. It is a tool for allocating resources and implementing strategic plans. It charts a way of allocating and maximising the use of resources and, preferably, identifies financial problems that could arise in the coming year. The budget also provides pointers for evaluating employee performance and gives the staff goals to reach and steps to achieve them. The Break-even Analysis lets you decides what you need to sell, monthly or annually, to cover your costs of business your break-even point. There are three assumptions of the break even forecast; these are Average per-unit sales price (per-unit revenue) this is the price that you receive per unit of sales. Taken into account sales discounts and special offers. Average per-unit cost:
This is the cost, or variable cost, of each unit of sales. Monthly fixed costs:
in theory, a break-even analysis defines fixed costs as costs that would continue even if you went broke. A cash flow forecast trys to predict the timing of a business' income and expenditure. With this knowledge you will be ready for any big outgoings that may occur e.g. VAT, new machinery required etc.A business start-up's cash flow is essentially less easy to predict than that of an established business, because there is no track record to work on. It's not viable, however, and should be done to the best of your ability. Profit & Loss Account is a report of the company's profit on the sale of their goods or the provision of their service over a trading period, normally one year.
A balance sheet is one of the most important statements in a company's accounts. It shows what assets and liabilities a company has, and how the business is funded (by shareholders and by debt: the financial structure of the company). The balance sheet includes information on that is positive when assessing the financial stability of a company. A number of financial relations use numbers from the balance sheet including gearing, the current assets ratio and the quick assets ratio. However, ratios based on profits and cash flow is at least as important for assessing financial firmness, the most important of these are interest cover and cash interest cover.
Human Resource Plan
The human resource department in any business or business plan is the section that looks after its employees and anything to do with the employees.
It makes sure that there is the right number of employees needed for the business to succeed without wasting any time or money keeping the business well-organized. It also looks at any skills that the employees might need to complete their tasks and provide training if needed, and its final job is to recruit the right employees for the job, e.g. a lawyer for a law suite and not a dentist. Human resources
All organisations need to employ people to carry out essential activities. Employees are one type of resource. The purpose of the human resources function is to recruit the employees needed by the businesses and to try to meet their needs once they are employed. Human resources are involved in the following areas:
Recruitment, retention and dismissal. Human resources aim to attract and retain high quality staff. However if staff have to be dismissed, human resources must make certain that this is done legally as there are many laws which relate to employing and dismissing staff.
Working conditions. High quality staff will be more attracted to an organisation, which has good working conditions than one, which has not. This relates to more than just salary.
• Training, Development and promotion. These are key areas because most staff wants to develop their skills and improve their career prospects
• Employee organisations and uniforms. Staffs likes to think their views are being taken into consideration if there are major changes and developments planned within the business. They also need advice if they have a serious problem. This is often the role of an employee organisation such as a staff association or trade union, which will discuss matters with the human resources manager.
• Health and Safety. All employees have the right to work in a safe environment. Human resources must ensure that the organisation operates with health and safety laws.
Constraints affecting the implementation of a business plan.
All businesses must comply with the law. Examples of laws which businesses are
Legal. Constraints that can impact on the successful implementation of a business plan there are several constraints that can affect how well a business plan is implemented. The constraints that may affect the implantation of a successful business plan are;
Legal, Financial, Social , Environmental ,Technological. Competitive Legal When a business is setting up a business plan it has to abide by laws to ensure that the business will not face any legal action against it. Legal changes can happen all the time over the course of a business's running. Legal changes can make the business to change the way a business operates and can have an impact on how employees have to set up rules to ensure the safety of its employees. Changes to tax laws and minimum wage can have an impact on the finance of a business.
•Political. There is an increasing amount of legislation and regulation that may affect the marketing plans of a business. It can vary from controls on the ingredients of products to restrictions on price changes of the privatised utilities, such as water and gas. Much of the new legislation affecting the UK is from the European Union.
•Economic. A wide range of economic factors may affect a business's marketing plans. A buoyant economy, for example, may lead to increased demand for products, higher incomes and the possibility of price increases. Growing unemployment may lead to a fall in future levels of demand. Marketing plans should also take into account the pricing, promotion, distribution and product policies of rival businesses.
Social. Changes in society can have consequences for marketing planning. The decline of the so-called nuclear family and the changing role of women may influence how a business promotes its products. The ageing of the population may influence the types of products which are developed and the channels of distribution used to deliver products to customers.
• Technological. Changes in technology can affect marketing plans in a variety of ways. It may snake it possible for businesses to manufacture products that were previously thought to be too costly. It may also lead to greater obsolescence and shorter product life cycles. New technological developments such as interactive television and the internet may change the promotional methods that a business uses
• Finance. Firms can set themselves ambitious marketing goals. However, unless finance is available to fund plans, such goals are unlikely to be achieved. This is
discussed later in this unit under the heading `Marketing Budgeting'.
Government Legislation and Law
The government legislation and law affects my new product because the government is responsible for creating new laws, which all businesses must follow.. Government actions bring into play a wide range of changes to taxes. These changes then become law through a finance bill, which becomes an Act of Parliament (a new law). Here are some examples of the laws the government created to protect consumers against exploitation by producers.
• The Sale of Goods Act 1997
• Sale and Supply of Goods Act 1994
• Trade description act.
Sex Discrimination Acts 1975/1986
The Sex Discrimination Act 1975 makes it unlawful to discriminate on grounds of sex or marital status in recruitment, promotion and training.
Direct sex discrimination occurs when a person of one sex is treated less favorably on grounds of sex than a person of the other sex would have been treated in the same circumstances.
Indirect sex discrimination can occur where a requirement or condition is applied equally to men and women, but the proportion of one sex that can satisfy the condition is much smaller than the proportion of the other sex. Unless it can be proven that the condition is essential for the job, indirect discrimination may have taken place. It has also been established that discrimination against part-time workers may constitute indirect discrimination against women because nationally, and in most organizations, the majority of part-time workers are women. Restricting employment by means of age limits is another possible instance of indirect discrimination.
The third type of discrimination covered by the Act is victimization. This occurs when an individual is discriminated against because they have exercised their rights under the Act.
Race relations Act 1976
The Race Relations Act 1976 makes it unlawful to discriminate on grounds of race, colour, nationality or ethnic or national origin. This Act covers recruitment, promotion and training. The Act covers direct discrimination, indirect discrimination and victimization. Examples of indirect discrimination would include recruiting from sources, which exclude areas of high settlement of minority ethnic groups or insisting on British qualifications. Word of mouth recruitment in an organization where people from ethnic minority communities are under-represented would also constitute indirect discrimination.
Equal Pay Acts 1970 and 1983
The Equal Pay Act (1970) came into force originally at the end of 1975 and its purpose was to eliminate discrimination in pay between men and women. It was amended in 1983 to include work of equal value and most claims are now under this part of the Act. The Act allows an individual to claim pay equal to that received by members of the opposite sex on the grounds that they are doing:
Like work
Work rated as equivalent under a job evaluation scheme
Work of Equal Value - in terms of demands made under such headings as effort, skill and decision-making
Claims can be pursued through the Employment Tribunal system.
Disability Discrimination Act 1995
The employment sections of the Disability Discrimination Act came into effect on 2nd December 1996. This Act operates in a similar way to the Race Relations Act and the Sex Discrimination Act, but also places a duty on an employer to make 'reasonable adjustments' to premises or working practices to allow a disabled person to be employed.
The definition of disability is wide and includes physical disabilities, sensory disabilities (visual or hearing impairment), learning difficulties, mental health problems as well as progressive conditions such as Multiple Sclerosis and Aids.
The Rehabilitation of Offenders Act 1974
The Rehabilitation of Offenders Act 1974 sets a scale of rehabilitation periods for people who have been convicted of criminal offences. After completing such a period without further conviction, the individual can regard any conviction as 'spent' (as if it had not occurred) when applying for jobs other than those which are 'exempted'. The purpose of the Act is to ensure that a person convicted of a criminal offence is given the opportunity to be freed from that conviction if they have 'gone straight'. There is no need for such a person to disclose to his employer, or prospective employer, any information about his spent conviction even if he is asked whether he has ever been convicted of an offence. Certain convictions such as a term of imprisonment of more than 30 months can never be spent. Some exceptions from the act, where the sentence is never classed as spent include applying for a job -
* Working with young people
* Working in social services
* Administrating justice
* Civil service
* Working Time Regulations Act 1998
The Working Time Regulations came into force on the 1st October 1998. These Regulations protect workers from being forced to work excessive hours. They also make the provision of paid annual leave mandatory, and include rights to rest breaks and uninterrupted periods of rest. We provide a summary of the regulations.
The Regulations apply to "adult workers" (over 18) and to "young workers" (over compulsory school age), and some of the detailed provisions are slightly different for each of these two groups. There are exceptions to some of the Regulations, primarily for employees working in transport (air, road, rail, sea etc.), sea-fishing, work at sea, doctors in training, certain activities of the armed forces, police and civil protection workers.
The Regulations state that:
A worker's working time, including overtime, must not exceed an average of 48 hours in each 7 days
If the worker claims this right not to exceed the 48 hours, then he must not suffer any detriment because of it (such as reduced chance of promotion, for instance)
A worker can agree, if he or she wishes, to work longer than 48 hours per week, but this agreement should be made in writing with the employer
Employers are obliged to keep records of the hours worked
Employment act 2002
The most recent act to be put into place in terms of recruitment and selection, this act covers numerous areas to help employees be treated fairly and equally. Some of the points within the act include -
* Right to 26 weeks paid maternity leave, 26 unpaid maternity leave thereafter
* Right to 2 weeks paternity leave for fathers
* Right for flexible working for parents with children under 6 or disabled children under 18
* Monitoring of equal opportunities through regular questionnaires
* Members of unions, allowed time off to attend meetings and training
The Trade Descriptions Act 1968 is an Act of the Parliament of the United Kingdom which prevents manufacturers, retailers or service industry providers from confusing consumers as to what they are spending their money on.
The Health and Safety at Work etc. Act 1974 is an Act of the Parliament of the United Kingdom that as of 2008 means the basic structure and power for the encouragement, regulation and enforcement of workplace health, safety and welfare within the United Kingdom..
