One of the ZBIN members has asked me to write about business plans. Defining them and providing a few examples. This should not be a challenge since i have helped a few members from the community in drafting and reviewing them.

I would say a business plan is a simple document where you write down a brief history of your business and what you plan to do in future. I would like to emphasize the word simple here because most people think it is a complicated document which can only be compiled by experts whereas in reality anyone can draft a business plan.

Why draft a Business Plan?

Clarify Direction:  The primary purpose of a business plan is to define what the business is or what it intends to be over time. Clarifying the purpose and direction of your business allows you to understand what needs to be done for forward movement. Clarifying can consist of a simple description of your business and its products or services, or it can specify the exact product lines and services you’ll offer, as well as a detailed description of your ideal customer.

Attract Funding: Perhaps the reason why most people prepare business plans-to seek funding! Businesses evolve and adapt over time, and factoring future growth and direction into the business plan can be an effective way to plan for changes in the market, growing or slowing trends, and new innovations or directions to take as the company grows. Although clarifying direction in the business plan lets you know where you’re starting, future vision allows you to have goals to reach for.

Attract Team members: Business plans can be designed as a sale tool to attract partners, secure supplier accounts and attract executive level employees into the new venture. Business plans can be shared with the executive candidates or desired partners to help convince them of the potential for the business, and persuade them to join the team.

Company Management: A business plan is one solid document which defines who the company is. A business plan conveys the organizational structure of your business, including titles of directors or officers and their individual duties. It also acts as a management tool that can be referred to regularly to ensure the business is on course with meeting goals, sales targets or operational milestones.

What does a Business Plan contain?

They can range in size from a simple few sentences to more than 100 pages with formal sections, a table of contents and a title page. Typical business plans average 15 to 20 pages. Comprehensive business plans have three sections–business concept, marketplace and financial–and these are broken down into seven components that include the overview or summary of the plan, a description of the business, market strategies, competition analysis, design and development, operations and management, and financial information.

I would in simple terms say a business plan should answer the question, who are you and why should i be interested in you? For potential funders the question is why should we fund you? So clearly illustrate a business plan allow me to provide you with an example below of

Below I have quickly drafted a Business Plan Outline to help our members to appreciate what a business plan is. In this plan you would like to tell a potential funder who you are as a company, who the owners are, why you exist, your competitive edge, your management team. This is pretty straightforward.

You would like to analyse the environment that you work in. For instance in the current environment in Zimbabwe you may like to refer to the Economic Outlook and impact on your company and the industry that you operate in.

Proposed Investment Description should be fairy straight forward, what do you intend to invest in? How much and is it going to be a profitable venture? Can you back it up with financial calculations? You may need a finance expert to do some Capital Budget calculations but for the purposes of illustration here, we are doing it ourselves. You will also need to describe the industry that you work in, the level of competition and your strategy for survival and competing.

Finances, this can be a small headache for Non- Finance Professionals but guess what? The good news is that there are a lot of templates where you can simply plug in figures and produce results. I have a friend who is an IT Manager whom I failed to help in drafting and reviewing his Business Plan, he produced a simple cashflow statement in excel which was accepted by a bank who gave him a loan.

So this is just an introduction to Business Plans which I drafted with the intention to demystify business plans. It is not rocket science, you too can draft one if you take time to learn more about them. I will provide you with examples of detailed business plans and also checklists to use when reviewing business plans.

If you are drafting one with the intention of applying for funding remember this golden rule…Is it a profitable venture? This is the bottom line and a business plan will simply help in backing a profitable venture.

Enjoy and see you tomorrow at the ZBIN Poultry meeting at 3:00pm

One of our key focus this year will be the promotion of partnerhips by our members. Partnerships by locals as well as locals and Diasporans. Partnership is not an easy field because in most cases it results in the other party being shortchanged. Diasporans have already been partnering with relatives back home and wee have heard many sad stories where locals abused funds received for partnership projects.

Below we cover advice from www.entrepreneur.com for the benefit of our members

Pitfalls abound when entrepreneurs decide to become partners. Know what they are ahead of time so you can set up guidelines that allow people to walk away if things go wrong.

From powerhouse financiers like Kohlberg Kravis Roberts to retailers like Baskin-Robbins to IT pioneers like Hewlett-Packard, business partnerships have been an important part of entrepreneurship and startup success. The reasons are simple: complementary skill sets, shared equipment or expenses, and the idea that one person with “hard” money capital can create synergy with the intellectual capital of another person so both can profit from their venture.

In theory, a partnership is a great way to start in business. In my experience, however, it’s not always the best way for the typical entrepreneur to organize a business.

The tough thing about most partnerships is that they are just like marriages, and if you know anything about those statistics, you know half of all marriages don’t survive. Making a marriage work involves handling a volatile mix of partnership issues: ego, money, stress, monthly overhead and day-to-day expenses. Throw in some employees you must manage, and you have a good idea of the work required to make a business partnership successful.

If you’re thinking about a partnership, consider the following list and avoid the potential pitfalls:

1. Sharing capital instead of expenses: Whenever you share your own capital–be it money, resources, information or property–you automatically give away your enterprise ability. In a perfect world, the person you are partnering with is upright, full of integrity, and not at all tempted to take this gift and run with it as his own. However, the world’s not perfect. So be careful. Instead, work out an arrangement where expenses are shared in an “associative” arrangement. It also makes it easier to walk away if things go wrong.

2. Partnering with someone because you can’t afford to hire: This is a partnership killer right from the start. The scene is always the same: Bob has a business idea and Fred has the business skills, but Bob can’t afford to hire Fred as an employee, so they decide to share duties, expenses and profits. What happens is both Bob and Fred end up working against each other, and Bob finds himself liable for Fred’s obligations (financial and otherwise) under the partnership agreement. If you’ve got the idea and someone else has the skill, simply hire him or work out an independent contractor agreement. Don’t give away what you don’t have to.

3. Lacking a written and signed partnership agreement: Due to the nature of partnerships, every detail and obligation must be clearly defined and written out, and agreed upon by all parties. This is best done with a written legal agreement drafted by a well-qualified, mutually agreed-upon lawyer. Just make sure the attorney is well-versed in business partnerships, and be sure to keep her card handy at all times. You may need that person again when things go wrong.

4. Overlooking a limited partnership: One of the main downfalls of a partnership agreement is the assumption of liability each partner makes for the other. A way around this is a limited partnership, where the limited partner is not liable for the actions or obligations of the general partner. Again, make sure an attorney well-versed in partnership agreements writes this arrangement.

5. Lacking an out or an exit strategy: Big-time marriages start with a pre-nuptial agreement. In business and contractual terms, a pre-nup is analogous to an exit agreement. In any partnership agreement, define the terms of an exit strategy that allows you or your partner to walk away from the partnership, or that provides options to buy out the other party. This can be done very clearly and simply–and without imploding the operations of a successful business.

6. Expecting the friendship to outlast the breakup of the partnership: Again, from the perspective of a marriage, how many ex-couples do you know who are truly friends? Not many, I suspect. So don’t go into any partnership with a friend expecting to remain friends after a partnership breakup. It may sound great to do business with your friends, but remember, in the business world, it’s always business first and friendships second. Also remember, most times when the business ends, so does the friendship.

7. Having a 50/50 partnership: Every business, including partnerships, needs a boss. If you decide to go the partnership route, make it a 60/40 or 70/30 split. Then you and the business have a point person for accountability and overall operational control. Also, keep your buyout or exit strategy clear and in your favor–benefitting you and saving problems down the road.

As a final note, I leave you with an interesting solution to the partnership issue from one of the companies mentioned earlier: Baskin-Robbins. Hopefully, it provides additional perspective.

When Burton Baskin and Irvine Robbins first considered partnering in the ice cream business, Robbins’ father advised against it, thinking the compromises each man would make in getting the partnership to work would kill the product’s potential. So the men each worked on their own businesses for two years before combining Robbins’ five shops with Baskin’s three stores under one name decided by the flip of a coin. Only after successfully launching and running their own separate businesses did the subsequent partnership actually work.

That’s one partnership formula I do know of that proved effective. And if it worked for those two pioneers of retail success, it just may work for you.