Home-grown Small Business Management Basics Workshop Developed/ Composed by Dr. Kazi Abdur Rouf...

Home-grown Small Business Management Basics Workshop

Developed/ Composed by Dr. Kazi Abdur RoufAssociate Professor

Noble International University, USANoble Institution for Environmental Peace, (NIEP, Canada

June 2013

Topics to be covered in “How to Run a Home-grown Business Basic Workshop

The Home-grown entrepreneurs and the home-grown enterprise Characteristics of a Family Business and that of a Small Business Leading reasons home-grown businesses failed Different Forms of Business Organizations Marketing Production and Quality Control Buying Costing and Pricing Stock Management Record Keeping Business Plan How to expand and diversity How to increase productivity and profitability through increased or improved

efficiency Negotiating skills Financial Management Importing Goods.

Home –grown business definitionA home-based business is any business that is operated from home. This could include baking and selling pies from your home, running a baby-sitting service, selling products that you store and ship from your home.

Possible home- grown businesses items are: clothing, embroidery works, sewing/tailoring, carpet and bag making and selling, IT software and hardware, business, Webpage designing, sweets preparing and supplying, electronics and electrical products repairing, shoe repairing, flooring, painting, carpentry, making stones crafts, film making, drawing arts and selling arts/pictures, selling music CDs, jewelries, toys, editing, tutoring, dance and music coaching, tourist guide, formatting manuscripts, Yoga , fitness, perfume selling and catering services.

Possible business items: continue-2

Fresh juice making and selling, fruits and vegetables selling, preparing dairy products, homestead gardening, homestead nursery and selling young plants, seed preserving, books selling, taxi driving, transport sharing, driving training, leasing, real estate brokering, insurance brokering, printing, packaging, naturopath, homeopathy practice, grass cutting and riming, snow removing, handicraft making and supplying, perfume selling, making and supplying ceramic mini products/souvenirs, decoration pieces/souvenirs selling, personal health care service, nursing services, online consultancy, online teaching, architect designing, calling card selling, supplying/distributing mails, moving/transporting goods, carpentry, herbs production, processing and selling, plumbing, paralegal services, notary services, beauty products selling, beverage selling, interior decorating consultancy, beauty parlor, nailing and waxing, coin laundry, games kiosk, babysitting, psychic readers, and translating services etc.

Benefits of Home-grown businesses

Benefits

•Owners have independence feelings•Work on own schedule•Sole proprietorships or husband-wife partnerships,•No overhead•Owner the ability to file business income and expenses right along with his or her personal income taxes •No need retail space, office space, or warehouse to rent and •No need to hire employees.

Costs•Inexpensive to start •No special fees for registering home-based business,•If your business name contains your full name•You may not even need a business register.

Home-grown business failures reasons

1. Home-grown business usually have no business plan

2. Under Funded: Owner need to develop Income Statements and Cash Flow Statements to see financial situation of the business

3. Lack of Operating Goals and Objectives: revenue objectives, profit objectives, numbers of new customers, specific marketing and operational activities, etc.

4. Failure to Measure Goals and Objectives: It tell owner whether or not modifications and alternate strategies are required

5. Failure to Pay Attention to Cash Flow: Cash inflow, Cash outflow (inventory purchases and operating expenses (rent, heat, hydro, salaries, marketing expenditures, etc.).

6. Failure to Understand the Industry and the Target Customer. What are the opportunities and what are the threats?

7. Fails to understand their target customers how they buy, what they buy, when they buy, what motivates them to buy and where they buy.

Benefits of Home-grown businesses

Benefits

•Owners have independence feelings•Work on own schedule•Sole proprietorships or husband-wife partnerships,•No overhead•Owner the ability to file business income and expenses right along with his or her personal income taxes •No need retail space, office space, or warehouse to rent and •No need to hire employees.

Costs•Inexpensive to start •No special fees for registering home-based business,•If your business name contains your full name•You may not even need a business register.

Home-grown business failures reasons.

1. No Means of Differentiation –Failure to offer a different or better product / service (better quality, lower prices, broader selection, faster delivery, better location, extended warranty

2. Poor or no Marketing Programs

3. Underestimating the Competition: Do not underestimate the competitive reactions to the start of your business. Competition could address by lowering prices, offering package / bundle pricing, extending terms, introducing new products, improving product quality, extending warranties, increasing marketing activities, etc.

4. Lack of Attention to Accounts Receivables and Inventory: Some businesses owners do not pay attention to their receivables and their inventories.

5. Poor Management Skills: fairly respect people to reduce o customer dissatisfaction and a decline in your business.

Source: http://www.evancarmichael.com/Starting-A-Business/866/12-REASONS-WHY-NEW-BUSINESSES-FAIL.html

Better results tips

• First, you should research your chosen niche. Second, enjoy the work, be enthusiastic about your product or service.

• Third, working at home is both rewarding and challenging.• Fourthly, know when to ask for help and do it!

Fifthly, be willing to take advice.

An Entrepreneur and an EnterpriseAn entrepreneur is a creative, talented person who sees chances of making profit and has the ability to state a business that will make a profit.

Qualities of an entrepreneurIs an entrepreneur self-confident, independent, and always hopes to succeedIs he task-oriented, wants to achieve something in life, and will work hard in order to achieve it and Is he always motivated and determinedIs he a risk-taker, willing to take challenges and not afraid of failing.Is he creative and always thinking of something newIs the entrepreneur willing to learn from other people’s experience Is he believes in having work performed to certain standardsDoes he seeks information and knowledgeDoes he sets clear goals and is always concerned about the future Is not he satisfied with seeing things remaining stagnantIs he prepared to move and to go where there is the businessDoes he want to know results of efforts

Four categories of Entrepreneurs

1. Innovative Entrepreneurs2. Imitating Entrepreneurs are watches the results of other innovative entrepreneurs

and implements the successful innovations.3. Fabian Entrepreneurs, not willing to adopt and implement any change -lazy, shy,

and less risk takers.4. Done entrepreneurs: traditional and refuse to adopt any new changes.

Characterizes of an entrepreneur

1. An entrepreneur looks around for new business opportunities and goes for it.

2. Looks for unusual ways to get credit, equipment, lands, work space or assistance. So an entrepreneur is opportunity seeking

3. Feels responsible in competing a job for a customer on time, wants to satisfy the customers. So an entrepreneur is committed t the work

4. He never gives up, but try again and again to overcome problems, makes personal sacrifice to succeed in business. So an entrepreneur is persistent.

5. An entrepreneur takes moderate risk after assessing what is good and what is bad. So entrepreneur is a risk-taker

6. He strives to do things better, faster, and cheaper, always wants to improve. So an entrepreneur demands efficiency and quality

7. An entrepreneur sets clear long-term goals and sets specific short-term objectives for the business. So an entrepreneur is a goal-setter.

Characterizes of an entrepreneur continue-21. An entrepreneur seeks information on customers, suppliers, and competitors for use in the businesses,

consults experts for business and technical advice, and looks for places to learn more about business. So an entrepreneurs seeks information

2. An entrepreneurs develops and uses clear, step-by-step plans in order to reach her/his goals, keeps records on business activities, monitors the progress of the business and changes strategy if she/he sees a problem, looks for better and cheaper ways of doing things. So an entrepreneur plans and monitor systematically.

3. An entrepreneur has good contacts with other business people, organizations and agencies that can offer assistance and convince others to help or work for the business in a positive manner, uses business and personal contacts to reach what she/he wants. So entrepreneur is persuasive and networking.

4. An entrepreneur believes strongly in that she/he is capable of succeeding in business, believes that she/he is able to overcome difficulties and likes to be challenged. So an entrepreneur is self-confident.

Nature of Family Business

• Passing from one generation to another generation • Keep away outsiders and secret their activities. Weakness of a family business1. Conflict of interest: Most families value privacy. They don`t usually like to let the

public know. Intergeneration conflicts2. Capital shortages: Even outside sources of business capital often oppose outside

involvement.3. The hidden beliefs of a family business: Outsiders’ contribution to business growth

tends to be minimal, has difficulty in adjusting to changing circumstances in business policies and strategies. They to oppose change.

4. Nepotism: Bias towards family members instead merits. This places a family business at a disadvantage against.

5. Family jealousies cause of family businesses breaking up 6. Lack of networks among family business owners

Strength of a Family Business

1. Personal sacrifice: Family members provide free services, founders get less paid 2. Family reputation: A good family reputation is a good thing for a family business.

Family reputation attracts customers. 3. Loyalty: Members family more loyal to the family business 4. Run business without heavy overhead costs: Family businesses run from owners own

homes, no need rent and other utilities costs for the businesses. Dealing with the problems of a family business1. Minimize weakness of the businesses. Avoid nepotism. 2. Make use of outsiders’ skills: use outsiders practical experience and skills. Receive

free consultation and devoted services if any. 3. Prepare for the next generation

EnterpriseAn enterprise or a business can be defined as putting into practice an idea in such a manner that its products or service is then provided to benefit both the consumer and the owner. This is possible through the use of:1.Manpower (labour)2.Money (capital3.Materials (stock)4.Machines (equipment and tools5.Methods (processes of production and management; and 6.Market. These are commonly called “6Ms” of a business

Common features of small businesses

1. Finance: usually starts from personal or family savings 2. Management: The business owner has close personal contact with the all business

cycle stakeholders. In clothing sell businesses, owners should know existing on-fashions styles

3. Capital needed: Need to realize optimum business capital for the business. 4. Adaption to change: In food business owners need to understand eating food

behaviours of the customers. 5. Motivation: Owner usually highly motivated to his/her business. S/he works longer,

harder. 6. Competition: family business owners often compete with one another. 7. Products found nearly everywhere: So you might ready to make differences in your

selling products, prices and marketing strategies

General problems of Small businesses

1. Failing to get money from the banks: 2. Technological problems: 3. Management problems: 4. Lack of staff development: 5. Low skilled manpower 6. Lack of knowledge of Government policies and regulations 7. Lack of knowledge or ignorance of markets: 8. Don’t know real problems

How to start a small business

• Define and identify who your customers would be. Know their ages, gender, tests, behaviours, education, income bracket

Type of product and service customers want or expect from your business Delivery, quality, price, method of payment, etc. Major competitors? Are they better than you? Where are the customers located? Can you charge the price you need to earn a living? What factors other than price are important to the customers? Think basic resources (the 6M’s) that needed to start operating a business.

Finding a name for your business and make business card

• Print business card• Put business name, contact address• Web address if possible • Mentioned your business products,

• E-payment facilities learn IT

Finding a name for your business

Define your market Describe your marketing process and approaches to marketing Describe how to find out the product or service the customers want Describe the 4 p’s of marketing Describe how to get products to the customers Describe factors to consider when setting prices Identify good selling manners Describe a god retail shop lay-out.

Market and marketing process

A market means who are going to buy your product or service.

Marketing is a process by which individuals obtain what they need and want through producing the goods and exchanging products and money with others.

Market Research.Market research is the process of finding out information about:The products the customers want.Who are likely customers?Why should they buy the product?What will influence them to buy the product?When do the customers need the product?Where are the customers located?How much do you expect the customers to buy from you?How much are they willing to pay for the product?Who are the major competitors in terms of price, quality, and creativity?

How do you do a market research?

You can ask the consumers by word of mouths You can observe what people buy from your competitors You can ask suppliers what they are mainly selling in order to determine what

people are buying You can develop a questionnaire with relevant questions about what you need to

know. You can interview the consumers directly. The information desired depends on the marketing problems you want to solve. You can ask direct questions, indirect questions, and open ended questions. Open ended questions allow the consumers to answer as they wish.

Ask close ended questions: Yes or, no, agree or disagree, like or dislike.

Marketing factors

• Marketing factors are product, price, place and promote. • These 4ps are called marketing mix. • Promote means the customers know about your products.

Product Price Place Promotion

QualityDesignTypesStyleBrand namePackagingSizeServicesGuaranteesRejects

Selling price DiscountsCredit termsPayment period

Channels of distributionLocation of businessTransport

AdvertisingPersonal sellingPublicitySpecial offersPoint of saleTrade fairs etc.

Product and Price

The Product: Determine what is its quality, quantity, features, style, colour, brand name, etc.? PriceWhat are your total costs of producing the product?The prices of the competitorsWhat prices can your customers afford?What are the prices of substitute products?How much profit do you need to make from the sales?Volume of salesWhat are you going to do if your competitors are charging a price which is lower than your costs? What are the prices of substitute products?How much profit do you need to make from the sales?Volume of sales

Price:Continue-2

What are you going to do if your competitors are charging a price which is below your costs?

What would your competitors do if you charge a price lower than theirs? Are you going to use old pricing? Are you going to use the loss leader approach? How pricing could affect your selling price? No credit selling

Remember: If prices are too high: Volume of sales will be low, stocks will pile up. Customers will complain and leave you

Place and PromotionPlace: Business location is very important for customers coming to your business. Promotion: telling customers; who you are, what you do, where you are, what you have to sell and why customers should buy from you.

Advertising

The basic aim of advertising is to sell or to increase the sales. Identify what kind, what channels you use for advertising your business.

•Use your community radio, community newspapers for advertising your business

•Distribute your business flyers to community centers, religious centers and niche shops

•Attend community fairs, display fairs and street festivals

•Use shopping bags, calendars,

•Telephone directory and

•T-Shirt jersey.

•Associated with clubs, charity organizations, or donating to organizations.

•Attractive shop, well light, clean products .

Remember

• Accept returns without quarrel. Respect customers’ decisions. Listen carefully to the customers complains Customers solutions suggested are acceptable. Never argue with customers. Never force customers to buy your products. Never lose your temper and angry/blast at customers. Don’t interrupt customers when

they are talking Never ignore customers Never allow customers to buy on credit

Marketing PlanIdentify your business 4Ps. 4Ps are your the marketing plan

Components of marketing plan areThe marketing strategy: Who to sell to and how you contact them. The pricing policy: Find what effective /attractive price of each product Sales tactics: How sell the product? Use personal selling or mail orders selling, etc.?

Service and guarantee policies Advertising and Promotion: Participate in exhibitions, trade fairs, community fairs, street festivals, use posters, or local newspapers

DistributionHow are you going to distribute your products?Will you sell direct to the customers, or the wholesalers?

Attractive business place

How to make a retail layout attractiveAppearance of the outside business should be decent. Unpleasant image from the outside could negative images to customers.

Factors to consider in Visual MerchandisingDisplaying the goods in a clean and well organized shop is always more attractive for customersA big place with few products is not attractive for customersNo overcrowded products displayProper lightning over the products Posters can be used for messages, such as price

Find someone who is successful in business and make your product like her/his to will be successful

Promotion

Promotion means building a good image of your business within the communityPromotion adds to the cost of your product or serviceGood promotion tells everything about your product or serviceGood promotion methods are posters, home visits, radio, handbills, good signs, and an interesting look at your place of businessSmall business place that looks interesting may attract customersPromotion means making people aware of your products , influencing them to buySuccessful business has many loyal, long-term customersPromotion can help create a new need to potential customersPromotion campaigns should aim to attract only new customersPromotion involves two decisions: what is your message? How will you deliver the message?Your promotion message should tell customers the benefits they can expect from the product

Negotiations Skills• Ability to make sure that the person that the person

understands the benefit of both you will get• Use time effectively• Deal whole matter step by step, but not at one time. Don’t be

hurry or pushy• Ability to handle resistance• Clearly define objectives and goals of negotiation• Taker facts to back up your arguments• Be flexible• Control your emotion/temper• Understand personalities of the complainers• Consider both human sides arguments

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Promotion

Promotion means building a good image of your business within the communityPromotion adds to the cost of your product or serviceGood promotion tells everything about your product or serviceGood promotion methods are posters, home visits, radio, handbills, good signs, and an interesting look at your place of businessSmall business place that looks interesting may attract customersPromotion means making people aware of your products , influencing them to buySuccessful business has many loyal, long-term customersPromotion can help create a new need to potential customersPromotion campaigns should aim to attract only new customersPromotion involves two decisions: what is your message? How will you deliver the message?Your promotion message should tell customers the benefits they can expect from the product

Negotiations Skills• State what you are going to talk and what your goal is• Listen carefully•Understand and state the problem clearly• Setting out proposals for logical solutions • Summarize and conclude•Handle resistance in positive approach • Agee where possible•Disagree agreeably• Keep your temper

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Steps in Selling

Three steps are in selling: 1.Finding out customers’ needs2.Presenting your product and 3.Making the sale.

Buying

Good buying helps in meeting the needs of the customers. Buy products by thinking customers test, choice, and needs Why is good buying important in business?• Satisfy the needs of the customers: prices affordable to customersIncrease your Increase sales by constantly offering better and fresh products. How to do good buying •Find out the needs of your customers. Find out the types, sizes, quality, and quantity your customers want. At what price are you going to buy the goods? •Will your customers afford your selling price? How much should you buy? Find out new products on the market •Find out who are the suppliers.

Good buying continue-2

• Compare wholesalers prices: • Negotiate for better terms • Placing the order for buying the stuffs for your business • Receive the goods by checking the good quality stuffs• Complaining to the supplier if you find any problem after receiving the stuffs from

suppliers. Remember: Please keep your buying records by dates, quantity and prices.

Stock Management

Through stock management the business tries to keep the right amount of goods or raw materials in stock. Reason why you need stock records: If you do not keep any stock records, you will never know how much was used or brought and how much you need to order.

Tips on good stock management• You should keep simple stock recordsCheck your stocks regularly. You have to decide how often you need to check according to the size and type of your business Stocks must be well set so that they are easy to see and countStocks must be set out by type, model, and size.

Good buying continue-2

• Compare wholesalers prices: • Negotiate for better terms • Placing the order for buying the stuffs for your business • Receive the goods by checking the good quality stuffs• Complaining to the supplier if you find any problem after receiving the stuffs from

suppliers. Remember: Please keep your buying records by dates, quantity and prices.

Stock Management continue-2Grouping yours stocks according to selling: Group the stock according to the volume of sales as follows: Top sells, Average sells and Poor sells No need make stock for poor sells0% stocks could be for Top sells Remove all damage products from your stocks/ shelves Keep the shelves always full. Try to sell older stock first (first in first out) All goods/products should be within the reach of customers reach/buying range Remember having a clean shop with well displayed goods is another way of saying “welcome” to the customers.Too many stock means that your money is tied up unnecessary stock products .

Record Keepings

Simple records system could be used in home-grown business: Stock Card Bin Card.Stock CardName of Product: ………Cost Price: ………………Selling Price: ……………

Date Details In Out Balance

Bin Card

Protects goods and keep goods in good condition Goods must be protected from damage, loss or deterioration. The methods of

doing so for each type of product must be properly communicated to the family members

Goods with shelf must keep away from light, heat or whatever can cause deterioration

Goods must be stored where it is consistent with safety and convenient access. Storing space must be used economically. Goods must be arranged in such a manner that it is easy to find them. Spoiled stock should be removed

Leakages should be identified early and be remedied Shelves, floors and walls should be maintained so that they protect the materials.

Date Details In Out Balance

Costing and PricingTopics to be coveredIdentify two main categories of costs in businessCalculate direct costs of making a product or providing a serviceCalculate indirect costs of making a product or providing a serviceCalculate the total cost of production.

CostingWhat is costing: Find out of how much money was spent for a product or for providing a service. Why costing is important:Getting a reasonable profitIdentify selling price Give quotations which are realistic to your See reducing costs on profit if need improvements in running business better.Different types of CostsDirect costsIndirect costs Direct costs: Costs are for making the products or services. Two types of Costs: Material costs and Labour costs. Wages or salaries paid to the workers . The indirect costs: Use buildings, machines and equipment, their maintenance, repair and replacementFuel, electricity and waterSalaries paid to those workers who are not directly involved in making the productStationary, postage, telephone costs, etc.Interest on loanSelling costs for advertising, etc.

Identifying Direct and Indirect CostsPlease identify which following costs are direct or indirect costs (Please tick)Remember: If you do not know how to price your product, you will never make the money.

Costs Direct costs Indirect CostsWages of workers producing bricks

Salary of the secretary

Rent for the business

Costs of stationary

Costs of raw materials

Petrol for the car that carries raw materials

Wages for the person who cleans the workshop

Costs for water used in making bricks

Costs for water used in making bread

Costs for telephone used in the business

Pricing strategiesThe steps followed in pricing are:First step: Find out how much it costs to make the product or to provide the service. Second Step: Decide how much profit you want to make. What are the prices at which your competitors are selling?What prices can your customers afford to pay?What is the reasonable price that can attract customers? Mark-up = Selling price-Cost price. It can be expressed as a percentage of costs. Third step: You calculate the selling priceOther factors to consider when pricingAre you selling products if your competitors charging a price which is below your costs?What would your competitors do if you charge a price lower than theirs?Are you going to use old pricing? It means either $1.00 or $0.99.Are you going to use the loss leader approach?

Remember: The closer your product or service is matched to your customer’s needs, the higher the price you can charge for it. If prices are too high, sales will be low, stocks will pile up and customers will complain and leave you.

Small Business PlanTopics1.Define what a small business idea is 2.Describe the importance of business planning A business plan is a detailed action programme or road map outlining your market, the costs and profit you are going to make from your proposed business. It tells: What you intend to do.How you intend doing it.When you intend doing it and why you believe your idea is going to succeed. Your business plan drives to who your market is going to be and what will be your volume of sales. It forces you to see what your cots are going to be and how much you are going to make as your profit. It enables you to solve some problems that would have seen before starting the business It enables you to make decisions about your business.

Components of a Good Business Plan

Here are a few guidelines which you might find useful: Step-1: Front pageThe name of the businessThe type of BusinessThe names of the ownersThe address and telephone numbers of the owners of the businessThe date presented Step -2: IntroductionYou have to introduce your business to the reader of the business plan. Here you to write:A description of the products/services you intend selling or manufacturing.Why do you believe your business is going to succeed?Your short-term and long-term business objectives.These are very important aspect of your business plan.

Step-3: Description of activities to be undertakenAfter introducing your business you have to give a detailed description of your business. Here you provide the following information in detail: Type of business ownership you selectedAny legal requirements like licensing, permits and tax regulationA detailed outlined of your products or services. A technical outline containing details and capabilities of your machinery and equipmentA description of your location, feature, floor layout, how far you are from competitors, leasing and purchasing conditions etc. A detailed outline of your educational qualification, work experience and training courses attended.

Step-4: Marketing Plan A description of your specific target markets or customers (sex, age group income

groups, geographical areas). Who do you plan to sell to? What percentage of the market share do you intend capturing in the short-term

and long-term and why? How much do you think you are going to sell?Stage-1: Estimate your monthly salesStage-2: Determine your profit 40%Stage-3: Determine cost of goods to be soldStage-4: Determine average stock turnover rate

Step-4: Marketing Plan continue-2• Stage5: To determine the average stock needed per month, you divide the cost of

goods sold (stage 3) by (stage 2) the stock turnover (stage-4). • Stage-6: Find out the amount of stock in the business (stock on hand)• Stage-7: Determine by what amount is the existing stock too much or little. You do

this by subtracting figure (stage 6) from figure (stage 5)• Stage-8: To find out amount of goods to be bought you add (stage7) to the cost of

goods to be sold (stage3). • In stage 7, you had found out that the stock on hand (figure), you were going to

subtract figure (stage-7) from figure (stage-3).

Marketing plan continue-3

• You need to describe what your competitors’ can do better than you and what their weaknesses are.

• What is it that you can do better than they? • What is your own business weaknesses compared to your competitors? • How are you going to overcome the strengths of your competitors?• How you are going to make the consumers know about the existence of your

business products or services you provide. • How are you going to set up your prices? • Will your prices be lower or higher than your competitors? • Why? How are you going to sell the products or services to the consumers?

Step-5: Profit

Identify your business how business could generate a reasonable profit. You have to find out the flow of money in and out in your business. A detailed income statement or profit and loss account for a period of 12 months Prepare a detailed cash flow statement for a period of 12 months. After drawing your financial plan, you try to find out what would happen to your profit if your sales increased or decreased.

Financial ManagementThe cash flow statement: A cash flow statement is a plan which shows how you think cash will flow into the business (cash receipts) and cash out of the business (cash payments, month by month during a future period) A cash flow statement helps you to find out what your future cash situation will be like. How to draw a cash flow statement Find out how much money is present at the beginning of the month

Money present at the beginning

Jan. Feb. Mar. Apr.

May June July Aug. Sept. Oct. Nov. Dec.

Cash Flow continue-2Find out how much to expect to sell in cash

Cash sales Jan. Feb. Mar. Apr.


Cash flow statement continue-3

Find out how much you will sell on credit

Cash from credit sales if any

Jan. Feb. Mar. Apr.


Cash flow-4

How much money do you expect from other sources?

Other money in

Jan. Feb. Mar. Apr.


Cash flow-5

How much are you going to buy on cash?

Cash purchase

Jan Feb. Mar. Apr.

May June July Aug. Sept. Oct.

Nov.

Dec.

Cash flow-6Credit Purchase

Cash paid for credit purchase

Jan. Feb. Mar. Apr.


Cash flow-7Finding out how much you will pay as wages

Wages Jan. Feb. Mar. Apr.


Cash flow-8

How much you will get as your own salary per month?

Owner’s salary

Jan. Feb. Mar. Apr.


Cash flow-9

Loan repayment and interest

Loan repayment

Jan. Feb Mar. Apr.


Loan interest

Cash flow-10

Rent

Rent Jan. Feb. Mar. Apr.


Cash Flow-11

Water and electricity

Water and Electricity

Jan.

Feb. Mar. Apr.

May June July Aug. Sept. Oct.

Nov.

Dec.

Cash flow-12

Transport

Transport Jan. Feb. Mar. Apr.


Cash Flow-13

Others

Others Jan. Feb. Mar. Apr.


Cash flow-14

Planned investments

Planned investments

Jan. Feb. Mar. Apr.


Cash Flow StatementDescriptions Jan Feb. Mar Apr

May Jun July Aug. Sept. Oct. Nov. Dec.

Cash present in the existing business

Receipts (money in)

Cash sales Cash received from credit sales

Other money in Money in this month

Payments (money out)

Cash purchase Cash paid for credit purchase

Wages Owners salary Loan repayment interest Rent Water and electricity

Transport Others Planned investments

Money out this month

Money present this month

‘Money in’ and ‘Money Out’ Statement

After drawing the cash flow statement you should add up all the sources of money ‘In’ for each month. Next you add up all the payments for January and you get …. You then enter this figure in the row called “Money out this month”.

Then subtract ‘Money Out’ from ‘Money In’ as follows:

Money in this MonthLess ‘Money out’ this month

Will give Money present at the end of month.

Loss and Profit StatementThe profit and loss statement is drawn in order to find out income or loss the business made over a given period of time. It enables you:To know if your business is making profit or not, To know whether you should go into other businesses, expand or not

Descriptions Money in Money out

(1)Sales (2)Direct Costs Purchase Gross Profit (3) Indirect Cost Wages Owners salary transport rent Water and electricity Interest on loan Others Net profit/loss

Organization and Evaluation Step-6: OrganizationStep-7: Evaluation of your potential successThis is the chance you have to sell your idea or plan and yourself to others. Sources of informationSuppliers of materials and equipmentCustomersLibrariesChambers of Commerce Small Business Development Offices of the Chambers and other organizationsNewspapers, magazines, booksCompetitionsOwn experience

Summary: Guide to Draw the Business Plan-1Front pageName of the business (Trade name)What type of business is it? Is it manufacturing, retail, and service, and what type of product or service are you going to provideWho are the owners of the business? Provide full namesWhat is the postal code and physical address?What is the contact telephone number?Date when the plan was written

Summary: Guide to Draw the Business Plan continue-2

IntroductionIs your business a sole proprietor, company, etc.?Do you have license or permit to trade? What is the license number? Attach a copy of the license)Briefly describe the product or service you intend selling or manufacturing?Why do you intend to sell or manufacturing this product or services?Where are you going to or where is the business located?What do you intended to achieve through this business? And how are you going to do it?

Summary: Guide to Draw the Business Plan continue -3Description of activities to be undertakenGive a detailed description of products you are selling or going to sellWhere are you going to buy the products, raw materials, equipment, etc.?How will you transport them?What types of skills are needed in the business?What type of skills do you have at the moment?Which are the skills you still need in the business?

Summary: Guide to Draw the Business Plan continue-4 Marketing PlanDescribe in detail that your customers are going to be or how many are theyWhere are they located?Why will you or are you selling to them?Who are you competitors (provide names)?What is it that they do better than you?What do you do better than they?What are you going to do so that your business can do better than your competitors? What are you going to do in-order to attract customers and to make people know that your business exists? How much do you think you are going to sell to your customers per month?How are you going to setup the prices of your products/ will you start with prices lower than your competitors? Will you sell at the price of your competitors?


Financial PlanAre you going to make some investment during the period of the plan? If yes, list them down and their costs.Will you build or rent a building? At what cost?How many people are you or will you employ? What are their salaries?What is your own monthly salary?How much will you pay for the other running costs of the business?Draw the cash flow statement of the business.Draw the estimated profit and loss statement of the business.Determine your financial net worthy (How much you do have).

Summary: Guide to Draw the Business Plan continue-6OrganizationHow many people are you going to employ? When are you going to employ them?What will each one of them do in the business?Who will be responsible for managing the business? And why?Who will keep the records of the business? And why? Do you have any documents to strengthen the credibility of your business plan? In order to strengthen the credibility of your business plan, it would be advisable to attach some of the following types of supporting documents:Curriculum vitaeQuotesFloor layouts, plans or diagramLease agreementsBond documentsCredit references, etc.


Evaluation of the business planHow much profit or loss are you going to make? Is this the situation acceptable to you?What can be done to make this situation? Will your net worth enable you get a loan from the bank or financial institutions/credit unions if you need one?Will you providing or are you needed product or services?How is the business going to help the local community?What are the risks or problems you see with the business?How are you going to overcome them?Do you think the business will succeed and why?

Annexure: Cooking Entrepreneurs- Want to Open a Restaurant and Make Sure It Succeeds

One excellent opportunity for stay at home moms is to start a home business through their kitchen. Restaurants fail more often than many other businesses for three main reasons: 1.There are so many of them 2.People think that it is easy

3.A successful restaurant relies upon: position, welcoming atmosphere, good chefs and waiting staff and lastly good value.

Annexure: Cooking Entrepreneurs- Want to Open a Restaurant and Make Sure It Succeeds -2

Winning recipe for a successful restaurant is: 1. Find a niche menu that no one else has closes by and make sure that people want to eat that kind of food. Find out what kind of food is not being served nearby – or a way of selling it. Domino’s pizza delivery became famous – and very rich – because they started delivering pizza to homes before anyone else thought of it – remember “Get the door”.2. Site the restaurant where it can be easily found, with good parking and plenty of passing trade.3. Ensure the restaurant is welcoming and your menu easily read.4. Make sure that you have good chefs and welcoming waiting staff and efficient kitchen workers.5. Keep the place clean.6. Control your stock and your costs, and make sure that you price for profit.7. Ensure that your menu is enticing/attractive, manageable and suitable for your customers.8. Encourage your customers to return.9. Market your restaurant, especially before holidays, mother’s day, valentines etc. and have an efficient booking system.10. Enjoy your restaurant as much as your customers and staff do.

Annexure: Cooking Entrepreneurs- Want to Open a Restaurant and Make Sure It Succeeds -3

Winning recipe for a successful restaurant is: 5. Keep the place clean.6. Control your stock and your costs, and make sure that you price for profit.7. Ensure that your menu is enticing/attractive, manageable and suitable for your customers.8. Encourage your customers to return.9. Market your restaurant, especially before holidays, mother’s day, valentines etc. and have an efficient booking system.10. Enjoy your restaurant as much as your customers and staff do.

Conclusion

Thank youAny Questions

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Home-grown Small Business Management Basics Workshop Developed/ Composed by Dr. Kazi Abdur Rouf...

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