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Business Planning and Performance Measurement (Business Plan Structure…
Business Planning and Performance Measurement
Business Planning
Important to provide a vision where the business is heading
Business Plan Structure
Title Page
Name of business, owners, contact details
Executive Summary
Summarizes key features the plan, quick snapshot of the idea
Business ideas and goals
Marketing
Operations
Finances
Background
Set issues driving the project
Mission statement
Company History
Business Goals
Marketing
Market Research, Analysis, plan
Operations and Production
Legal and Licensingg requirements
Management details
Organization al structure and staffing
professional advisors
Insurance and security
Business premises
Plant and equipment
Production processes
Information and communication technologies
Critical risks and contingencies plan
Financial Projections
Basic Assumptions and information
Financial Forecast
Analysis of financial forecasts
Implementation timetable
Schedule of activities needed to set up and run business
Appendices
Extra handful information
Time frame
Time period, can be short term or long term
Performance Measurement
Allows owners to see wether targets are being realized
Business Plan
A written document that explains and analyses an existing or proposed business venture
Provides direction or clarity of the goals and strategy
"Blueprint"
Main function
To communicate the future of a business
To convey credibility of a business
To act as an organizing tool
To assist in raising finance
Advantages
Holistic perspective on the business
Clear statement of direction and purpose for a film
Integrates operation, financial and marketing aspects
Encourages owners to fully research their business idea
helps evaluate performance
Disadvantages
May use inaccurate, biased or out dated information
Cannot eliminate uncertainty - not possible to accurately predict the future
not a guarantee of success
Balanced scorecard
Performance management tool
Top performing business had a clear vision and strategy in areas of...
Finance
Financial measures
How do we look to our shareholders?
Costumer
Customer satisfaction
How do our customers see us?
Internal processes
How well is the business running
Do we provide what our customers want?
Innovation and improvement
People, skills, training and leadership
How can we improve and create value?
Balance between financial and non financial measures
MANAGEMENT PROCESS
DEVELOPING GOALS TO SUPPORT ENTITYS MISSION - TRANSFORMING GOALS INTO STRATEGIES - MEASURING PERFORMANCE
Key Performance Indicators (KPI's)
Divisional Performance Evaluation
Unit managers are responsible for the performance of their unit, division or branch
Return on Investment
ROI = profit / investment
Very straight forward
Desired ROI depends on several company expectations and factors
Amount of profit relative to the amount of investment
Its important that the ROI is bigger than the required rate of return
Residual Income
Divisional profit leftover after deducting a charge for the divisional investment
Positive RI is considered to be performing satisfactory
Profit before tax - (required rate of return x divisional investment)
Organisational Structures
Segments or divisions
Functional
Brances based different company functions (Manufacturing, Marketing, Distribution, Administration)
Geographical
Based on geographic location (Australia, New Zealand)
Enterprise
Branches based on different categories of products and services offered
Functional and Geographical
Combines functional and geographical
Responsibility Centers
Segments or divisions are further classified as responsibility centers
Cost Center
Responsible of reducing costs
Revenue Center
Responsible of increasing sales
Profit Center
Responsible of reducing costs and increasing sales
Investment Center
Responsible of decreasing costs - increasing sales - and maximizing returns