Your parents started a small business whilst you were still at school. During the start-up years, you and your siblings worked over weekends and holidays in the business. During these times, your parents taught you valuable business skills that would eventually see you finishing a Bachelor of Commerce degree before returning to the business. You are the last of the three siblings to return to the business and thus have the most junior role within the business. The small business that your parents established is called Family DIY. Family DIY is a hardware store that is 17 years old and has a good reputation within the local community with the supply of building materials for major construction projects as well as supporting the local handyman with equipment and services to attempt small DIY projects at home. As the last member of the family to join Family DIY and the only one with a Bachelor of Commerce degree, you are thrown into the deep-end at the annual strategic meeting. The strategic committee decides that the business must establish itself as a franchise and open more stores across the province with a focus on developing and increasing small family-owned business. business report to table at the Strategic Evaluation Committee meeting in three weeks. You must provide feedback on how the following aspects would apply to the business franchise model.

f) The report requires of you to provide a justification to the new franchise owners why it is important that they must write up a business plan.

doc. zich prob to solve the 6-1 An Overview of the Business Plan lan. It giva the start-up what was anticipated and what actually occurred should be thoroughly analysed and escription used as a basis of future planning. It is only through planning and analysis that we can become better at what we do. there. John three key Attracting Finance Finally, and perhaps most importantly, a business plan can be employed as a tool to attract the capital required for the business to grow. Here, the entrepreneur might need to think through a number of options. Who would be interested in investing in my business? What would they want in return? Do they want equity-that is, a share in ng my business? How much do they want? How much am I prepared to give away? Right now, how much is my business actually worth-and how much would it be worth if I acquired the capital I need? also a good Those approached to provide finance would need to consider whether they wish to sell enough become shareholders, creditors, or investors. Each of these options will have different Chapter 1 expectations. Those who might be interested in financing your business could include usiness does funding sources in government, such as the Small Enterprise Finance Agency SEFA. inly will not SEFA was established in 2012 as a result of the merger of South African Micro Apex Fund, Khula Enterprise Finance Led and the small business activities of the Industrial Devel opment Corporation (IDC). Alternatively, you might consider a private funding agency such as Business Partners. Based in South Africa, Business Partners (www.businesspart- ners.co.za) provides risk capital to small and medium enterprises (SMEs) in South Africa and certain African countries. It offers a suite of unique financing solutions aimed at pro- ernal stake. viding maximum flexibility for entrepreneurs, and also offers excellent tips and advice to Let's look at those writing up business plans. Entrepreneur magazine (www.entrepreneurmag.co.za) also offers advice and specialised business-plan templates for bakers, farmers, and so on. Additionally, funding is also available from local commercial banks. These include Absa Bank (www.absa.co.za), First National Bank (www.fnb.co.za), Nedbank (www.nedbank. co.za) and Standard Bank (www.standardbank.co.za). art-up. This In conclusion, a business plan, if done well, is a tool to be used by business insiders for Each object direction and to aid in the development of relationships with outsiders who could help nd map out the business to achieve its goals. Exhibit 6.1 provides an overview of those who might urable basis have an interest in a business plan for a proposed venture. we do what the outcome Exhibit 6.1 Users of Business Plans How many Outsiders Insiders ke? Was the usiness, Ifal ve as a mar e out future Potential customers . Lenders Entrepreneur and of success management team and ways a ach faceid . Suppliers . Investors ich alter . Employees Vide a let Family and Private Venture friends investors capitalists pancies on cann to solve the Chapter 6 The Business P that no single plan will work in all sit ument that outlines the basic concept underlying lem the business will solve-and describes how you will execute problem. A business plan can also be thought of as an entrepreneur's game plan. It gives 146 shape to the dreams and hopes that have motivated the entrepreneur to take the start-up nd how you intend to get there. John plunge. The plan should lay out your basic idea for the venture and include descriptions of where you are now, where you want to go, and he Mullins, the author of The New Business Road Test, says that the following three key elements should be in every business plan:' . A logical statement of a problem and its solution . A significant amount of cold, hard evidence Candour about the risks, gaps and assumptions that might be proved wrong. Writing a business plan is an opportunity to assess whether a good idea is also a good investment opportunity. It needs to provide evidence that your business can sell enough products or services to make a satisfactory profit. Also, as emphasised in Chapter 1, your personal aspirations and motivations deserve careful thought. If the business does enjoy the journey. not align with your personal goals, you are not likely to succeed, and you certainly will not 6-1A REASONS FOR DRAWING UP A BUSINESS PLAN There are three important reasons for drafting a business plan: (1) for internal stake- each of these. holders, (2) as a basis of reducing risk of failure, and (3) to attract finance. Let's look at Internal Stakeholders A business plan should help to sharpen the focus of those involved in the start-up. This should be done in a systematic way around carefully thought-out objectives. Each object tive is collectively agreed upon in joint discussions designed to plan for and map out the future of the business. In this way, the business plan can provide a measurable basis of assessing progress. Some of the questions to be asked could include: Did we do what we planned to do? Who did it? By when? Was it done on time, or late? Was the outcome a success or a failure? Can these evaluations be assessed and quantified? How many widgets did we make? What was the total cost? How much profit did we make? Was the profit bigger than last time? If so, by how much? The plan can also be designed as a document designed to help the sale of a business. If all the correct information is included in the document, the business plan can serve as a mar- keting instrument aimed to attract potential buyers. So, the plan should scope out future scenarios and provide guidance about them, and should analyse the likelihood of success. Reducing Failure Thinking your plan through carefully will help you to identify areas of risk and ways of avoiding these areas where possible. An entrepreneur must think though each facet of the business. Where some level of risk exists, he or she should consider which alterna- an tives will increase the likelihood of success. The business plan can thus provide a tem- that out- plate for comparing actual with forecasted results. Where significant discrepancies are c concept identified, it is important to consider why these have arisen and how this gap can be usiness and closed in future. In this sense, the business plan should provide a template against which that con- progress can be measured. Both failure and success should be comparably measured alised. against what was expected. Importantly, reasons for significant differences between