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Writing a Business Plan

5/30/2012

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By Kristen Winterton
         
While writing a business plan is commonly referred to in the entrepreneurial world, there is often little clarity in what is expected in the business plan, and what elements are usually found within the pages of a business plan.  To help with this, I have compiled a general outline of a business plan, with the details of what to include.  The business plan includes: an executive summary, a company description, an industry analysis, a marketing plan, and a financial plan.

A business plan begins with an executive summary.  This summary includes a brief overview of who the stakeholders in the business plan are, the nature of the product or service, how the product will be sold, expected financial requirements, and growth expectations for the company.  This is meant to be relatively short, and will follow the outline of the rest of the business plan.  If there were only one page through which you could convey your business idea, this would be it.  The rest of the business plan is an extension of the executive summary.

This is generally followed by a general company description, through which you can thoroughly describe your product or service, who you would like to sell to, your “target market”, organizational type and structure, and the general administration items of your business.

The next section will be the market research portion of the business plan, and is called the industry analysis.  Throughout this section, the business idea is constantly reevaluated for viability.  The section will have a SWOT analysis which details out the Strengths, Weaknesses, Opportunities, and Threats of this business idea. 

Strengths are the established internal factors that will help the business succeed and can include such things as previous experience in the field or connections to necessary resources, among other things.  Weaknesses are the internal factors that could cause a business to fail, and could include such things as financial limitations, lack of experiences or knowledge, other resource restraints.

The other two factors are external factors, meaning that they have to do with outside influences; it allows you to think beyond your current status to what could happen in the future.  Opportunities are the positive movements that could be made and could include expectations of advancements in technology, decreased governmental regulations, or similar events that a company could take as an opportunity.  Threats are the opposite factor, and could include increased regulations, increased competition in the industry, or consumer substitutions for your product in favor of another product, among others.

The marketing plan is developed to state how a product will be introduced to the marketplace.  It can be brought to consumers in many ways from social media, to word-of-mouth, to networking, to televised or broadcasted media, or through printed banners, billboards, signs, or fliers, depending upon the unique needs of a business.  The marketing plan is developed to outline who will be contacted, the medium through which to contact, how many people will be contacted, and the frequency of contacting.

The final step in the business plan is the financial plan.  This section states how the business will be funded, the necessary requirements for funding, and includes preliminary, or pro forma, financials which are the anticipated results of the business.  It includes income statements, balance sheets, and statements of cash flow.  These financials will include how many units will be sold, anticipated costs and liabilities, anticipated growth based on the availability of customers, and the analysis of the business idea from a purely financial perspective which will allow an investor to see how the business has the capacity to perform.  If necessary, a section for appendices may be included at the end, which contains tables, graphs, and charts and which can be referenced in any of the previous sections.

When developed in this manner, a business plan can be coherently and completely compiled, allowing a company to see potential pitfalls and allowing them to proactively develop a viable business.  Many failures can be avoided in businesses when the business plans are taken through these various steps, as it takes a multitude of concerns into account.  When these mistakes are avoided, the odds of succeeding in business ventures invariably increase.
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Effect International- Building Schools in India

5/15/2012

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By Kristen Winterton

Perhaps one of the most difficult aspects of micro-finance is in finding funding.  Many different avenues exist for funding, through venture capital funding, angel investors, friends and family, or by using your networks.  Correct utilization of networking can be an excellent source of finding funding.

One example of utilizing a network is Effect International.  The students who started Effect International are alumni of Utah State University, and are utilizing the friendships and connections made there to make a difference in the world as a whole.  Over the course of the last year, the Huntsman Scholars in the School of Business at Utah State University have worked with Effect International to raise money to build a school in India. 

This school will be located in the village of Kuan, Madhya Pradesh, India, and is the second school to be built by Effect International.  The first school is established and is already serving 120 students, with plans to expand.  It seems that there is always more need for education, and the individuals working with Effect International are trying to meet the growing needs.

The location of the school in Kuan is very strategic, as it is a central location for several communities, and will allow students from many villages to attend school.  These children currently have very little opportunity for schooling, as the system is very corrupt, and teachers don’t even bother showing up to teach.  Effect International works with the communities to build the school, hire teachers, and oversee the operations to ensure that children are educated properly.

In order for Effect International to have the funds to build and operate the schools, they reached out to their established network at Utah State University.  One of the co-founders of Effect International is an alumnus of the Huntsman Scholars Program, so current students in the program reached out to help.  They set up craft fairs, a princess party, bake sales, developed partnerships with restaurants to receive a portion of proceeds, and created small businesses to raise the money necessary to build the school.

The craft fair was an expo of several businesses, many with international ties, who set up booths in a large center, allowing community members to have a central location to see what the community had to offer.  These businesses provided everything from homemade jewelry to belt buckles made from caribao (an animal native to the Philippines) to notebooks with paintings, photographs, and drawings made by novice artists from around the world.

The princess party was an event held for young girls which provided an opportunity for them to dress up as a princess and go to get their hair and nails done, story time, dancing, and encouragement for them to fulfill their dreams.  The group had the girls write down their dreams on a slip of paper, and the group then developed a dream tree, as seen in the picture, with all of the dreams hung on the limbs of the trees.  The community responded positively, and the event was a great success.

Many small businesses were created, such as a window-washing business, bake sales, and a partnership with local restaurants which allowed the students to advertise attendance at a restaurant in favor of the group raising money for Effect International as a portion of profits.

By reaching out to their network, thousands of dollars of funding was raised for Effect International.  Likewise, think of the connections that you may have as you try to find funding.  Consider what resources you may have at your disposal which can help you achieve your purpose. CREED is currently raising capital to fund micro enterprises loans in Belize. Click on one of the links to donate.

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Small Enterprise Education and Development in Peru

2/27/2012

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Me, back row 3rd from left, with friends in Peru and our team mates.
What is a major flaw in the creation of business plans?  When Kristen Winterton visited Peru during the summer of 2010 to evaluate business plans for small start-up businesses and determine feasibility of these businesses, the biggest problem she saw was the lack of time spent on basic market research when developing a business plan.  A business idea may have great potential, but there is much more to the implementation of a successful business than just a great idea.

A thorough look at competitors, including indirect competitors, and the potential for growth for the company are critical to the successful implementation of a business plan.  For example, Kristen and her colleagues evaluated the business plan for a small copy center which was to be located near one of the several universities in the area.  In theory, this was an excellent idea, since college students spend a lot of money on copies; however, in actuality, a walk around the perimeter of one college campus yielded over fifty copy centers.  Additionally, when they spoke with the owners of the copy centers, they found that there were major concerns about how saturated the market was.  The copy centers had a hard time making a profit because of the steep competition they faced which forced them to cut their profit margin.  Many could not even afford to hire employees, and had to work seven days a week on their own to break even, or even take a second job to make ends meet.

Had the companies looked at the market before entering, they would have known many of the possible threats to their business.  An additional benefit of market research is the increased visibility that it gives in demand predictions, which aids in the development of more accurate pro forma income statements.  With greater information, companies can respond more effectively and become more profitable.

Market research can be as simple as going to the location to see what products or services are already offered, doing a preliminary search on the Internet to see what competitors already exist and how they run their companies, talking with current business owners to hear about the challenges they face, or as difficult as in-depth market surveys, focus groups, and statistical analysis.  With the ever-increasing and widespread availability of information there is little excuse to not do market research.

The information gathered in this research process can be gained while drafting the business plan, before the start of the company, and can drastically reduce the probability of failed business ventures and the associated costs of failure.  All of these benefits ultimately translate to better understanding about the competitive environment of the businesses, and how the business can be better positioned in its market.

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The Newest Chicken Coop/Business in Uganda

10/11/2010

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Our team with the children. The foreground is filled with the potato plants that they have planted.
Wendell Brock - Monday, October 11, 2010

We first met Paul and Rose Bogere our second week in Uganda. I friend of our who had worked in Uganda in the past told us about the St Paul and Rose orphanage and the work Paul and Rose were doing to provide 27 young orphans with a loving home environment, a quality education, and practical skills. 

When we arrived at the orphanage the children greeted with an overwhelming abundance of love and gratitude just for us being there. They showed us with pride around their small home with only two small bedrooms for all of the children to share. Each room contained a couple of bunk beds where the children would sleep three or four to a bed.

From the very beginning our team knew that we wanted to do something to help these orphans and Paul and Rose who has dedicated their lives to creating a stable home life for each of them. The biggest challenge they faced was earning the money to send each of the children to school, an expense that adds up to $50 USD per semester per child or $1350 a semester for all of them. Most the money they are able to bring in comes from the acres of crops that the children themselves are responsible for nurturing and harvesting. Unfortunately they are so far removed from any sort of economic center that there really is no market for their goods. What they are able to manage to sell doesn't even begin to cover the costs of the children's school fees. 

We were drawn to Rose and Paul’s because Paul has truly taken it upon himself to make these orphans into successful members of society. Beyond sending as many of the children as possible to school (7 have had to stay home this semester because as much as he tried Paul just couldn't pull the school fees together) Paul provides them with the practical skills that will be extremely useful in the future.

One problem that many of the rising generation face in Uganda is a lack of practical skills. They all want to grow up and have white collar jobs working in an office in front of a computer. Unfortunately this isn't feasible, there just aren't enough jobs. The result is people like our taxi driver who has a doctorate but can't find a job. Turns out education doesn't solve everything unless you have a practical way to apply it.

Agriculture is something that they will never get enough of in Uganda though. Unfortunately most adolescents consider such skills below themselves. Not Paul's children though, they have been trained in the latest practices and have the opportunity to apply them on a daily basis. Team this with some basic business skills and discipline (all of which are also provided at the orphanage) and the odds are definitely in these children's favor.

Beyond the skills that these children learn from a young age they are also provided with an abundance of love and nurturing. This is why we truly felt that the St Paul and Rose orphanage was worthy of our investment of time and money.

During our second visit to St Paul’s, Paul asked us to help him build a chicken coop so that they could sell the eggs to the endless market found in the area. "I don't want money for school fees" he explained to us, "I want a way so I can EARN the school fees." Paul understands the fact the sponsors disappear and cannot be counted on in the long run. If he could find someone to pay his children's school fees this semester there is no guarantee that he will be able to find someone to pay them next semester. He would much rather have an income generating project that would next to guarantee that all of his children would be able to attend school. Consequently his orphans would also be learning how to care for and rear the chickens which is another valuable practical skill.

Beyond his goal to be able to pay all his children's school fees Paul and Rose would also like to be able to expand their orphanage so that he can provide a home for more children. "We have children show up on our doorstep every week asking for a place to live and the best we can do is give them some food before turning them away." Paul and Rose want so badly to be able to help these children but there just aren't enough resources to go around.

Unfortunately as we ran through Paul's numbers for the chicken coop project we realized that such a project was financially out of the reach of our team’s funds for the summer. It broke our hearts to have to tell him this as he looked to us with such hope for his children's future.  "What if we were to cut the project in half?" he asked. "We could start smaller and then with time we could reinvest the profits into the project and it would grow." Our hearts were torn; even still it would require a substantial amount of money.

All hope was not lost though, we were determined to do everything in our power to help Paul and Rose along with their orphans achieve their dreams of a better future. It was then that our team came in contact with CREED or The Center of Resources for Economic Education and Development. Because of the generosity of CREED we were able to return to Rose and Paul’s and announce to them that we would be able to build their chicken coop after all. The children literally jumped for joy as we told them the news and Paul promised that whatever they were given they would help it to grow providing them with more and more independence.  

The rest of the team’s summer was spent planning and building the chicken coop providing a meaningful experience for all involved. Now our team is back in America but the legacy made possible by CREED will not soon be forgotten. I recently received the following E-mail from Paul:

Hi Carrie!!
    Thank you so much for the donation your team and donors made to the St.Paul and Rose orphanage. We really appreciate so much, and we a sure you that we shall be able to look after these chicks, we shall take care of the house and we shall be updating to you everything concerning with this chicken coop.
We finished the construction, we paid for the chicks, and we paid for the feeds and paid for the Vaccines, only waiting for 28 October to collect the chicks from the Ugachick office in Kampala.
 So thank you very much God bless you all.


PAUL.
I personally would like to thank CREED for their generous donation and for making all of this possible. You not only made an impact on the lives of Rose and Paul and their 27 children but the 26 college students who had the opportunity to work on this project over the summer. It was an experience that will not soon be forgotten. Words cannot express the impact you have made on each of our lives.  

Photos:
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Showing off the window of the Chicken Coop.
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Paul and Rose and the children of their orphanage in front of their new Chicken Coop.
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One Chicken Coop Will Send an Orphanage to School

7/6/2010

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Wendell Brock - Tuesday, July 06, 2010AIDS has taken many lives, and  to the children in a small orphanage in Uganda it has turned their lives upside down as they learn to cope without their  family, mothers, fathers, brothers, and sisters.

The St. Paul and Rose Orphanage is currently taking care of 27 children.  Paul, the owner of the orphanage was only able to pay for 20 of the children which left 7 of them at home for a semester. Schooling in Uganda is expensive for the people, costing $50 (in U.S. currency) for one semester, and $1350 for all of the children in the orphanage to attend for only one semester.

Paul doesn’t want people to donate money so all of the children may attend school, because once one semester is over who is going to be able to pay for the next? Even if he receives more donations for many semesters to come, those donations will eventually come to a close. 

Children with the dental kits we handed out after showing them how to properly care for their teeth.

Instead, he would rather develop a micro-business that he and the children can work together to create a steady income for the children’s school fund every semester.  Running a micro-business will provide the children with a great economic education, which will strengthen their abilities to care for their own families later in life.

He has asked a team of young adults that have come to Uganda to help out with the AIDS victims to assist him and his children in building a chicken coup so the children will have an opportunity to sell the eggs at a market nearby. The team of young adults would absolutely love to help this orphanage out, but they don’t have enough funds to build it. But Paul didn’t give up. He asked the team to try to cut the project in half, “only do half as big of a coup”, but the team wouldn’t even be able to afford that small of a coup. It broke their hearts to have to turn down this sweet man’s request to help better the lives of orphans in Uganda, especially because with having a chicken coup these children will learn a valuable and practical skill in Uganda by caring, and taking care of chickens.

But this chicken coup is only the beginning of Paul and Roses dreams and aspirations for their humble orphanage.  "We have children show up on our doorstep every week asking for a place to live and the best we can do is give them some food before turning them away." Paul and Rose say. They want to be able to expand their orphanage so they are able to house more orphans.

Even though a chicken coup seems like a small little project, it will turn out to be what changes many children’s lives. Through this many children will be able to go through school, and eventually find work to take care of, and support their future families. Eventually Paul and Rose will be able to expand their orphanage and change many other children’s lives as well. But there is no way that any of this will be able to happen without donations to start on one chicken coup.  

The chicken coop will cost $1,500 USD to build it large enough and strong enough to withstand the elements and wild animals.  That will also supply them with a small flock of chickens to start out with as well.  All extra funds will be used for school kits we will send to the orphanage.

Learn More At: http://carrieinuganda.blogspot.com/2010/06/childs-prayer.html

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Micro Finance, Macro Changes

2/12/2010

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Wendell Brock - Friday, February 12, 2010

When Mohammed Yunus and Grameen Bank won a Nobel Peace Prize in 2006, micro lending became a household term. Yunus had been giving micro credit for decades, though, making his first loan to Bangladeshi basket weavers in 1974.

The United Nations beat the Nobel Prize committee to the issue by a year, designating 2005 the InternationalYear of Microcredit.

But for any global issue, one year is hardly enough.

The Year of Microcredit’s website says, “The Year will be successful if 2005 is considered one pivotal chapter in the promotion and development of inclusive financial sectors. Considerable follow-up at all levels after the close of the Year will help sustain the momentum achieved by the Year observance.”

While we must have reasonable expectations, the momentum’s still here in 2010. A quick Google search finds that, just this year, micro credit companies have popped up in Kyrgyzstan, the Philippines, and Indonesia. As well as in the United States, there are several micro finance companies - many are operated as non-profits, likeAccion Texas and the PLAN Fund.

Micro Lending Primer
While terms vary, there are a few guidelines that most lenders follow
  • Loans are based on trust rather than collateral
  • Loans are paid back in very frequent installments
  • Borrowers must join a borrowers’ group for support, advice, and accountability
  • Micro lending helps people help themselves.
First-responder Lending
A current Newsweek article sheds light on Fonkoze, Haiti’s largest micro financier. Not only does it assist people in ordinary times, but it is also making disaster-specific loans following the January 12 earthquake.

While Haiti’s traditional banks were (and still are) in ruins, Fonkoze began lending money two weeks after the earthquake.

Because micro finance units know the specific needs of their customers—this is how they do business, with small loans to individuals—they’re better equipped to handle disasters that hit their customers. The Newsweek article asks, “Could microcredit be the new Red Cross?” While it can’t completely replace disaster aid, it can play a part.

“Chemen Lavi Miyo”
Fonkoze’s primary program—which means “the Road to a Better Life”—is micro lending in non-disaster times. A video on their website tells the stories of several women who’ve received micro loans.

A mother of four children says that, before Fonkoze’s loan, “I didn’t even have a chicken. Now I have 18 ducks and chickens and eight goats. I have standing in this community. … For the first time in my life, I have the resources and knowledge to grow food and earn money.”

Micro financing has done much to help the poor improve their lives, but much more still needs to be done.

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