Compre

Basic Subjects
1. Before Jolibee bought Chowking, Grgeenwich and Delifrance they had problems projecting and
marketing themselves in the highly competitive food business sector. Discuss how Tony Tan
Caktiong of Jolibee positioned these companies to their customers, competitors, partners and
suppliers to transform them into highly competitive food outlets.(40%)
2. You are planning to start a business. Employing your skills at SWOT analysis-scanning the
environment for strengths, weaknesses, opportunities and other threats-discuss what business
you will eventually decide to put up and why. (40%)
3. Prepare strategic plan for a roasted chicken business that will give your outlet greater
competitive advantage than say, Mang Inasal, Chooks to go, Andoks Lechon Manok or Senor
Pedro.(40%)
Major Subjects
1. Economics say that when America coughs the rest of the world sneezes. Discuss how economic
trends and realities in the global environment impact on the Philippine economy. (20pts)
2. Explain why ethical managing is given primary consideration in today’s global workplaces.
(20pts)
3. Explain the market forces that drive the engine of economic development.(20pts)
4. Discuss one current issue that impacts on the economic development of the Philippines.(25pts)
5. Using your entrepreneurship theories and principles, prepare an enterprise development plan.
6. Discuss how critical the leader’s role in attaining organizational goals. Explain how his education
and track experience, qualities and personal characteristics, vision, skills and attitudes figure in
successful organizations. (30pts)
SUCCESS STORIES – How Did Jollibee
Knock Ronald of McDonald’s?
2 Comments
“ One man gives freely, yet gains even more; another withholds unduly, but comes to
poverty. ” – Prov. 11:24
This is a story of a poor busboy migrated from China to seek their luck in the Philippines and after 33 years later
(from the time of this writing) owning a fastfood chain that has been called the Most Admired, the Most Copied, the
Most Innovative, and the Most Professionally-Run Company in the Philippines. It has been the number one fastfood
chain overtaking giants such as McDonalds and Kentucky Fried Chicken or KFC.
Tony Tan Caktiong the chief founder of Jollibee has reaped enough national awards and his
achievements has been written up by international business publications like the Far Eastern Economic Review,
Forbes, Euromoney and Asian Business.
Jollibee grew more than P30 Billion net income per year and opens around 80-100 stores annually and can be found
in over 9 countries worldwide. He commands 65% of the burger and chicken market in the Philippines, leaving the
world-famous Ronald McDonald to eat, well, dust. Truly, Ton Tan Caktiong rules. But, like many success stories Tony
got to the top of the heap by starting small.
Family’s First Restaurant Venture In the Philippines

Tony Tan Caktiong’s Life and his Jollibee Company is another rags to riches story of an entrepreneur that truly
inspires everyone. Tony came from a poor parents who migrated from the Fujian province of China. His father work
as a chef in a Chinese Temple and later was invited to open a restaurant business in Davao so the whole family
moved south. They helped one another in managing the restaurant business which in turn became profitable. This
allowed young Tony to return back to Manila and pursue his course Chemical Engineering at the University of Santo
Tomas (UST).
The Magnolia Ice Cream Parlor

In 1975, Tony and his colleagues went on a visit to a Magnolia Ice Cream plant and learned that it was offering
franchise when he saw a poster for it. He grab the franchise opportunity and took P350,000 from his family’s savings
and opened two Magnolia Ice Cream Parlors. They all worked hands-on but as the business propels, they noticed
they could not do it all so they started to set up an organization that hired store managers, and trained people.
From Ice Cream to Burger Restaurants

His siblings also moved back to Manila to help run the new family business. But Pinoys don’t like eating something
cold on an empty stomach. So customers began asking for something to warm their stomachs first before moving on
the Tony’s cool treats. Tony and his siblings began to draw on their restaurant experience to fashion a recipe for
chicken and hamburgers and later on they decided to convert their ice cream parlors into burger restaurants.
The Branding and Transformed Enterprise

It had to be something that reflect both the hard work and the sweet success that Tony and his siblings were after.
That was also the time they decided to incorporate and realized that they needed a brand name. They were looking
for a symbol that would represent the group, and because Tony was very impressed with Disney characters, finally
they settled on a bee.
The bee is a busy creature that produces honey “one of life’s sweetest food.” They thought it would be a very good
symbol to represent everybody. They decided they would all be very busy and happy at the same time, because if
they were busy but not happy, it wouldn’t be worth it. That’s why they put the word jolly and changed the “y” into “i” to
form a brand name –JOLLIBEE.
The McDonald’s Invasion

It wasn’t long before we heard that the multinationals were coming in including McDonald’s. Tony’s friends were
afraid for his business. They started asking if He were going to get a McDonald’s Franchise and give up his smiling
bee. Tony refused. He and his family geared up for battle.
When McDonald’s came in they didn’t feel threatened because they were a little naive and Jollibee was doing very
well.They found McDonald’s to be very good at everything, but it didn’t know the local culture.
Although McDonald’s had the advantage because it was already a well-known brand. Jollibee countered by airing ads
that attacked McDonald’s where it was lacking in expertise -the Pinoy taste and sentiment and also airing ads that
played on distinctly Pinoy themes. Later, McDonald’s would begin Filipinizing their ads too-using the nickname
everyone else called them-MacDo-and using sentimentality to attract their Pinoy customers.
Jollibee’s Expansion
Now Jollibee Food Corporation has become bigger and has acquired almost all of the famous food chains in the
country today namely Chowking, Greenwich, Delifrance, Red Ribbon and Mang Inasal, which is more than 1185
stores worldwide. It employs 40,000 people and provides employment and business opportunities to hundreds of
suppliers and small medium entrepreneurs.
Jollibee’s Secret of Success
When asked what’s the secret of Jollibee’s success, Tony says: “If you have to ask, the secret of Jollibee’s success
is sharing. We share our success with people; we give good compensation; we share any honor that comes our way.
Actually, this idea of sharing didn’t come from me. It came from a friend. He said: You know why you’re successful?
You know how to share. A lot of people do not share, but in Jollibee you share a lot with your people.” Its no longer
about knocking out the competition. It’s about telling you us that, if Tony Tan Caktiong can do it, you can too.
Before you begin…

 First, there are no hard and fast rules for writing a business plan, it is written by
you for you!
 Second, writing your business plan is an ongoing process and doesn’t end unless
you’ve sold your company, quit, or failed miserably.
 Third, writing a business plan is not about writing the plan, it’s about planningto
set your business up for success.
Writing a business plan…

As mentioned before, there are no hard and fast rules for writing a business plan. Do
you really need an executive summary, 3-Year pro forma, and sales forecasts for the
next five years? Only if you’re going to find a benefit from these things.
The example below is the structure I used to get started, so feel free to mix it up,
reorder, and modify it to suit your needs:
- The Vision -
What exactly is my business?
What problem does it solve and why is my solution the best/most unique?
What benefit does it provide to my customers?
- Branding -
What is my story and/or message?
What is my product’s personality, soul, and voice?
How will I translate the above into an identity, logo, website, business card, et cetera?
- The Numbers -
What does it cost to build my product and/or provide my service?
What are my expenses and are there any hidden costs?
What profit can I expect to make per item and is it acceptable/realistic?
What is my budget and what will I do if I go over?
- Beta Testing -
What existing resources/products can I use to help create my product?
Do I have someone in mind to try out my product/service?
How will I collect and utilize feedback?
How will I turn my beta users into paying customers?
- Sales and Marketing -
How will I get my initial customers?
How will I provide customer service and collect/utilize feedback?
What marketing channels should I explore – web, radio, print, et cetera?
As I mentioned before, this is what I used to get started and there are other pieces to
the puzzle that can be incorporated such as funding, an exit strategy, employees,
management structure, break-even analysis, profit and loss, et cetera. Ultimately,
utilize items that will help your business grow and succeed now, and…
Beware Planning Paralysis!

Your goal is to set your business up for success; your goal isn’t to become an armchair
entrepreneur pondering every detail of your business plan. If you don’t know the
answer to something, do some research, ask SCORE for advice, try some focused beta
testing, and/or make an educated guess. Whatever you do, keep moving and don’t put
your business on hold by sweating over every little detail. Inevitably, there will be
things that you won’t be able to account for so at the very least, plan for the current
state of your business vision and fill in the blanks as best you can. And last but not
least…
Frequently Revise, Revise, Revise!

“Be stubborn about your vision, but flexible in the details” – Jeff Bezos, Amazon.com
CEO
Things constantly change, so writing your business plan should be an ongoing, organic
process. Plus, imagine the waste if you draft a business plan only to bury it in your
documents and forget about it.
Make a habit of periodically revising and updating your business plan, it should remain
fresh, nimble, and flexible because you never know what disruptive events or changes
await. Also remember that the longer it sits idle, the more it becomes outdated and less
useful.
In conclusion…
Entrepreneurs do not need a business plan to succeed, just ask Pierre Omidyar who
created eBay (initially AuctionWeb) on a whim. Yet a business plan is a simple and
useful tool for collecting your thoughts, prioritizing your actions, and planning for your
business’ success. Also remember that a business plan is there to help and should not
get in the way of moving forward with your business.
Now it’s your turn, has this post changed your mind about writing a business plan or do
you have your own tips on writing a business plan? Feel free to contribute or ask
questions by leaving a comment!
Sincerely,
The Closet Entrepreneur
Post Scriptum: As an additional resource, here are 5 Apps That Make Your
Business Plan More Useful.
 1.0 Executive Summary

 Mission
 Objectives
 Keys to Success
 2.0 Company Summary
 3.0 Services
 4.0 Market Analysis Summary
 5.0 Strategy and Implementation Summary
 6.0 Web Plan Summary
 7.0 Management Summary
 8.0 Financial Plan
 Appendix
Executive Summary
Kid's Community College® aims to prepare its students to excel as young leaders of tomorrow by
combining an exclusive collegiate-based curriculum tailored specifically for children with enhanced, first
class child care services. Unlike our competitors, we offer advanced technology programs, after-school
tutoring, and activities such as arts and crafts, dance, theatre and gymnastics, all in one location.
Kid's Community College is a privately held corporation run by its owner, Timothy Bernard Kilpatrick, Sr.
Mr. Kilpatrick has 17 years of Executive Management (VP) and Budgeting experience, and extensive
experience with budgeting methodologies and strategic planning, including the Balanced Scorecard
approach. His advanced degree (and interest) in computer science is the driving force behind our
technology component. He will be supported in daily operations by an industry consultant, a campus
director, and a VP of educational operations, all with extensive experience in child care fields.
With inflation continuing to rise each year, the typical American family now requires dual or supplemental
incomes. This trend has created a need for quality child care services. The population growth rate in
the Riverview area of Hillsborough County is now over 14.6%, leading us to anticipate expanding market
potential for this industry in our local area. Price, service, certification and reputation are critical success
factors in the child care services industry. Kid's Community College® will compete well in our market by
offering competitive prices, high-quality child care services, and leading-edge educational programs
with certified, college-educated instructors, and by maintaining an excellent reputation with parents and
the community we serve.
This is a daycare business plan for Kid's Community College®, which will focus on two subdivisions:
'Lake St. Charles' and 'The Villages of Lake St. Charles,' which are new upscale community
developments within a 2 square mile radius, boasting over 900 new homes. Our target customers are
dual-income, middle-class families who value the quality of education and child care we provide for their
children, ages 4 months to 12 years.
We will open for business starting with an initial enrollment of 13 students. We project healthy revenues
by the end of the first year, and expect to nearly triple that by the end of Year 3. Our biggest operating
expenses will be compensation at industry standard rates for our highly-qualified personnel, and rent on
our facilities, improved for our purposes during the start-up period. We would like to grow into four
campuses, eventually, but growth is planned conservatively, to be financed from existing cash flow as we
go. We anticipate a net profit beginning in our second year.
To these ends, we are putting significant investment in the business, and are seeking a matching
amount in the form of an SBA loan.
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Mission
"Some of the best years in life are the time spent as a child and later our collegiate years..." As working
adults in a fast paced society, we sometimes forget just how precious and fleeting those years are.
With that in mind, imagine an alternative to traditional infant, day and after school care that not only met
your child care needs, but also provided an activity based learning environment that mirrors those used at
colleges, universities and vocational centers around the nation. A college community of professional care
givers with the credentials to not only enhance your child's early social and motor skills, but to also teach
them advanced studies in the arts and sciences found at institutions of higher learning. A collegiate-
based curriculum tailored specifically for children, taught in a fun, nurturing care giving environment.
Now imagine this at a cost less than that of the combination of conventional day care and specific interest
based children programs.
Kid's Community College® is a start-up comprehensive community college exclusively for kids ages 4
months to 5 years and 1st through 5th grades. The College dedicates its efforts and resources toward
ensuring top-rated care giving services coupled with a high-quality activity based learning environment
tailored for children in these age groups. The College will respond to the needs of its parents and
students with excellent care-giving and instruction, an advanced curriculum, flexible programs, local
community involvement and business partnerships.
The College has a strong commitment to accessibility and diversity. Its open door policy embraces all
who desire to provide a better quality of care, preparedness and education for their children. The College
works to provide affordable, first-class care giving and education by providing a broad range of integrated
programs and services and innovative learning approaches.
The College is committed to taking a leadership role in child care services, higher learning, community
services and promoting cultural diversity. Kid's Community College® directs its activities towards student
success.
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Objectives
1. Sales increasing to almost double first year sales by the end of Year 2.
2. Maintain a high raw gross margin by the end of Year 1.
3. Open second campus by the end of Year 1.
4. Begin franchise effort by end of Year 3.
Keys to Success
The keys to success for KCC are:
 Marketing: differentiating KCC's care giving and educational services from traditional daycare offerings
and interest activity programs.
 Service quality: care giving and educational programs provided by degreed and certified educators, child
care workers, tutors and subject matter industry professionals in a technologically advanced first-class
collegiate environment.
 Reputation: maintaining a highly regarded reputation for excellence in care giving, education and
community involvement and being the employer of choice in our market for child care and educational
talent.
 Profitability: controlling costs and managing budgets in accordance with company goals, adhering to
strategic business plans for growth and expansion and reinvesting in the business and its employees.
Company Summary
Kid's Community College® - Lake St. Charles Campus will be located in Riverview, FL. The College will
employ six fundamentals that will serve as the driving force for the services offered:
 Premier Care Giving Services
 An Activity Based, Children Structured Collegiate Curriculum
 Advanced Technology and Developmental Programs
 Trademarked General and "Continuing" Education Mentoring and Tutoring
 Learning Services
 Community Advancement and Involvement
The Lake St. Charles campus is a newly constructed, 3,600 square foot facility in the Lake St. Charles
Medical Plaza and will be developed meeting strict KCC design standards, under close supervision of
Hillsborough County child care Licensing.
Start-up Summary
The college founder and president, Mr. Kilpatrick, will oversee fiscal responsibility, employing an
independent CPA for financial oversight. A Campus Director will be hired to handle day-to-day operations
of the facility and will work collaboratively with the silent partners and other campus personnel to ensure a
successful business venture.
As reflected in the table below, the estimated start-up costs for KCC will be $39,450. These costs will be
financed solely by the owners' personal cash funds and optional credit lines. An anticipated $60,000 SBA
guaranteed 5-year loan will be used as working capital. Future expansion, growth and franchising
strategy will be self-financed.
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Start-up Requirements
Start-up Expenses
Legal $1,000
Stationery $250
Brochures $500
Insurance $1,500
Rent $8,250
R&D $500
Consultants $1,000
Playground Equipment $3,500
Playground Prep $700
Playground Fence $3,000
Furnishings $7,500
Toys $3,000
Buildout $8,750
Total Start-up Expenses $39,450
Start-up Assets
Cash Required $65,550
Other Current Assets $14,130
Long-term Assets $0
Total Assets $79,680
Total Requirements $119,130
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Start-up Funding
Start-up Expenses to Fund $39,450
Start-up Assets to Fund $79,680
Total Funding Required $119,130
Assets
Non-cash Assets from Start-up $14,130
Cash Requirements from Start-up $65,550
Additional Cash Raised $0
Cash Balance on Starting Date $65,550

Total Assets $79,680
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $60,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $60,000
Capital
Planned Investment
Owner - Kilpatrick Cash $45,000
Owner - Kilpatrick Credit Line $12,500
Other Assets Invested $1,630
Additional Investment Requirement $0
Total Planned Investment $59,130
Loss at Start-up (Start-up Expenses) ($39,450)
Total Capital $19,680
Total Capital and Liabilities $79,680
Total Funding $119,130
Company Locations and Facilities

Kid's Community College® will begin with one location - a newly constructed 3,600 square foot campus in
Riverview, FL located near the entrance of the upscale Lake St. Charles subdivision. The campus is in
the Lake St. Charles Medical Professional center and will boast separate halls for arts and crafts, theatre
and dance, information technology, library and quiet study, tutoring, infant care and a cafeteria. The play
area will be adjacent to the campus and will be securely fenced and furnished with appropriate
playground equipment and facilities.
Three additional campuses are planned in the rural Tampa marketplace over the next four years.
Franchise start-ups will be offered in the Orlando, Miami and Jacksonville marketplace after 2 years of
successful operation.
Company Ownership
Kid's Community College® is a privately-held proprietorship owned in majority by its founder and
president, Timothy Bernard Kilpatrick, Sr. There are also two silent partners, neither of whom owns more
than 10%, but will be active participants in daily operations, management decisions and consulting,
though they do not own a financial stake in the company.
Once the operation reaches its anticipated growth and profitability goals, the college plans to franchise
and will re-register as a limited liability company or as a corporation, whichever will better suit the
future business needs.
Services
Kid's Community College® offers upscale child care services and an advanced collegiate based
curriculum designed for kids ages 4 months to 5 years and 1st through 5th grades. Normal operating
hours will be 6:45am to 6:30pm, Monday through Friday - with observance of all major legal holidays.
Early drop-off service will be offered as needed.
KCC exists to provide Premier child care services that are aimed at enhancing traditional day care
methodologies and integrating extracurricular interests (such as arts and crafts, dance, theatre and
gymnastics) into one comprehensive program. Our activity based collegiate curriculum is
specifically tailored for children and mirrors the arts and sciences taught at colleges, universities and
vocational schools around the nation. We offer state-of-the-art technology programs in leading-
edge facilities which help prepare students for the technology age in which they live. Our general and
"continuing" education programs help mentor and tutor students through "main school" homework
assignments and provide a base of understanding and interaction to ensure success in future educational
endeavors. Finally, our developmental programs reinforce basic social, listening, independence and
motor skills and prepare students for future related interaction.
All of our learning and child care services employ technology, partnerships, professional services and
other activities that support and promote higher learning.
In addition to the extensive services and curriculum offered, each campus will also offer weekend
specialty classes for children and adults and planned family activities in the community it serves. KCC
will also offer children birthday party hosting services, providing great activities for kids and an easy
experience for parents. Activity instructors will be assigned for these events and will lead the activities,
ensuring a memorable celebration.
Service Description
Upon its opening, Kid's Community College® will offer four basic services in the Lake St. Charles
community:
 Full-time Child Day Care
 Part-time/After School Care (including drop-off and pick-up)
 After School Tutoring
 Drop-In Care
Prior to opening, the college will have a two-month enrollment drive. Based on the market reaction to the
drive, these services may be altered to meet the needs of the community. The college will always remain
nimble enough to respond to the needs of the community in which it serves.

Competitive Comparison
The child care industry as a whole is saturated. However, based on US Census 2000 data, Hillsborough
County Child Care Services provider listings and Hillsborough County building permit records, the city of
Riverview, Florida itself is growing and has few licensed child care facilities. Kid's Community College®
intends to fill this local market need.
The Lake St. Charles and 'The Villages of Lake St. Charles' subdivisions have 800 and 100 single family
homes respectively. There are only two other child care facilities in the neighborhood. One is in the
immediate area, a church based facility and the other is 2 miles away, a facility hosted by a local martial
arts academy. There are also three family child caregivers listed in the area, but none in the immediate
community. Kid's Community College® will differentiate itself from its local competitors by offering an
alternative to these traditional day care approaches.
The Kid's Community College® market strategy is based on providing an activity based learning
environment that is used in many major colleges, universities and vocational centers around the
nation. We will offer a community of professional caregivers with the credentials to not only enhance a
child's early social and motor skills, but to also teach them advanced studies in the arts and sciences
found at institutions of higher learning.
Kid's Community College® will be located in a new medical arts plaza, which has already shown a need
and interest for child care services. The center currently has a pediatrics office and fitness center with
clientele that has inquired about child care services. By forming collaborative partnerships with these
businesses and becoming an active voice in the Lake St. Charles community, the college will position
itself as the market share leader in child care services, development and educational offerings.
Sales Literature
A copy of the Kid's Community College® informational brochure is attached in an appendix at the end of
this document.
Fulfillment
The key fulfillment and delivery of services will be provided by the campus director, licensed campus
instructors and staff workers. The real core value is the professional strength and industry expertise of the
founder and silent partners, staff experience and certifications, education and hard work (in that order).
We will turn to qualified professionals for freelance back-up in tutoring and educational support, which will
enhance the core values provided to the clients.
Technology
Since the company founder has an extensive Information Technology background, it's only natural that
Kid's Community College® will employ and maintain the latest technology to enhance its curriculum,
office management systems, payment processing and record keeping.
Future Services
Three additional campuses are planned in the rural Tampa marketplace over the next four years.
Franchise start-ups will be offered in the Orlando, Miami and Jacksonville marketplace after 2 years of
successful operation.
Market Analysis Summary

Kid's Community College® offers services which are vitally important in today's fast paced, dual-income
world. As an increasing number of families have become dependent on two incomes, the need for quality
child care has skyrocketed. According to Florida Business Statistics, 84.6% of licensed child care facilities
succeed and make a profit in their 1st year of operation. Nationally, this number is 66.7%.
There is no doubt, in the Riverview, FL area, that there is room and a need for Kid's Community
College®. Market demographics to support this statement can be found below.
Market Segmentation
Kid's Community College® has a focus on meeting the local community need for child care services
within the 10-mile radius of Riverview. Students will be taken in flexibly on either a full-time or part-time
basis.
Full-Time Working Couples
The college will establish a significantly large, full-time, regular client base in order to establish the
healthy, consistent revenue base which will ensure stability of the business. Customer and community
relations are extremely important, as it is imperative to keep the parents pleased in order to keep their
children in the college.
After School Care
Another large segment of the college's business will be in the after school care market. This client base
will provide a higher profit for the college since instructor-to-student ratios are higher, and the students
require more educational services, which are the primary focus of the college. By offering tutoring, and
advanced studies in technology, theatre, arts and sciences, the college will attract these profitable
business clients, producing significant supplemental revenues.
Part-Time Workers/Drop-Ins
Part-time workers and Drop-Ins from the fitness center and locals businesses will comprise less than 1%
of the revenues. While this market is not a primary focus, sufficient flexibility to handle this market is
important to the local 'word-of-mouth' marketing strategy.
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Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Under 5 Years 6% 2,665 2,825 2,995 3,175 3,366 6.01%
5 to 9 Years 6% 2,865 3,037 3,219 3,412 3,617 6.00%
10 to 12 Years 6% 2,771 2,937 3,113 3,300 3,498 6.00%
Total 6.00% 8,301 8,799 9,327 9,887 10,481 6.00%

plan.
Target Market Segment Strategy
The target market for Kid's Community College® is full-time working couples. Referral marketing, direct-
mail campaigns and community activity days will be the primary types of marketing strategies
utilized. Maintaining and enhancing its reputation with families and in the community will be crucial in
obtaining the planned market share growth of this target market.
Market Growth
According to US Census 2000 data, the population growth rate for Hillsborough county is approximately
2%, which is reflected in the market analysis summary. However, the Riverview area of Hillsborough
County is experiencing a residential construction boom, yielding well over a 14.6% growth. This is
supported by data obtained from the Hillsborough County Building Permits office and is included in the
appendix of this plan. This suggests that more families continue to move into the Riverview area, thus
becoming potential customers.
In our market analysis, we suggest a modest 6% yearly growth in the number of potential customers.
Market Needs
With inflation continuing to rise each year, the typical American family now requires dual or supplemental
incomes. This trend has created a need for quality child care services. We do not see this model
changing in the foreseeable future. In fact, based on the growth in the Riverview area, specifically the
new Lake St. Charles and Village of Lake St. Charles communities, we expect the need to increase.
Market Trends
Currently there are more family caregivers than licensed child care facilities nationwide. However, this
business model can't keep up with the needs of the growing child care industry. In the family care giver
paradigm, space is limited and quality of care is questionable - in many cases viewed as only slightly
higher quality than babysitter services.
Service Business Analysis
Kid's Community College® is in the child care services industry, which includes several models:
1. Licensed Child Care Facilities: Business facilities that offer child daycare services.
2. Family Child Care Homes: Individuals that offer child daycare services in their homes.
3. Specific Interest Based Programs: Businesses that offer specialized instruction such as gymnastics,
martial arts and athletics.
4. Church Child Care Facilities: Religious organizations that offer child daycare services in their
communities.
Competition and Buying Patterns
Price, service, certification and reputation are critical success factors in the child care services
industry. Kid's Community College® will compete well in our market by offering competitive prices, high-
quality child care services, and leading-edge educational programs with certified, college-educated
instructors, and by maintaining an excellent reputation with parents and the community in which we serve.
Main Competitors
1. Catholic Church Day Care:
o Strengths: Large church congregation. Already established in market.
o Weaknesses: May not appeal to customers of different religious beliefs. Unlicensed facility. Non-
accredited.
2. Martial Arts America - Kick Kare:
o Strengths: Already established in area. Martial arts offering with child care services.
o Weaknesses: Location - outside of middle-income market. Non-educational offering. Building condition -
prone to constant flooding.
3. Family Child Care Homes:
o Strengths: Established in market. "Personal" service.
o Weaknesses: Capacity - only allowed a certain number of children. Non-professional stigma.
Business Participants
1. Licensed Child Care Centers: Kids Kountry, Lapetite Academy, Mary Go Round Child Care Center and
Bloomingdale Academy. While these centers are within the 10-mile radius target area, none are inside a
5-mile radius of the Lake St. Charles community. None of these facilities are nationally accredited.
2. Family Child Care Homes: Mindy Rumore FCCH and Stacie Dawn Hamann FCCH.
3. Specific Interest Based Programs: Martial Arts America
4. Church Child Care Facilities: Christian Day Academy (not licensed).
Strategy and Implementation Summary

Kid's Community College® will focus on two subdivisions: 'Lake St. Charles' and 'The Villages of Lake St.
Charles,' which are new upscale community developments within a 2 square mile radius and boast over
900 new homes.
The target customers are dual income, middle-class families who value the quality of education and child
care provided for their children ages 4 months to 12 years.
Value Proposition
Kid's Community College's® value proposition is quite clear and quite easily distinguished from others in
the market. We offer uniquely premium child care services, as measured by the curriculum and activities
offered, experience and educational level of the instructors, community involvement and community
college theme.
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Competitive Edge
We start with a critical competitive edge: there is no competitor in our market that is offering our concept,
quality of educational program and child care services. Our educational approach is unique and we have
a resource with over 25 years of child care expertise and over 17 years of technology savvy. Our
positioning on these points is very hard to match, but only if we maintain the focus in our strategy,
marketing, business development, and fulfillment. We should be aware that the tendency to dilute this
expertise with bargain shopping could weaken the importance of our competitive edge, but we must
continue to bolster our value proposition.
Marketing Strategy
Marketing in the child care industry depends largely on reputation and referral. At Kid's Community
College® that reputation will start within our community bolstered by our involved commitment to those
we serve.
Promotion Strategy
We will depend on client referrals, community exposure and direct mail campaigns as our main way to
reach new clients. As we change strategies, however, we need to change the way we promote
ourselves:
1. Advertising--We'll be developing our core positioning message: "A community college for kids!" to
differentiate our service from the competition. We will be using direct mail campaigns, pre-enrollment
drives, and local community newspaper advertising to launch the initial campaign.
2. Sales Brochure--Our theme and curriculum will help sell the college to prospective clients.
3. Direct Mail--We will send quarterly direct mail campaigns to the housing developments in a 10-mile
radius of the campus. We will also offer monthly calendars for parents and the Lake St. Charles
community, noting weekend family days and other open house approaches.
4. Community Involvement--We will be active in the Lake St. Charles community, sponsoring events at
the community center for families and residents.
Marketing Programs
Catered open houses, parent survival days/nights, clubhouse pool parties and weekend movie matinees
are but a few approaches we will utilize to reach out to our community. We will also develop and maintain
partnerships with local businesses that cater to the needs of children.
Our pre-opening effort will include an application fee waiver, free children ID cards, T-shirts and a
community block party sponsored and hosted by Kid's Community College®.
Positioning Statement
For families who value the importance of higher education and quality child care services, Kid's
Community College® offers a great alternative to traditional child care services and specific interest
based programs. Unlike those programs, KCC combines child care services with a modified collegiate
level curriculum, just for kids!
Pricing Strategy
Kid's Community College® must charge appropriately for the high-end, high-quality educational and care
giving services we offer. Our revenue structure has to support our cost structure, so the salaries we pay
to assure quality services must be balanced by the revenue we charge.
We will be price competitive in the market we serve; however, we will not subscribe to the "low price
leader" concept. The quality of our service will support the prices we charge.
Sales Strategy
Kid's Community College® will sell its community college theme, services and offerings, separating itself
from traditional daycare-only offerings.
We will be a one-stop shop for child care services, advanced learning and specialized program offerings.
We will also be active in the community, building a solid reputation with parents and the community. By
succeeding in these areas, we expect to begin seeing an operational net profit in month nine of the 1st
year, while increasing enrollment by 32% monthly for the first 8 months and gradually thereafter, until our
maximum allowed capacity is reached.
Sales Forecast
The following table and chart give a run-down on forecasted sales. A detailed spreadsheet is also
included in the appendix of this business plan.
For the first eight months of operation, Kid's Community College® has assumed a conservative
enrollment due to the fact that school, aftercare and child care placement has already taken place for the
school year and most parents will be comfortable with their current arrangements. Consequently, we
expect initial enrollment to be far less than anticipated future year levels.
A sales increase of approximately 32% each month is expected until the start of the next school term, in
August. While this forecasted increase seems large by industry standards, it is a good estimate based
on initial enrollment. Going into years 2 and 3, we expect that our presence will be known, convenience
factor considered and we will then be a considered as a choice in August 2003. In fiscal years 2004 and
2005, 80% and 90% of full enrollment is assumed respectively.
We expect to be open for business on January 1, 2003, starting with an initial enrollment of 13 students:
7 Full-time students at $115 each per week. 6 After-school students at $60 each per week and Drop-in
revenue of approximately $100 per month.
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Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Full-time Couples 199 455 512
After School Care 141 220 248
Summer Camp 26 29 31
Part-time Workers/Drop-Ins 12 14 16
Total Unit Sales 378 718 807
Unit Prices Year 1 Year 2 Year 3
Full-time Couples $460.00 $460.00 $460.00
After School Care $240.00 $240.00 $240.00
Summer Camp $460.00 $460.00 $460.00

Part-time Workers/Drop-Ins $100.00 $100.00 $100.00
Sales
Full-time Couples $91,540 $209,300 $235,520
After School Care $33,840 $52,800 $59,400
Summer Camp $11,960 $13,340 $14,352
Part-time Workers/Drop-Ins $1,200 $1,380 $1,587
Total Sales $138,540 $276,820 $310,859
Direct Unit Costs Year 1 Year 2 Year 3
Full-time Couples $13.34 $13.82 $13.82
After School Care $4.56 $4.75 $4.75
Summer Camp $13.80 $13.80 $13.80
Part-time Workers/Drop-Ins $0.00 $0.00 $0.00
Direct Cost of Sales
Full-time Couples $2,655 $6,288 $7,076
After School Care $643 $1,045 $1,176
Summer Camp $359 $400 $431
Part-time Workers/Drop-Ins $0 $0 $0
Subtotal Direct Cost of Sales $3,656 $7,733 $8,682

plan.
Sales Programs
Sales programs will include incentives for obtaining quarterly financial and enrollment goals, probationary
period completion, passing county inspections and maintaining perfect attendance.
Customer service awards will be provided for those employees who best exemplify the mission of Kid's
Community College® and exceed customers' expectations.
Milestones
The accompanying table highlights important start-up milestones, with dates, completion status,
responsible parties and budgets for each. The milestone schedule indicates our emphasis on planning
for implementation.
What the table doesn't show is the commitment behind it. Our business plan includes complete
provisions for plan-vs.-actual analysis, and we will hold monthly follow-up meetings to discuss the
variance and course corrections.
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Milestones
Milestone Start Date End Date Budget Manager Department
Business Plan 8/1/2002 9/30/2002 $200 Tim Kilpatrick Department
Lease RFP 7/15/2002 7/30/2002 $0 Tim Kilpatrick Department
Site Selection 8/1/2002 9/15/2002 $0 Tim Kilpatrick Department
Architect Design 9/15/2002 10/1/2002 $0 Zimmer Department
Secure Additional Funding 10/1/2002 10/30/2002 $500 Tim Kilpatrick Department
Sign Lease 10/15/2002 10/30/2002 $4,500 Tim Kilpatrick Department
Personnel Plan 10/1/2002 10/30/2002 $0 Tim Kilpatrick Department
Curriculum Development 10/1/2002 12/31/2002 $500 Candice Harris Department
County Certification Req. 9/20/2002 12/31/2002 $100 Tim Kilpatrick Department
Licensing 12/1/2002 12/31/2002 $0 Tim Kilpatrick Department
Totals $5,800
Strategic Alliances
As mentioned previously, Kid's Community College® will form professional alliances with Impact Fitness
to offer Drop-In child care services while parents work out. We will also partner with Family Pediatrics to
provide referrals of their existing customers. A discounted rate will be offered in both cases.
Web Plan Summary

The Kid's Community College® website will be the virtual business card and portfolio for the college, as
well as its online "home."
It will showcase the campus, curriculum and activity calendar for the school. It will also provide for an
Internet background of the instructors, online projects posted by the students, the campus newsletter and
online enrollment.
The Kid's Community College® website will be simple, yet classy and well designed, but at the same
time, in keeping with the latest trends in user interface design. A site that is too flashy, or tries to use too
much of the latest technology can be over-done, and may not be supported by all browsers.
The key to the website strategy will be presenting a very well designed and informative Web presence
that will market the Kid's Community College® image, service offerings and community commitment.
Website Marketing Strategy
The Kid's Community College® website will embody the mission of the college. It will not only offer
visitors the opportunity to "look around" the campus, but it will give them a good idea of the level of quality
and service they can come to expect from the college.
Mostly informative in nature, the website will be a digital representation of our physical self.

Development Requirements
The Kid's Community College® website will be developed by the college founder, Timothy B. Kilpatrick,
Sr., who has over 17 years of Information Technology experience. Formation Technologies will host the
site.
The site will be developed using Macromedia Dreamweaver 4, which will allow for support outside of
Mr. Kilpatrick's involvement. The initial maintenance of the site will be done by Mr. Kilpatrick.
Management Summary
The opening management team of Kid's Community College® will consist of the founder, a silent partner,
a campus director and administrative assistant.
As the college grows, gradual investments in the instructional staff will be made over the next 3 years -
beginning in June 2003 or as otherwise dictated by enrollment.
Organizational Structure
Kid's Community College® depends on the founder, silent partner, Campus Director and VP of Education
Operations for management in the following roles:

Management Team
Owner/President - Timothy B. Kilpatrick, Sr. The Owner/President will have overall fiscal responsibility,
ensuring that the business is financially sound and attains its planned goals.
 17 years Executive Management (VP) and Budgeting experience
 Advanced degree in Computer Science
 Proven leadership and employee development ability
 Extensive experience with budgeting methodologies and strategic planning, including the Balanced
Scorecard approach.
Industry Consultant - Carolyn Steverson. The Industry Consultant will be relied upon for her industry
expertise, providing valuable insight to rules, regulations and governmental programs that may benefit the
college.
 25 Year owner of Fat Albert Day Care Center
 Licensed child care facility owner
 Vast knowledge of Hillsborough County Child Care Licensing requirements and government
supplemental programs
Campus Director - Candice Harris. The Campus Director will be responsible for daily operations,
curriculum oversight and management of all instructors, caregivers and tutors.
 B.S. Degree in Education
 2 years facilities administration/support experience with the University of South Florida
 2+ years Regional Operations Manager
 5+ years managerial/supervisory experience
 3+ years grant writing, technical writing, workflow and process documentation experience
VP of Education Operations - Nitika Steverson-Kilpatrick
 Collegiate-level Public Relations education
 5+ years customer service experience
 8+ years child care industry experience (her mother owns Fat Albert Daycare)
 Extensive theatre and dance background
Management Team Gaps
The present team requires Child Care Development Associate credentials to support our value
proposition and preparation for 2004 Florida child care requirements. Currently, the Campus Director and
Industry Consultant are the only members of the management team who have these credentials.
The Owner/President and VP of Education Operations will be enrolling in January 2003 to complete the
six-month course required to obtain these credentials. Education for these two can't begin in this area
until that time since it is a requirement that the college be open for business before the course work can
begin. Long-term, all full-time instructors will be required by the college (not the State) to obtain this
credential.
Regarding financial administration, we will retain a strong CPA to help the owner guard cash flow. While
the owner is well versed in the worries of cash flow, he also has the sense to listen to reason and deal
with constraints, as guided by the CPA.
Personnel Plan
The following table summarizes our personnel expenditures for the first three years, with compensation
increasing from approximately $57K the first year to about $113K in the third. We believe this plan is a
fair compromise between fairness and expedience, and meets the commitment of our mission statement.
The yearly figures in the second and third year are assumptions for the Lake St. Charles campus only.
The numbers reflect 100% enrollment, a full staff of instructors and a 5% payroll increase each year -
which will include tuition reimbursement, pay increases, vacation pay, bonuses and state required
certifications.
Personnel Plan
Campus Director $23,877 $25,071 $26,324

F/T Instructors $21,760 $61,440 $64,512
P/T Instructors $11,400 $21,600 $22,680
Total People 5 8 8
Total Payroll $57,037 $108,111 $113,516
Financial Plan
 Kid's Community College® will finance growth mainly through cash flow. It is recognized that this means
the school will have to grow gradually into the planned four campuses.
 The most important factor in our case is enrollment. We must stay focused on our enrollment plan and
maintain budgeted enrollment levels.
 Adequate start-up capital is assumed, along with an SBA 5-year guaranteed loan.
Important Assumptions
The Kid's Community College® financial plan depends on important assumptions, most of which are
shown in the following table as annual assumptions. The monthly assumptions are included in the
appendices. From the beginning, it is recognized that total enrollment is critical, which is a factor that
must be influenced immediately. Interest rates, tax rates, and personnel burden are based on
conservative assumptions.
The most important underlying assumption is that there is a strong need for the business in the Lake St.
Charles community.

General Assumptions
Plan Month 1 2 3
Current Interest Rate 7.00% 7.00% 7.00%
Long-term Interest Rate 7.00% 7.00% 7.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

plan.
Key Financial Indicators
The following benchmark chart indicates the key financial indicators for the first three years. We foresee
a gradual growth in sales (enrollment) and operating expenses into the second and third year.
It is projected that the raw gross margin will remain stable for the first three years since expenses are
relatively indirect in the service based course work industry. Operating expenses increase gradually as
enrollment increases.
Enrollment is very important. We must maintain an average weekly enrollment of 34 students for fixed
cost coverage.
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Break-even Analysis
For the break-even analysis, start-up monthly running costs assumptions are shown in the the table
below, including a three person payroll, rent, utilities and an estimation of other running costs. Payroll, at
median market averages, was presented previously in the Personnel table.
Based on these assumptions, the chart below shows the enrollment of students per month needed to
break-even. This represents about 46% of our allowable monthly enrollment based on state and county
course work guidelines.
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Break-even Analysis
Monthly Units Break-even 34
Monthly Revenue Break-even $12,350
Assumptions:
Average Per-Unit Revenue $366.51
Average Per-Unit Variable Cost $9.67
Estimated Monthly Fixed Cost $12,024
Projected Profit and Loss

Our projected profit and loss is shown on the following table, with sales increasing from the first year to
the third.
In years two and three, we are projecting full enrollment regarding cost of sales and gross margin. The
investment return in these years supports the goal of opening another campus at the end of the second
year and begin the franchise offering by the end of the third year. Profit from the additional campuses
and income from franchising are not included in this business plan.
The detailed monthly projections are included in the appendices.
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Pro Forma Profit and Loss

Sales $138,540 $276,820 $310,859
Direct Cost of Sales $3,656 $7,733 $8,682
Hidden Row $0 $0 $0
Total Cost of Sales $3,656 $7,733 $8,682
Gross Margin $134,884 $269,087 $302,177
Gross Margin % 97.36% 97.21% 97.21%
Expenses
Payroll $57,037 $108,111 $113,516
Sales and Marketing and Other Expenses $2,200 $3,500 $3,500
Depreciation $0 $0 $0
Rent $58,800 $59,500 $60,000
Utilities $10,500 $10,500 $10,500
Insurance $7,200 $7,200 $7,200
Payroll Taxes $8,556 $16,217 $17,027
Other $0 $0 $0
Total Operating Expenses $144,293 $205,027 $211,744
Profit Before Interest and Taxes ($9,409) $64,059 $90,433
EBITDA ($9,409) $64,059 $90,433
Interest Expense $3,819 $3,144 $2,440
Taxes Incurred $0 $18,275 $26,398
Net Profit ($13,228) $42,641 $61,595
Net Profit/Sales -9.55% 15.40% 19.81%
Projected Cash Flow

The following cash flow projections show the annual amounts only, significant for the first year mainly in
the amounts projected in cash sales and payables.
Cash flow projections are critical to the success of Kid's Community College®. The monthly cash flow is
shown in the illustration, with one bar representing the cash flow per month and the other the monthly
cash balance. The annual cash flow figures are included here and the more important detailed monthly
numbers are included in the appendices.
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Pro Forma Cash Flow
Cash Received
Cash from Operations
Cash Sales $138,540 $276,820 $310,859
Subtotal Cash from Operations $138,540 $276,820 $310,859
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0

Subtotal Cash Received $138,540 $276,820 $310,859
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $57,037 $108,111 $113,516
Bill Payments $86,777 $123,660 $134,952
Subtotal Spent on Operations $143,814 $231,771 $248,468
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $10,057 $10,057 $10,057
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $153,871 $241,828 $258,525
Net Cash Flow ($15,331) $34,992 $52,334
Cash Balance $50,219 $85,211 $137,545
Projected Balance Sheet

The balance sheet in the following table shows managed but sufficient growth of net worth, and a
gradually sufficient healthy financial position. The monthly estimates are included in the appendices.
Pro Forma Balance Sheet
Assets
Current Assets
Cash $50,219 $85,211 $137,545
Other Current Assets $14,130 $14,130 $14,130

Total Current Assets $64,349 $99,341 $151,675
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $64,349 $99,341 $151,675
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $7,954 $10,362 $11,157
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $7,954 $10,362 $11,157
Long-term Liabilities $49,943 $39,886 $29,829
Total Liabilities $57,897 $50,248 $40,986
Paid-in Capital $59,130 $59,130 $59,130
Retained Earnings ($39,450) ($52,678) ($10,037)
Earnings ($13,228) $42,641 $61,595
Total Capital $6,452 $49,093 $110,688
Total Liabilities and Capital $64,349 $99,341 $151,675
Net Worth $6,452 $49,093 $110,688

plan.
Business Ratios
The following table shows the projected businesses ratios for our industry: Child Day Care services, SIC
code 8351. Kid's Community College® expects to maintain healthy ratios for profitability, risk, and return.
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 99.81% 12.30% 6.98%
Percent of Total Assets
Other Current Assets 21.96% 14.22% 9.32% 30.21%
Total Current Assets 100.00% 100.00% 100.00% 60.28%
Long-term Assets 0.00% 0.00% 0.00% 39.72%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 12.36% 10.43% 7.36% 27.78%
Long-term Liabilities 77.61% 40.15% 19.67% 24.23%
Total Liabilities 89.97% 50.58% 27.02% 52.01%
Net Worth 10.03% 49.42% 72.98% 47.99%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 97.36% 97.21% 97.21% 100.00%
Selling, General & Administrative Expenses 113.51% 78.74% 72.22% 81.45%
Advertising Expenses 0.00% 0.00% 0.00% 0.88%
Profit Before Interest and Taxes -6.79% 23.14% 29.09% 1.52%
Main Ratios
Current 8.09 9.59 13.59 1.96
Quick 8.09 9.59 13.59 1.56
Total Debt to Total Assets 89.97% 50.58% 27.02% 60.93%
Pre-tax Return on Net Worth -205.01% 124.08% 79.50% 2.47%
Pre-tax Return on Assets -20.56% 61.32% 58.01% 6.32%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -9.55% 15.40% 19.81% n.a

Return on Equity -205.01% 86.86% 55.65% n.a
Activity Ratios
Accounts Payable Turnover 11.91 12.17 12.17 n.a
Payment Days 27 27 29 n.a
Total Asset Turnover 2.15 2.79 2.05 n.a
Debt Ratios
Debt to Net Worth 8.97 1.02 0.37 n.a
Current Liab. to Liab. 0.14 0.21 0.27 n.a
Liquidity Ratios
Net Working Capital $56,396 $88,979 $140,517 n.a
Interest Coverage -2.46 20.37 37.06 n.a
Additional Ratios
Assets to Sales 0.46 0.36 0.49 n.a
Current Debt/Total Assets 12% 10% 7% n.a
Acid Test 8.09 9.59 13.59 n.a
Sales/Net Worth 21.47 5.64 2.81 n.a
Dividend Payout 0.00 0.00 0.00 n.a
Appendix
Sales Forecast
Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 Month 12
Unit Sales
Full-time Couples 0% 6 8 10 12 12 10 10 20 27 27 27 30
After School Care 0% 6 6 6 6 6 8 8 15 20 20 20 20
Summer Camp 0% 0 0 0 0 0 13 13 0 0 0 0 0
Part-time Workers/Drop-Ins 0% 1 1 1 1 1 1 1 1 1 1 1 1
Total Unit Sales 13 15 17 19 19 32 32 36 48 48 48 51
Unit Prices 1 2 3 4 5 6 7 8 9 10 11 Month 12
Full-time Couples $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00
After School Care $240.00 $240.00 $240.00 $240.00 $240.00 $240.00 $240.00 $240.00 $240.00 $240.00 $240.00 $240.00
Summer Camp $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00 $460.00
Part-time Workers/Drop-Ins $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00
Sales
Full-time Couples $2,760 $3,680 $4,600 $5,520 $5,520 $4,600 $4,600 $9,200 $12,420 $12,420 $12,420 $13,800
After School Care $1,440 $1,440 $1,440 $1,440 $1,440 $1,920 $1,920 $3,600 $4,800 $4,800 $4,800 $4,800
Summer Camp $0 $0 $0 $0 $0 $5,980 $5,980 $0 $0 $0 $0 $0
Part-time Workers/Drop-Ins $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Total Sales $4,300 $5,220 $6,140 $7,060 $7,060 $12,600 $12,600 $12,900 $17,320 $17,320 $17,320 $18,700
Direct Unit Costs 1 2 3 4 5 6 7 8 9 10 11 Month 12
Full-time Couples 2.90% $13.34 $13.34 $13.34 $13.34 $13.34 $13.34 $13.34 $13.34 $13.34 $13.34 $13.34 $13.34
After School Care 1.90% $4.56 $4.56 $4.56 $4.56 $4.56 $4.56 $4.56 $4.56 $4.56 $4.56 $4.56 $4.56
Summer Camp 3.00% $13.80 $13.80 $13.80 $13.80 $13.80 $13.80 $13.80 $13.80 $13.80 $13.80 $13.80 $13.80
Part-time Workers/Drop-Ins 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Direct Cost of Sales
Full-time Couples $80 $107 $133 $160 $160 $133 $133 $267 $360 $360 $360 $400
After School Care $27 $27 $27 $27 $27 $36 $36 $68 $91 $91 $91 $91
Summer Camp $0 $0 $0 $0 $0 $179 $179 $0 $0 $0 $0 $0
Part-time Workers/Drop-Ins $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of

Sales $107 $134 $161 $187 $187 $349 $349 $335 $451 $451 $451 $491
plan.

Personnel Plan
1 2 3 4 5 6 7 8 9 10 11 Month 12
Campus Director 0% $1,833 $1,833 $1,833 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042
F/T Instructors 0% $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $2,560 $2,560 $2,560 $2,560 $2,560
P/T Instructors 0% $600 $600 $600 $600 $600 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
Total People 3 3 3 3 3 4 4 5 5 5 5 5
Total Payroll $3,713 $3,713 $3,713 $3,922 $3,922 $4,522 $4,522 $5,802 $5,802 $5,802 $5,802 $5,802
General Assumptions
1 2 3 4 5 6 7 8 9 10 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest
Rate 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
Long-term
Interest Rate 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0
Pro Forma Profit and Loss
Month Month
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 10 11 Month 12
Sales $4,300 $5,220 $6,140 $7,060 $7,060 $12,600 $12,600 $12,900 $17,320 $17,320 $17,320 $18,700
Direct Cost of Sales $107 $134 $161 $187 $187 $349 $349 $335 $451 $451 $451 $491
Hidden Row $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $107 $134 $161 $187 $187 $349 $349 $335 $451 $451 $451 $491
Gross Margin $4,193 $5,086 $5,979 $6,873 $6,873 $12,251 $12,251 $12,565 $16,869 $16,869 $16,869 $18,209
Gross Margin % 97.50% 97.43% 97.38% 97.35% 97.35% 97.23% 97.23% 97.40% 97.39% 97.39% 97.39% 97.37%
Expenses
Payroll $3,713 $3,713 $3,713 $3,922 $3,922 $4,522 $4,522 $5,802 $5,802 $5,802 $5,802 $5,802
Sales and Marketing

and Other Expenses $0 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $4,900 $4,900 $4,900 $4,900 $4,900 $4,900 $4,900 $4,900 $4,900 $4,900 $4,900 $4,900
Utilities $875 $875 $875 $875 $875 $875 $875 $875 $875 $875 $875 $875
Insurance $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Payroll Taxes 15% $557 $557 $557 $588 $588 $678 $678 $870 $870 $870 $870 $870
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating
Expenses $10,645 $10,845 $10,845 $11,085 $11,085 $11,775 $11,775 $13,247 $13,247 $13,247 $13,247 $13,247
Profit Before
Interest and Taxes ($6,452) ($5,759) ($4,866) ($4,213) ($4,213) $475 $475 ($683) $3,621 $3,621 $3,621 $4,961
EBITDA ($6,452) ($5,759) ($4,866) ($4,213) ($4,213) $475 $475 ($683) $3,621 $3,621 $3,621 $4,961
Interest Expense $345 $340 $335 $330 $326 $321 $316 $311 $306 $301 $296 $291
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($6,797) ($6,099) ($5,201) ($4,543) ($4,538) $155 $160 ($993) $3,315 $3,320 $3,325 $4,670
Net Profit/Sales -158.08% -116.84% -84.71% -64.35% -64.28% 1.23% 1.27% -7.70% 19.14% 19.17% 19.20% 24.97%
Pro Forma Cash Flow
1 2 3 4 5 6 7 8 9 10 11 Month 12
Cash Received
Cash from Operations
Cash Sales $4,300 $5,220 $6,140 $7,060 $7,060 $12,600 $12,600 $12,900 $17,320 $17,320 $17,320 $18,700
Subtotal Cash from

Operations $4,300 $5,220 $6,140 $7,060 $7,060 $12,600 $12,600 $12,900 $17,320 $17,320 $17,320 $18,700
Additional Cash Received
Sales Tax, VAT, HST/GST

Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities

(interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current

Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $4,300 $5,220 $6,140 $7,060 $7,060 $12,600 $12,600 $12,900 $17,320 $17,320 $17,320 $18,700
Expenditures 1 2 3 4 5 6 7 8 9 10 11 Month 12
Expenditures from
Operations
Cash Spending $3,713 $3,713 $3,713 $3,922 $3,922 $4,522 $4,522 $5,802 $5,802 $5,802 $5,802 $5,802
Bill Payments $246 $7,392 $7,607 $7,630 $7,681 $7,685 $7,923 $7,924 $8,095 $8,203 $8,198 $8,194
Subtotal Spent on
Operations $3,959 $11,105 $11,320 $11,552 $11,603 $12,207 $12,445 $13,726 $13,897 $14,005 $14,000 $13,996
Additional Cash Spent
Sales Tax, VAT, HST/GST

Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal

Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities
Principal Repayment $838 $838 $838 $838 $838 $838 $838 $838 $838 $838 $838 $838
Purchase Other Current

Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $4,797 $11,943 $12,158 $12,390 $12,441 $13,045 $13,283 $14,564 $14,735 $14,843 $14,838 $14,834
Net Cash Flow ($497) ($6,723) ($6,018) ($5,330) ($5,381) ($445) ($683) ($1,664) $2,585 $2,477 $2,482 $3,866
Cash Balance $65,053 $58,330 $52,312 $46,982 $41,601 $41,156 $40,473 $38,809 $41,394 $43,871 $46,353 $50,219
plan.
Pro Forma Balance Sheet
Month Month
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 10 11 Month 12
Starting
Assets Balances
Current Assets
Cash $65,550 $65,053 $58,330 $52,312 $46,982 $41,601 $41,156 $40,473 $38,809 $41,394 $43,871 $46,353 $50,219
Other Current Assets $14,130 $14,130 $14,130 $14,130 $14,130 $14,130 $14,130 $14,130 $14,130 $14,130 $14,130 $14,130 $14,130
Total Current Assets $79,680 $79,183 $72,460 $66,442 $61,112 $55,731 $55,286 $54,603 $52,939 $55,524 $58,001 $60,483 $64,349
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $79,680 $79,183 $72,460 $66,442 $61,112 $55,731 $55,286 $54,603 $52,939 $55,524 $58,001 $60,483 $64,349
Month Month
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 10 11 Month 12
Current Liabilities
Accounts Payable $0 $7,138 $7,353 $7,374 $7,425 $7,420 $7,659 $7,654 $7,822 $7,929 $7,925 $7,920 $7,954
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $7,138 $7,353 $7,374 $7,425 $7,420 $7,659 $7,654 $7,822 $7,929 $7,925 $7,920 $7,954
Long-term Liabilities $60,000 $59,162 $58,324 $57,486 $56,648 $55,810 $54,972 $54,134 $53,295 $52,457 $51,619 $50,781 $49,943
Total Liabilities $60,000 $66,300 $65,677 $64,860 $64,073 $63,230 $62,631 $61,788 $61,117 $60,387 $59,544 $58,701 $57,897
Paid-in Capital $59,130 $59,130 $59,130 $59,130 $59,130 $59,130 $59,130 $59,130 $59,130 $59,130 $59,130 $59,130 $59,130
Retained Earnings ($39,450) ($39,450) ($39,450) ($39,450) ($39,450) ($39,450) ($39,450) ($39,450) ($39,450) ($39,450) ($39,450) ($39,450) ($39,450)
Earnings $0 ($6,797) ($12,897) ($18,098) ($22,641) ($27,179) ($27,024) ($26,865) ($27,858) ($24,543) ($21,223) ($17,898) ($13,228)
Total Capital $19,680 $12,883 $6,783 $1,582 ($2,961) ($7,499) ($7,344) ($7,185) ($8,178) ($4,863) ($1,543) $1,782 $6,452
Total Liabilities and Capital $79,680 $79,183 $72,460 $66,442 $61,112 $55,731 $55,286 $54,603 $52,939 $55,524 $58,001 $60,483 $64,349
Net Worth $19,680 $12,883 $6,783 $1,582 ($2,961) ($7,499) ($7,344) ($7,185) ($8,178) ($4,863) ($1,543) $1,782 $6,452
Start with the Basics

Unlike common restaurants, a bbq restaurant is much simpler although not less taxing to run. You need
to showcase your basic business skills such as accounting, record keeping, HR management and
marketing. On top of this, you need to have at least exceptional love for food, specifically grilled and
barbecued ones. To some extent, home-made and family recipes seem to capture a large chunk of the
market as well as those that promise added health benefits. A good location for a restaurant is
characterized by ample human traffic and often visited by potential customers such as office/government
workers and students. If you're renting a space, search out landlords offering agreeable rates and terms.
Register your business and obtain applicable licenses/permits. Visit the U.S. Internal Revenue Service
office and State Revenue Agency regarding business registration.
Secure BBQ Equipment/Materials
You may actually utilize what extras your kitchen provides. It is always an advantage to start small
especially when you don't have much experience or overwhelming capital to spend yet. The family's griller
or grill-oven can be used for your restaurant, as well as your extra refrigerator/freezer for storing your
meat, vegetables and other ingredients. Condiments, saucers, plates, spoons, forks, knives and other
kitchen utensils are also needed. A couple of tables and chairs would do for a small restaurant. If you
can't find any extra stuff in the house, you may secure less expensive materials from discount stores and
on-line. Recipes and techniques are also highly available from the Internet for your disposal. A computer
with Internet connection, a telephone and/or fax machine, cash register, receipt and document printer and
a calculating tool are also some of the essential stuff for your restaurant. You may also use your car for
running errands, small deliveries and purchasing items for the restaurant.
You may purchase grill&smoker equipment for as low as $100 to as high as $1,500. Prices of some
freezers and refrigerators are more or less the same as most grill&smoker. To sum up, a start-up capital
of $15,000 to $20,000 may be sufficient for a small-scale BBQ restaurant.
Satisfaction Guaranteed
To market your product, you may use classified ads, posters and/or fliers, combined with enticing music
and eye-catching signboard. But the best method of all is the favorable commendation by your satisfied
customers. Keep them all coming back for more of your mouth-watering, fall-off-the-bone and high quality
grills and barbecues.
History of Quality
The roots of Total Quality Management (TQM) can be traced back to early 1920s when statistical theory was first
applied to product quality control. This concept was further developed in Japan in the 40s led by Americans, such as
Deming, Juran and Feigenbaum. The focus widened from quality of products to quality of all issues within an
organisation – the start of TQM.
The following shows the history of Total Quality Management, from inspection to business excellence.
 Inspection
 Quality Control and Statistical Theory
 Quality in Japan
 Total Quality
 Total Quality Management
 Quality Awards and Excellence Models
 Business Excellence
 How the BPIR can help Quality Practioners and Managers
Inspection
Inspection involves measuring, examining, and testing products, process and services against specified requirements
to determine conformity.
The use of inspection has been evident throughout the history of organised production. In the late Middle Ages,
special measures were taken to inspect the work of apprentices and journeymen in order to guard the Guild against
claims of makeshift or shoddy work.
During the early years of manufacturing, inspection was used to decide whether a worker’s job or a product met the
requirements; therefore, acceptable. It was not done in a systematic way, but worked well when the volume of
production was reasonably low. However, as organisations became larger, the need for more effective operations
became apparent.
In 1911, Frederick W. Taylor helped to satisfy this need. He published ‘The Principles of Scientific Management’
which provided a framework for the effective use of people in industrial organisations. One of Taylor’s concepts was
clearly defined tasks performed under standard conditions. Inspection was one of these tasks and
 was intended to ensure that no faulty product left the factory or workshop;
 focuses on the product and the detection of problems in the product;
 involves testing every item to ensure that it complies with product specifications;
 is carried out at the end of the production process; and relies on specially trained inspectors.
This movement led to the emergence of a separate inspection department. An important new idea that emerged from
this new department was defect prevention, which led to quality control.
Inspection still has an important role in modern quality practices. However, it is no longer seen as the answer to all
quality problems. Rather, it is one tool within a wider array.
[Top]
Quality Control and Statistical Theory
Quality Control was introduced to detect and fix problems along the production line to prevent the production of faulty
products. Statistical theory played an important role in this area. In the 1920s, Dr W. Shewhart developed the
application of statistical methods to the management of quality. He made the first modern control chart and
demonstrated that variation in the production process leads to variation in product. Therefore, eliminating variation in
the process leads to a good standard of end products.
Statistical Quality Control:
 focuses on product and the detection and control of quality problems;

 involves testing samples and statistically infers compliance of all products;
 is carried out at stages through the production process; and
 relies on trained production personnel and quality control professionals.
Shewart’s work was later developed by Deming, Dodge and Roming. However, manufacturing companies did not
fully utilise these techniques until the late 1940s.
[Top]
Quality in Japan
In the 1940s, Japanese products were perceived as cheep, shoddy imitations. Japanese industrial
leaders recognised this problem and aimed to produce innovative high quality products. They invited a
few quality gurus, such as Deming, Juran, and Feigenbaum to learn how to achieve this aim.
Deming suggested that they can achieve their goal in five years; not many Japanese believed him.
However, they followed his suggestions. Maybe the Japanese thought it was rude to say that they did not
believe Deming. Or maybe they thought it would be embarrassing if they could not follow his suggestions.
Whatever reason it was, they took Deming’s and other gurus’ advice and never looked back.
In the 1950s, quality control and management developed quickly and became a main theme of Japanese
management. The idea of quality did not stop at the management level. Quality circles started in the early
60s. A quality circle is a volunteer group of workers who meet and discuss issues to improve any aspects
of workplace, and make presentations to management with their ideas.
A by-product of quality circles was employee motivation . Workers felt that they were involved and heard.
Another by-product was the idea of improving not only quality of the products, but also every aspect of
organisational issues. This probably was the start of the idea, total quality.
[Top]
Total Quality
The term ‘total quality’ was used for the first time in a paper by Feigenbaum at the first international
conference on quality control in Tokyo in 1969. The term referred to wider issues within an organisation.
Ishikawa also discussed ‘total quality control’ in Japan, which is different from the western idea of total
quality. According to his explanation, it means ‘company-wide quality control’ that involves all employees,
from top management to the workers, in quality control.
[Top]
Total Quality Management
In the 1980s to the 1990s, a new phase of quality control and management began. This became known
as Total Quality Management (TQM). Having observed Japan’s success of employing quality issues,
western companies started to introduce their own quality initiatives. TQM, developed as a catchall phrase
for the broad spectrum of quality-focused strategies, programmes and techniques during this period,
became the centre of focus for the western quality movement.
A typical definition of TQM includes phrases such as: customer focus, the involvement of all employees,
continuous improvement and the integration of quality management into the total organisation. Although
the definitions were all similar, there was confusion. It was not clear what sort of practices, policies, and
activities needed to be implemented to fit the TQM definition.
Read more on Total Quality Management.
[Top]
Quality Awards and Excellence Models
In 1988 a major step forward in quality management was made with the development of the Malcolm
Baldrige Award in the United States. The model, on which the award was based, represented the first
clearly defined and internationally recognised TQM model. It was developed by the United States
government to encourage companies to adopt the model and improve their competitiveness.
In response to this, a similar model was developed by the European Foundation of Quality Management
in 1992. This EFQM Excellence Model is the framework for the European Quality Award.
While leading organisations compete to win awards, the main purpose of these awards is to encourage
more companies to adopt quality management principles. The models are practical tools; they help
organisations to measure where they are now and where they want to be in the future. The models also
help organisations to create a plan to reduce the gap between these positions.
Today, hundreds of quality awards and several models exist all over the world. For more information on
some of these models, visit 'Excellence Models'.
[Top]
Business Excellence
TQM models are often called Business Excellence Models. Also, TQM itself is now often called Business
Excellence. This is to distinguish the “new TQM” from the past work on TQM.
As mentioned earlier, there was confusion as to what TQM was in the 80s and early 90s. This was
because any business improvement programme was becoming called TQM. Therefore, the name TQM
became tarnished.
Business Excellence is really the same as TQM, but with a more clearly defined approach.
Read more on Business Excellence
[Top]
How the BPIR can help Quality Practioners and Managers
Increasing number of organisations, large or small, have become involved in TQM/Business Excellence in
the new millennium. The Centre for Organisational Excellence Research (COER), recognised the need
for resources devoted to this area and launched the BPIR.com in April 2002.
Today, the BPIR.com members' area provides the most comprehensive information and services related
to quality, quality management, TQM and Business Excellence. Whether you are quality practitioner or a
manager focussed on business improvement, the resources within the members' area will help you to
have a greater impact within your workplace.
The Importance of Choosing the Right Leadership Style

By Murray Johannsen, Feel free to connect with the author on Linkedin or by email
"A groom used to spend whole days in currycombing and rubbing down his Horse, but at the same time stole
his oats and sold them for his own profit. “Alas!” said the Horse, “if you really wish me to be in good
condition, you should groom me less, and feed me more.”— Aesop's Fables
Moral of the Story: Looking good is never good enough.
When developing your leadership skills, one must soon confront an important practical question, "What leadership
styles work best for me and my organization?" To answer this question, it's best to understand that there are many
from which to choose and as part of yourleadership development effort, you should consider developing as many
leadership styles as possible.
This page focuses on an aspect of leadership we commonly don't think much about—style. But it is also about
leadership. Many think is all about fashion. In fact, choosing the right style, at the right time in the right situation is a
key element of leader effectiveness. That's not what most people do—they have one style used in all situations. It's
like having only one suit or one dress, something you wear everywhere. Of course, all of us would agree that having
only one set of clothes is ridiculous. So to is having only one leadership style.
16 Major Leadership Styles

"Our knowledge can only be finite, while our ignorance must necessarily be infinite." — Karl Popper, Austrian
philosopher
There is some overlap between the styles (i.e. charisma and transformational); some can be used together
(facilitative and team building); while others might be implemented less frequently (strategic and cross-cultural); and
some are polar opposites (autocratic & participative).
One dimension of has to do with control and one's perception of how much control one should give to people. For
example, the laissez faire style implies low control, the autocratic style high control and the participative lies
somewhere in between.
The Autocratic Leadership Style
The autocratic style has its advocates, but it is falling out of favor in many countries. Some people have argued that
the style is popular with today's CEO's, who have much in common with feudal lords in Medieval Europe.
A basic set of leadership styles have to do with control—how much you are willing to give to others and how much to
give to others. Partly, it is a matter of personal choice. For example, despite the best efforts of management theoriest,
many CEOs are simply control freaks who want to "firm hand on the helm" and will not tolerate difference of opinions.
Kurt Lewin called these styles: authoritative, participative (democratic) or delegative (Laissez Faire).
Take an on-line Quiz on these Leadership Styles
The Charismatic Style
“The superior man understands what is right; the inferior man understands what will sell.” - Confucius
This is a special leadership style commonly often associated with transformational leadership. While charisma is
extremely powerful, it is difficult to learn and not that easy to define.
The Coaching Style Of Leadership
A great coach is definitely a leader who also possess a unique gifts ability to teach and train.
Cross-Cultural Leadership
Not all individuals can adapt to the leadership styles expected in a different culture whether that culture is
organizational or national. In fact, there is some evidence that American and Asian Leadership Styles are very
different, primarily due to cultural factors.
Emergent Leadership
Contrary to the belief of many, groups don't automatically accept a new "boss" as leader. Emergent leadership is
what you must do when one taking over a new group.
The Exchange Style
Sometimes known as leader-member exchange, the style involves the exchange of favors between two individuals.
An exchange can be hierarchical between the boss and subordinate or occur between two individuals of equal status.
For this leadership style to work, you need to know how to develop, maintain and repair relationships.
The Laissez Faire Leadership Style

The style is largely a "hands off" view that tends to minimize the amount of direction and face time required. Works
well if you have highly trained, highly motivated direct reports.
Situational Leadership
Situational Leadership. In the 1950s, management theorists from Ohio State University and the University of
Michigan published a series of studies to determine whether leaders should be more task or relationship (people)
oriented. The importance of the research cannot be over estimated since leaders tend to have a dominant style; a
leadership style they use in a wide variety of situations. Surprisingly, the research discovered that there is no one
best style: leaders must adjust their leadership style to the situation as well as to the people being led.
Hershey and Blanchard's Model of Situational Leadership. Going back to the 1970s, the model primarily focuses on
the nature of the task as the major variable in choosing your style. In this model, there are four options: telling, selling,
participating and delegating.
Strategic Leadership
This is practiced by the military services such as the US Army, US Air Force, and many large corporations. It stresses
the competitive nature of running an organization and being able to out fox and out wit the competition.
Team Leadership
A few years ago, a large corporation decided that supervisors were no longer needed and those in charge were
suddenly made "team leaders." Today, companies have gotten smarter about how to exert effective team leadership,
but it still takes leadership to transition a group into a team.
The Transformational Leadership Style
The primary focus of the transformational leadership style is to make change happen in:
 Our Self,
 Others,
 Groups, and
 Organizations
The transformational style requires a number of different skills and is closely associated with two other leadership
styles: charismatic and visionary leadership.
Facilitative Leadership
This is a special style that anyone who runs a meeting can employ. Rather than being directive, one using
the facilitative leadership style uses a number of indirect communication patterns to help the group reach consensus.
Influence Styles
Here one looks at the behaviors associated how one exercises influence. For example, does the person mostly
punish? Do they know how to reward?
The Participative Leadership Style
It's hard to order and demand someone to be creative, perform as a team, solve complex problems, improve quality,
and provide outstanding customer service. The participative style presents a happy medium between over controlling
(micromanaging) and not being engaged and tends to be seen in organizations that must innovate to prosper.
Servant Leadership Style
Some leaders have put the needs of their followers first. For example, the motto of the Los Angeles Police
Department, "To Protect and Serve." reflects this philosophy of service. One suspects servant leadership are
relatively rare in business.
Visionary Leadership
"The Roots of our Problems are: Wealth without work, Pleasure without conscience, Knowledge without
character, Commerce without morality, Science without humanity, Worship without sacrifice, Politics without
principles." - Mohandas k. Gandhi
It's surprising who few leaders really have a clear view of what is happening socially or economically in their industry,
nation or globally. The visionary leadership style focuses on how the leader defines the future for followers and
moves them toward it.
Less Common Styles
Transactional Leadership
The approach emphasizes getting things done within the umbrella of the status quo; almost in opposition to the goals
of the transformational leadership. It's considered to be a "by the book" approach in which the person works within
the rules. As such, it's more commonly seen in large, bureaucratic organizations where political considerations are
part of daily life.
Level 5 Leadership
This term was coined by Jim Collins in his book Good to Great: Why Some Company’s Make the Leap and Other
Don’t. As Collins says in his book, "We were surprised, shocked really, to discover the types of leadership required
for turning a good company into a great one." What he seems to have found is whatThe Economist calls, "The Cult of
the Faceless Boss."
Primal Leadership Styles
It would seem that just when you have it all sorted out, someone invents a new set of labels. Goleman's model
of leadership is a relatively recent addition to the pantheon of leadership style. In this case, it is Danel Goleman. A
psychologist who can write in more scholar English, he was one of the major people who popularized Emotional
Intelligence and then followed it up with a book called "Primal Leadership. Worth taking a look at. ts based on the
application of emotional intelligence to leadership. The six leadership styles one can use are: coaching, pace setting,
democratic, affinitive, authoritative and coercive.
Resources For Learning The Major Leadership Styles

The following table presents the resources available if you wish to learn how to use some of the styles on this page.
Major Styles On-site On-line Online

Information Classes Coaching
Available
Available*
Autocratic Yes
Charisma Yes
Coaching Yes
Cross-Cultural Yes Yes Yes
Emergent Yes
Exchange Yes
Facilitative Yes Yes
Influence Tactics Yes Yes
Laissez Faire
Participative
Servant
Situational Yes Yes
Strategic
Team Yes Yes
Transformational Yes Yes Yes
Visionary Yes Yes
Contact Us for more information on the specifics.
Profiles In Leadership
This section will contain videos about the leadership styles of business and government leaders.
The Importance of Leadership
Description: Some have said that one only needs good management to run a successful business organization. In
what areas do leaders make a difference? This video talks about the importance of leadership using different
examples ranging from student organizations to three historical examples: Japan, China and Britain and three leaders
who had such an immense impact on those nations: Emperor Meiji, The Dowager Empress Ci Xi and Elisabeth I.
Ben Bernanke and Henry Paulson.
The two men have widely differing leadership styles but have been thrust together by historical chance in dealing with
the 2008 Wall Street financial crisis.
"Any one can hold the helm when the sea is calm." -Publilius Syrus
Concepts of Leadership
I used to think that running an organization was equivalent to conducting a symphony orchestra. But I don't think
that's quite it; it's more like jazz. There is more improvisation. — Warren Bennis
Good leaders are made not born. If you have the desire and willpower, you can become an effective leader. Good
leaders develop through a never ending process of self-study, education, training, and experience (Jago, 1982). This
guide will help you through that process.
To inspire your workers into higher levels of teamwork, there are certain things you must be, know, and, do. These
do not come naturally, but are acquired through continual work and study. Good leaders are continually working and
studying to improve their leadership skills; they are NOT resting on their laurels.
Definition of Leadership
The meaning of a message is the change which it produces in the

image. — Kenneth Boulding in The Image: Knowledge in Life and
Society
Before we get started, lets define leadership. Leadership is a process by which a person influences others to
accomplish an objective and directs the organization in a way that makes it more cohesive and coherent. This
definition is similar to Northouse's (2007, p3) definition — Leadership is a process whereby an individual influences a
group of individuals to achieve a common goal.
Leaders carry out this process by applying their leadership knowledge and skills. This is called Process
Leadership (Jago, 1982). However, we know that we have traits that can influence our actions. This is called Trait
Leadership (Jago, 1982), in that it was once common to believe that leaders were born rather than made. These two
leadership types are shown in the chart below (Northouse, 2007, p5):
While leadership is learned, the skills and knowledge processed by the leader can be influenced by his or hers
attributes or traits, such as beliefs, values, ethics, and character. Knowledge and skills contribute directly to
the process of leadership, while the other attributes give the leader certain characteristics that make him or her
unique.
Skills, knowledge, and attributes make the Leader, which is one of the:
Four Factors of Leadership
There are four major factors in leadership (U.S. Army, 1983):

Leader
You must have an honest understanding of who you are, what you know, and what you can do. Also, note that it is
the followers, not the leader or someone else who determines if the leader is successful. If they do not trust or lack
confidence in their leader, then they will be uninspired. To be successful you have to convince your followers, not
yourself or your superiors, that you are worthy of being followed.
Followers
Different people require different styles of leadership. For example, a new hire requires more supervision than an
experienced employee. A person who lacks motivation requires a different approach than one with a high degree of
motivation. You must know your people! The fundamental starting point is having a good understanding of human
nature, such as needs, emotions, and motivation. You must come to know your employees' be,
know, and do attributes.
Communication
You lead through two-way communication. Much of it is nonverbal. For instance, when you “set the example,” that
communicates to your people that you would not ask them to perform anything that you would not be willing to do.
What and how you communicate either builds or harms the relationship between you and your employees.
Situation
All situations are different. What you do in one situation will not always work in another. You must use your judgment
to decide the best course of action and the leadership style needed for each situation. For example, you may need to
confront an employee for inappropriate behavior, but if the confrontation is too late or too early, too harsh or too
weak, then the results may prove ineffective.
Also note that the situation normally has a greater effect on a leader's action than his or her traits. This is because
while traits may have an impressive stability over a period of time, they have little consistency across situations
(Mischel, 1968). This is why a number of leadership scholars think the Process Theory of Leadership is a more
accurate than the Trait Theory of Leadership.
Various forces will affect these four factors. Examples of forces are your relationship with your seniors, the skill of
your followers, the informal leaders within your organization, and how your organization is organized.
Boss or Leader?
Although your position as a manager, supervisor, lead, etc. gives you the authority to accomplish certain tasks and
objectives in the organization (called Assigned Leadership), this power does not make you a leader, it simply makes
you theboss (Rowe, 2007). Leadership differs in that it makes the followers want to achieve high goals
(called Emergent Leadership), rather than simply bossing people around (Rowe, 2007). Thus you get Assigned
Leadership by your position and you display Emergent Leadership by influencing people to do great things.
Bass' Theory of Leadership
Bass' theory of leadership states that there are three basic ways to explain how people become leaders (Stogdill,
1989; Bass, 1990). The first two explain the leadership development for a small number of people. These theories
are:
o Some personality traits may lead people naturally into leadership roles. This is the Trait Theory.
o A crisis or important event may cause a person to rise to the occasion, which brings out
extraordinary leadership qualities in an ordinary person. This is the Great Events Theory.
o People can choose to become leaders. People can learn leadership skills. This is the
Transformational or Process Leadership Theory. It is the most widely accepted theory today and the
premise on which this guide is based.
Total Leadership
What makes a person want to follow a leader? People want to be guided by those they respect and who have a clear
sense of direction. To gain respect, they must be ethical. A sense of direction is achieved by conveying a strong
vision of the future.
When a person is deciding if she respects you as a leader, she does not think about your attributes, rather, she
observes what you do so that she can know who you really are. She uses this observation to tell if you are an
honorable and trusted leader or a self-serving person who misuses authority to look good and get promoted. Self-
serving leaders are not as effective because their employees only obey them, not follow them. They succeed in many
areas because they present a good image to their seniors at the expense of their workers.
Be Know Do
The basis of good leadership is honorable character and selfless service to your organization. In your employees'
eyes, your leadership is everything you do that effects the organization's objectives and their well-being. Respected
leaders concentrate on (U.S. Army, 1983):
o what they are [be] (such as beliefs and character)

o what they know (such as job, tasks, and human nature)
o what they do (such as implementing, motivating, and providing direction).
What makes a person want to follow a leader? People want to be guided by those they respect and who have a clear
sense of direction. To gain respect, they must be ethical. A sense of direction is achieved by conveying a strong
vision of the future.
The Two Most Important Keys to Effective

Leadership
According to a study by the Hay Group, a global management consultancy, there are 75 key components of
employee satisfaction (Lamb, McKee, 2004). They found that:
o Trust and confidence in top leadership was the single most reliable predictor of employee
satisfaction in an organization.
o Effective communication by leadership in three critical areas was the key to winning organizational
trust and confidence:
1. Helping employees understand the company's overall business strategy.
2. Helping employees understand how they contribute to achieving key business objectives.
3. Sharing information with employees on both how the company is doing and how an
employee's own division is doing — relative to strategic business objectives.
So in a nutshell — you must be trustworthy and you have to be able to communicate a vision of where the
organization needs to go. The next section, Principles of Leadership, ties in closely with this key concept.
Principles of Leadership
To help you be, know, and do, follow these eleven principles of leadership (U.S. Army, 1983). The later chapters in
thisLeadership guide expand on these principles and provide tools for implementing them:
1. Know yourself and seek self-improvement - In order to know yourself, you have to understand
your be, know, and do, attributes. Seeking self-improvement means continually strengthening your
attributes. This can be accomplished through self-study, formal classes, reflection, and interacting
with others.
2. Be technically proficient - As a leader, you must know your job and have a solid familiarity with
your employees' tasks.
3. Seek responsibility and take responsibility for your actions - Search for ways to guide your
organization to new heights. And when things go wrong, they always do sooner or later — do not
blame others. Analyze the situation, take corrective action, and move on to the next challenge.
4. Make sound and timely decisions - Use good problem solving, decision making, and planning
tools.
5. Set the example - Be a good role model for your employees. They must not only hear what they
are expected to do, but also see. We must become the change we want to see - Mahatma Gandhi
6. Know your people and look out for their well-being - Know human nature and the importance
of sincerely caring for your workers.
7. Keep your workers informed - Know how to communicate with not only them, but also seniors
and other key people.
8. Develop a sense of responsibility in your workers - Help to develop good character traits that
will help them carry out their professional responsibilities.
9. Ensure that tasks are understood, supervised, and accomplished - Communication is the key
to this responsibility.
10. Train as a team - Although many so called leaders call their organization, department, section,
etc. a team; they are not really teams...they are just a group of people doing their jobs.
11. Use the full capabilities of your organization - By developing a team spirit, you will be able to
employ your organization, department, section, etc. to its fullest capabilities.
Attributes of Leadership
If you are a leader who can be trusted, then those around you will grow to respect you. To be such a leader, there is
aLeadership Framework to guide you:
BE KNOW DO
BE a professional. Examples: Be loyal to the organization, perform selfless service, take personal responsibility.
BE a professional who possess good character traits. Examples: Honesty, competence, candor, commitment,
integrity, courage, straightforwardness, imagination.
KNOW the four factors of leadership — follower, leader, communication, situation.
KNOW yourself. Examples: strengths and weakness of your character, knowledge, and skills.
KNOW human nature. Examples: Human needs, emotions, and how people respond to stress.
KNOW your job. Examples: be proficient and be able to train others in their tasks.
KNOW your organization. Examples: where to go for help, its climate and culture, who the unofficial leaders are.
DO provide direction. Examples: goal setting, problem solving, decision making, planning.
DO implement. Examples: communicating, coordinating, supervising, evaluating.
DO motivate. Examples: develop morale and esprit de corps in the organization, train, coach, counsel.
Environment
Every organization has a particular work environment, which dictates to a considerable degree how its leaders
respond to problems and opportunities. This is brought about by its heritage of past leaders and its present leaders.
Goals, Values, and Concepts
Leaders exert influence on the environment via three types of actions:
1. The goals and performance standards they establish.

2. The values they establish for the organization.
3. The business and people concepts they establish.
Successful organizations have leaders who set high standards and goals across the entire spectrum, such as
strategies, market leadership, plans, meetings and presentations, productivity, quality, and reliability.
Values reflect the concern the organization has for its employees, customers, investors, vendors, and surrounding
community. These values define the manner in how business will be conducted.
Concepts define what products or services the organization will offer and the methods and processes for conducting
business.
These goals, values, and concepts make up the organization's personality or how the organization is observed by
both outsiders and insiders. This personality defines the roles, relationships, rewards, and rites that take place.
Roles and Relationships
Roles are the positions that are defined by a set of expectations about behavior of any job incumbent. Each role has
a set of tasks and responsibilities that may or may not be spelled out. Roles have a powerful effect on behavior for
several reasons, to include money being paid for the performance of the role, there is prestige attached to a role, and
a sense of accomplishment or challenge.
Relationships are determined by a role's tasks. While some tasks are performed alone, most are carried out in
relationship with others. The tasks will determine who the role-holder is required to interact with, how often, and
towards what end. Also, normally the greater the interaction, the greater the liking. This in turn leads to more frequent
interaction. In human behavior, its hard to like someone whom we have no contact with, and we tend to seek out
those we like. People tend to do what they are rewarded for, and friendship is a powerful reward. Many tasks and
behaviors that are associated with a role are brought about by these relationships. That is, new task and behaviors
are expected of the present role-holder because a strong relationship was developed in the past, either by that role-
holder or a prior role-holder.
Culture and Climate
There are two distinct forces that dictate how to act within an organization: culture and climate.
Each organization has its own distinctive culture. It is a combination of the founders, past leadership, current
leadership, crises, events, history, and size (Newstrom, Davis, 1993). This results in rites: the routines, rituals, and
the “way we do things.” These rites impact individual behavior on what it takes to be in good standing (the norm) and
directs the appropriate behavior for each circumstance.
The climate is the feel of the organization, the individual and shared perceptions and attitudes of the organization's
members (Ivancevich, Konopaske, Matteson, 2007). While the culture is the deeply rooted nature of the organization
that is a result of long-held formal and informal systems, rules, traditions, and customs; climate is a short-term
phenomenon created by the current leadership. Climate represents the beliefs about the “feel of the organization” by
its members. This individual perception of the “feel of the organization” comes from what the people believe about the
activities that occur in the organization. These activities influence both individual and team motivation and
satisfaction, such as:
o How well does the leader clarify the priorities and goals of the organization? What is expected of us?
o What is the system of recognition, rewards, and punishments in the organization?
o How competent are the leaders?
o Are leaders free to make decisions?
o What will happen if I make a mistake?
Organizational climate is directly related to the leadership and management style of the leader, based on the values,
attributes, skills, and actions, as well as the priorities of the leader. Compare this to “ethical climate” — the feel of the
organization about the activities that have ethical content or those aspects of the work environment that constitute
ethical behavior. The ethical climate is the feel about whether we do things right; or the feel of whether we behave the
way we ought to behave. The behavior (character) of the leader is the most important factor that impacts the climate.
On the other hand, culture is a long-term, complex phenomenon. Culture represents the shared expectations and
self-image of the organization. The mature values that create tradition or the “way we do things here.” Things are
done differently in every organization. The collective vision and common folklore that define the institution are a
reflection of culture. Individual leaders, cannot easily create or change culture because culture is a part of the
organization. Culture influences the characteristics of the climate by its effect on the actions and thought processes of
the leader. But, everything you do as a leader will affect the climate of the organization.
For information on culture, see Long-Term Short-Term Orientation
The Process of Great Leadership
The road to great leadership (Kouzes & Posner, 1987) that is common to successful leaders:
o Challenge the process - First, find a process that you believe needs to be improved the most.
o Inspire a shared vision - Next, share your vision in words that can be understood by your
followers.
o Enable others to act - Give them the tools and methods to solve the problem.
o Model the way - When the process gets tough, get your hands dirty. A boss tells others what to
do, a leader shows that it can be done.
o Encourage the heart - Share the glory with your followers' hearts, while keeping the pains within
your own.
Next Steps
Go to the next chapter: The Four Pillars: Leadership, Management,

Command, and Control
leadership
leadership development methods and tips

Explaining and understanding the nature of good leadership is probably easier
than practising it. Good leadership requires deep human qualities, beyond
conventional notions of authority.
In the modern age good leaders are an enabling force, helping people and
organizations to perform and develop, which implies that a sophisticated
alignment be achieved - of people's needs, and the aims of the organization.
The traditional concept of a leader being the directing chief at the top of a
hierachy is nowadays a very incomplete appreciation of what true leadership
must be.
Effective leadership does not necessarily require great technical or intellectual
capacity. These attributes might help, but they are not pivotal.
Good leadership in the modern age more importantly
requires attitudes and behaviours which characterise and relate
tohumanity.
The concept of serving is fundamental to the leadership role. Good
leadership involves serving the organization or group and the people within
it. Ineffective leaders tend to invert this principle and consider merely that the
leader must be served by the people. This faulty idea fosters the notion that
leadership as an opportunity to take: to acquire personal status, advantage,
gain, etc., at the expense of others, which is grossly wrong. Leadership is
instead an opportunity to give; to serve the organization, and crucially the
people too. The modern notions of 'servant leader' and 'servant leadership'
are attributed to Robert K Greenleaf (in his 1970 essay The Servant as
Leader) however the philosophy and concept of leadership being a serving
function rather than one that is served, is very old indeed and found in
ancient civilisations and religious writings.
Leadership is centrally concerned with people. Of course leadership involves
decisions and actions relating to all sorts of other things, but leadership is
special compared to any other role because of its unique
responsibilty for people - i.e., the followers of the leader - in whatever
context leadership is seen to operate.
Many capabilities in life are a matter of acquiring skills and knowledge and
then applying them in a reliable way. Leadership is quite different. Good
leadership demands emotional strengths and behavioural characteristics
which can draw deeply on a leader's mental and spiritual reserves.
The leadership role is an inevitable reflection of people's needs and challenges
in modern life. Leadership is therefore a profound concept, with increasingly
complex implications, driven by an increasingly complex and fast-changing
world.
Leadership and management are commonly seen as the same thing, which
they are not. Leadership is also misunderstood to mean directing and
instructing people and making important decisions on behalf of an
organization. Effective leadership is much more than these.
Good leaders are followed chiefly because people trust and respect them,
rather than the skills they possess. Leadership is about behaviour first, skills
second.
This is a simple way to see how leadership is different to management:
 Management is mostly about processes.
 Leadership is mostly about behaviour.
We could extend this to say:

 Management relies heavily on tangible measurable capabilities such as
effective planning; the use of organizational systems; and the use of
appropriate communications methods.
 Leadership involves many management skills, but generally as a secondary
or background function of true leadership. Leadership instead relies most
strongly on less tangible and less measurable things like trust, inspiration,
attitude, decision-making, and personal character. These are not processes
or skills or even necessarily the result of experience. They are facets of
humanity, and are enabled mainly by the leader's character and especially
his/her emotional reserves.
Another way to see leadership compared with management, is that leadership

does not crucially depend on the type of management methods and
processes a leaders uses; leadership instead primarily depends on the
ways in which the leader uses management methods and processes.
Good leadership depends on attitudinal qualities, not management processes.
Humanity is a way to describe these qualities, because this reflects the
leader's vital relationship with people.
Qualities critical for a leader's relationship with his/her people are quite
different to conventional skills and processes:
examples of highly significant leadership qualities

 integrity
 honesty
 humility
 courage
 commitment
 sincerity
 passion
 confidence
 positivity
 wisdom
 determination
 compassion
 sensitivity
People with these sort of behaviours and attitudes tend to attract followers.
Followers are naturally drawn to people who exhibit strength and can inspire
belief in others. These qualities tend to produce a charismatic effect.
Charisma tends to result from effective leadership and the qualities which
enable effective leadership. Charisma is by itself no guarantee of effective
leadership.
Some people are born more naturally to leadership than others. Most people
don't seek to be a leader, but many more people are able to lead, in one way
or another and in one situation or another, than they realize.
People who want to be a leader can develop leadership ability. Leadership is
not the exclusive preserve of the wealthy and educated.
Leadership is a matter of personal conviction and believing strongly in a cause
or aim, whatever it is.
Leadership sometimes comes to people later in life, and this is no bad thing.
Humanity tends to be generational characteristic. There is no real obstacle to
people who seek to become leaders if leadership is approached with proper
integrity. Anyone can be a leader if he/she is suitably driven to a particular
cause.
And many qualities of effective leadership, like confidence and charisma,
continue to grow from experience in the leadership role. Even initially
surprised modest leaders can become great ones, and sometimes the greatest
ones.
Leadership can be performed with different styles. Some leaders have one
style, which is right for certain situations and wrong for others. Some leaders
can adapt and use different leadership styles for given situations.
Adaptability of style is an increasingly significant aspect of leadership, because
the world is increasingly complex and dynamic. Adaptability stems from
objectivity, which in turn stems from emotional security and emotional
maturity. Again these strengths are not dependent on wealth or education, or
skills or processes.
Good leaders typically have a keen understanding of relationships within quite
large and complex systems and networks. This may be from an intuitive
angle, or a technical/learned angle, or both.
A very useful way to explore this crucial aspect of leadership with respect to
wider relationships and systems is offered by the Psychological Contractand
how that theory relates to organizations and leadership.
People new to leadership (and supervision and management) often feel under
pressure to lead in a particularly dominant way. Sometimes this pressure on a
new leader to impose their authority on the team comes from above.
Dominant leadership is rarely appropriate however, especially for mature
teams. Misreading this situation, and attempting to be overly dominant, can
then cause problems for a new leader. Resistance from the team becomes a
problem, and a cycle of negative behaviours and reducing performance
begins. Much of leadership is counter-intuitive. Leadership is often more
about serving than leading. Besides which, individuals and teams tend not to
resist or push against something in which they have a strong
involvement/ownership/sense of control. People tend to respond well to
thanks, encouragement, recognition, inclusiveness, etc. Tough, overly
dominant leadership gives teams a lot to push against and resist. It also
prevents a sense of ownership and self-control among the people being led.
And it also inhibits the positive rewards and incentives (thanks, recognition,
encouragement, etc) vital for teams and individuals to cope with change, and
to enjoy themselves. Leaders of course need to be able to make tough
decisions when required, but most importantly leaders should concentrate on
enabling the team to thrive, which is actually a 'serving' role, not the
dominant 'leading' role commonly associated with leadership.
Today ethical leadership is more important than ever. The world is more
transparent and connected than it has ever been. The actions and
philosophies of organisations are scrutinised by the media and the general
public as never before. This coincides with massively increased awareness
and interest among people everywhere in corporate responsibility and the
many related concepts, such as social and community responsibility (see
theethical leadership and ethical organisations page). The modern leader
needs to understand and aspire to leading people and achieving greatness in
all these areas.
Here is (was..) an Excellent 30 minute BBC Radio 4 Discussion about Modern
Leadership - (first broadcast 2 Sept 2006, part of the 'Sound Advice' series).
Its mere existence is evidence of changed attitudes to leadership. Such a
programme would not have warranted BBC airtime a generation ago due to
lack of audience interest. Today there is huge awareness of, and interest in,
more modern leadership methods. The radio discussion highlighted the need
for effective modern leaders to have emotional strength and sensitivity, far
beyond traditional ideas of more limited autocratic leadership styles. I'm sorry
(if still) this linked item is unavailable from the BBC website, especially if the
recording is lost forever in the BBC's archives. If you know a suitably
influential executive at the Beeb who can liberate it please contact me.
Incidentally as a quick case-study, the BBC illustrates an important aspect of
leadership, namely philosophy.
Philosophy (you could call it 'fundamental purpose') is the foundation on
which to build strategy, management, operational activities, and
pretty well everything else that happens in an organization.
Whatever the size of the organization, operational activities need to be
reconcilable with a single congruent (fitting, harmonious) philosophy.
Executives, managers, staff, customers, suppliers, stakeholders, etc., need
solid philosophical principles (another term would be a 'frame of reference')
on which to base their expectations, decisions and actions. In a vast complex
organization like the BBC, leadership will be very challenging at the best of
times due to reasons of size, diversity, political and public interest, etc. Having
a conflicting philosophy dramatically increases these difficulties for everyone,
not least the leader, because the frame of reference is confusing.
For leadership to work well, people (employees and interested outsiders)
must be able to connect their expectations, aims and activities to a basic
purpose or philosophy of the organization. This foundational philosophy
should provide vital reference points for employees' decisions and actions - an
increasingly significant factor in modern 'empowered' organizations. Seeing a
clear philosophy and purpose is also essential for staff, customers and
outsiders in assessing crucial organizational characteristics such as integrity,
ethics, fairness, quality and performance. A clear philosophy is vital to the
'psychological contract' - whether stated or unstated (almost always unstated)
- on which people (employees, customers or observers) tend to judge their
relationships and transactions.
The BBC is an example (it's not the only one) of an organization which has a
confusing organizational philosophy. At times it is inherently conflicting. For
example: Who are its owners? Who are its customers? What are its priorities
and obligations? Are its commercial operations a means to an end, or an end
in themselves? Is its main aim to provide commercial mainstream
entertainment, or non-commercial education and information? Is it a public
service, or is it a commercial provider? Will it one day be privatised in part or
whole? If so will this threaten me or benefit me? As an employee am I sharing
in something, or being exploited? As a customer (if the description is apt) am
I also an owner? Or am I funding somebody else's gravy train? What are the
organization's obligations to the state and to government?
Given such uncertainties, not only is there a very unclear basic philosophy and
purpose, but also, it's very difficult to achieve consistency for leadership
messages to staff and customers. Also, how can staff and customers align
their efforts and expectations with such confusing aims and principles?
The BBC is just an example. There are many organizations, large and small,
with conflicting and confusing fundamental aims. The lesson is that
philosophy - or underpinning purpose - is the foundation on which leadership
(for strategy, management, motivation, everything) is built. If the foundation
is not solid and viable, and is not totally congruent with what follows, then
everything built onto it is prone to wobble, and at times can fall over
completely.
Get the philosophy right - solid and in harmony with the activities - and the
foundation is strong.
Again, the Psychological Contract provides a helpful perspective for aligning
people and organizational philosopy.
This of course gives rise to the question of what to do if you find yourself
leading a team or organization which lacks clarity of fundamental philosophy
and purpose, and here lies an inescapable difference between managing and
leading:
As a leader your responsibility extends beyond leading the people.
True leadership also includes - as far as your situation allows - the
responsibility to protect or refine fundamental purpose and
philosophy.
See also the notes and processes for incorporating fundamental philosophy
within strategic business development and marketing.
allegiance and leadership
Different leaders have different ideas about leadership. For example, see
below Jack Welch's perspective, which even though quite modern compared
to many leaders, is nevertheless based on quite traditional leadership
principles.
First here is a deeper more philosophical view of effective modern leadership
which addresses the foundations of effective leadership, rather than the styles
and methods built on top, which are explained later.
A British government initiative surfaced in March 2008, which suggested that
young people should swear an oath of allegiance to 'Queen and Country',
seemingly as a means of improving national loyalty, identity, and allegiance.
While packaged as a suggestion to address 'disaffection' among young
people, the idea was essentially concerned with leadership - or more precisely
a failing leadership.
The idea was rightly and unanimously dismissed by all sensible commentators
as foolhardy nonsense, but it does provide a wonderful perspective by which
to examine and illustrate the actual important principles of leadership:
1. Always, when leaders say that the people are not following, it's the
leaders who are lost, not the people.
2. Leaders get lost because of isolation, delusion, arrogance, plain
stupidity, etc., but above all because they become obsessed with
imposing their authority, instead of truly leading.
3. Incidentally, leading is helping people achieve a shared vision, not
telling people what to do.
4. It is not possible for a leader to understand and lead people when the
leader's head is high in the clouds or stuck firmly up his backside.
5. That is to say - loyalty to leadership relies on the leader having a
connection with and understanding of people's needs and wishes and
possibilities. Solutions to leadership challenges do not lie in the leader's
needs and wishes. Leadership solutions lie in the needs and wishes of
the followers.
6. The suggestion that loyalty and a following can be built by simply
asking or forcing people to be loyal is not any basis for effective
leadership.
7. Prior to expecting anyone to follow, a leader first needs to demonstrate
a vision and values worthy of a following.
8. A given type of leadership inevitably attracts the same type of followers.
Put another way, a leadership cannot behave in any way that it asks its
people not to.
9. In other words, for people to embrace and follow modern
compassionate, honest, ethical, peaceful, and fair principles, they must
see these qualities demonstrated by their leadership.
10. People are a lot cleverer than most leaders think.
11. People have a much keener sense of truth than most leaders
think.
12. People quickly lose faith in a leader who behaves as if points 10
and 11 do not exist.
13. People generally have the answers which elude the leaders - they
just have better things to do than help the leader to lead - like getting
on with their own lives.
14. A leadership which screws up in a big way should come clean and
admit their errors. People will generally forgive mistakes but they do not
tolerate being treated like idiots by leaders.
15. And on the question of mistakes, a mistake is an opportunity to
be better, and to show remorse and a lesson learned. This is how
civilisation progresses.
16. A leader should be brave enough to talk when lesser people want
to fight. Anyone can resort to threats and aggression. Being aggressive
is not leading. It might have been a couple of thousand years ago, but
it's not now. The nature of humankind and civilisation is to become
more civilised. Leaders should enable not obstruct this process.
traditional leadership tips - jack welch style..
Jack Welch, respected business leader and writer is quoted as proposing

these fundamental leadership principles (notably these principles are
expanded in his 2001 book 'Jack: Straight From The Gut'):
1. There is only one way - the straight way. It sets the tone of the
organisation.
2. Be open to the best of what everyone, everywhere, has to offer;
transfer learning across your organisation.
3. Get the right people in the right jobs - it is more important than
developing a strategy.
4. An informal atmosphere is a competitive advantage.
5. Make sure everybody counts and everybody knows they count.
6. Legitimate self-confidence is a winner - the true test of self-confidence
is the courage to be open.
7. Business has to be fun - celebrations energise and organisation.
8. Never underestimate the other guy.
9. Understand where real value is added and put your best people there.
10. Know when to meddle and when to let go - this is pure instinct.
As a leader, your main priority is to get the job done, whatever the job is.
Leaders make things happen by:
 knowing your objectives and having a plan how to achieve them
 building a team committed to achieving the objectives
 helping each team member to give their best efforts
As a leader you must know yourself. Know your own strengths and
weaknesses, so that you can build the best team around you.
However - always remember the philosophical platform - this ethical
platform is not a technique or a process - it's the foundation on
which all the techniques and methodologies are based.
Plan carefully, with your people where appropriate, how you will achieve your
aims. You may have to redefine or develop your own new aims and priorities.
Leadership can be daunting for many people simply because no-one else is
issuing the aims - leadership often means you have to create your own from a
blank sheet of paper. Set and agree clear standards. Keep the right balance
between 'doing' yourself and managing others 'to do'.
Build teams. Ensure you look after people and that communications and
relationships are good. Select good people and help them to develop. Develop
people via training and experience, particularly by agreeing objectives and
responsibilities that will interest and stretch them, and always support people
while they strive to improve and take on extra tasks. Follow the rules
about delegation closely - this process is crucial. Ensure that your managers
are applying the same principles. Good leadership principles must cascade
down through the whole organisation. This means that if you are leading a
large organisation you must check that the processes for managing,
communicating and developing people are in place and working properly.
Communication is critical. Listen, consult, involve, explain why as well as what
needs to be done.
Some leaders lead by example and are very 'hands on'; others are more
distanced and let their people do it. Whatever - your example is paramount -
the way you work and conduct yourself will be the most you can possibly
expect from your people. If you set low standards you are to blame for low
standards in your people.
"... Praise loudly, blame softly." (Catherine the Great). Follow this maxim.
If you seek one singlemost important behaviour that will rapidly earn you
respect and trust among your people, this is it: Always give your people the
credit for your achievements and successes. Never take the credit yourself -
even if it's all down to you, which would be unlikely anyway. You must
however take the blame and accept responsibility for any failings or mistakes
that your people make. Never never never publicly blame another person for
a failing. Their failing is your responsibility - true leadership offers is no hiding
place for a true leader.
Take time to listen to and really understand people. Walk the job. Ask and
learn about what people do and think, and how they think improvements can
be made.
Accentuate the positive. Express things in terms of what should be done, not
what should not be done. If you accentuate the negative, people are more
likely to veer towards it. Like the mother who left her five-year-old for a
minute unsupervised in the kitchen, saying as she left the room, "...don't you
go putting those beans up your nose..."
Have faith in people to do great things - given space and air and time,
everyone can achieve more than they hope for. Provide people with relevant
interesting opportunities, with proper measures and rewards and they will
more than repay your faith.
Take difficult decisions bravely, and be truthful and sensitive when you
implement them.
Constantly seek to learn from the people around you - they will teach you
more about yourself than anything else. They will also tell you 90% of what
you need to know to achieve your business goals.
Embrace change, but not for change's sake. Begin to plan your own
succession as soon as you take up your new post, and in this regard, ensure
that the only promises you ever make are those that you can guarantee to
deliver.
Here are some processes and tips for training and developing leadership.
leadership behaviours and development of leadership style and skills
Leadership skills are based on leadership behaviour. Skills alone do not make
leaders - style and behaviour do. If you are interested in leadership training
and development - start with leadership behaviour.
The growing awareness and demand for idealist principles in leadership are
increasing the emphasis (in terms of leadership characteristics) on business
ethics, corporate responsibility, emotional maturity, personal integrity, and
what is popularly now known as the 'triple bottom line'(abbreviated to TBL or
3BL, representing 'profit, people, planet').
For many people (staff, customers, suppliers, investors, commentators,
visionaries, etc) these are becoming the most significant areas of
attitude/behaviour/appreciation required in modern business and
organisational leaders.
3BL (triple bottom line - profit, people, planet) also provides an excellent
multi-dimensional framework for explaining, developing and assessing
leadership potential and capability, and also links strongly with psychology
aspects if for instance psychometrics (personality testing) features in
leadership selection and development methods: each of us is more naturally
inclined to one or the other (profit, people, planet) by virtue of our
personality, which can be referenced to Jung, Myers Briggs, etc.
Much debate persists as to the validity of 'triple bottom line accounting', since
standards and measures are some way from being clearly defined and
agreed, but this does not reduce the relevance of the concept, nor the
growing public awareness of it, which effectively and continuously re-shapes
markets and therefore corporate behaviour. Accordingly leaders need to
understand and respond to such huge attitudinal trends, whether they can be
reliably accounted for or not at the moment.
Adaptability and vision - as might be demonstrated via project development
scenarios or tasks - especially involving modern communications and
knowledge technologies - are also critical for certain leadership roles, and
provide unlimited scope for leadership development processes, methods and
activities.
Cultural diversity is another topical and very relevant area requiring leadership
involvement, if not mastery. Large organisations particularly must recognise
that the market-place, in terms of staff, customers and suppliers, is truly
global now, and leaders must be able to function and appreciate and adapt to
all aspects of cultural diversification. A leaders who fails to relate culturally
well and widely and openly inevitably condemns the entire organisation to
adopt the same narrow focus and bias exhibited by the leader.
Bear in mind that different leadership jobs (and chairman) require different
types of leaders - Churchill was fine for war but not good for peacetime re-
building. There's a big difference between short-term return on investment
versus long-term change. Each warrants a different type of leadership style,
and actually very few leaders are able to adapt from one to the other. (Again
see the personality styles section: short-term results and profit require strong
Jungian 'thinking' orientation, or frontal left brain dominance; whereas long-
term vision and change require 'intuition' orientation, or frontal right brain
dominance).
If it's not clear already, leadership is without doubt mostly about behaviour,
especially towards others. People who strive for these things generally come
to be regarded and respected as a leader by their people:
 Integrity - the most important requirement; without it everything else is for
nothing.
 Having an effective appreciation and approach towards corporate
responsibility, (Triple Bottom Line, Fair Trade, etc), so that the need to
make profit is balanced with wider social and environmental responsibilities.
 Being very grown-up - never getting emotionally negative with people - no
shouting or ranting, even if you feel very upset or angry.
 Leading by example - always be seen to be working harder and more
determinedly than anyone else.
 Helping alongside your people when they need it.
 Fairness - treating everyone equally and on merit.
 Being firm and clear in dealing with bad or unethical behaviour.
 Listening to and really understanding people, and show them that you
understand (this doesn't mean you have to agree with everyone -
understanding is different to agreeing).
 Always taking the responsibility and blame for your people's mistakes.
 Always giving your people the credit for your successes.
 Never self-promoting.
 Backing-up and supporting your people.
 Being decisive - even if the decision is to delegate or do nothing if
appropriate - but be seen to be making fair and balanced decisions.
 Asking for people's views, but remain neutral and objective.
 Being honest but sensitive in the way that you give bad news or criticism.
 Always doing what you say you will do - keeping your promises.
 Working hard to become expert at what you do technically, and at
understanding your people's technical abilities and challenges.
 Encouraging your people to grow, to learn and to take on as much as they
want to, at a pace they can handle.
 Always accentuating the positive (say 'do it like this', not 'don't do it like
that').
 Smiling and encouraging others to be happy and enjoy themselves.
 Relaxing - breaking down the barriers and the leadership awe - and giving
your people and yourself time to get to know and respect each other.
 Taking notes and keeping good records.
 Planning and prioritising.
 Managing your time well and helping others to do so too.
 Involving your people in your thinking and especially in managing change.
 Reading good books, and taking advice from good people, to help develop
your own understanding of yourself, and particularly of other people's
weaknesses (some of the best books for leadership are not about business
at all - they are about people who triumph over adversity).
 Achieve the company tasks and objectives, while maintaining your integrity,
the trust of your people, are a balancing the corporate aims with the needs
of the world beyond.
great leadership quotes and inspirational quotes
Some of these quotes are available as free motivational posters.

"People ask the difference between a leader and a boss.... The leader works
in the open, and the boss in covert. The leader leads and the boss drives."
(Theodore Roosevelt)
"The marksman hitteth the target partly by pulling, partly by letting go. The
boatsman reacheth the landing partly by pulling, partly by letting go."
(Egyptian proverb)
"No man is fit to command another that cannot command himself." (William
Penn)
"It is amazing what you can accomplish if you do not care who gets the
credit." (President Harry S Truman)
"I not only use all the brains I have, but all I can borrow." (Woodrow Wilson)
"What should it profit a man if he would gain the whole world yet lose his
soul." (The Holy Bible, Mark 8:36)
"A dream is just a dream. A goal is a dream with a plan and a deadline."
(Harvey Mackay)
"Ideas are like rabbits. You get a couple, learn how to look after them, and
pretty soon you have a dozen." (John Steinbeck)
"I keep six honest serving-men, They taught me all I knew; Their names are
What and Why and When, And How and Where and Who." (Rudyard Kipling,
from 'Just So Stories', 1902.)
"A dwarf standing on the shoulders of a giant may see farther than the giant
himself." (Didacus Stella, circa AD60 - and, as a matter of interest, abridged
on the edge of an English £2 coin)
"Integrity without knowledge is weak and useless, and knowledge without
integrity is dangerous and dreadful." (Samuel Johnson 1709-84)
"The most important thing in life is not to capitalise on your successes - any
fool can do that. The really important thing is to profit from your mistakes."
(William Bolitho, from 'Twelve against the Gods')
"Out of the night that covers me, Black as the pit from pole to pole, I thank
whatever gods may be, For my unconquerable soul. In the fell clutch of
circumstance, I have not winced nor cried aloud: Under the bludgeonings of
chance my head is bloody but unbowed . . . . . It matters not how strait the
gait, how charged with punishments the scroll, I am the master of my fate: I
am the captain of my soul." (WE Henley, 1849-1903, from 'Invictus')
"Everybody can get angry - that's easy. But getting angry at the right person,
with the right intensity, at the right time, for the right reason and in the right
way - that's hard." (Aristotle)
"Management means helping people to get the best out of themselves, not
organising things." (Lauren Appley)
"It's not the critic who counts, not the one who points out how the strong
man stumbled or how the doer of deeds might have done them better. The
credit belongs to the man who is actually in the arena; whose face is marred
with the sweat and dust and blood; who strives valiantly; who errs and comes
up short again and again; who knows the great enthusiasms, the great
devotions and spends himself in a worthy cause and who, at best knows the
triumph of high achievement and who at worst, if he fails, at least fails while
daring greatly so that his place shall never be with those cold and timid souls
who know neither victory nor defeat." (Theodore Roosevelt.)
"Behind an able man there are always other able men." (Chinese Proverb.)
"I praise loudly. I blame softly." (Catherine the Great, 1729-1796.)
"Experto Credite." ("Trust one who has proved it." Virgil, 2,000 years ago.)
More leadership and inspirational quotes

See also the free motivational posters for leadership quotes.
leadership development exercises and games
The are various games and exercises on the free team building games section
that work well for demonstrating, assessing and developing leadership. See
particularly the 'leading or managing' exercise, which is a flexible activity for
illustrating the differences between managing and leading. As regards
leadership exercises for experiential development of leadership abilities, focus
on the leadership challenge of leading and managing a team - the task itself is
secondary - so virtually any team game is suitable provided you give each
leader a team of four or more people to lead. The more people, the bigger
the test of leadership. You do not need a complicated exercise to create a
leadership challenge. The leadership challenge is produced by having to
organise, plan and motivate a team of people. In fact, if the task is too
complex it will obscure the team leadership issues, by distracting from or
hampering leadership skills and qualities. For leadership development choose
exercises that includes an enjoyable and achievable challenge - even very
basic games like newspaper towers will be a good test of leadership if you
create teams of four or more for the leader to lead. Use games that you feel
will produce variety, fun and a mixture of activities. The round tables exercise
is particularly suitable to test and develop leadership skills. Choose a mixture
of exercises which encourage the leaders think about using a different
approach, and different people's strengths, for each challenge.
leadership articles and leadership development justification
Many articles appear in the press and trade journals about leadership; look
out for them, they can teach you a lot.
Newspaper articles - particularly those that appear in the serious press -
about leadership and management, organizational and business culture, are
an excellent source of ideas, examples and references for developing
leadership.
A journalist could have spent a week researching the subject, talking to
leading business leaders, academics and writers, and preparing useful
statistics. This is valuable material. Learn from it, use it and keep it, because
finding specific detail like this is usually quite difficult.
Serious relevant articles in the newspapers, trade press, or online equivalent,
cost little or nothing, and yet they can be invaluable in developing your own
ideas about leadership, and in providing compelling justification to
organizations and managers for the need to adopt new ideas and different
approach to leadership development.
Particularly powerful are articles which describe corporate failings, many with
huge liabilities, arising from poor leadership behaviour and decisions, and
which appear in the news virtually every week. Recent history is also littered
with all sorts of corporate disasters and scandals, and while these high-profile
examples are of a grander scale than usually applies in typical organisations,
the same principles apply - an organisation is only as good as its leadership -
at all levels.
Business disasters and failures - be their nature environmental, financial,
safety, commercial or people-related - are invariably traceable back to a
failure in leadership, and so any boardroom that says "That sort of thing
wouldn't happen to us.." or "Our managers all know how to lead without
being taught.." is probably riding for a fall.
Finding specific examples of cost and return on investment relating to
leadership development is not easy (measuring leadership 'cause and effect' is
not as simple as more tangible business elements), which is why it's useful to
keep any such articles when you happen to see them.
Certain leadership development organisations are sometimes able to provide
ROI justification and/or case studies, which is another possible source of
evidence for reports and justification studies.
And given the growing significance of corporate ethics and responsibility, we
can expect to see increasing ROI data relating to 'Triple Bottom Line' and
'Corporate Responsibility', which being strongly linked to leadership therefore
will provide a further source of evidence and justification for leadership
development.
Top 10 HR Best Practices

By: Gireesh Sharma
Abstract
Here is a collaboration of Top Ten HR Practices that can help you achieve your
organizational goals every year
Summary of practices
1. Safe, Healthy And Happy Workplace

2. Open Book Management Style
3. Performance Linked Bonuses
4. 360-Degree Performance Management Feedback System
5. Fair Evaluation System For Employees
6. Knowledge Sharing
7. Highlight Performers
8. Open House Discussions And Feedback Mechanisms
9. Reward Ceremonies
10. Delight Employees With The Unexpected
1. Safe, Healthy and Happy Workplace
Creating a safe, healthy and happy workplace will ensure that your employees feel
homely and stay with your organization for a very long time. Capture their pulse
through employee surveys.
2. Open Book Management Style
Sharing information about contracts, sales, new clients, management objectives,

company policies, employee personal data etc. ensures that the employees are as
enthusiastic about the business as the management. Through this open book process
you can gradually create a culture of participative management and ignite the creative
endeavor of your work force.. It involves making people an interested party to your
strategic decisions, thus aligning them to your business objectives. Be as open as you
can. It helps in building trust & motivates employees. Employee self service portal,
Manager on-line etc. are the tools available today to the management to practice this
style.
3. Performance linked Bonuses
Paying out bonuses or having any kind of variable compensation plan can be both an
incentive and a disillusionment, based on how it is administered and communicated.
Bonus must be designed in such a way that people understand that there is no payout
unless the company hits a certain level of profitability. Additional criteria could be the
team's success and the individual's performance. Never pay out bonus without
measuring performance, unless it is a statutory obligation.
4. 360 Degree Performance Management Feedback System
This system, which solicits feedback from seniors (including the boss), peers and
subordinates has been increasingly embraced as the best of all available methods for
collecting performance feedback. Gone are the days of working hard to impress only
one person, now the opinions of all matter, especially if you are in a leadership role (at
any level). Every person in the team is responsible for giving relevant, positive and
constructive feedback. Such systems also help in identifying leaders for higher level
positions in the organization. Senior managers could use this feed back for self
development.
5. Fair Evaluation System for Employees
Develop an evaluation system that clearly links individual performance to corporate

business goals and priorities. Each employee should have well defined reporting
relationships. Self rating as a part of evaluation process empowers employees.
Evaluation becomes fairer if it is based on the records of periodic counseling &
achievements of the employee, tracked over the year. For higher objectivity, besides
the immediate boss, each employee should be screened by the next higher level (often
called a Reviewer). Cross - functional feedback, if obtained by the immediate boss from
another manager (for whom this employee's work is also important), will add to the
fairness of the system. Relative ratings of all subordinates reporting to the same
manager is another tool for fairness of evaluation. Normalization of evaluation is yet
another dimension of improving fairness.
6. Knowledge Sharing
Adopt a systematic approach to ensure that knowledge management supports

strategy. Store knowledge in databases to provide greater access to information posted
either by the company or the employees on the knowledge portals of the company.
When an employee returns after attending any competencies or skills development
program, sharing essential knowledge with others could be made mandatory.
Innovative ideas(implemented at the work place) are good to be posted on these
knowledge sharing platforms. However,what to store & how to maintain a Knowledge
base requires deep thinking to avoid clutter.
7. Highlight performers
Create profiles of top performers and make these visible though company intranet,
display boards etc. It will encourage others to put in their best, thereby creating a
competitive environment within the company. If a systems approach is followed to
shortlist high performers, you can surely avoid disgruntlements.
8. Open house discussions and feedback mechanism
Ideas rule the world. Great organizations recognize, nurture and execute great ideas.
Employees are the biggest source of ideas. The only thing that can stop great ideas
flooding your organization is the lack of an appropriate mechanism to capture ideas.
Open house discussions,employee-management meets, suggestion boxes and ideas
capture tools such as Critical Incidents diaries are the building blocks that can help the
Managers to identify & develop talent.
9. Reward Ceremonies
Merely recognizing talent does not work, you need to couple it with ceremonies where
recognition is broadcast. Looking at the Dollar Check is often less significant than
listening to the thunderous applause by colleagues in a public forum.
10. Delight Employees with the Unexpected
The last but not least way is to occasionally delight your employees with unexpected
things that may come in the form of a reward, a gift or a well-done certificate. Reward
not only the top performers but also a few others who are in need of motivation to
exhibit their potential.
EmpXtrack' is a composite HR solution which helps in the institutionalization of most of

these best practices by utilizing software tools. EmpXtrack team is always available to
provide you with systems which are synchronized with your HR processes.
Human Resource Planning: an Introduction

Reilly P
Report 312, Institute for Employment Studies, September 1996
print-friendly page
A British Foreign Office official looking back over a career spanning the
first half of the twentieth century commented: ‘Year after year the fretters
and worriers would come to me with their awful predictions of the
outbreak of war. I denied it each time. I was only wrong twice!’Some
would see this as the arrogant complacency to be associated with
planners. Critics think of the inaccuracy and over-optimism of forecasting
— the ‘hockey stick’ business growth projections. They regard planning as
too inflexible, slow to respond to change, too conservative in assumptions
and risk averse. These points are made about any sort of planning.
Practical benefits
When it concerns human resources, there are the more specific criticisms that it is
over-quantitative and neglects the qualitative aspects of contribution. The issue has
become not how many people should be employed, but ensuring that all members
of staff are making an effective contribution. And for the future, the questions are
what are the skills that will be required, and how will they be acquired.
There are others, though, that still regard the quantitative planning of resources as
important. They do not see its value in trying to predict events, be they wars or
takeovers. Rather, they believe there is a benefit from using planning to challenge
assumptions about the future, to stimulate thinking. For some there is, moreover,
an implicit or explicit wish to get better integration of decision making and
resourcing across the whole organisation, or greater influence by the centre over
devolved operating units.
Cynics would say this is all very well, but the assertion of corporate control has
been tried and rejected. And is it not the talk of the process benefits to be derived
self indulgent nonsense? Can we really afford this kind of intellectual dilettantism?
Whether these criticisms are fair or not, supporters of human resource planning
point to its practical benefits in optimising the use of resources and identifying ways
of making them more flexible. For some organisations, the need to acquire and
grow skills which take time to develop is paramount. If they fail to identify the
business demand, both numerically and in the skills required, and secure the
appropriate supply, then the capacity of the organisation to fulfil its function will be
endangered.
Why human resource planning?
Human Resource Planning: an Introduction was written to draw these issues to the
attention of HR or line managers. We address such questions as:
 what is human resource planning?
 how do organisations undertake this sort of exercise?
 what specific uses does it have?
In dealing with the last point we need to be able to say to hard pressed managers:
why spend time on this activity rather than the other issues bulging your in tray?
The report tries to meet this need by illustrating how human resource planning
techniques can be applied to four key problems. It then concludes by considering
the circumstances is which human resourcing can be used.
1. Determining the numbers to be employed at a new location
If organisations overdo the size of their workforce it will carry surplus or

underutilised staff. Alternatively, if the opposite misjudgement is made, staff may
be overstretched, making it hard or impossible to meet production or service
deadlines at the quality level expected. So the questions we ask are:
 How can output be improved your through understanding the interrelation

between productivity, work organisation and technological development? What
does this mean for staff numbers?
 What techniques can be used to establish workforce requirements?
 Have more flexible work arrangements been considered?
 How are the staff you need to be acquired?
The principles can be applied to any exercise to define workforce requirements,

whether it be a business start-up, a relocation, or the opening of new factory or
office.
2. Retaining your highly skilled staff
Issues about retention may not have been to the fore in recent years, but all it
needs is for organisations to lose key staff to realise that an understanding of the
pattern of resignation is needed. Thus organisations should:
 monitor the extent of resignation
 discover the reasons for it
 establish what it is costing the organisation
 compare loss rates with other similar organisations.
Without this understanding, management may be unaware of how many good

quality staff are being lost. This will cost the organisation directly through the bill
for separation, recruitment and induction, but also through a loss of long-term
capability.
Having understood the nature and extent of resignation steps can be taken to
rectify the situation. These may be relatively cheap and simple solutions once the
reasons for the departure of employees have been identified. But it will depend on
whether the problem is peculiar to your own organisation, and whether it is
concentrated in particular groups (eg by age, gender, grade or skill).
3. Managing an effective downsizing programme
This is an all too common issue for managers. How is the workforce to be cut
painlessly, while at the same time protecting the long-term interests of the
organisation? A question made all the harder by the time pressures management is
under, both because of business necessities and employee anxieties. HRP helps by
considering:
 the sort of workforce envisaged at the end of the exercise
 the pros and cons of the different routes to get there
 how the nature and extent of wastage will change during the run-down
 the utility of retraining, redeployment and transfers
 what the appropriate recruitment levels might be.
Such an analysis can be presented to senior managers so that the cost benefit of
various methods of reduction can be assessed, and the time taken to meet targets
established.
If instead the CEO announces on day one that there will be no compulsory
redundancies and voluntary severance is open to all staff, the danger is that an
unbalanced workforce will result, reflecting the take-up of the severance offer. It is
often difficult and expensive to replace lost quality and experience.
4. Where will the next generation of managers come from?
Many senior managers are troubled by this issue. They have seen traditional career
paths disappear. They have had to bring in senior staff from elsewhere. But they
recognise that while this may have dealt with a short-term skills shortage, it has
not solved the longer term question of managerial supply: what sort, how many,
and where will they come from? To address these questions you need to
understand:
 the present career system (including patterns of promotion and movement, of

recruitment and wastage)
 the characteristics of those who currently occupy senior positions
 the organisation’s future supply of talent.
This then can be compared with future requirements, in number and type. These
will of course be affected by internal structural changes and external business or
political changes. Comparing your current supply to this revised demand will show
surpluses and shortages which will allow you to take corrective action such as:
 recruiting to meet a shortage of those with senior management potential
 allowing faster promotion to fill immediate gaps
 developing cross functional transfers for high fliers
 hiring on fixed-term contracts to meet short-term skills/experience deficits
 reducing staff numbers to remove blockages or forthcoming surpluses.
Thus appropriate recruitment, deployment and severance policies can be pursued to

meet business needs. Otherwise processes are likely to be haphazard and
inconsistent. The wrong sort of staff are engaged at the wrong time on the wrong
contract. It is expensive and embarrassing to put such matters right.
How can HRP be applied?
The report details the sort of approach companies might wish to take. Most
organisations are likely to want HRP systems:
 which are responsive to change
 where assumptions can easily be modified
 that recognise organisational fluidity around skills
 that allow flexibility in supply to be included
 that are simple to understand and use

 which are not too time demanding.
To operate such systems organisations need:
 appropriate demand models
 good monitoring and corrective action processes
 comprehensive data about current employees and the external labour market
 an understanding how resourcing works in the organisation.
If HRP techniques are ignored, decisions will still be taken, but without the benefit
of understanding their implications. Graduate recruitment numbers will be set in
ignorance of demand, or management succession problems will develop unnoticed.
As George Bernard Shaw said: ‘to be in hell is to drift; to be in heaven is to steer’.
It is surely better if decision makers follow this maxim in the way they make and
execute resourcing plans.
The Importance of Ethics in Business and

Management
“When I do good, I feel good; when I do bad, I feel bad. That’s my religion.” -
Abraham Lincoln
Good ethics lead us to believe in not doing things that are not right and not saying if they
are not true. Ethics is a system of moral principles governing the appropriate conduct of a
person or a group. It is a way of being human and having a feeling of compassion,
sympathy or regard for others the way we have for ourselves. Good ethics is important to
all occupations or social or economic class. Thus, maintaining good ethics is being consistent
with the principles of correct moral conduct constantly.
Business ethics is similar to our normal every day ethics. Good ethics leads to good
business. It is a fundamental requirement of any profession. It is integral to the success of
the business as well. Good ethics makes us aware of what we are doing including the
consequences of our actions. An organization strives continually to be in pursuit of its goals
while benefiting the employees in building up their high competencies. In this pursuit, the
adherence to high ethical standards of the employees can be very much contributory to the
impressive achievements of business goals being turned out as planned and intended.
Ethics refers to human conduct as to make judgments between what is right and what is
wrong. It could be that there are several factors that may encourage one to adopt unethical
behavior, but the right person is he who, despite facing ethical dilemmas, assesses the
situations and makes differentiation between what is morally good and bad in order to
follow the rules and code of professional conduct. Good ethics causes to gain confidence of
superiors while promoting integrity, which means to continue doing right things even when
we are not being watched.
Business also has responsibilities, such as, designing proper jobs. After the jobs are created
and the employees are appointed, fair reward and promotion systems are necessary for an
organization to implement. Employees develop positive feelings, the feeling of pleasure
when a need or desired is fulfilled. If an organization does not recognize the talent and hard
work of the employees, the consequences may lead the employees toward unethical
behavior. Employees must be treated fairly. If they are treated respectfully and in an
appropriate way, they are in favor of management else they may get back to adopt
unethical behavior.
Moreover, it is the responsibility of management to intervene if managers take improper

decisions in terms of hiring and firing the employees because the managers of business may
sometimes lose their ethics when they take certain decisions that affect the employees’
career and growth. If the decisions of managers are unethical, both employees and the
organization suffer the consequences. It must be seen whether employee morale is
enhanced. The policy guidelines related to compensations is a factor affecting employee
morale. The difference between the aspects that what compensation the employees expect
to get and what is being offered to them is in general prevailing and so it is a reason of
dissatisfaction. What in such situation a management needs to do is it should come out with
the schemes that can enhance the morale with reasonable compensations.
Furthermore, business managers or supervisors need to develop perceptual abilities that on

the basis of accurate perceptions, an unbiased outlook may be maintained. Every employee
should be treated fairly by inculcating the sense of positive feelings about the organization.
Professionalism should be preferred to favoritism as the practice of giving special treatment
or unfair advantages to a person or group creates lots of problems that result in hurting the
feelings, causing emotional pain or suffering of another person or group.
The importance of ethics in professional life can be evidenced by a number of instances

showing failure of businesses and several scandals. It may be rightly said that the situations
would not have been so worsened had there been observance of ethical standards.
Therefore, maintaining ethical standards is must for the prosperity of an organization as
well as the development of one’s personality. Good ethics will lead us to maintain our
honest image. It will enable us to refrain from such activities that may discredit to our
profession. Thus, adhesion to good ethics is to let our conscience be our guide at all times.
Albert Schweitzer says, “Ethics is the activity of man directed to secure the inner perfection
of his own personality.”
By: K.A.Fareed (Fareed Siddiqui)

market forces
Definition
Forces of demand and supply representing the aggregate influence of self-interested buyers and sellers
on price and quantity of the goods and services offered in a market. In general, excess demand causes
prices and quantity of supply to rise, and excess supply causes them to fall.
In economics, the forces of demand (a want backed by the ability to pay) and supply (the willingness and
ability to supply).
Some economists argue that resources are allocated most efficiently when producers are able to
respond to consumer demand without intervention from ‘distortions’ such as governments and trade
unions, and that profits and competition between firms and individuals provide sufficient incentives to
produce efficiently (monetarism). Critics of this view suggest that market forces alone may not be
efficient because they fail to consider social costs and benefits, and may also fail to provide for the
needs of the less well off, since private firms aiming to make a profit respond to the ability to pay.
The Market Forces of Supply and Demand
This lesson is a brief introduction to The Market Forces of Supply and Demand as seen through Volume
Spread Analysis.
Warning: This is a major step towards seeing the markets through the eyes of SM.
First, the basics from Investopedia:
Supply and demand is perhaps one of the most fundamental concepts of economics and it is the
backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired
by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price;
the relationship between price and quantity demanded is known as the demand relationship. Supply
represents how much the market can offer. The quantity supplied refers to the amount of a certain good
producers are willing to supply when receiving a certain price. The correlation between price and how
much of a good or service is supplied to the market is known as the supply relationship. Price, therefore,
is a reflection of supply and demand.
Markets move off of the imbalance of supply and demand. This is what VSA identifies so clearly on a
chart: <i>an imbalance of supply and the market has to fall; an imbalance of demand and the market has
to rise.
Accumulation from the Supply/Demand perspective is demand coming in to gradually overcome and
absorb the supply and to support the market at this price level.
Distribution from the Supply/Demand perspective is where the Supply overcomes Demand and stops
the upward move and eventually begins the downward move. Distribution refers to the elimination of a
long investment or speculative position and often involves establishing a speculative short position by
professional interests in anticipation of a decline of price. In the distribution area the professional
investors or speculators who had previously bought stock, sell there stock to the public. The public buys
and it generally buys because of good news of various sorts. Good news on the company, its product,
the economy or any news which will entice untrained people to rationalize there buying decision. The
best news of all is the advancing of the price of a stock.
There is an important relationship between supply/demand and price. But there are also other
determing factors in a market. To illustrate: suppose brand new Fords are selling for $20,000. This
means demand will step in for that commodity at that price. But, suppose, a Ford is being offered for
less: $10,000. Just considering supply and demand, one would think that demand would grab it up.
Now lets consider some other factors. In the first instance we find that the the Fprds are all pickup being
sold in a ranch community. While, in the second instance the Ford is ten years old and has been in a
wreck. In this case demand might not step up at the offered price - or any price.
Now looking at the first case: The Ford dealer understood the communities expectations and supplied
those expectations. In the second case, buyers were lkooking for a bargain, but expect to find something
drivable at that price. There expectations were not met and, even though there was supply at their
price, demand was never created.
For VSA to work, you must know the circumstances of the supply at a given price level and the
expectations od demand at that price level.
Without any other considerations:
The Law of Demand states, the lower something's price is, the more demand there is for it and the
relationship between demand and price is an inverse relationship. As one goes up, the other comes
down.
The Law of Supply states, the higher something's price is, the more it will be supplied and the
relationship between supply and price is a direct relationship. As one goes up, the other goes up.
Now consider the following chart:
This image has been resized. Click this bar to view the full image. The original image is sized
720x562.
There is nothing in the chart that hints at the reversal at point A. Price has passed a former demand
zone and volume is regular. Then (B, the blue box) comes and area of consolidation lasting more than
three weeks with tight spreads and slightly lower volume. Then, suddenly (C), volume is up and so is
price. In a discussion on this at IFT, Tekmnd explains point C very well:
"Supply and demand is the basic foundation of economics However,...Supply and demand is the effect,
not the cause.
Something happens, and supply increases or demand decreases (or both) causing price to go down, or
something happens and supply goes down or demand goes up (or both) causing price to go up.
The "something" is the cause, and the change in supply/demand is the effect.
So, yes, price went up on USD/JPY because of an increase in demand for the pair. However, it is the cause
for the change in supply and demand that caused the price change.
In fact, when you boil it all down, trading is the perception and speculation of what the change in supply
and demand will be.
To put it another way, its not like a huge bunch of people coincidentally decided to buy this pair at the
exact moment the Japan Central Bank makes an announcement that will cause the supply of Yen (the
currency in circulation) to be increased by billions of Yen."
[I highly recommend his course at Free Forex Academy]
So, at point A the insiders (other banks in Japan) are told of the discount rate change coming and price
shoots up on the dollar against the yen. At area B they wait for the public announcement, then price
shoots up again at point C. There was a fundamental change that changed expectations that changed
the balance of supply/demand and moved the price.
Wyckoff's third law: The Law of Cause and Effect
This law states that in order to have an effect you must first have a cause, and that effect will be in
proportion to the cause. This law’s operation can be seen working as the force of accumulation or
distribution within a trading range that works itself out in the subsequent move out of that trading
range.
The idea is to measure this cause and project the extent of its effect. The excesses that develop in supply
and demand are not random but are the result of key events in market action or the result of periods of
preparation.
More from Tom Wiliams and becoming a Predator:

<i>Admittedly easy to identify in hindsight bar by bar. The important point is to keep in mind is that all
the indications of weakness must have been there in the first place, as the market was unfolding day by
day. You will no doubt have difficulties in analysing a chart as it unfolds bar by bar until you have trained
your mind to think like a predator rather than run and act with the Herd. Practically all these up bars on
this chart will be accompanied with 'good news' of some sort. If there is no good news available the
news media will simply make it up to explain away the sudden up move taken place on any particular
day. Your subconscious mind will be busy absorbing this information whether you like it or not and
forming an opinion. To the untrained mind that view will be bullish, therefore you will not have even
noticed volume implications telling you otherwise.</i>
Small and Medium Enterprises (SME)
1. What is the National Small and Medium Enterprises (SME) Development Plan (Plan)?
Who is the target market of the Plan?
The National SME Development Plan is a priority strategy for developing the SME sector that comprises
99.6% of the total Philippine enterprises. This is a government initiative for the SME sector in order to
provide a strong domestic supply base for globally competitive industries.
2. Who are the agencies involved? What is the role of the DTI?
The Plan fuses together the different agencies of the Philippine government. The Department of Trade
and Industry is the lead agency for the implementation of the Plan. Specifically, the bureaus involved
are:
 Bureau of Domestic Trade Promotion (BDTP)

 Bureau of Small and Medium Enterprises Development (BSMED)
 Philippine International Trading Corporation (PITC)
 Philippine Trade and Training Center (PTTC)
 Product Development and Design Center of the Philippines (PDDCP)
 Regional Operations Group (ROG)
 Small Business Guarantee Finance Corporation (SBGFC)
 Trade and Industry Information Center (TIIC)
3. What are the general objectives of the Plan?
The Plan hopes to achieve the expansion of the enterprise by graduating micro and small enterprises to
higher levels of business undertakings and upgrading their productivity and value-added capabilities.
4. What are the specific objectives of the Plan?
The Plan has six-month objectives and three-year objectives.

a. Six-month (Jan-June 2003) objectives?
 To increase the share of small and medium segments from 8.7% to 10% by fortifying micro-
enterprises into small businesses and generating new ones
 To strengthen 20 strategic SME Centers all over the Philippines
 To intensify awareness of government initiatives to provide assistance to SMEs
b. Three-year objectives?
 To increase the share of the Small and Medium segments from 8.7% to 12%
 To increase productivity in terms of Gross-Value Added from 32% to 40% at the level of the
Asian average
5. What are the basic strategies in implementing the Plan?
 The Plan aims at a comprehensive and integrated approach to SME development

 The Plan emphasizes the seamless access to government services
 The Plan employs a supply-side push through financing, etc.
 The Plan aims for localization to directly address the concerns of the SMEs
6. What are the elements of the Plan?
The Plan has five elements:
 Financing
 Human Resource Development / Entrepreneurship Training
 Market Development
 Product Development
 Advocacy for Enabling Environment.
7. What website address will contain information about the Plan?
For more information about the Plan and other related materials, go to www.sbgfc.org.ph/smeplan
8. Who are the key contact persons?
SME - Project Management Office (SME-PMO):

Ms. Zorayda Amelia Alonzo
Chairperson
SME Core Group, National SMED Council
18th Floor, 139 Corporate Center, Valero St, Salcedo Village, Makati City
Telephone: 810-5791 local 230 / 813-5720
Telefax: 813-5720
Email: sme-pmo@sbgfc.org.ph
Financing:
Mr. Benel Lagua
President
SB Corporation
18th Floor, 139 Corporate Center, Valero St, Salcedo Village, Makati City
Telephone: 810-5791 or 95 / 813-5720 to 27
Fax No: 813-5726
Email: sbcorporation@sbgfc.org.ph
HRD / Entrepreneurship Training:
Ms. Adelaida Inton
Executive Director
Philippine Trade and Training Center
PTTC Complex, Roxas Boulevard, Pasay City
Telephone: 834-1341 / 834-1344 to 49
Fax No: 834-1343
Email: pttc@netgazer.com.ph
Marketing:
Ms. Rhodora M. Leaño
Director
Bureau of Small and Medium Enterprises Development
3rd Floor, Oppen Building, 349 Gil Puyat Avenue, Makati City
Telephone: 890-5682 / 897-1680
Fax No: 896-7916
Email: bsmed@dti.dti.gov.ph
Product Development:
Ms. Minerva P. Franco
Executive Director
Product Development and Design Center of the Philippines
CCP Complex, Roxas Boulevard, Pasay City
Telephone: 832-1112 to 18
Fax No: 832-3649
Email: pddcp@mozcom.com
Advocacy for Enabling Environment:

Ms. Minerva Fajardo
Executive Director
Trade and Industry and Information Center
4th Floor, Board of Investments Building, 385 Gil Puyat Avenue, Makati City
Telephone: 895-3611
Fax No: 895-6487
Email: MRFajardo@boi.gov.ph
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GENERAL INFORMATION
1. What business is most viable to get into?

There are hundreds of businesses available. The viability of a business will largely depend on the
following which an entrepreneur should analyze very well:
 market niche that needs the product/services

 knowledge of the product/services
 location of the business
 value-added of the product/services, in terms of quality and timeliness of delivery
 promotion
 availability of raw materials
 after sales service
 manufacturing capacity
2. Is there a need to prepare a business plan before implementing the business?
The business plan is a roadmap that will serve as a guide to the entrepreneur as he/she implements the
business and as a monitoring and evaluation tool in assessing the progress of the business. It is not
something that is permanent, but rather something that should be periodically updated as the market
demand changes. Thus, the entrepreneur should seriously prepare the business plan before the start of
the business.
All entrepreneurs, in one way or another, prepare a business plan. However, for the most part, a
majority of entrepreneurs have their business plan residing in their minds or on little notes. When they
started their businesses they relied solely on their gut-feel to tell them that their business idea is ok and
that they should pursue it. But as the business progressed or investing more money into the business
became more critical, these same entrepreneurs discovered how important it is to have a well-written
business plan. So much so that they have had to hire a consultant to assist them in the preparation of
the business plan.
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FINANCE
1. What are the major financing programs under the Plan?
SULONG (SME Unified Lending Opportunities for National Growth) Program is the brand name for the
financing initiatives under the Plan. Under SULONG, government financial institutions (GFIs) have
allocated P10 billion to lend out in the next six months. This will be achieved through the following:
 Standardized Unified Lending Program by GFIs for SMEs

 Standardized Accreditation Program by GFIs for rural and thrift banks
Moreover, the following policy, structural changes are being proposed to facilitate SME lending:
 COA rules
 BSP
 Improvement of credibility of SB Corporation through sovereign guarantee and increased
subscription
 Operation of a credit bureau
 Implementation of a credit rating system
In addition, the 'One Town, One Product, One Million Pesos' Program of President Gloria Macapagal-
Arroyo is also a part of the Plan.
2. Whom do we contact for financing programs under the Plan?
You may contact Mr. Benel Lagua, President of SB Corporation, at telephone number 813-5791.
3. How can SMEs avail of the P10 billion funds being allocated by the government under
SULONG?
SMEs can approach any of the following government financial institutions (GFIs):
a. Development Bank of the Philippines

b. Land Bank of the Philippines
c. National Livelihood Support Fund
d. Small Business Guarantee and Finance Corp.
e. Philippine Export-Import Credit Agency
f. Quedan & Rural Credit Guarantee Corporation
4. Will SULONG replace the other programs and products of the participating government
financial institutions (GFIs)?
No, the loans under the SULONG program are IN ADDITION to the existing financial services of the
participating GFIs.
5. Who qualifies to borrow under SULONG?
 Enterprises in all industries except trading of imported goods, liquor, cigarettes and extractive
industries.
 Enterprises that are at least 60% Filipino owned, whose assets are valued at not more than P
100.00 M, excluding the value of the land, or subject to ownership rules as defined under
existing Philippine laws for specific industries.
6. What type of loans may be funded?
 For short-term loans, the entrepreneur may tap the program either for export financing (export
packing credit) or a credit line for temporary working capital.
 For long-term loans, SMEs may apply for loans for permanent working capital, or to purchase
equipment, a lot or to construct a building/warehouse.
7. What is the maximum financing?
 For short-term loans, the program can fund up to 70% of the value of the LC/PO (export
packing), or 70% of working capital requirement (temporary working capital); maximum of P 5.0
M.
 For long-term loans, 80% of the incremental project cost, maximum of P5.0M.
8. What is the repayment term?
 For short-term loans, a maximum of one year.

 For long-term loan, a maximum of five years, inclusive of a maximum of one year grace period
on principal monthly amortization.
9. Are collateral required? If so, what assets are acceptable?
The program will not decline a loan only on the basis of inadequate collateral. However, the borrower
must be willing to mortgage any available business and personal collateral, including assets to be
acquired from the loan, to secure the borrowing.
The following are acceptable collateral: postdated checks, registered/ unregistered real estate mortgage
(REM) / chattel mortgage (CHM), or the assignment of life insurance. In addition, for franchisees, the
following may be considered: corporate guarantee and assignment of lease rights.
If the loan purpose is for export packing credit, a borrower may assign his letter of credit (LC)/PO or
sales invoice.
10. What financial ratios/hurdles must a borrower meet?
The debt-equity ratio must at most be 80:20 after the loan. For franchisees, the required ratio is 70:30.
In addition, the borrower must show positive income for the preceding year. Should the SME borrower's
financials show negative income in the past year, the government financial institution (GFI) may
consider their average income for the last two or three years.
11. What is the interest rate for loans under this program?
The participating government financial institutions (GFIs) will charge the same rate for the program
based on a regular review. In its program launch, the interest rate for loan releases until June 30, 2003
shall be: 9% for short-term loans; 11.25% for medium-term loans of up to 3-years and 12.75% for loans
over 3-years to five years.
12. Aside from the interest rate, what fees must be paid?
A one-time application and evaluation fee of P2,000 for every P 1.0 M, a front-end fee of 1% of
approved loan, and a commitment fee of 0.125% of the unavailed balance for long term loans.
13. How long does it take to process the loan?
This will depend on the government financial institution (GFI). For example, SB Corporation can process
the loan within 2 weeks after receipt of complete documentation.
14. What is the One Town, One Product, One Million Peso Program?
The 'One Town, One Product, One Million Pesos' Program is a project of President Gloria Macapagal-
Arroyo that seeks to enhance the stimulation of domestic demand through the development of small
and medium-scale enterprises (SMEs) on a countrywide basis. For more information about the One
Town Program, you may contact Director Andy Maquiling of the Office of the President at 734-2095.
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TRAINING
1. What are the key training initiatives under the Plan?
The training and entrepreneurship development programs of the National SME Agenda seek to provide
existing and potential entrepreneurs with the necessary skills and knowledge to become competitive
players in the local or global market. It also seeks to create a pool of SME trainers, advisors and
counselors who can effectively assist SMEs nationwide.
2. How can the SMEs avail of training programs? How much are the training courses?
Training programs are provided by both the private and government institutions and are available either
for free or for a fee. SMEs must get in touch with the corresponding agency providing the training they
would like to attend and register their names. They can check the major daily newspapers for the
schedule or call Philippine Trade Training Center (PTTC) at telephone numbers 834-1344 to 49, or send a
fax to 8341343 c/o Ms. Beth Manuel or Narcel. The seminar fees vary depending on the type and
duration of the training.
Training programs are also available in the regions and provinces. They can check with the regional and
provincial offices of the different agencies for the schedule.
The PTTC has come up with a compendium of training programs from which SMEs can check for the
training schedule and contact information.
3. What is business counseling?

This is a service being provided to the SMEs wherein the business counselor explores with the
entrepreneur the possible alternative solutions to the business management problems being
encountered by the entrepreneur. The final decision, given the alternatives, still rests with the
entrepreneur.
4. Where can I obtain a list of business counselors?
Business counselors are assigned to the SME Centers at the regional and provincial offices. SME Centers
are the result of a joint undertaking by the private sector and government agencies, as initiated by the
Department of Trade and Industry through its Bureau of Small and Medium Enterprise Development
(DTI-BSMED). For more information, you may contact either Jerry Clavesillas or Dhel of BSMED at
telephone numbers 897-1680 / 897-7596 / 890-4968, fax number 896-7916 or e-mail:
bsmed@dti.dti.gov.ph.
5. How can I become a business counselor?
PTTC accredits individuals who successfully complete its Business Management Systems (BMS) course as
business counselors. For more details on the BMS course, you may contact Ms. Beth Manuel at 831-
9988 or 833-9325.
6. Where can I obtain training on how to prepare a business plan?
The Philippine Trade Training Center of the DTI (DTI-PTTC) provides training on business plan
preparation. This is a 3-day program that will enable the participants to come up with a business plan for
their enterprise. For the details and schedule you may contact either Ms. Beth Manuel or Narcel through
telefax number 831-9988 / 833-9325, trunk line 834-1344 to -49 loc. 320 / 312 / 318, or via e-mail at
tbmd@netgazer.com.ph.
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MARKETING
1. What are the key marketing initiatives under the National SME Development Plan?
The marketing objectives of the Plan are to increase the exposure of SME products in domestic and
foreign markets, and to improve the distribution of SME products among and between the local
manufacturing and trade sectors. These will be done through the organization of trade fairs, the
creation of buying and selling missions, the establishment of SME Trade Houses, and through the
administration of buyer-supplier matching services.
2. Where and when are the international and national trade fairs and missions for 2003?
There are various international and national trade fairs mounted throughout the year by the Bureau of
Small and Medium Business Development (BSMED), the Center for International Trade Expositions and
Missions (CITEM), and the Bureau of Export Trade Promotion (BETP). Please contact the respective
agency for the schedules.
BSMED
3/F, 349 Oppen Bldg., Sen. Gil Puyat
Avenue, Makati City
Tel. Nos.: 897-1680 or 897-7596
CITEM
Golden Shell Pavilion, Roxas Blvd.
Cor. Sen. Gil Puyat Ave., Pasay City
Tel. Nos.: 897-9659 or 890-5073
BETP
5/F & 8/F, New Solid Bldg.,
357 Sen. Gil Puyat Ave., Makati City
Tel. No.: 890-5243 or 897-7610
PITC
2/F, 116 Tordesillas St., Makati City
Tel. Nos.: 845-4776, 892-3335
3. What are the requirements to join the trade fairs?
Basic requirements include:
 Registration of your business enterprise with the relevant government agencies (e.g. DTI, SEC,
etc.)
 Submission of accomplished application form
 Payment of participation fee
Additional requirements may include:
 Participation in training programs

 Willingness to undergo product development
 Track record of the company (years of operation, exports, sales, etc.)
More detailed information on participating in these trade events can be secured from the respective
organizing agencies:
BSMED
Avenue, Makati City
Tel. Nos.: 897-1680 or 897-7596
CITEM
Tel. Nos.: 897-9659 or 890-5073
BETP
Tel. Nos.: 890-5243 or 897-7610
PITC
Tel. Nos.: 845-4776, 892-3335
4. How much do I pay to participate in the trade fair?
The amount depends on the event and entitlements such as booth size, venue, and the number of fair
days. More detailed information on the events of interest to you can be secured at the respective
organizing agencies:
BSMED
Avenue, Makati City
Tel. Nos.: 897-1680 or 897-7596
CITEM
Tel. Nos.: 897-9659 or 890-5073
BETP
Tel. Nos.: 890-5243 or 897-7610
PITC
Tel. Nos.: 845-4776, 892-3335
5. How can I promote my product abroad?
You can participate in one of the international missions or trade fairs mounted by either the Center for
International Trade Expositions and Missions (CITEM) or the Bureau of Export Trade Promotion (BETP).
Please contact these agencies for more details on the events.
CITEM
Tel. Nos.: 897-9659 or 890-5073
BETP
Tel. Nos.: 890-5243 or 897-7610
PITC
Tel. Nos.: 845-4776, 892-3335
6. Where can I get a list of possible buyers for my product?
There are several ways through which you could find buyers for your product. One is to market your
product amongst the members listed in the Trade Association Directory. A copy of the Directory can be
obtained for P500 at the office of the Bureau of Domestic Trade (BDT), located at the Trade & Industry
Bldg., 361 Sen. Gil J. Puyat Avenue, Makati City.
The BDT also provides market matching assistance to help locate buyers for your product. Online market
matching services are also available through Tradeline Philippines and at DBP.
7. Where can I get a list of suppliers of manufactured goods?
The Bureau of Small and Medium Enterprise Development (BSMED) has a directory of the firms that
participated in its National Trade Fair. For more information, you may visit the BSMED office at the 3rd
Floor, Oppen Bldg., 349 Sen. Gil J. Puyat Avenue, Makati City, or call 897-1680 or 897-5775. You may
also visit the CITEM web site at www.citem.com.ph. Online market matching services are also available
through Tradeline Philippines and at DBP.
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PRODUCT DEVELOPMENT & TECHNOLOGY INTERVENTION

1. What are the key product development initiatives under the National SME Development
Plan?
There are two main product development objectives under the Plan. The first is to create and sustain
competitive advantage through product and package design and development, as well as through
technology intervention. The second objective is to create an awareness and understanding of product
development, its processes and how a company can use it to its advantage.
2. How can I avail of product development services?
There are several agencies that provide a variety of product development services and technology
intervention assistance. Contact the agency that handles the type of service you need:
Product Development and Design Center of the Philippines (PDDCP) - the Product Clinic
Tel. Nos.: 832-1112 to 19; 833-7881
E-mail: pddcp@mozcom.com; pddcp@mozcom.com
Industrial Technology Development Institute (ITDI)

Tel. Nos.: 837-2071 to 82 loc. 2182
Technology Application & Research Institute (TAPI)

Tel. Nos.: 837-2071 loc. 2130
Metals Industry Research & Development Center (MIRDC)

Tel. Nos.: 837-2071 to 82 loc. 2407
Forest Products Research & Development Institute (FPRDI)

Tel. Nos.: (049) 536-2360, 536-2377
E-mail: bps@dti.gov.ph
Philippine Textile Research Institute (PTRI)

Tel. Nos.: 837-2071 to 82 loc. 2360
Packaging Research & Design Center of the Philippines (PRDCP)

Tel. Nos.: 837-2071 loc. 2271, 2206
Bureau of Food and Drug (BFAD)

Tel. Nos.: 807-0721
Bureau of Product Standards (BPS)

Tel. Nos.: 890-4965, 890-4946
Food Development Center (FDC)

Tel. Nos.: 828-4015, 838-4601
3. How much are these services?
The fees of the services vary depending on the project and the number of times the client has availed of
the service.
4. How can I obtain information about HALAL, HACCP and ISO certification?
More information about HALAL certification can be obtained from the following:
Bureau of Export and Trade Promotion (BETP)

Asst. Dir. Tetet Reginio
Tel. Nos.: 890-5243 or 897-7610
Food Development Center

Dir. Dr. Alicia Lustre
Tel. Nos.: 828-4015, 838-4601
Office on Muslim Affairs

Usec./Exec. Dir. Datu Zamzamin L. Ampatuan,
Tel. Nos.: 742-2711 to 16 loc. 208
For information regarding ISO 1705 (Lab Testing) certification, please contact the Bureau of Product
Standards (BPS) - Laboratory Accreditation Scheme:
Ms. Perla Baje

Tel. No.: 890-4965
For ISO 900x certification please contact the ISO certifying bodies.
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ADVOCACY FOR AN ENABLING ENVIRONMENT
1. What are the laws governing SMEs?
SMEs are governed by RA 9178, an act to promote the establishment of Barangay Micro Business
Enterprises (BMBEs) providing incentives and benefits.
Also, SMEs are governed by RA 6977 as amended by RA 8289. RA 6977 is the Magna Carta for Small
Enterprises, an act to promote, develop and assist small and medium scale enterprises through the
creation of a Small and Medium Enterprise Development (SMED) Council, and the rationalization of
government assistance, programs and agencies concerned with the development of small and medium
enterprises, and for other purposes.
2. What is the BMBE Law? When will it be implemented?
RA 9178 is the Barangay Micro Business Enterprises (BMBE) Law, an act to promote the establishment of
barangay micro business enterprises, providing incentives and benefits. The BMBE law will be enacted as
soon as the implementing rules and regulations are completed.
3. Where can we register our complaints about local government, etc.?
Complaints can be addressed by one-stop shop centers located in various areas across the Philippines.
The Department of Interior and Local Government (DILG) organized these centers.
4. What is the government doing to reduce the cost of doing business for SMEs?
The government provides for a seamless access of services. The lead agency is the Department of Trade
and Industry (DTI). DTI is implementing various efforts such as consolidating business registration
requirements, buyer-supplier matching, streamlining financial requirements of government financing
institutions (GFIs) and other similar initiatives towards reducing the cost of doing business.
5. What are one-stop shops? How are they different from SME Centers?
One-stop shops are venues provided by the Department of Interior and Local Government (DILG) to
address complaints and other concerns about the local government.
SME Centers are venues provided jointly by the Department of Trade and Industry and by either the
local government unit (LGU) or the private sector to render a range of services to assist both start-ups
and already established SMEs in addressing their business needs. The SME Centers offer business
counseling, as well as service facilities such as fax, computer and the like.
6. What is an SME Caravan? Where will they be launched? When?
An SME Caravan is a DTI-led traveling event showcasing SME opportunities and which provides firm-
level assistance to SMEs in pre-identified regions. There have already been caravans in La Union, Negros
Occidental, Tayabas (Quezon), Davao City, and Leyte.
business plans and marketing strategy
free business planning and marketing tips, samples, examples and tools - how to
write a business plan, techniques for writing a marketing strategy, strategic
business plans and sales plans
Here are tips, examples, techniques, tools and a process for writing business plans to produce
effective results.
This free online guide explains how to write a marketing or business strategy, a basic business
plan, and a sales plan, using free templates, tools and examples, such as SWOT Analysis, PEST
Analysis, the 'Ansoff Matrix' and the 'Boston Matrix'.
Separately the marketing guide offers more specific explanation and theories and tools for
marketing strategy and marketing planning, including techniques and tips for advertising, public
relations (PR), press and media publicity, sales enquiry lead generation, advertising copy-
writing, internet and website marketing, etc.
The sales training guide offers detailed theories and methods about sales planning and selling,
extending to cold calling and negotiation skills and techniques, especially relating to selling.
Sometimes people use the term business plan when they are referring to a project. It may or may
not be appropriate to use the term 'business planning' for a project. Some projects are very
substantial and equate to an autonomous (independent) business activity, in which case a
business plan is entirely appropriate. Other projects are smaller, perhaps limited to internal
change or development, and are less likely to require a conventional business plan, and are quite
adequately planned and managed via project management methods.
Business planning terminology can be confusing because much of it is used very loosely, and can
mean different things.
Here is a way to understand it better:
business planning terminology..
Terminology in business planning is often used very loosely. When people talk and write about
business planning different terms may mean the same thing, and a single term can mean different
things.
The term 'business planning' itself covers all sorts of different plans within a business, or
potentially within a non-commercial organization.
The words 'strategy' and 'strategic' arise often in the subject of buisness planning, although there
is no actual difference between a 'business plan' and a 'strategic business plan'. Every business
plan is arguably 'strategic'. Everyone involved in planning arguably adopts a 'strategic' approach.
Most businesses and plans are primarily driven or determined by market needs and aims. This
increasingly applies to many non-commercial activities (government services, education, health,
charities, etc), whose planning processes may also be described as 'business planning', even
though such organizations may not be businesses in the way we normally imagine. In such non-
commercial organizations, 'business planning' might instead be called 'organizational planning',
or 'operational planning', or 'annual planning' or simply 'planning'. Essentially all these terms
mean the same, and increasingly the tendency is for 'business planning' to become a generic
(general) term to refer to them.
I should clarify that finance is of course a major and unavoidable aspect of business and
organizational activities, but in terms of planning, finance is a limiting or enabling factor; finance
is a means to an end, or a restriction; finance in itself is not a basis for growth or strategy.
Markets/customers, product/service development, and sales, provide the only true basis for
businesses to define direction, development, growth, etc., and thereby business strategy and
planning.
Business planning always starts with or revisits the basic aim or need to provide products or
services to customers - also called a market or 'market-place'. Consequently business plans tend
first to look outwards, at a market, before they look inwards, at finance and production, etc.
This means that most business plans are driven by marketing, since marketing is the function
which addresses market opportunity and need, and how to fulfil it.
Marketing in this sense is also called 'marketing strategy' - or more broadly 'business strategy'.
In many simple, small, and/or old traditional businesses, 'marketing' is often seen instead to be
'sales' or 'selling' (usually because in such businesses selling is the only marketing activity), in
which case a 'sales plan' may be the main driver of strategy and the business plan.
Many people use the words 'sales' or 'selling' and 'marketing' to mean the same thing - basically
selling products or services to customers, in the broadest sense. In fact, marketing refers to much
wider issues than sales and selling. Marketing involves the strategic planning of a business (or
other organizational provider) through to every aspect of customer engagement, including market
reserach, product development, branding, advertising and promotion, methods of selling,
customer service, and extending to the acquisition or development of new businesses. Sales or
selling is an activity within marketing, referring to the methods and processes of communicating
and agreeing and completing the transaction (sale) with the customer.
Given all this, it is hopefully easier to understand why, depending on a person's role or
standpoint or the department in which they work, 'business planning' may be referrred to in many
and various ways, for example as 'sales planning', 'marketing planning', 'strategic planning', etc.,
and that all these terms might mean slightly different things, according to the situation.
If there is a technically correct definition of 'business planning', then perhaps we can best say that
'business planning' refers to the plan of the overall organization, or to a unit or division within an
organization with responsibility for a trade or profit. A business plan technically contains and
reflects the individual plans for the different functions within the whole operation, each of which
may have its own detailed 'business plans', which might be called business plans, or more
correctly departmental or functional plans according to their purpose, such as a marketing plan,
sales plan, production plan, financial plan, etc.
Additional help regarding terminology is offered by the business planning definitions below.
Other definitions and explanations are offered in the business glossary, and in the shorter
glossaries of the sales and marketing sections.
Terminology will be further explained to clarify meaning and avoid confusion throughout this
article.
introduction
Approached correctly, writing business plans and marketing strategy is usually simpler than first
seems.
Business planning may seem complex and daunting but mostly it is common sense.
Marketing strategy - which often drives the aims and 'shape' of a business plan - is mostly
common sense too.
Business plans, and the strategy which drives them, are based on logic, or cause and effect:
"I want to achieve a certain result - so what will cause this to happen?"
Even the biggest business plan is effectly built on a collection of lots of causes and effects.
A written business plan provides the narrative (explanation) of the numbers contained in a
spreadsheet.
A format or template for the written business plan, including numbers as required, is given
below.
When we see lots of numbers in a computer spreadsheet we can forget this, but the numbers are
merely a reflection of scale and detail, and of computerised calculations and modelling, etc.
In fact often when we are confronted with a complex planning spreadsheet containing thousands
of numbers, what we are actually being offered is a ready-made planning tool. In many cases,
where business planning is a continuation of an ongoing situation, the most frightening
spreadsheets can provide a very easy template for future plans, especially with a little help from
a colleague in the acciounts department who understands how it all works.
Ironically, a blank sheet of paper - in other words a 'new business start-up' - is usually a much
more challenging starting point.
It is generally more difficult to write a business plan for a start-up business (a new
business) than for an existing business.
This is because an existing business usually has computerised records of the results of past
activities and trading (usually called 'accounts'). Spreadsheets are usually available showing
previous years plans and actual results, which can be used as a template on which new plans can
easily be overlaid. Writing a new business plan for the continuation or development of such an
existing situation obviously enables much of the planning to be based on existing figures, ratios,
statistics, etc.
New business start-up situations by their nature tend to have no previous results, so we often
refer to this sort of planning as 'starting with a blank sheet of paper'.
New business start-ups - especially if you are the owner or entrepreneur - present bigger
planning challenges in some respects because we have no previous records to act as a guide, but
in other respects they offer wonderful opportunities to create genuinely innovative and exciting
founding principles - your own new business philosophy - on which your plans can be built and
developed.
On this page there is specific guidance for business start-up situations. See the simple business
start-up principles.
Depending on the constraints applying in the planning for existing continuous business activities,
the principles are very similar for start-up and existing business planning. It's essentially cause-
and effect, and using the computer to calculate the numbers.
See the free business plan and marketing plan sample/template.
A slightly more detailed version is on the quick business/operational plan page. , and begins with
To explore personal direction and change (for example for early planning of self-employment or
new business start-up) see the passion-to-profit exercise and template on the teambuilding
exercises page.
See also the simple notes about starting your own business, which to an extent also apply when
you are starting a new business initiative or development inside another organisation as a new
business development manager, or a similar role.
Here's a free profit and loss account spreadsheet template tool (xls) for incorporating these
factors and financials into a more formal phased business trading plan, which also serves as a
business forecasting and reporting tool too.
Adapt it to suit your purposes. This plan example is also available as a PDF, see the Profit and
Loss Account (P&L) Small Enterprise Business Plan Example (PDF). The numbers could be
anything: ten times less, ten times more, a hundred times more - the principle is the same.
Towards the end of this article there is also a simple template/framework for a feasibility study
or justification report, such as might be required to win funding, authorisation or approval for
starting a project, or the continuation of a project or group, in a commercial or voluntary
situation.
If you are starting a new business you might also find the tips and information about buying a
franchise business to be helpful, since they cover many basic points about choice of business
activity and early planning.
(Note: Some UK-English and US-English spellings differ, for example

organisation/organization, colour/color. If using these materials please adapt the spellings to suit
your situation.)
how to write strategic marketing plans, business plans and sales plans
People use various terms referring to the business planning process - business plans, business
strategy, marketing strategy, strategic business planning, sales planning - they all cover the same
basic principles. When faced with business planning or strategy development task it's important
to clarify exactly what is required: clarify what needs to be done rather than assume the aim
from the description given to it - terms are confused and mean different things to different
people. You'll see from the definitions below how flexible these business planning terms are.
business planning definitions
a plan - a statement of intent - a calculated intention to organize effort and resource to achieve
an outcome - in this context a plan is in written form, comprising explanation, justification and
relevant numerical and financial statistical data. In a business context a plan's numerical data -
costs and revenues - are normally scheduled over at least one trading year, broken down weekly,
monthly quarterly and cumulatively.
a business - an activity or entity, irrespective of size and autonomy, which is engaged in an

activity, normally the provision of products and/or services, to produce commercial gain,
extending to non-commercial organizations whose aim may or may not be profit (hence why
public service sector schools and hospitals are in this context referred to as 'businesses').
business plan - this is now rightly a very general and flexible term, applicable to the planned
activities and aims of any entity, individual group or organization where effort is being
converted into results, for example: a small company; a large company; a corner shop; a local
window-cleaning business; a regional business; a multi-million pound multi-national
corporation; a charity; a school; a hospital; a local council; a government agency or department;
a joint-venture; a project within a business or department; a business unit, division, or
department within another organization or company, a profit centre or cost centre within an an
organization or business; the responsibility of a team or group or an individual. The business
entity could also be a proposed start-up, a new business development within an existing
organization, a new joint-venture, or any new organizational or business project which aims to
convert action into results. The extent to which a business plan includes costs and overheads
activities and resources (eg., production, research and development, warehouse, storage,
transport, distribution, wastage, shrinkage, head office, training, bad debts, etc) depends on the
needs of the business and the purpose of the plan. Large 'executive-level' business plans therefore
look rather like a 'predictive profit and loss account', fully itemised down to the 'bottom line'.
Business plans written at business unit or departmental level do not generally include financial
data outside the department concerned. Most business plans are in effect sales plans or marketing
plans or departmental plans, which form the main bias of this guide.
strategy - originally a military term, in a business planning context strategy/strategic

means/pertains to why and how the plan will work, in relation to all factors of influence upon
the business entity and activity, particularly including competitors (thus the use of a military
combative term), customers and demographics, technology and communications.
marketing - believed by many to mean the same as advertising or sales promotion, marketing
actually means and covers everything from company culture and positioning, through market
research, new business/product development, advertising and promotion, PR (public/press
relations), and arguably all of the sales functions as well. Marketing is the process by which a
business decides what it will sell, to whom, when and how, and then does it.
marketing plan - logically a plan which details what a business will sell, to whom, when and
how, implicitly including the business/marketing strategy. The extent to which financial and
commercial numerical data is included depends on the needs of the business. The extent to which
this details the sales plan also depends on the needs of the business.
sales - the transactions between the business and its customers whereby services and/or products
are provided in return for payment. Sales (sales department/sales team) also describes the
activities and resources that enable this process, and sales also describes the revenues that the
business derives from the sales activities.
sales plan - a plan describing, quantifying and phased over time, how the the sales will be made
and to whom. Some organizations interpret this to be the same as a business plan or a marketing
plan.
business strategy - see 'strategy' - it's the same.
marketing strategy - see 'strategy' - it's the same.
service contract - a formal document usually drawn up by the supplier by which the trading
arrangement is agreed with the customer. See the section on service contracts and trading
agreements.
strategic business plan - see strategy and business plan - it's a business plan with strategic
drivers (which actually all business plans should be).
strategic business planning - developing and writing a strategic business plan.
philosophy, values, ethics, vision - these are the fundamentals of business planning, and
determine the spirit and integrity of the business or organisation - see the guide to how
philosophical and ethical factors fit into the planning process, and also the principles and
materials relating to corporate responsibility and ethical leadership.
You can see that many of these terms are interchangeable, so it's important to clarify what needs
to be planned for rather than assuming or inferring a meaning from the name given to the task.
That said, the principles explained here can be applied to business plans of all sorts. Business
plans are often called different names - especially by senior managers and directors delegating a
planning exercise that they do not understand well enough to explain. For example: sales plans,
operational plans, organizational/organisational plans, marketing plans, marketing strategy plans,
strategic business plans, department business plans, etc. Typically these names reflect the
department doing the planning, despite which, the planning process and content required in the
document is broadly similar.
Other useful and relevant business planning definitions are in the business dictionary; the sales
and selling glossary; some are also in the financial terms glossary, and more - especially for
training - are in the business and training acronyms listing, which also provides amusing light
relief if this business planning gets a little dry (be warned, the acronyms listings contain some
adult content).
when writing a business or operating plan, remember...
A useful first rule of business planning is to decide what you are actually trying to achieve
and always keep this in mind. Write your aim large as a constant reminder to yourself, and to
anyone else involved. Keeping your central aim visible will help you minimise the distractions
and distortions which frequently arise during the planning process.
An increasingly vital and perhaps second rule of business planning is to establish a strong
ethical philosophy at the outset of your planning. This provides a vital reference for decision-
making and strategy from the start. A strong clear ethical code communicates your values to
staff, customers, suppliers, and creates a simple consistent basis for operations which
conventional financials, processes, systems and even people, do not address. It is very difficult to
introduce ethical principles later into an enterprise, especially when planning shifts into
implementation, and more so if problems arise relating to integrity, honesty, corporate
responsibility, trust, governance, etc., any of which can have massive impact on relationships and
reputation. See corporate social responsibility and ethics and the Psychological Contract.
It is easy to address issues of ethics and corporate responsibility when you are the owner of a
new enterprise. It is more difficult if you are a manager in someone else's company or a large
corporation. Nevertheless ethics and corporate responsibility are highly significant in planning,
and strong justification for their proper consideration can now be made. There are now plenty of
recent examples of corporations - indeed entire national economies and governments - which
have failed because of poor regard to ethical considerations. The world is changing and learning,
slowly, but it is, and anyone ignoring ethics in planning today does so at their own peril.
A third crucial requirement for business plans is return on investment, or for public services
and non-profit organisations: effective use of investment and resources, which is beyond
simple 'cost control'.
For the vast majority of organisations, whether companies, public services, not-for-profit trusts
and charities, all organisations need to be financially effective in what they do, otherwise
they will cease to function.
Ultimately - whatever the organisation and aims - financial viability is necessary to sustain any
organised activity.
While it's essential to manage ethical and socially responsible aspects of organisational aims,
these must allow for adequate return on investment (or in less traditional and 'non-profit'
enterprises, must allow for the effective use of investment and resources, according to the
financial requirements of the particular organisation).
Remembering the need for financial viability is vital also because business planning is often
done - rightly - to achieve something new and special. This tends to focus thinking on creativity,
innovation, ambition, quality, excellence, perhaps even social good, etc., which can easily
distract planning away from the basic need to be financially viable - and crucially not to make a
loss. By treating return on investment as a vital requirement of planning we increase the
likelihood that plans will be viable and therefore sustainable.
Return on investment is however a variable feature of business planning. It is flexible

according to the type of enterprise, its main purpose and philosophy.
In a conventional profit-driven corporation return on investment (at an optimal rate) is typically

a strong strategic driver for local planning and decisions, and by implication also a basic
requirement of the enterprise as a whole. On the other hand, in a business or organization less
focused on shareholder reward, such as a public services trust or charity, or a social enterprise or
cooperative, return on investment (at a relatively lower rate), may be a requirement simply to
sustain viable operations, according to the aims of the enterprise. In the first example, return on
investment is the aim; in the second example, return on investment enables some other higher
aim to be achieved. In more detail:
In a traditional profit-driven corporation, return on investment tends to be the main requirement

of any business plan and also the main aim or purpose or driver of the plan. In most traditional
corporations return on investment tends to be at the heart of all activities, since typically the
corporation exists to maximize the yield (profit and growth effectively) of shareholder funds
invested in the business. Planning in traditional corporations at times forgets this basic
obligation, especially when a junior manager is asked to 'write a business plan' for the first time.
In traditional profit-driven corporations, when a new manager starts to write a business plan or
operational plan for the first time (and for some experienced managers also, for the umpteenth
time), the manager wonders: What is the aim? What am I trying to achieve? Often when they ask
their own manager, the manager has the same doubts. The central aim is usually return on
investment.
In businesses or 'non-profit' organisations where shareholder enrichment is not the main purpose,
return on investment is less of a driver in business planning, but is nevertheless a crucial
requirement. Such enterprises are becoming more popular, and will continue to become so,
since the collapse of the western economies in 2008, and increasing disillusionment with old-
style business thinking. Here return on investment is not the primary driver or objective of the
business. Instead the main driver of enterprise may be some other purpose.
An example of 'some other purpose' might be the activities of a social enterprise or cooperative,
or maybe an employee ownership company, or perhaps a trust or charity, whose main aim is
(rather than the traditional profit generation for external/institutional shareholders) perhaps to
benefit its members/staff, and/or to sustain local jobs, and/or to benefit the local community, or
maybe to advance science or learning or health, etc. Here, while return on investment may
seem less crucial or appropriate to planning and operations, the enterprise must nevertheless
remain financially viable, or it ceases to be able to operate at all.
In such examples, return on investment in business planning is not usually maximized, but
must still be treated as an underpinning requirement to planning, and flexed according to the
fundamental aims and financial requirements of the enterprise.
Before planning, therefore, it is helpful to understand clearly:
1. What are we actually aiming to achieve?

2. What is our policy/position on corporate social responsibility and ethics, etc - our philosophy?
3. And what return on investment (or alternative financial performance) does our
activity/enterprise require - is this a strategic driver in itself, or simply the means by which we
maintain our activities in support of our (point 1) aims?
planning - cause and effect..

The basic methodology of business planning is identifying causes and effects, according to your
relevant business requirements (financials and ethics) and strategic drivers (what we are actually
aiming to achieve).
Here a cause is an input or action or resource; an effect is an outcome or result or consequence

of some sort.
We want to achieve xyz effect (for example a given return on investment, or a certain sales level
or market share, whatever) - so what should we plan to cause this to happen?
Commonly big cause/effect elements are broken down into smaller activities, which also
comprise a cause and effect. (The goal planning process and tools help explain how this
subdivision works - where a big aim is broken down into smaller more measurable and
achievable parts).
Junior managers have responsibility for plans and activities which feed into larger departmental
plans and activities of senior managers. The plans and activities of senior managers feed into the
divisional plans of executives and directors. There is a hierarchy or tree structure of cause and
effects, all hopefully contributing to the overall organizational aim.
In many good businesses a substantial business planning responsibility extends now to front line
customer-facing staff, and the trend is increasing. In this context, the business plan could be
called also be called a marketing plan, or a sales plan - all departmental plans are basically types
of business planning:
"What you are going to sell to whom, when and how you are going to sell it, how much
contribution (gross profit) the sales will produce, what the marketing and/or selling cost will be,
and what will be the return on investment."
Where a department is a 'cost centre' not a 'profit-centre' - providing products or services

internally to other departments rather than externally to customers - then the language and
planning elements may alter, but the principles remain the same.
Also, these principles and methods apply to very large complex multinational organizations,
which tend to entail more and different costs, fixed overheads, revenues, and consequently larger
planning formats; more and bigger spreadsheets, more lines and columns on each, more attention
and people working on the numbers, more accountants, and typically - especially at middle-
management level and above - more emphasis on cashflow and the balance sheet, alongside
basic 'profit and loss' planning.
carry out your market research, including understanding your competitor

activity
'The market' varies according to the business or organisation concerned, but every organised
activity has a market. Knowing the market enables you to assess and value and plan how to
engage with it. A common failing of business planning or operational planning outside of the
'business' world, is to plan in isolation, looking inward, when ideas can seem very positive and
reliable because there's no context and nothing to compare. Hence research is critical. And this
applies to any type of organisation - not just to businesses. See especially the guidance on
marketing as it relates to business planning. Planning very much concerns processes. The
principles of marketing will explain additionally how to put meaning and values into what you
plan.
Your market research should focus on the information you need, to help you to formulate
strategy and make business decisions. Market research should be pragmatic and purposeful - a
means to an end, and not a means in itself. Market information potentially covers a vast range of
data, from global macro-trends and statistics, to very specific and detailed local or technical
information, so it's important to decide what is actually relevant and necessary to know. Market
information about market and industry trends, values, main corporations, market structure, etc, is
important to know for large corporations operating on a national or international basis. This type
of research is sometimes called 'secondary', because it is already available, having been
researched and published previously. This sort of information is available from the internet,
libraries, research companies, trade and national press and publications, professional associations
and institutes. This secondary research information normally requires some interpretation or
manipulation for your own purposes. However there's no point spending days researching global
statistical economic and demographic data if you are developing a strategy for a relatively small
or local business. Far more useful would be to carry out your own 'primary' research (i.e. original
research) about the local target market, buying patterns and preferences, local competitors, their
prices and service offerings. A lot of useful primary market research can be performed using
customer feed-back, surveys, questionnaires and focus groups (obtaining indicators and views
through discussion among a few representative people in a controlled discussion situation). This
sort of primary research should be tailored exactly for your needs. Primary research requires less
manipulation than secondary research, but all types of research need a certain amount of
analysis. Be careful when extrapolating or projecting figures to avoid magnifying initial mistakes
or wrong assumptions. If the starting point is inaccurate the resulting analysis will not be
reliable. For businesses of any size; small, local, global and everything in between, the main
elements you need to understand and quantify are:
 customer (and potential customer) numbers, profile and mix

 customer perceptions, needs, preferences, buying patterns, and trends, by sub-sector if
necessary
 products and services, mix, values and trends
 demographic issues and trends (especially if dependent on consumer markets)
 future regulatory and legal effects
 prices and values, and customer perceptions in these areas
 distribution and routes to market
 competitor activities, strengths, weaknesses, products, services, prices, sales methods, etc
Primary research is recommended for local and niche services. Keep the subjects simple and the
range narrow. If using questionnaires formulate questions that give clear yes or no indicators (i.e.
avoid three and five options in multi-choices which produce lots of uncertain answers) always
understand how you will analyse and measure the data produced. Try to convert data to
numerical format and manipulate on a spreadsheet. Use focus groups for more detailed work. For
large research projects consider using a market research organization because they'll probably do
it better than you, even though this is likely to be more costly. If you use any sort of marketing
agency ensure you issue a clear brief, and that your aims are clearly understood. Useful
frameworks for research are PEST analysis and SWOT analysis.
establish your corporate philosophy and the aims of your business or

operation
First establish or confirm the aims of the business, and if you are concerned with a part of a
business, establish and validate the aims of your part of the business. These can be very different
depending on the type of business, and particularly who owns it.
Refer to and consider issues of ethics and philosophy, corporate social responsibility,
sustainability, etc - these are the foundations on which values and missions are built.
Look at the reasons ethics and corporate responsibility are so important. And see also the
fundamental organisational planning stages.
Consider the Psychological Contract and the benefits of establishing a natural balance and
fairness between all interests (notably staff, customers, the organization).
Traditional business models are not necessarily the best ones. The world is constantly changing,
and establishing a new business is a good time to challenge preconceptions of fundamental
business structure and purpose. A business based on a narrow aim of enriching a few investors
while relegating the needs and involvement of everyone else may contain conflicts and tensions
at a deep level. There are other innovative business structures which can inherently provide a
more natural, cooperative and self-fuelling relationship - especially between employees and the
organization, and potentially between customers and the organization too.
When you have established or confirmed your philosophical and ethical position, state the
objectives of the business unit you are planning to develop - your short, medium and long term
aims - (typically 'short, medium and long' equate to 1 year, 2-3 years and 3 years plus). In other
words, what is the business aiming to do over the next one, three and five years?
Bear in mind that you must reliably ensure the success and viability of the business in the short
term or the long term is merely an academic issue. Grand visions need solid foundations. All
objectives and aims must be prioritised and as far as possible quantified. If you can't measure it,
you can't manage it.
define your 'mission statement'
All businesses need a ‘mission statement'. It announces clearly and succinctly to your staff,
shareholders and customers what you are in business to do. Your mission statement may build
upon a general ‘service charter' relevant to your industry. You can involve staff in defining and
refining the business's mission statement, which helps develop a sense of ownership and
responsibility. Producing and announcing the mission statement is also an excellent process for
focusing attention on the business's priorities, and particularly the emphasis on customer service.
Whole businesses need a mission statement - departments and smaller business units within a
bigger business need them too.
define your 'product offering(s)' or 'service offering(s)' - your sales

proposition(s)
You must understand and define clearly what you are providing to your customers. This
description should normally go beyond your products or services, and critically must include the
way you do business, and what business benefits your customers derive from your products
and services, and from doing business with you. Develop offerings or propositions for each main
area of your business activity - sometimes referred to as 'revenue streams', or 'business streams' -
and/or for the sector(s) that you serve. Under normal circumstances competitive advantage is
increased the more you can offer things that your competitors cannot. Good research will tell you
where the opportunities are to increase your competitive advantage in areas that are of prime
interest to your target markets. Develop your service offering to emphasise your strengths, which
should normally relate to your business objectives, in turn being influenced by corporate aims
and market research. The important process in developing a proposition is translating your
view of these services into an offer that means something to your customer. The definition of
your service offer must make sense to your customer in terms that are advantageous and
beneficial to the customer, not what is technically good, or scientifically sound to you. Think
about what your service, and the manner by which you deliver it, means to your customer.
Traditionally, in sales and marketing, this perspective is referred to as translating features into
benefits. The easiest way to translate a feature into a benefit is to add the prompt ‘which means
that...'. For example, if a strong feature of a business is that it has 24-hour opening, this feature
would translate into something like: "We're open 24 hours (the feature) which means that you
can get what you need when you need it - day or night." (the benefit). Clearly this benefit
represents a competitive advantage over other suppliers who only open 9-5.
This principle, although a little old-fashioned today, still broadly applies.
The important thing is to understand your services and proposition in terms that your
customer will recognise as being relevant and beneficial to them.
Most businesses have a very poor understanding of what their customers value most in the
relationship, so ensure you discover this in the research stage, and reflect it in your stated product
or service proposition(s).
Customers invariably value these benefits higher than all others:
 Making money
 Saving money
 Saving time
If your proposition(s) cannot be seen as leading to any of the above then customers will not
be very interested in you.
A service-offer or proposition should be an encapsulation of what you do best, that you do better
than your competitors (or that they don't do at all); something that fits with your business
objectives, stated in terms that will make your customers think ‘Yes, that means something to me
and I think it could be good for my business (and therefore good for me also as a buyer or
sponsor).'
This is the first 'brick in the wall' in the process of business planning, sales planning, marketing
planning, and thereafter, direct marketing, and particularly sales lead generation.
write your business plan - include sales, costs of sales, gross margins, and if
necessary your business overheads
Business plans come in all shapes and sizes. Pragmatism is essential. Ensure your plan shows
what your business needs it to show. Essentially your plan is a spreadsheet of numbers with
supporting narrative, explaining how the numbers are to be achieved. A plan should show all the
activities and resources in terms of revenues and costs, which together hopefully produce a profit
at the end of the trading year. The level of detail and complexity depends on the size and part of
the business that the plan concerns. Your business plan, which deals with all aspects of the
resource and management of the business (or your part of the business), will include many
decisions and factors fed in from the marketing process. It will state sales and profitability targets
by activity. In a marketing plan there may also be references to image and reputation, and to
public relations. All of these issues require thought and planning if they are to result in
improvement, and particularly increasing numbers of customers and revenue growth. You would
normally describe and provide financial justification for the means of achieving these things,
together with customer satisfaction improvement. Above all a plan needs to be based on actions -
cost-effective and profitable cause and effect; inputs required to achieved required outputs,
analysed, identified and quantified separately wherever necessary to be able to manage and
measure the relevant activities and resources.
quantify the business you seek from each of your market sectors, segments,
products and customer groupings, and allocate investment, resources and
activities accordingly
These principles apply to a small local business, a department within a business, or a vast whole
business. Before attending to the detail of how to achieve your marketing aims you need to
quantify clearly what they are. What growth targets does the business have? What customer
losses are you projecting? How many new customers do you need, by size and type, by product
and service? What sales volumes, revenues and contributions values do you need for each
business or revenue stream from each sector? What is your product mix, in terms of customer
type, size, sector, volumes, values, contribution, and distribution channel or route to market?
What are your projected selling costs and net contributions per service, product, sector? What
trends and percentage increase in revenues and contributions, and volumes compared to last year
are you projecting? How is your market share per business stream and sector changing, and how
does this compare with your overall business aims? What are your fast-growth high-margin
opportunities, and what are your mature and low-margin services; how are you treating these
different opportunities, and anything else in between? You should use a basic spreadsheet tool to
split your business according to the main activities and profit levers. See the simple
sales/business planning tool example below.
ansoff product-market growth matrix - strategic tool
A useful planning tool in respect of markets and products is the matrix developed by Igor Ansoff
(H Igor Ansoff, 1918-2002), who is regarded by some as the 'Father of Strategic Management'.
Fully titled the Ansoff Product-Market Growth Matrix, the tool was first published in Harvard
Business Review, 1957, in Ansoff's paper Strategies for Diversification.
The Ansoff product-market matrix helps to understand and assess marketing or business
development strategy. Any business, or part of a business can choose which strategy to employ,
or which mix of strategic options to use.
This is a fundamentally simple and effective way of looking at strategic development options.
existing products new products
existing markets market penetration product development
new markets market development diversification
Each of these strategic options holds different opportunities and downsides for different
organizations, so what is right for one business won't necessarily be right for another. Think
about what option offers the best potential for your own business and market. Think about the
strengths of your business and what type of growth strategy your strengths will enable most
naturally. Generally beware of diversification - this is, by its nature, unknown territory, and
carries the highest risk of failure.
Here are the Ansoff strategies in summary:
market penetration - Developing your sales of existing products to your existing market(s).
This is fine if there is plenty of market share to be had at the expense of your competitors, or if
the market is growing fast and large enough for the growth you need. If you already have large
market share you need to consider whether investing for further growth in this area would
produce diminishing returns from your development activity. It could be that you will increase
the profit from this activity more by reducing costs than by actively seeking more market share.
Strong market share suggests there are likely to be better returns from extending the range of
products/services that you can offer to the market, as in the next option.
product development - Developing or finding new products to take to your existing market(s).
This is an attractive strategy if you have strong market share in a particular market. Such a
strategy can be a suitable reason for acquiring another company or product/service capability
provided it is relevant to your market and your distribution route. Developing new products does
not mean that you have to do this yourself (which is normally very expensive and frequently
results in simply re-inventing someone else's wheel) - often there are potential manufacturing
partners out there who are looking for their own distribution partner with the sort of market
presence that you already have. However if you already have good market share across a wide
range of products for your market, this option may be one that produces diminishing returns on
your growth investment and activities, and instead you may do better to seek to develop new
markets, as in the next strategic option.
market development - Developing new markets for your existing products. New markets can
also mean new sub-sectors within your market - it helps to stay reasonably close to the markets
you know and which know you. Moving into completely different markets, even if the
product/service fit looks good, holds risks because this will be unknown territory for you, and
almost certainly will involve working through new distribution channels, routes or partners. If
you have good market share and good product/service range then moving into associated markets
or segments is likely to be an attractive strategy.
diversification - taking new products into new markets. This is high risk - not only do you not
know the products, but neither do you know the new market(s), and again this strategic option is
likely to entail working through new distribution channels and routes to market. This sort of
activity should generally be regarded as additional and supplementary to the core business
activity, and should be rolled out carefully through rigorous testing and piloting.
Consider also your existing products and services themselves in terms of their market
development opportunity and profit potential. Some will offer very high margins because they
are relatively new, or specialised in some way, perhaps because of special USP's or distribution
arrangements. Other products and services may be more mature, with little or no competitive
advantage, in which case they will produce lower margins. The Boston Matrix is a useful way to
understand and assess your different existing product and service opportunities:
boston matrix model - product/service development
The Boston Matrix model (also called the BSG Matrix, Growth-Share Matrix, and variations
around these titles) is a tool for assessing existing and development products in terms of their
market potential, and thereby implying strategic action for products and services in each of the
four categories reflected in the model. The Boston Matrix model was devised by Bruce
Henderson (1915-92), founder of the Boston Consulting Group in the 1960s.
It has been adapted in many ways. A simple version is shown here below.
Like other four-part 2x2 matrix models, the Boston Matrix is a very quick and easy method for
analysis, thinking and decision-making, while being unavoidably limited in its handling of
subtlety and detail. Often in business and strategic thinking too much detail is unhelpful -
instead, clarity and ease of understanding are extremely helpful, especially in communicating
ideas to teams and groups, in which circumstances the Boston Matrix is an excellent aid.
low market share high market share
growing
market
problem child (rising) star
mature market dog cash cow
cash cow - The rather crude metaphor is based on the idea of 'milking' the returns from previous
investments which established good distribution and market share for the product. Products in
this quadrant need maintenance and protection activity, together with good cost management, not
growth effort, because there is little or no additional growth available.
dog - This is any product or service of yours which has low market presence in a mature or
stagnant market. There is no point in developing products or services in this quadrant. Many
organizations discontinue products/services that they consider fall into this category, in which
case consider potential impact on overhead cost recovery. Businesses that have been starved or
denied development find themselves with a high or entire proportion of their products or services
in this quadrant, which is obviously not very funny at all, except to the competitors.
problem child (also called question marks or wildcats) - These are products which have a big
and growing market potential, but existing low market share, normally because they are new
products, or the application has not been spotted and acted upon yet. New business development
and project management principles are required here to ensure that these products' potential can
be realised and disasters avoided. This is likely to be an area of business that is quite
competitive, where the pioneers take the risks in the hope of securing good early distribution
arrangements, image, reputation and market share. Gross profit margins are likely to be high, but
overheads, in the form of costs of research, development, advertising, market education, and low
economies of scale, are normally high, and can cause initial business development in this area to
be loss-making until the product moves into the rising star category, which is by no means
assured - many problem children products remain as such.
rising star - Or 'star' products, are those which have good market share in a strong and growing
market. As a product moves into this category it is commonly known as a 'rising star'. When a
market is strong and still growing, competition is not yet fully established. Demand is strong;
saturation or over-supply do not exists, and so pricing is relatively unhindered. This all means
that these products produce very good returns and profitability. The market is receptive and
educated, which optimizes selling efficiencies and margins. Production and manufacturing
overheads are established and costs minimised due to high volumes and good economies of
scale. These are great products and worthy of continuing investment provided good growth
potential continues to exist. When it does not these products are likely to move down to cash cow
status, and the company needs to have the next rising stars developing from its problem children.
After considering your business in terms of the Ansoff matrix and Boston matrix (which are
thinking aids as much as anything else, not a magic solution in themselves), on a more detailed
level, and for many businesses just as significant as the Ansoff-type-options, what is the
significance of your major accounts - do they offer better opportunity for growth and
development than your ordinary business? Do you have a high quality, specialised offering that
delivers better business benefit on a large scale as opposed to small scale? Are your selling costs
and investment similar for large and small contracts? If so you might do better concentrating on
developing large major accounts business, rather than taking a sophisticated product or service
solution to smaller companies which do not appreciate or require it, and cost you just as much to
sell to as a large organization.
customer matrix
This customer matrix model is used by many companies to understand and determine strategies
according to customer types.
good products not so good products
develop and find more customers like educate and convert these customers to
these - allocate your best resources to good products if beneficial to them,
good customers these existing customers and to failing which, maintain customers via
prospective customers matching this account management
profile
invest cautiously to develop and assess feasibility of moving these

not so good improve relationship, failing which, customers left or up, failing which,
customers maintain customers via account withdraw from supplying sensitively
management
Assessing product type is helped by reference to the Boston matrix model. There is a lot of
flexibility as to what constitutes 'good' and 'not so good customers' - use your own criteria. A
good way to do this is to devise your own grading system using criteria that mean something to
your own situation. Typical criteria are: size, location, relationship, credit-rating and payment
terms, is the customer growing (or not), the security of the supply contract, the service and
support overhead required, etc. This kind of customer profiling tool and exercise is often
overlooked, but it is a critical aspect of marketing and sales development, and of optimizing sales
effectiveness and business development performance and profitability. Each quadrant requires a
different sales approach. The type of customer also implies the type of sales person who should
be responsible for managing the relationship. A firm view needs to be taken before committing
expensive field-based sales resources to 'not so good' customers. Focus prospect development
(identifying and contacting new prospective customers) on the profile which appears in the top
left quadrant. Identify prospective new customers who fit this profile, and allocate your business
development resources (people and advertising) to this audience.
Consider also What are your competitor weaknesses in terms of sectors, geographical territory
and products or services, and how might these factors affect your options? Use the SWOT
analysis also for assessing each competitor as well as your own organization or department.
Many organizations issue a marketing budget from the top down (a budget issued by the
Centre/HQ/Finance Director), so to speak, in which case, what is your marketing budget and
how can you use it to produce the best return on investment, and to help the company best to
meet its overall business aims? Use the models described here to assess your best likely returns
on marketing investment.
The best way to begin to model and plan your marketing is to have a record of your
historical (say last year's) sales results (including selling and advertising costs if
appropriate and available) on a spreadsheet. The level of detail is up to you; modern
spreadsheets can organize massive amounts of data and make very complex analysis quick easy.
Data is vital and will enable you to do most of the analysis you need for marketing planning. In
simple terms you can use last year's results as a basis for planning and modelling the next year's
sales, and the marketing expenditure and activities required to achieve them.
simple business plan or sales plan tools examples
These templates examples help the planning process. Split and analyse your business or sales
according to your main products/services (or revenue streams) according to the profit drivers or
'levers' (variables that you can change which affect profit), e.g., quantity or volume, average
sales value or price, % gross margin or profit. Add different columns which reflect your own
business profit drivers or levers, and to provide the most relevant measures.
total sales total sales or

quantity average value % gross margin
value gross margin
product 1
product 2
product 3
product 4
totals
Do the same for each important aspect of your business, for example, split by market sector (or
segment):
total sales total sales or gross

value margin
sector 1
sector 2
sector 3
sector 4
totals
And, for example, split by distributor (or route to market):
total sales total sales or

value gross margin
distributor 1
distributor 2
distributor 3
distributor 4
totals
These simple split analysis tools are an extremely effective way to plan your sales and business.
Construct a working spreadsheet so that the bottom-right cell shows the total sales or gross
margin, or profit, whatever you need to measure, and by changing the figures within the split
(altering the mix, average prices, quantities, etc) you can carry out 'what if?' analysis to develop
the best plans.
If you are a competent working with spreadsheets it is normally possible to assemble all of
this data onto a single spreadsheet and then show different analyses by sorting and
graphing according to different fields.
When you are happy with the overall totals for the year, convert this into a phased monthly plan,
with as many lines and columns as you need and are appropriate for the business. Develop this
spreadsheet by showing inputs as well as sales outputs - the quantifiable activity (for example,
the numbers of enquiries necessary to produce the planned sales levels) required to produce the
planned performance. Large businesses need extensive and multiple page spreadsheets. A
business plan needs costs as well as sales, and will show profit as well as revenue and gross
margin, but the principle is the same: plan the detailed numbers and values of what the business
performance will be, and what inputs are required to achieve it.
Here's a free MSExcel profit and loss account template tool for incorporating these factors and
financials into a more formal phased business trading plan, which also serves as a business
forecasting and reporting tool too. Adapt it to suit your purposes. This plan example is also
available as a PDF, see the Profit and Loss Account (P&L) Small Enterprise Business Plan
Example (PDF). The numbers could be anything: ten times less, ten times more, a hundred times
more - the principle is the same.
Consider also indirect activities that affect sales and business levels, such as customer service.
Identify key performance indicators here too, such as customer complaints response and
resolution levels and timescales. Internal lead referral schemes, strategic partnership activity; the
performance of other direct sales activities such as sales agencies, distributorships, export
activities, licensing, etc. These performance factors won't normally appear on a business plan
spreadsheet, but a separate plan should be made for them, otherwise they won't happen.
write your marketing plan or business plan
Your marketing plan is actually a statement, supported by relevant financial data, of how you are
going to develop your business. Plans should be based on actions, not masses of historical data.
The historical and market information should be sufficient just to explain and justify the
opportunities, direction, strategy, and most importantly, the marketing actions, methods and
measures - not to tell the story of the past 20 years of your particular industry.
"What you are going to sell to whom, when and how you are going to sell it, how much
contribution (gross profit) the sales produce, what the marketing cost will be, and what will be
the return on investment."
As stated above it is easiest and best to assemble all of this data onto a spreadsheet, which then
allows data to be manipulated through the planning process, and then changed and re-projected
when the trading year is under way. The spreadsheet then becomes the basis of your sales and
marketing forecasting and results reporting tool.
As well as sales and marketing data, in most types of businesses it is also useful to include
measurable aims concerning customer service and satisfaction.
The marketing plan will have costs that relate to a marketing budget in the overall business plan.
The marketing plan will also have revenue and gross margin/profitability targets that relate to the
turnover and profitability in the overall business plan. This data is essentially numerical, and so
needs also some supporting narrative as to how the numbers will be achieved - the actions - but
keep the narrative concise; if it extends to more than a half-dozen sheets make sure you put a
succinct executive summary on the front.
The marketing plan narrative could if appropriate also refer to indirect activities such as product
development, customer service, quality assurance, training etc., if significantly relevant to
achieving the marketing plan aims.
Be pragmatic - marketing plans vary enormously depending on the type, size and maturity of
business. Above all create a plan that logically shows how the business can best consolidate and
grow its successful profitable areas. The marketing plan should be a working and truly useful
tool - if it is, then it's probably a good one.
sample business plan, marketing plan or sales plan sample structure and
example format/template
Keep the written part of the business plan as concise and brief as possible - most situations and
high-ranking executives do not need to see plans that are an inch thick. If you can make your
case on a half dozen pages then do so. Particularly if your plan is more than 5-6 pages long,
produce an executive summary (easiest to do when you have completed the plan) and insert it at
the beginning of the document. If you need to include lots of reference material, examples,
charts, evidence, etc, show these as appendices at the back of the document and make sure they
are numbered and referenced during the main body of the plan. Each new section should start at
the top of a new page. Number the pages. Important plans should be suitably bound. All business
plans should be professionally and neatly presented, with no grammar and spelling errors, clearly
laid out in an easy to read format (avoid lots of upper-case or fancy fonts or italics as these are all
difficult to read). Your business plan contents and structure should be as follows:
business plans structure - a business planning template
 Title page: Title or heading of the plan and brief description if required, author, date,
company/organization if applicable, details of circulation and confidentiality.
 Contents page: A list of contents (basically the sections listed here, starting with the
Introduction page) showing page numbers, plus a list of appendices or addendums (added
reference material at the back of the document) allowing the reader to find what they need and
navigate the document easily, and to refer others to particular items and page numbers when
reviewing or querying.
 Introduction page: Introduction and purpose of the plan, terms of reference if applicable
(usually for formal and large plans or projects).
 Executive summary page: Optional and usually beneficial, this should normally be no more than
a page long (or it's not an executive summary) - the key points of the whole plan including
conclusions, recommendations, actions, financial returns on investment, etc., clearly readable in
a few minutes.
 Main body of plan: sections and headings as required, see template below.
 Acknowledgments and bibliography/reference sources: if relevant (only required normally for
very large formal plans)
 Appendices: appendices or addendums - additional detailed reference material, examples,
statistics, spreadsheets, etc., for reference and not central to the main presentation of your
plan.
business plans - main body sections examples template
This sample template is typical for a sales/marketing/new business development business plan.
(A business plan for a more complex project such as an international joint-venture, or the
formation of a new company including manufacturing plant or other overhead activities would
need to include relevant information and financials about the overheads and resources concerned,
and the financials would need to show costs and profits more like a fully developed profit and
loss account, with cashflow projections, balance sheet, etc.) Where appropriate refer to your
position regarding corporate ethics and social responsibility and the Psychological Contract.
While these aspects are not mechanisms within the plan, they are crucial reference points.
1. Define your market - sector(s) and segment(s) definitions

2. Quantify your market (overview only) - size, segmentation, relevant statistics, values, numbers
(locations, people/users, etc) - make this relevant to you business
3. Explain your market(s) - sector trends, eg., growth, legislation, seasonality, PEST factors where
relevant, refer to Ansoff matrix, show the strategic business drivers within sector and segments,
purchasing mechanisms, processes, restrictions - what are the factors that determine
customers' priorities and needs - this is a logical place to refer to ethics and CSR (corporate
social responsibility
4. Explain your existing business - your current business according to sector, products/services,
quantities, values, distributor, etc.
5. Analyse your existing customer spread by customer type, values and products/services including
major accounts (the 'Pareto Principle' or the '80:20 rule' often applies here, eg., 80% of your
business comes from 20% of your customers)
6. Explain your products and services - refer to Boston matrix and especially your strategic
propositions (what these propositions will do for your customers) including your USP's and
UPB's (see sales training section and acronyms)
7. Explain you routes to market, gatekeepers, influencers and strategic partners - the other
organizations/individuals you will work with to develop your market, including 'what's in it for
them', commissions, endorsements, accreditations, approvals, licenses, etc.
8. Case studies and track record - the credibility, evidence and proof that your propositions and
strategic partnerships work
9. Competitor analysis, eg., SWOT analysis of your own business compared to SWOT analysis of
each competitor
10. Sales/marketing/business plan (1 year min) showing sales and margins by product/service
stream, mix, values, segment, 'distributor', etc, whatever is relevant, phased monthly, in as
much detail as you need. This should be on a spreadsheet, with as many different sheets as
necessary to quantify relevant inputs and outputs.
11. List your strategic actions (marketing campaigns, sales activities, advertising, etc) that will
deliver the above, with costs and returns. This should be supported with a spreadsheet, showing
cost and return on investment for each activity.
Tip: If the business plan concerns an existing activity, use the previous year's sales/business
analysis as the basis for the next year's sales/business plan. Adapt as necessary according to your
new strategic plans.
other business planning and marketing issues
staffing and training implications
Your people are unlikely to have all the skills they need to help you implement a marketing plan.
You may not have all the people that you need so you have to consider justifying and obtaining
extra. Customer service is acutely sensitive to staffing and training. Are all of your people aware
of the aims of the business, its mission statement and your sales propositions? Do they know
what their responsibilities are? How will you measure their performance? Many of these issues
feed back into the business plan under human resources and training, where budgets need to be
available to support the investment in these areas.
customer service charter
You should formulate a customer service charter, extending both your mission statement and
your service offer, so as to inform staff and customers what your standards are. These standards
can cover quite detailed aspects of your service, such as how many times the telephone will be
permitted to ring until the caller is gets an answer. Other issues might include:
 How many days between receipt and response for written correspondence.
 Complaints procedure and timescales for each stage.
This charter sets customer expectations, so be sure you can meet them. Customers get
disappointed particularly when their expectations are not met, and when so many standards can
be set at arbitrary levels, think of each one as a promise that you should keep. Business-to-
business customers would expect to agree these standards with their suppliers and have them
recorded as part of their contracts, or as SLA's (service level agreements). Increasingly, large
customers demand SLA's to be tailored to their own specific needs, and the process of
developing these understandings and agreements is absolutely crucial to the maintenance and
development of large contracts.
Remember an important rule about customer service: It's not so much the failure to meet
standards that causes major dissatisfaction among customers - everyone can make a mistake - the
biggest cause of upset is the failure of suppliers to inform customers and keep them updated
when problems arise. Not being told in advance, not receiving any apology, not getting any
explanation why, and not hearing what's going to be done to put things right, are key areas of
customer dissatisfaction, and therefore easy areas for suppliers to focus their efforts to achieve
and communicate improvements.
A special point of note for businesses that require a strong technical profile among their service
staff: these people are often reactive by nature and so not good at taking initiative to identify and
anticipate problem areas in customer service. It's therefore helpful to establish suitable
mechanisms and responsibility to pick up problems and deal with them - a kind of trouble-
shooting capability - which can be separately managed and monitored at a strategic level. Do not
assume that technically-oriented staff will be capable of proactively developing customer service
solutions and revisions to SLA's - they generally need help in doing so from staff with high
creativity, empathy, communications and initiative capabilities.
establish systems to measure customer service and staff performance
These standards and the SLA's established for large customers need to be visible, agreed with
customers, absolutely measurable. You must keep measuring your performance against them,
and preferably publishing the results, internally and externally. Customer complaints handling is
a key element:
Measuring customer complaints is crucial because individual complaints are crucial areas to
resolve, and also as a whole, complaints serve as a barometer for the quality and performance of
the business. You need to have a scheme which encourages, not discourages, customers to
complain, to open the channels as wide as possible. Most businesses are too defensive where
complaints are concerned, preferring to minimise their importance, or to seek to justify and
excuse them. Wrong. Complaints are the opportunities to turn ordinary service into unbeatable
service.
Moreover, time and again surveys suggest that anything up to nine out of ten people do not
complain to the provider when they feel dissatisfied - they just keep their dissatisfaction to
themselves and the provider never finds out there's a problem, even when the customer chooses
to go elsewhere. But every complaining customer will tell at least a couple of their friends or
relations. Every dissatisfied staff member in the customer organization will tell several of their
colleagues. Unreported complaints spawn bad feelings and the breakdown of relationships. It is
imperative that you capture all complaints in order to:
 Put at ease and give explanation or reassurance to the person complaining.

 Reduce the chances of them complaining to someone else.
 Monitor exactly how many dissatisfied customers you have and what the causes are, and that's
even more important if you're failing to deliver your mission statement or service offer!
 Take appropriate corrective action to prevent a re-occurrence.
 If appropriate (ie for large customers) review SLA's and take the opportunity to agree new SLA's
with the customer.
implications for IT, premises, and reporting systems
Also relating to your business plan are the issues of:
Information Technology - are your computers and communications systems capable of giving
you the information and analysis you need? How do you use email - is it helping or hindering
your business and the quality of service you give to your customers? What internet presence and
processes do you need? How should your voice and data systems work together? What systems
need to be available to mobile staff? What customer relationship management (CRM) systems
should you have? How should you consider all these issues to see the needs and opportunities?
IT and communications systems increasingly offer marketing and competitive advantage to
businesses in all sectors - make sure you know hat IT can do for you and for your customers.
Premises - Review your premises and sites in light of your customer service, distribution, and
customer relationship requirements. Pay particular attention anywhere in your organization that
your customers visit - the impression and service you give here is critical.
Reporting systems - If you can't measure it you can't manage it, and where finance and business
performance is concerned this is certainly true. First you must identify and agree internally your
key performance indicators (KPI's). Identify every aspect of your service or performance that is
important - then you need to be able to measure it and report on it, and where people are
involved in performing to certain standards then the standards and the reporting needs to be
transparent to them also.
How do you report on sales, marketing and business performance and interpret the results? Who
needs to know? Who needs to capture the data?
communications and ongoing customer feedback are essential
Having an open dialogue with your customers is vital. There's a double benefit to your business
in ensuring this happens:
 You nip problems in the bud and stay aware of how you're performing.
 Your customers feel better about the service you provide as a result of the communications, or
from the fact that the channel is open even if they don't use it - it's human nature.
Try to devise a standard feedback form. It can double as a promotional tool as well if it's made
available on a wider scale. The form can carry details of your mission statement, service offer
and your customer service charter.
Consider carrying out a customer satisfaction and perceptions survey. There are many ways to do
this on a small or large scale, and valuable feedback is always obtained from customer survey
exercises.
tips for starting a small business or self-employment - for non-financial people
Some of us are not naturally inclined towards the sort of detailed financial thinking that is
required for traditional detailed business planning. If this is you, you'll possess other valuable
capabilities that will be useful in your own enterprise, and you'll maybe find it helpful to use this
alternative approach to planning a new enterprise or self-employment. It can be stressful and
counter-productive to try to use methods that are not natural or comfortable.
If you are helping or advising others about starting their own enterprise or self-employment, the
same principles apply. Not everyone is naturally good at business planning, but everyone who
dreams of being self-employed or who wants to start and run their own independent enterprise is
capable of doing so, provided they work to their strengths, capabilities and passions.
People running successful enterprises come in all shapes and sizes, from all backgrounds, all
ages, with skills, passions, and capabilities in any field you can imagine. Anyone can run their
own business or be successful in self-employment given the simple determination to do so.
Business and enterprise is not just for stereotypical 'business-types'; the benefits and advantages
of being your own boss are available to us all.
Here are some pointers for people considering starting their own new enterprise, or for helping
others to do the same.
First, and especially if you are not clear of your own real strengths, or what direction to pursue,
focus on using tools to understanding your own personality style and strengths. Then use this
knowledge to imagine and realise how your natural capabilities can be used to best effect in
defining and providing your own services or running your own enterprise.
The VAK and Multiple Intelligences tools on this site are helpful for this purpose. They assess
people's strengths completely differently to traditional IQ or academic evaluations, which are
extremely narrow and generally not relevant at all for people who want to be their own boss.
Understanding personality is also useful since personality-type greatly influences the way that a
person approaches self-employment or running an enterprise, and what sort of service or
business to offer. The Personality Styles page provides a lot of explanation about this.
Many people are conditioned by schools and over-cautious parents to under-estimate their own
potential and capabilities, which is a big reason to take a fresh look at what you are good at, and
to re-think and understand better the ways that your personality type tends to be successful in life
and business.
There are many ways to be successful and independent in life aside from building and running a
conventional business and adhering to conventional financial planning methods.
The basic economics of becoming successfully independent in any sort of venture are actually
extremely simple, and focusing on the following simple fundamentals (a process really) can help
many folk turn your dream or an idea into a successful enterprise or self-employment reality. It's
usually easiest to think first of these factors in terms of daily, weekly or monthly numbers and
values, and then to extend the figures to give totals for a whole year:
1. What's your product or service? (What's good/special/different about your products or

service that enough people will buy it? And importantly is this something that you have a real
passion for? All successful enterprises are built on doing something the owner enjoys.)
2. What does it cost to make/buy in/provide the product or service? (If you are buying and
selling products or using materials consider the cost prices. If the main resource is your own time
then attach a cost to your labour that reflects your available time for the work and the wage you
need to draw. Divide your required annual wage by the number of work hours available to you,
and this is your notional hourly labour cost.)
3. What price will the product/service sell for? (Ideally small businesses need a healthy profit
margin or mark-up - doubling the cost is good if the market will accept it. A mark-up of less than
50% is cause for concern unless you are selling products in relatively high volumes or values.
Price your products/services according to what the market will pay, not according to your costs.
Take into account your competitors and what they charge and their relative quality. Service
businesses that use only the person's time are often very attractive and profitable because there is
no added complication of buying and holding stock - hence why window-cleaning, sign-writing,
repairs, gardening, decorating, tutoring, writing, therapy, training, coaching and consultancy,
etc., are such good businesses for people who prefer a simple approach to self-employment and
enterprise. Consider the effect of VAT especially for 'consumer' businesses - ie., selling to the
general public - assuming your business is or must be VAT registered. Private consumers of
course are more sensitive to VAT than business customers who can generally reclaim VAT
should you have to add it to your prices.)
4. Who will buy the product/service? (Identify your customers and market. Do you know this
for sure? Test your assumptions: this is a critical part of the proposition and generally benefits
from more thought and research to confirm that a big enough market exists for your idea.
Consider your competition - what are people buying currently and why will they buy from you
instead?)
5. How much/many do you need to sell in a year? And how many customers do you need?
(This is a vital part of the proposition to confirm that the gross profit (the difference between
costs of bought in products/labour and sales revenues) covers your/their financial needs
(including a living wage and other fixed costs of running the enterprise. Again remember the
affect of VAT on your selling prices if applicable.)
6. How will people know about the service/product? (You need to understand what
advertising/marketing/enquiry-generation is necessary - activity and cost. There is usually a cost
for generating new customers, especially in the early stages of a new enterprise. Once the
business is established, say after six months to a year, 'word-of-mouth' referrals are for some
businesses all that is required to produce new customers - especially those based in a local
community, but virtually any new enterprise requires marketing at its launch. See the articles on
marketing and selling.)
7. Does all this add up, and better still provide a cash surplus at the end of a year? - if so
then it's probably a good business model.
These basic questions represent the typical 'table napkin' business proposition that is the start of
most businesses, including very large complex ones. People who dislike and are not fluent in
detailed business calculations might find the above process a useful starting point when thinking
about how to begin a new enterprise or a venture in self-employment.
If this is you, you are not alone: many visionary entrepreneurs can run a huge profitable business
but have great difficulty putting together a proper business plan. Hence many highly successful
business leaders rely heavily on their financial directors to take care of the financial details,
leaving them free to get on with the business activity that makes best use of their natural skill, be
it creativity, selling, service-provision, people-skills, technical skills, or whatever.
Incidentally the above factors are the essential components which make up a basic Profit and
Loss Account, which is the primary management tool for a business of any scale and complexity.
Here's a free MSExcel profit and loss account template tool for extending these factors and
financials into a more formal phased plan, which also serves as a business forecasting and
reporting tool too. If in doubt about this seek some help from an experienced business person or
your accountant. Adapt it to suit your purposes. The example P&L trading plan is also available
as a pdf. The numbers could be anything - ten times less, ten times more, a hundred times more -
the principle is the same.
company types and financial set up - quick guide
When you have confirmed and refined the basic viability of your business idea you can then
begin getting to grips with the more detailed aspects of forming the business itself.
This necessarily includes deciding your type of business constitution - the legal format of your
company - or 'company type' as it is often described.
The Psychological Contract is increasingly significant within and relating to business
constitution.
Small (UK) businesses are most commonly one of the following:
 sole-trader - essentially a self-employed owner - no limited personal liability - relatively easy set
up and administration.
 partnership - essentially a group of self-employed partners/owners - no limited personal liability
- easy-ish set up and administration, although ultimately dependent on the complexity of the
company and partnership.
 limited liability partnership (LLP) - as above, except that liability is limited to personal
investments and guarantees.
 limited company (abbreviated to Ltd after the company name) - liability is limited to the assets
of the company - registered with Companies House and legally obliged to publish accounts.
There are less common variations of limited companies, and other business structures and
constitutions, for example:
 social enterprise - various structures including , trusts, associations and especially cooperatives -
these are not common typical or traditional business structures, but social enterprises are
growing in popularity, and will be explained in more detail on this website in due course.
Meanwhile here is useful information about cooperatives.
 public limited company (plc) - not appropriate for small companies.
Sole-trader and partnership companies are very easy to set up and administer, but the
owner/partners are personally liable for all business debts and potential claims, so good
insurance cover (including professional indemnity and public liability) is essential especially if
business liabilities are potentially serious.
A limited liability partnership offers protection to partners in terms of personal liabilities, in that
liabilities are limited to the extent of personal investment and any other guarantees. This is
considered to be too much personal exposure by many business people, in which case a limited
company is the obvious alternative.
A limited company exists in its own right - a tricky concept to understand for many people -
basically meaning that financial liabilities belong to the company (its shareholders, to the value
of their shares in other words) rather than the directors and executives of the business, as would
apply in a partnership. Limited companies ultimately offer more flexibility for large complex
businesses but can be over-complicated and administratively heavy if all you want to do is run a
local shop or landscape gardening business or modest training or coaching business.
Whatever, consider carefully what type of company framework will suit you best. Once
established it can be quite difficult to unravel and change if you get it wrong - not impossible,
but a nuisance if you could have got it right first time with a bit of extra thought at the planning
stage.
A good accountant will help you decide what is best for your situation from a legal and financial
standpoint, although before this you should think for yourself what sort of business structure best
fits your wider business situation, and especially your business aims and philosophy. Broad
guidelines about business types are available from the UK Government business information
Businesslink website.
You'll need a business bank account. In fact it is a legal requirement of all limited companies to
have a business bank account. Shop around. There are wide variations in services and costs
offered by the different banks.
You must also understand and organize the tax implications for your type of business.
Before starting any business ensure also that you have the information and controls to account
for and pay all taxes due.
Helpfully to learn more about this in the UK, most tax affairs are within the responsibilities of
HM Revenue and Customs - until they too change their name to something very silly. That said,
the relevance today of HM (Her Majesty's) is a bit puzzling when you stop to think about it and
surely due for updating to the modern age. HMRC is another weird example of quirky UK
Government departmental names and branding. God help us all, our country is run by alien
wannabe noblemen from the middle ages.
VAT (Value Added Tax or your national equivalent) is an issue warranting serious thought if
your business is small enough to have a choice in the matter. Beyond a certain turnover (£68,000
as at 2010) any UK business must register for VAT. Check the HMRC website for the current
position.
Being VAT registered means you must charge VAT on all VAT-rated supplies, which means
also that the VAT you receive on payments from your customers must be paid to HM Revenue
and Customs. (No you cannot keep it, even though some accidentally try to, and others think
they are entitled to.)
Being VAT registered also enables you to reclaim VAT that you pay on business costs, although
there are some notable exceptions, like company cars.
Retail and consumer businesses are especially affected by VAT. Private consumers cannot claim
back VAT, so the effect of VAT on pricing and margins needs careful thought in planning any
consumer business.
Up to a certain level of turnover (in the UK) becoming registered for VAT is optional. If your
business turnover is likely to be below the threshold for mandatory VAT registration, you must
decide for yourself if the advantages outweigh the disadvantages. The main advantages of VAT
registration are:
 your business will be perceived by certain people - especially other businesses - to be larger and
more credible (not being registered for VAT indicates immediately that your turnover is below
the VAT threshold)
 you will be able to reclaim VAT that you are charged on legitimate allowable business costs
The main disadvantages of being VAT registered are:
 the administrative burden in keeping VAT records and submitting VAT returns (although this has
been enormously simplified in recent years so that for small simple businesses it is really not a
problem at all)
 risks of getting onto cashflow difficulties if you fail to set funds aside to pay your VAT bills (see
the tax tips below)
Information about VAT (and all other tax issues) is at the UK Government HM Revenue and
Customs website: http://www.hmrc.gov.uk
VAT is not the only tax. Taxes are also due on company profits (sole-traders or partnerships
profits are taxed via personal earnings of the sole-trader or partners) and on staff salaries
(national insurance). A sole-trader or partnership can employ staff, in which case national
insurance tax is due on salaries paid to employees, which is different to the tax that employees
pay themselves.
Failing to retain funds in a company to pay taxes is a serious problem that's easily avoided with
good early planning. Contact your tax office. Inform them of your plans and seek their help. Tax
offices are generally extremely helpful, so ask. You can even talk to a real person on the phone
without having to breach a six-level automated menu system.
Ideally find a decent accountant too. Preferably one who comes recommended to you. With all
the greatest respect to accountants everywhere, accountants are quite commonly very intense
people, like solicitors and scientists, very much focused on process, accuracy, rules, etc., which
in terms of personality fit can be a little at odds with the style of many entrepreneurs. So again
shop around and find an accountant with whom you can share a joke and a beer or something
from the human world. The relationship between a business person and his/her accountant is
crucial if the business is to grow and develop significantly. Accountants might seem at times to
be from another planet, but I can assure you the good ones are bloody magicians when it comes
to business development, especially when the figures get really interesting. The statement that
one stroke of an accountant's pen is mightier than the world's most successful sales team, is
actually true.
For many entrepreneurs, the ideal scenario is to grow your business large enough to support the
cost of a really excellent finance director, who can take care of all the detailed legal and financial
matters for you, and leave you completely free to concentrate on growing the business -
concentrating your efforts and ideas and strategy externally towards markets and customers, and
internally towards optimizing innovation and your staff.
See the quick tax tips below, especially for small businesses which might not easily be able to
achieve immediate and accurate control of their tax liabilities, which is one of the major early
risks for a new successful small business.
tax tips - understanding and accounting for taxes from the start
A significant potential problem area for newly self-employed people, and for new business start-
ups, is failing to budget and save for inevitable taxes which arise from your business activities.
N.B. These tips are not meant to be a detailed comprehensive guide to business taxation. This
section merely addresses a particular vulnerability of new start-up businesses in failing to set
aside sufficient reserves to meet tax liabilities, especially small businesses, and even more
especially sole-traders and partnerships and small limited companies, which lack expertise in
accounting and consequently might benefit from these simple warnings and tips related to tax
liabilities.
In general these issues would normally be managed via a cashflow forecast, together with
suitable financial processes to allocate and make payments for all costs and liabilities arising in
the course of trading. I recognise however that many small business start-ups do not begin with
such attention to financial processes, and it's primarily for those situations that these particular
notes are provided.
These notes in no way suggest that this is the normal fully controlled approach to planning and
organizing tax liabilities and other cashflow issues within any business of significant scale. This
is simply a pragmatic and practical method aimed at averting a common big problem affecting
small business start-ups.
While your type of company and business determines precisely which taxes apply to you,
broadly taxes are due on sales (for VAT registered businesses in the UK, or your VAT
equivalent if outside the UK), and on the profits of your business and your earnings. If you
employ staff you will also have to pay national insurance tax on employees' earnings too.
Generally sole-traders and partnerships have simpler tax arrangements - for example, profits are
typically taxed as personal earnings - as compared with the more complex taxes applicable to
limited companies, which also pay taxes on company profits and staff salaries.
Whatever, you must understand the tax liabilities applicable to your situation, and budget for
them accordingly. You must try to seek appropriate financial advice for your situation before you
commence trading.
Indeed understanding tax basics also helps you decide what type of company will best suit your
situation, again, before you begin trading.
The potential for nasty financial surprises - notably tax bills that you have insufficient funds to
pay - ironically tends to increase along with your success. This is because bigger sales and
profits and earnings inevitably produce bigger tax bills (percentage of tax increases too in the
early growth of a business), all of which becomes a very big problem if you've no funds to pay
taxes when due.
The risks of getting into difficulties can be greater for the self-employed and small partnerships
which perhaps do not have great financial knowledge and experience, than for larger Limited
Company start-ups which tend to have more systems and support in financial areas.
Start-ups are especially prone to tax surprises because the first set of tax bills can commonly be
delayed, and if you fail to account properly for all taxes due then obviously you increase the
chances of spending more than you should do, resulting in not having adequate funds to cover
the payments when they are due.
Risks are increased further if you are new to self-employment, previously having been employed
and accustomed to receiving a regular salary on which all taxes have already been deducted, in
other words 'net' of tax. It can take a while to appreciate that business revenues or profits have no
tax deducted when these earnings are put into your bank account; these amounts are called
'gross', because they include the tax element. Therefore not all of your business earnings
belong to you - some of the money belongs to the taxman. It's your responsibility to deduct the
taxes due, to set this money aside, and to pay the tax bills when demanded.
Additionally, if you are a person who is in the habit of spending everything that you earn, you
must be even more careful, since this tendency will increase the risks of your being unable to pay
your taxes.
Failing to get on top of the reality of taxes from the very beginning can lead to serious debt and
cashflow problems, which is a miserable way to run a business.
So you must anticipate and set aside funds necessary to meet your tax liabilities from the very
start of your business, even if you do not initially have a very accurate idea of what taxes will be
due, or you lack effective systems to calculate them - many small start-ups are in this position.
Nevertheless it is too late to start thinking about tax when the first demands fall due.
If when starting your business you do not have information and systems to identify and account
accurately for your tax liabilities, here are two simple quick tax tips to avoid problems with the
taxman:
1. You must estimate your tax liabilities and ensure that you set aside funds to cover these
liabilities while you are banking your payments received into the business. The easiest way to do
this is to identify the taxes applicable to your business, for example VAT and your own personal
income tax and national insurance. Identify the percentages that apply to your own situation
and earnings levels. You can do this approximately. It does not need to be very precise. Add
these percentages together, and then set aside this percentage of all your earnings that you
receive into your business. Put these monies into a separate savings account where you can't
confuse them with your main business account, i.e., your 'working capital' typically held in a
current account.
2. Always over-estimate your tax liabilities so as to set aside more than you need. Having a surplus
is not a problem. Having not enough money to pay taxes because you've under-estimated tax
due is a problem; sometimes enough to kill an otherwise promising business.
Here's an example to show how quickly and easily you can plan and set aside a contingency to
pay your tax bills, even if you've no experience or systems to calculate them precisely. This
example is based on a self-employed consultancy-type business, like a training or coaching
business, in which there are no significant costs of sales (products or services bought in) or
overheads, i.e., revenues are effectively the profits too, since there are minimal costs to offset
against profits:
example of estimating and setting aside money to pay taxes
1. In the UK VAT on most products and services is 17.5%. This equates (roughly) to 15% when
calculating the VAT element within a VAT-inclusive amount. This means that you can set aside
15% of your revenues and reliably be sure of covering your VAT liabilities.
2. In the UK personal income tax and national insurance combined is roughly 30% of earnings
up to about £30,000 (a little over in fact), rising to 49% - call it 50% - of earnings above £30k -
roughly.
N.B. Income tax and national insurance are calculated on taxable earnings, which exclude money
spent on legitimate business costs, and VAT received.
These figures in the above example are approximate I emphasise again, which is all you need for
this purpose, moreover the approximations are on the high side of what the precise liabilities
actually are. Accountants call this sort of thinking 'prudent'. It's a pessimistic approach to
forecasting liabilities rather than optimistic, which is fundamental to good financial planning and
management: if the pessimism is wrong then you end up with a surplus (which is good), but if
you are wrong in making optimistic forecasts and estimates (over-ambitious sales, and lower-
than-actual costs and liabilities), then you run out of money (which is bad).
Back to the percentages.. Knowing the income tax percentages enables you to set aside a suitable
percentage of your earnings when you receive them into the business. Roughly speaking, for
earnings up to £30k you need to set aside 30% to cover income tax and national insurance. For
earnings over £30k you need to set aside 50% to cover your income tax and national insurance.
(Earnings below £30k remain taxable at 30%). Remember you can arrive at these figures based
on the VAT exclusive revenues, but to keep matters simpler it is easier to use an adjusted total
percentage figure to apply to the total gross earnings. If it's kept very simple and quick you'll be
more likely to do it - and/or to communicate the method effectively to your partner if they are
responsible for handling the financials, as often happens.
Given this example, if in your first year your gross revenues (banked payments received) are say
£50,000, assuming you are VAT registered, then your tax liabilities will be (roughly):
17.5% VAT liabilities equates to (again we are assuming no significant costs to
£7.5k
15% of gross sales revenues offset these figures)
total net earnings are say £42.5k, being £50k

30% Income tax/NI on first £30k
£9.0k less £7.5k VAT, again we are assuming
earnings
negligible costs to offset against earnings
£12.5k of the net £43.5k earnings is taxed at

50% Income tax/NI on remaining
£6.25k the higher rate, again assuming negligible costs
£12.5k earnings
offset against earnings
total tax liabilities = 45.5%, or to (£22.75k total tax ÷ £50k gross revenues =
£22.75k
be extra prudent call it 50%... 45.5%)
From this example you can see that setting aside 45.5% of earnings (yes it's a lot isn't it - which
is why you need to anticipate it and set the money aside) would comfortably cover VAT and
income tax liabilities. To be extra safe and simpler in this example you could round it up to 50%.
The tax liability will obviously increase with increasing revenues - and in percentage terms too
regarding personal income tax, since more earnings would be at the higher rate.
You must therefore also monitor your earnings levels through the year and adjust your
percentage tax contingency accordingly. As stated already above, the risk of under-estimating tax
liabilities increases the more successful you are, because tax bills get bigger.
In truth you will have some costs to offset against the earnings figures above, but again for the
purposes of establishing a very quick principle of saving a fixed percentage as a tax reserve until
you know and can control these liabilities more accurately, the above is a very useful simple easy
method of initially staying solvent and on top of your tax affairs, which are for many people the
most serious source of nasty financial surprises in successful start-up businesses.
The above example is very simple, and is provided mainly for small start-up businesses which
might otherwise neglect to provide for tax liabilities. The figures and percentages are not
appropriate (but the broad principle of forecasting and providing funds for tax liabilities is) to
apply to retail businesses for example, or businesses in which staff are employed, since these
businesses carry significant costs of sales and overheads, which should be deducted from
revenues before calculating profits and taxes liabilities. Neither does the example take account of
the various ways to reduce tax liabilities by reinvesting profits in the business, writing off stock,
putting money into pensions, charitable donations, etc.
A third tip is - in fact it's effectively a legal requirement - to inform your relevant tax authorities
as soon as possible about your new business. Preferably do this a few weeks before you actually
begin trading. That way you can be fully informed of the tax situation - and your best methods of
dealing with tax, because there are usually different ways, and sometimes the differences can be
worth quite a lot of money.
I do not go into more detail about tax here because it's a very complex subject with wide
variations depending on your own situation, for which you should seek relevant information and
advice from a qualified accountant and/or the relevant tax authorities.
template and structure for a feasibility study or project justification report
First, and importantly, you need to clarify/confirm the criteria that need to be fulfilled in order to
justify starting or continuing the project or group, in other words, what do the decision-makers
need to see in order to approve the project or its continuation?
Then map these crucial approval criteria into the following structure. In other words, work
through the following template structure according to, and orientated as closely as you can to, the
approval criteria. (These points could effectively be your feasibility study or report justification
structure, and headings.)
 past, present and particularly future ('customer') need (for the outputs/results produced by
group or project)
 benefits and outcomes achieved to date for what cost/investment
 benefits and outcomes to be produced in the future
 resources, costs, investment, etc., required to produce future required outcomes and benefits
(identify capital vs revenue costs, i.e., acquisition of major assets and ongoing overheads)
 alternative methods or ways of satisfying needs, with relative cost/return (return on
investment) comparisons (ie., what other ways might there be for satisfying the need if the
group or project doesn't happen or ceases?)
 outline strategy and financial plan, including people, aims, philosophy, etc (ideally tuned to
meet the authorising power's fulfilment criteria) for proposed start or continuation of project
(assuming you have a case, and assuming there is no better alternative)
Keep it simple. Keep to the facts and figures. Provide evidence. Be clear and concise. Refer to
the tips about effective writing. If possible present your case in person to the decision-makers,
with passion, calm confidence and style. Look at the tips on presentations, and assertiveness.
tips on finding and working with business planning advisors and consultants
If you need help putting together a business plan, and if you want to get the best from the
engagement, it's important to find the right person to work with, and to establish and maintain a
good working relationship with them. If you are great big organisation you'll probably not need
to work with outsiders, and if you do then you'll probably opt for a great big supplier, however
there are significant benefits from working with much smaller suppliers - even single operators -
and if you are a small business yourself, then this is probably the best choice anyway: to seek a
good single operator, or small partnership of experts. Here are some ideas of what to look for.
You'll be best finding someone who meets as much of this criteria as possible:
 lives close-by you so you can work face-to-face with them and get to know each other properly,
and so that their time is efficiently used, instead of being in traffic on their way to and from your
place
 is high integrity and very discreet
 is grown-up and got no baggage or emotional triggers - wise and mature - and it needn't be an
age thing
 can help you see and decide where and how you want to take the business, rather than tell you
where he/she thinks you need to go - a mentor not an instructor
 understands or can immediately relate to your industry sector and type of work
 is experienced working with small family companies, but is also a big picture strategist and
visionary (advisors who've only ever worked with big corporations can sometimes be a bit free
and easy with relatively small amounts of money - you need someone with a very very practical
approach to managing cash-flow, and real business realities, who've worked in situations
without the protection of vast corporate bureaucracy and the lack of transparency that this
often brings)
 is triple-brained or whole-brained - mostly front-brained - (see the stuff on Benziger) - intuitive-
creative, thinking, but also able to be personable and grounded, subject to the point below
 complements your own strengths and fills the gaps and weaknesses in your collective abilities
(again see the stuff on Benziger and Jung etc) - ie., if collectively you need hard facts and figures
and logic then seek people with these strengths - conversely if you are strong on all this, then
seek the creative humanist ethical strengths - he/she must work with you in a balanced team -
so that the team has no blind spots, and no subjective biases in style or emphasis
 has two or three referees you can talk to and see evidence of past work (although if you check
most of the above it will be a formality)
 doesn't smoke or drink too much
 isn't desperate for the work
As regards finding someone like this, without doubt the most reliable and quickest method is by
networking introductions through trusted people. The person you seek might be three or more
links away, but if it's a friend or associate of someone trusted, by someone who's trusted, by
someone you trust, then probably they'll be right for you. Start by talking to people you know
and asking if they know anyone, or if they know anyone who might know anyone - and take it
from there.
The chances of finding the right person in the local business listings or directory, out of the blue
and from cold, are pretty remote.
Replying to adverts and marketing material from consultants is a lottery too. You'll find someone
eventually but you'll need to kiss a lot of frogs first, which takes ages and is not the cleverest
way to spend your valuable time.
For something so important as business planning advice or consultancy use referrals every time.
Referrals work not only because you get to find someone trusted, but the person you find has a
reasonable assurance that you can be trusted too, you see: good suppliers are just as choosy as
good clients. It works both ways.
Be prepared to reward the person in whatever way is appropriate and fair (I'm thinking
percentage share of incremental success beyond expectations - perhaps even equity share if the
person is really good and you'd value their on-going contribution and help).
Often the best people won't ask for much money up front at all, but from your point of view you
will attract a lot more commitment and work beyond the call of normal duty from them if you
reward higher than they ask or need.
Good suppliers are immensely motivated by good clients and lots of appreciation, even if they
don't want the financial reward.
Good suppliers have usually seen too many ungrateful greedy people taking them for granted and
penny pinching, and will tend to sack clients like these without even telling them why, and move
on to more deserving enjoyable work with people who are fair and appreciative, which is how
you'll be I'm sure.
Finally, when you've found the right person, always continually agree expectations and invite
feedback about how the relationship is working, not just how the work is going.
starting your own business - or starting any new business
These are the simple rules for planning and starting your own business. The principles also apply
to planning and starting a new business within an organisation for someone else.
In amongst the distractions and details of new business planning, it is important to keep sight of
the basic rules of new business success:
Your successful new business must offer something unique that people want.
Uniqueness is vital because otherwise there is no reason for customers to buy from you.
Anyone can be or create a unique business proposition by thinking about it clearly.
Uniqueness comes in all shapes and sizes - it's chiefly being especially good and different in a
particular area, or field or sector.
Uniqueness can be in a product or service, or in a trading method, or in you yourself, or any

other aspect of your business which makes what you are offering special and appealing to
people.
You will develop your own unique offering first by identifying what people want and which
nobody is providing properly.
Second you must ensure that your chosen unique offering is also an extension of your own
passion or particular expertise or strength - something you will love and enjoy being the best at -
whatever it is.
Every successful business is built on someone's passion.
new business start-ups by older people
If you already have a career behind you, and you wonder if you've got it in you to compete and
succeed in the modern world, consider this.
First - you have definitely got it in you to succeed.
Experience and wisdom are fundamental building blocks of success, and will be for you from the
moment you start looking at yourself in this way.
The reassuring wisdom that older people generally possess is extremely helpful in forming
trusting relationships - with customers, suppliers, partners, colleagues, etc - which are essential
for good business.
Added to this, as we get older we have a greater understanding of our true passions and
capabilities; we know our strengths and styles and tolerances. This gives older people a very
special potency in business. Older people know what they are good at. They play to their
strengths. They know which battles they can win, and which to avoid.
Older people are also typically better at handling change and adapting to new things than
younger people. This is because older people have had more experience doing just this. Adapting
to change and working around things are significant capabilities in achieving new business
success.
If you are an older person considering starting a new business, think about the things you can do
better than most other people - think about your strengths and use them.
business start-ups for younger people
Younger people can be very successful starting new businesses just as much as older people can
be.
The essential principle of playing to your strengths applies, although the implications are
different for younger people compared to older people.
Younger people are likely to have lots of fresh ideas. This is an advantage, so avoid people pour
cold water on them.
Test your ideas on potential customers, rather than to take advice from those people who are
ready with their buckets of water.
Next, get the help you need. It's difficult for young people to know all the answers.
You'll have the ideas and the energy to make things happen, but consider the gaps in your
experience, and the things you don't enjoy doing, and seek good quality reliable help for these
things.
Getting good help at what you can't do or don't want to do will enable you to put all your energy
into what you are good at and what you want to spend your time doing.
Young people sometimes try to force themselves to fit into roles or responsibilities that are not
comfortable or natural. This is de-stabilising and stressful. Learn what you love and excel at, and
focus on building success from this.
Which brings us back to playing to your strengths.
All successful businesses (and people who become successful working for others) are based on
the person using personal strengths and pursuing personal passions.
Success in business is always based on doing something you love and enjoy, which is
fundamentally related to your natural strengths and unique personal potential, whatever that is.
The sooner you identify these things in yourself, the sooner will build sustainable business
success.
planning business success - in summary
Spreadsheets, mission statements, planning templates and other process elements of new
business creation and development are tools. They enable the business to be properly structured,
started and run. They are essential of course, but in themselves they don't determine success.
Business success is determined by deeper factors.
Increasingly business success depends on having a solid philosophical foundation - where

relevant interests, inside and outside of the organization, are balanced rather than conflicting.
The bigger the business, the more widely it must consider how it relates to external interests and
responsibilities - to society and the world at large.
A business with this sort of harmony and balance built into its shape and principles at the outset
has a huge advantage over a business which contains tensions and competing pressures. Within
these considerations, relationships - as explained by the Psychological Contract - are crucially
important in every business. Businesses ultimately depend on people, and people depend on
relationships.
Aside from this - and without diminishing the significance of other vital business components
such as reliability, value, quality, etc., which are necessary merely to survive at a basic level -
uniqueness and passion are the remaining special ingredients for success:
 Uniqueness (just one word, with so many implications) - so that people will want what you offer,
and
 Passion, so that you will enjoy being and offering your best - and so that this belief and
commitment conveys to others.

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Basic Subjects

Family’s First Restaurant Venture In the Philippines

The Magnolia Ice Cream Parlor

From Ice Cream to Burger Restaurants

The Branding and Transformed Enterprise

The McDonald’s Invasion

bee. Tony refused. He and his family geared up for battle.

Before you begin…

Writing a business plan…

Beware Planning Paralysis!

Frequently Revise, Revise, Revise!

 1.0 Executive Summary

Need actual charts?

Research Your IndustryNeed to Get Figures on Your Industry?

Research Your IndustryNeed to Get Figures on Your Industry?

Need actual charts?

Playground Equipment $3,500

Playground Prep $700

Playground Fence $3,000

Total Start-up Expenses $39,450

Cash Required $65,550

Other Current Assets $14,130

Total Assets $79,680

Total Requirements $119,130

Need real financials?

Start-up Expenses to Fund $39,450

Start-up Assets to Fund $79,680

Total Funding Required $119,130

Non-cash Assets from Start-up $14,130

Cash Requirements from Start-up $65,550

Additional Cash Raised $0

Cash Balance on Starting Date $65,550

Liabilities and Capital

Long-term Liabilities $60,000

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

Total Liabilities $60,000

Owner - Kilpatrick Cash $45,000

Owner - Kilpatrick Credit Line $12,500

Other Assets Invested $1,630

Additional Investment Requirement $0

Total Planned Investment $59,130

Loss at Start-up (Start-up Expenses) ($39,450)

Total Capital $19,680

Total Capital and Liabilities $79,680

Total Funding $119,130

Company Locations and Facilities

Research Your IndustryNeed to Get Figures on Your Industry?

Market Analysis Summary

Business Start-up GuidesStep-by-step instructions you need

Need actual charts?

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Under 5 Years 6% 2,665 2,825 2,995 3,175 3,366 6.01%

5 to 9 Years 6% 2,865 3,037 3,219 3,412 3,617 6.00%

10 to 12 Years 6% 2,771 2,937 3,113 3,300 3,498 6.00%

Total 6.00% 8,301 8,799 9,327 9,887 10,481 6.00%

Need real financials?

Strategy and Implementation Summary