How to write the perfect business plan

How to write the perfect business plan

Reading Time: 5 minutes

Guest blog by Govchain

Simply put, a business plan is a document that explains what your business is all about. It sets out what the business is planning to do, how it’s going to do it, and over what sort of timeline it’s planning to do it over. A good business plan helps give the business direction and serves as a reference guide to make sure you have a laser focus on the most important goals of the company. So, what makes a good business plan? 

The more detailed you make your business plan, the more encompassing of your mission it will be, making it clear how the business will be run. But, pro tip: don’t get distracted by unnecessary details, a good business plan focuses on the core of business – how it’s going to generate money. Stick to the point and plan everything around that.

Longer and more formal business plans start with an Executive Summary. This is a brief summary of the entire business plan – the trick here is to make it as comprehensive, yet concise, as possible. For a busy investor your Executive Summary might be the deciding factor in whether they go on to read your full business plan or not, so make it count.

Next is an Introduction to your company. This is exactly what it sounds like – an introduction to who you are, your history, how you came up with the idea for the business, what work you’ve done so far, your location, and your management.

 

Related: A quick guide to Bridging Finance

 

After that comes the Company Summary. This is structured in four parts:

Vision: This describes the change that the company is looking to make and how that will impact the community it serves and the world. It’s usually a high-level aspirational statement.

Mission: This explains why the company exists and what its central goals are – spreading its products and/or services. You can include who the major customers will be, but keep it short and sweet.

Objectives: These are measurable outcomes that your company wants to achieve through the business. Include estimated growth figures like how much do you plan on growing every year, how many sales a month do you plan on making etc.

Values: These are your ethics, your core beliefs about how the company is run, and how you want to operate in the world. Examples are integrity, consistency, and spreading positive change. Vision and Values tend to stay the same over the life of a company, but Objectives can change as the business grows over time, which may influence your Mission. 

 

After Company Summary comes the Production/Service Overview. Here you describe in detail how the company makes its products or how the service will be carried out, being very clear with what goes into the processes. Following this is another section on Products and Services where you list all the various things your business might produce, including waste products and/or added services.

To show how you fit into the relevant market, include an Industry Overview. In this section, you describe what other role-players in the industry are doing, what the total market size is, and, if applicable, how much of that total you are planning to take over. If your business covers more than one industry, be sure to show this.

A section on Research and Development is a good place to show how you are planning to improve your products and/or services, and how you plan to offer a better experience for your customers than that of your competitors. Here you can also talk about things you would like to look into in the future as your business grows.

 

Related: Business Funding: An overview of how SMEs can access funding in SA

 

Now for the big one – your Financial Plan. This, after the Executive Summary, is the second thing a busy investor will look at, so make sure you do it properly. A full Financial Plan typically includes:

  • Assumptions made about the business and markets,
  • Options for financing the business, e.g. loans, direct investment or grants,
  • If applicable, a Facility Cost where you lay out all expenses needed to build or fit out the premises. A general rule of thumb is that building ends up costing double what you expect, so budget for this,
  • A Unit Cost Analysis – working out each and every cost that goes into making the product or service that you will be selling to figure out how much you will be charging. This is calculated by adding fixed cost ‘overheads’ (like rent for premises, salaries of employees, water and electricity, etc) to the variable cost of inputs needed to produce each unit, and then dividing it by the total number of units you will be able to produce given those costs. Be thorough here and think about all the costs, everything from insurance to staples,
  • A detailed 3-Year Cash Flow Plan, showing that you will always have cash available, even if you are operating at a loss at the beginning, and
  • A 5-Year Profit/Loss Plan, showing how you will grow and start building capital. Be sure to include the breakeven point. This is the important day where all costs of setting up the business will be repaid and from where you will start making a continuous profit. 

 

Pro Tip: Balance being optimistic, realistic, and prudent when doing your costing – rather ask for a bit more investment and make sure that the business always has cash instead of having to ask for more later.

A final section to include is one detailing your Risk Management. All companies and businesses face risks, and it’s important to consider how you will stay safe. This includes things like insurance, staffing plans, legal matters, and other strategies to make sure things run smoothly.

 

It’s important to be honest and realistic in this document. Exaggerating or underplaying certain things will come out eventually, which will lead to some uncomfortable meetings and explanations. That being said, also think about who you are going to give the document to, and consider what they want to see. You can cater the business plan to a specific investor so long as your document is still accurate and truthful. Depending on what you want to achieve, perhaps let an accountant or someone with experience in the business have a look through the plan and financials before giving it to investors.

Remember that most investors look at the bottom line; they want to see that your business is, or is going to be, profitable. Include any Purchase Orders, Letters of Intent of other contracts as annexures to the business plan. Some investors might be looking to add different types of value to their investment portfolios, such as environmental responsibility and corporate social responsibility – if your business falls into one of those areas, be sure to point it out to them.

Even if you aren’t looking for investors, a good business plan helps bring structure to your company and the objectives within. It also helps to speak to people around you when writing your business plan, to test ideas against them. They may think about things in a way you hadn’t thought of before, which will help to further refine your ideas. Finally, remember to update the business plan as things move along so that it always remains the working manual your company can use to be successful at business!

 

Ready to take the first step in your entrepreneurial journey? Meet Govchain, your partner in company registration and small business compliance. Register your company quickly and easily online, no paperwork needed.

It’s time for a business funding repayment holiday

It’s time for a business funding repayment holiday

Reading Time: < 1 minute

As part of our continued commitment to support small businesses across South Africa, we’re doing everything we can to help you end off the year on a high note while also setting up your business for growth in 2021.

Just as major bank payment holidays are coming to an end, we’d like to offer you a repayment holiday until January 2021.

When you apply for business funding with Lulalend before the end of November 2020, you will get to enjoy a repayment break and only start paying from 11 January 2021. That could be up to two months of completely free capital!

As always, our qualifying criteria stays the same to give you access to funding.

  1. Annual turnover of over R500k
  2. You’ve been in business for more than 12 months
  3. Your business is located in South Africa

If you qualify, our standard rules still apply and you’ll have access to the following:

  • Access to up to R2 Million in funding
  • Funding within 24 hours
  • No early repayment penalty fees
  • Fast and easy online application

Apply for business funding before 30 November and only start repaying from 11th January 2021.
Get up to R2 million in funding, in 24 hours, no paperwork, no hidden fees.

Enter promo code HOLIDAY to qualify.

APPLY NOW

What’s more is that during the repayment holiday, you can rest assured that no interest, monthly charges, or any other fees will be accrued. Giving you extra peace of mind to focus solely on putting your business in a better position to grow and succeed in 2021.

Offer applies to first time Lulalend advances only.

Make the most of 2020, and put your business in a secure spot for 2021.

 

Lulalend named one of the Inclusive Fintech 50

Lulalend named one of the Inclusive Fintech 50

Reading Time: 2 minutes

Lulalend is proud to announce that we have been named one of the winners in the 2020 Inclusive Fintech Awards. Inclusive Fintech 50 announced the 2020 cohort of companies driving inclusion and resilience for the 3 billion financially underserved people globally.

An independent panel of 35 experts from venture capital, technology, and financial services firms identified the most promising Fintech companies providing credit, insurance, savings, and other critical products to low-income households and businesses that are particularly vulnerable to financial shocks like the COVID-19 economic crisis.

We are honoured to be part of the 50 fintech companies that were selected from a pool of 403 eligible applicants operating in 111 countries based on four criteria: inclusiveness, innovation, scale potential, and traction.

Brad Jones, CEO of Wave Money and one of the expert judges said, “The final 50 were selected based on strong product-market fit, the experience of their leadership teams, and their potential to scale and reach underserved populations.”

Launched in 2019, Inclusive Fintech 50 identifies and elevates high-potential, innovative fintech companies driving financial inclusion and resilience. The initiative is implemented by MIX, the global data resource for investors focused on inclusive finance.

“Lulalend is incredibly proud of the work we’ve been doing to support the nation’s SMEs. Recognition of what we’ve managed to achieve from Inclusive Fintech, a global thought leader on financial inclusion, will fuel the fire in our team to deliver on our mission of helping South Africa’s SMEs grow, prosper and drive our country forward, ” said Trevor Gosling, Lulalend CEO, and co-founder.

The winners are listed below by the main operating region. Full profiles can be viewed at www.inclusivefintech50.com/2020-cohort.

East Asia & the Pacific

  • Fairbanc (Credit)
  • First Circle (Credit)
  • Helicap (Credit)
  • Kiu Global Ltd (Infrastructure)
  • Modal Rakyat (Credit)
  • Neat (Payments & Remittances)
  • Oriente (Credit)
  • reach52 (Insurance)
  • UangMe (Credit)
  • ZigWay (Infrastructure)

Europe & Central Asia

  • EthicHub (Credit)
  • Eversend (Payments & Remittances)
  • Papara (Payments & Remittances)
  • SteadyPay (Credit)
  • TagPay (Payments & Remittances)

Latin America & the Caribbean

  • Aflore (Credit)
  • Akiba (Savings & Personal Financial Management)
  • Alfi (Savings & Personal Financial Management)
  • Bamba (Insurance)
  • Coink (Savings & Personal Financial Management)
  • Grupo R5 (Insurance)
  • Siembro (Credit)
  • TiendaPago (Credit)

North America

  • Climb Credit (Payments & Remittances)
  • Esusu (Credit)
  • Fonbnk (Payments & Remittances)
  • Propel (Savings & Personal Financial Management)
  • SoLo Funds (Credit)
  • Trust Stamp (Infrastructure)

South Asia

  • Davinta (Credit)
  • Dvara SmartGold (Savings & Personal Financial Management)
  • ftcash (Credit)
  • Fundfina (Credit)
  • Kaleidofin (Savings & Personal Financial Management)
  • Naya Jeevan (Insurance)
  • Nagad (Payments & Remittances)
  • SureClaim (Insurance)
  • Verismart (Infrastructure)

Sub-Saharan Africa

  • Asaak (Credit)
  • Bankly (Savings & Personal Financial Management)
  • DreamStart Labs (Savings & Personal Financial Management)
  • Extramile Africa (Savings & Personal Financial Management)
  • Hydrologistics Africa Ltd (Payments & Remittances)
  • Lulalend (Credit)
  • Moon (Infrastructure)
  • OKO Finance Ltd (Insurance)
  • Paycode (Payments & Remittances)
  • PayGo Energy (Infrastructure)
  • PesaKit (Infrastructure)
  • Turaco (Insurance)

Inclusive Fintech 50 was founded by MetLife Foundation and Visa, with support from Accion and IFC, and additional funding from BlackRock and Jersey Overseas Aid & Comic Relief.”

How to move your retail business online

How to move your retail business online

Reading Time: 2 minutes

If 2020 and the COVID-19 pandemic is anything to go by, we know that in order to survive in business, one must adapt. If you’re a retailer, right now this means going digital. In this guide, we’ve unpacked the basics of what you need to know if you are looking to move your retail business online and develop eCommerce capabilities. We’ve also provided an indication of how much you’ll need to invest.

DOWNLOAD THE COMPLETE GUIDE HERE

Know your target customer

At this point, you should be very well versed in who your customer is and what their buying behaviour is. You need to research whether your customer base does in fact shop online and whether they will be willing to do so for your business and the products or services you sell.

 

Optimize your products, services, and offerings

What you sell or offer online must make sense, be easy to find, attractively presented, and be readily available.

 

Related: Business High Five: Online tools to improve your business

 

Choose the right eCommerce platform for your business

Having the right website and eCommerce platform for your business goes hand in hand. If you do not have a website already, there’s always the option to build your own website (integrating with an eCommerce platform) if you have the budget and resources available.

 

Choose a payment gateway

The final basic step to setting up your online selling channel is choosing the right payment gateway. If you want to maximise your online sales, choosing a gateway that has a variety of payment options is important. To match the payment preferences of online shoppers in South Africa, you will need to offer most of the following payment methods; Credit and debit cards, Instant EFT, Masterpass, Mobicred, and  Zapper.

 

Related: Move your business online by following these essential steps

 

Make sure your business has a digital presence

Marketing your business online may seem like a daunting task but as a small business owner, you can start small. No matter what industry you’re in, chances are your customers are online. It’s estimated that South Africans spend more than 9 hours a day online, according to a wearesocial.com report.

For the complete expert guide on how to move your retail business online, click here.

7 Ways to manage your cashflow in your construction business

7 Ways to manage your cashflow in your construction business

Reading Time: 2 minutes

Having an effective cash flow system is the heartbeat of any successful business. This is especially true in a construction business where managing cash flow between different projects can mean the difference between success and failure of your business.

We’ve put together a few tips and tricks that can help you manage your cash flow to ensure your construction business remains profitable across all projects.

Understand your customer

As a business owner, it is always ideal to work with contractors and customers who know how to process your paperwork, provide approval on work completed, and pay for services soon after completion. Knowing your customer’s creditworthiness by reviewing their financial statements or annual fiscal reports can help you understand how they have worked in the past and guide you on how to manage your relationship with them. It is important to know that they will be able to pay for the work you complete for them, even before you begin.

Do a Cash Flow Forecast

Create a reasonable cash flow forecast for each of your projects. Depending on the length of the project, plan out how much work will be completed each week or month and how much you can invoice for. Remember to consider how much you are set to pay vendors so you have an estimated idea of how much cash you will have at every stage during your project. At the end of each project, compare your forecast against your receipts so you can improve future forecasts and in turn better manage your cash flow.

 

The Best Bridging Finance for SMEs

 

Be realistic about your profitable estimate

You should never consider taking on a construction project that will not be profitable for your business. Managing your cash flow on profitable projects is difficult enough. You always have to avoid moving funds from one project to pay for another just to keep an unprofitable project going.

Negotiate contract terms in your favour

It is important to ensure that the payment terms you agree on are in your company’s best interest. The invoicing schedule you should prefer is one that reflects upfront costs that set the project in motion, such as being paid for materials when they are delivered rather than when they have been installed. Come up with a schedule that works for you and your vendors so both parties have an understanding and you can avoid having disputes about money and payment terms throughout the project.

Always check Change Orders

Change orders can have a big impact on your cash flow so it’s important to know what you can and can’t charge for. Change orders should be clearly established in the contract. Keeping on top of and documenting the extra work completed is essential.

Be strict about collecting payments

It is always good to have your accounts receivable down to 40 days or less, however, this may not always be the case. When invoicing customers, ensure you have all the correct and necessary documentation and that you are submitting to the relevant people so you can avoid delayed payments. Do not be shy when requesting payment against an agreed contract.

 

3 Ways Bridging Finance Instantly Improves Cash Flow for Your Business

 

Close the Project

Closing a project and collecting payment can be tricky at times. Effectively managing the final punch list can improve the timeliness of the final payment. With the help of Lulapay, you can collect payments upfront and we can offer your debtors payment terms with us. Read more about how this works here.