Task 1
1. A well-thought-out business plan lets others know how the man who made the plan is serious, and that you can handle all that running a business entails. It can also give you a solid roadmap to help you navigate the tricky waters. The seven components a person must have in the business plan include:
Executive Summary
Business Description
Market Analysis
Organization Management
Sales Strategies
Funding Requirements
Financial Projections
All of these elements can help a person to build his business, in addition to showing lenders and potential backers that you have a clear idea of what he is doing.
2. Strategic planning is a systematic process that helps a eperson set an ambition for his business’ future and to determine how best to achieve it. Its primary purpose is to connect three key areas which are:
Strategic planning is different to business planning. It requires stepping back from t day-to-day operations and articulating where the business is heading, by setting long-term goals, objectives and priorities for the future.
3. Key elements that should be included in a business plan are:
4. Research the Industry
Understand the industry in which you plan to operate, researching historic performance and growth forecasts. The Timmons model of opportunity recognition, a popular technique for evaluating an industry, can help you assess market demand, market size and margin analysis (Bryman and Bell 2015).
Analyze the Market
Define your target market. Use demographic and psychographic information to better understand what your customers want, how they want to receive it and how you can best reach them. This information will help you improve your offering, and it forms the foundation for your marketing plan (Bryman and Bell 2015).
Size Up Your Competitors
Determine your direct and indirect competitors and consider how your product or service compares to theirs. Note key attributes and success factors, evaluating your business against the competition, and then identify your competitive advantage or develop one using the information obtained in the competitor analysis.
Design Your Company
Choose your company’s name, location and business model. Determine how you will sell your product or service to your customer and how you will protect your competitive advantage. If you plan on securing a patent, apply for one early because the process can take more than a year.
Create a Marketing Strategy
Develop a plan for reaching your target customer. It should contain information on advertising channels, distribution avenues, pricing and product attributes. Include a sales forecast that will provide the foundation for your business’ financial plan.
Plan Your Operations
Determine how you will manufacture or deliver your product or service. Decide where to locate your business and anticipate how your operations will change as demand grows. Decide how ownership will be distributed and how investors and employees will be compensated. Begin to build your team.
Determine Your Financial Needs
Calculate how much must be invested to start your business. You will need to fund operations until the business can sustain itself. Keep in mind that actual sales are usually lower, and expenses higher, than forecast. Decide which, if any, outside sources of funding your business will utilize, and draft a plan for securing those funds.
5. The strategic plan impacts many, both outside as well as inside the organization. To varying degrees these relationships must be recognized during various planning phases, including the communication of the plan. Some of the possible stakeholders are:
6. Business plan defines the work your company intends to do. One element, the vision statement, outlines your purpose, requirements and goals at the beginning of the plan. Developing a vision for your plan involves identifying your business requirements so that you can state your intentions clearly (Swamidass 2016). Doing so will enable you to obtain business sponsorship. Obtaining funding and investment for your business endeavors often depends on your ability to articulate your goals in a realistic manner. By defining your vision and requirements up front, you can prevent changes to your requirements. Constantly changing requirements causes rework and the waste of precious and costly resources (Hair Jr et al. 2015). Making a compelling business vision plan ensures your business receives the funding and resources you need to make your business successful. Like mission statements, vision statements help to describe the organization’s purpose. Vision statements also include the organization values. Vision statements give direction for employee behavior and helps provide inspiration. Strategic plans may require a marketing strategy, which could include the vision statement to also help inspire consumers to work with the organization.
7. The term “SWOT” is an acronym for the words “strengths”, “weaknesses”, “threats” and “opportunities”. A S.W.O.T framework involves composing lists of the internal strengths and weaknesses a business that is relevant to a certain project and then creating lists of opportunities and threats that exist outside of the company that could impact the project. For example, consider a tech company wants to increase its sales by expanding its product offerings. If the company owns a patent on a new type of computer processor technology, the patent could be listed as strength, but if it the company does not have the resources to engineer and produce a prototype of the new processor, managers might list lack of capital as a weakness. Venture capitalists often invest in businesses with new ideas that have the potential for large growth, so the potential to attract venture capital could be listed as on opportunity. If competitors are in the process of developing similar technologies it could constitute a threat. Once all four lists are composed, managers can brainstorm ways to maximize strengths, limit weaknesses, take advantage of opportunities and avoid or reduce threats. The purpose of a Strengths, Weaknesses, Opportunities, and Threats framework is to get managers thinking about everything that could potentially impact the success of a new project. Failure to consider a key strength, weakness, threat or opportunity could lead to poor business decisions. For example, if the tech company with the patent for a new processor did not recognize the threat that its competitors were developing similar products, it might overestimate the sales potential of the new processor and take on debt to fund the development of the processor only to discover that the new product does not bring in enough revenue to pay off the debt. In other words, a strengths, weaknesses, opportunities, and threats brainwork can help managers avoid making costly mistakes and determine which projects are most likely to succeed.
8. Performance measurement is the process of collecting, analyzing and reporting information regarding the performance of an individual, group, organization, system or component. One of the most important aspects to be considered in relation to performance measurement process is that the performance measures work qualitatively to provide the useful information about products, processes and services that are produced in a business. Hence, implementing performance measures is a great way to understand and manage and improve what a business organization does.
The measurement of performance is a continuous process which involves checking the performance against the standards that have been fixed to be followed. It leads to compare the actual performance with the established standards. A manager needs to supervise, observe and control the activities of his subordinates while he is involved in studying various summaries or reports, so that he may manage the work in an effective manner getting the things accomplished in a desirable manner. It requires the manager to constantly check the performance in order to take corrective actions in case of deviations ensuring that such deviations do not occur gain. Thus the Performance measurement is an ongoing, continuous improvement operation.
As stated above, the process of performance measurement leads to compare the actual performance with the standards. This in turn helps managers to understand the extent at which the performance is getting deviated from the expected ones. This way determining whether performance matches standards entails evaluating the differences and take necessary actions to improve the performance. However, while analyzing deviations, it is important to consider that some deviations in performance can be expected and so controlling by exception is useful in this way. It is therefore important that a manager should concentrate on exceptional deviations instead of trying to control each and every deviation. According to management by exception principle by Fredrick W. Taylor, Managers should concentrate on only exceptional deviations instead of trying to correct each and every deviation. It is also worth mentioning the saying, “If you try to control everything, you may end up controlling nothing.”
The importance of performance measurement system lies in the fact that it not only improves the performance, but also the productivity of a business entity by reducing costs. It is a good way to align the activities with the plans being established. It provides necessary feedback that the activities may be guided accordingly by allowing managers to implement best practices. It may thus be said that performance measurement process is a great way to understand, manage and improve the overall functioning state of a business organization. If done effectively and efficiently, it drives success in business definitely.
9. Survey customers
Understand expectations
Find out where you are failing
10. Traditionally, many Federal agencies have measured their organizational performance by focusing on internal or process performance, looking at factors such as the number of full-time equivalents (FTE) allotted, the number of programs controlled by the agency, or the size of the budget for the fiscal year. In contrast, private sector businesses usually focus on the financial measures of their bottom line: return-on-investment, market share, and earnings-per-share. Alone, neither of these approaches provides the full perspective of an organization’s performance that a manager needs to manage effectively (Bryman and Bell 2015). But by balancing internal and process measures with results and financial measures, managers will have a more complete picture and will know where to make improvements.
Balancing Measures
Robert S. Kaplan and David P. Norton have developed a set of measures that they refer to as “a balanced scorecard.” These measures give top managers a fast but comprehensive view of the organization’s performance and include both process and results measures. Kaplan and Norton compare the balanced scorecard to the dials and indicators in an airplane cockpit. For the complex task of flying an airplane, pilots need detailed information about fuel, air speed, altitude, bearing, and other indicators that summarize the current and predicted environment. Reliance on one instrument can be fatal (Burns 2016). Similarly, the complexity of managing an organization requires that managers be able to view performance in several areas simultaneously. A balanced scorecard or a balanced set of measures provides that valuable information.
Four Perspectives
Kaplan and Norton recommend that managers gather information from four important perspectives:
Tie-In to Employee Performance
The balanced scorecard philosophy need not apply only at the organizational level. A balanced approach to employee performance appraisal is an effective way of getting a complete look at an employee’s work performance, not just a partial view. Too often, employee performance plans with their elements and standards measure behaviors, actions, or processes without also measuring the results of employees’ work. By measuring only behaviors or actions in employee performance plans, an organization might find that most of its employees are appraised as Outstanding when the organization as a whole has failed to meet its objectives.
By using balanced measures at the organizational level, and by sharing the results with supervisors, teams, and employees, managers are providing the information needed to align employee performance plans with organizational goals. By balancing the measures used in employee performance plans, the performance picture becomes complete.
11. SMART is an acronym that you can use to guide your goal setting.
Its criteria are commonly attributed to Peter Drucker’s Management by Objectives concept. The first known use of the term occurs in the November 1981 issue of Management Review by George T. Doran. Since then, Professor Robert S. Rubin (Saint Louis University) wrote about SMART in an article for The Society for Industrial and Organizational Psychology. He stated that SMART has come to mean different things to different people, as shown below.
To make sure your goals are clear and reachable, each one should be:
Professor Rubin also notes that the definition of the SMART acronym may need updating to reflect the importance of efficacy and feedback. However, some authors have expanded it to include extra focus areas; SMARTER, for example, includes Evaluated and Reviewed.
SMART is an effective tool that provides the clarity, focus and motivation you need to achieve your goals. It can also improve your ability to reach them by encouraging you to define your objectives and set a completion date. SMART goals are also easy to use by anyone, anywhere, without the need for specialist tools or training (Hair Jr et al. 2015).
Various interpretations of SMART have meant that it can lose its effectiveness or be misunderstood. Some people believe that SMART doesn’t work well for long-term goals because it lacks flexibility, while others suggest that it might stifle creativity.
12. Excellent customer service, employee satisfaction and enthusiasm, and office organization are all desirable characteristics of a company. They are also key performance indicators (KPIs), which are a necessary part of any business aiming for success. KPIs are used by organizations to measure, monitor and manage performance; they allow employers/employees to envision what needs to be done to improve their organization (Burns 2016).
KPIs “represent a set of measures focusing on those aspects of organizational performance that are the most critical for the current and future success of the organization” (Parmenter 3). KPIs are an invaluable form of business intelligence. When determined by an organization, they can educate every member of the company with regards to developing a strong team approach to business (Swamidass 2016).
Monitoring, managing and analyzing KPIs takes time and energy, so it is necessary that appropriate ones are chosen to address the specific needs of the company. The two main characteristics that help construct a relevant KPI include: (1) the need for it to be “measured frequently” (daily or constantly if possible) as well as (2) there must be an understanding of what has to be done to fix outcomes predicted by the KPI.
If a company relies on having a strong web presence to generate leads, an example of a relevant KPI would be the “bounce rate.” A bounce rate represents the percentage of initial visitors to a site who “bounce” away to a different site rather than continuing on to other pages within the same site (Burns 2016). The conventional wisdom is that visitors who bounce do so for lack of compelling reasons to explore on. Typically, the target for bounce rate is 30 percent or lower and it needs to be updated on a daily basis. If the bounce rate is higher than 30 percent, then the web content should be modified to help lower the rate (Hair Jr et al. 2015). This satisfies the characteristics of a KPI and it is apparent how valuable it is to continually monitor the bounce rate (Bryman and Bell 2015).
As shown above, a KPI will “tell you an action that needs to take place” (Parmenter 6). If a KPI has been correctly assigned to a company, it will have a “flow-on effect” which will in turn benefit the company (Parmenter 7). The entire office can monitor and fix problems associated with the success rate of the company’s KPIs (Eckerson xiii).
In addition, KPIs can create a type of benchmarking within one’s business. A person can see the present quality of their business and with the use of KPIs, they can envision the business they want to become; they help companies become what they deem the epitome of success through the process of managing, monitoring and analysis.
Performance dashboards are generally used to facilitate the easy monitoring of an organization’s KPIs. The dashboard will check the rate at which the chosen KPI is succeeding (or failing). If the results of the KPI are not improving, the dashboard will visually alert staff that changes must be made. It will then be possible to analyze what could have caused the shortcoming and allow staff to quickly remedy the situation.
Performance dashboards facilitate getting “the right information to the right users at the right time to optimize decisions, enhance efficiency, and accelerate results”. As performance dashboards have the data needed to measure a KPI in one place, it is easy to see if the KPIs are succeeding in their purpose or not. Such dashboards allow employees at any level to monitor information which represents the outcome of a KPI. Dashboards are a topic onto itself and beyond the scope of this article.
Every business person should strive to create exceptional KPIs, as they show the ways in which troubled companies can fix their problems and successful companies can proactively plan and manger continued success (Burns 2016). Companies will obviously benefit when employees can readily understand what needs to be done through the presentation of easy-to-read dashboards allowing them to make the most effective follow-up decisions.
Task 2
Oz House Cleaning Service’s projected growth rate is very high each year with respectable profit margins as a percentage of sales. MHCS will be a home-based business with Sarah Tookleen as the sole proprietor. By the end of year one, MHCS will have six additional employees. This house cleaning business plan will help the owner navigate the startup, and subsequent management of the business.
Mission:
Oz house Clean is committed to providing the highest quality residential and commercial cleaning services available by exceeding the expectations of our clients. Vision We are constantly working to establish ourselves as the most respected and sought after contract cleaning and facilities support service in Melbourne.
Values Respect:
Taking time to understand and value each person and respecting their choices. Responsibility: acting with integrity towards our staff, our customers, the community and the environment.
Caring:
A duty of care for our staff, customers and the environment
Excellence:
To always look to provide the best quality experience with regards to our cleaning and our customer service. Integrity: to act with honesty, openness and do what we say we will do.
Innovation:
To be among the industry leaders
Objectives
Our key objectives which are fundamental to our business in delivering world-class cleaning and customer service are as follows:
SWOT
Strengths
Weaknesses
Opportunities
Threats
Marketing strategy
Oz House cleaning services’ target market was chosen because these customers appreciate a professional, reliable, trustworthy, and immaculate house cleaning service, and are more than willing to pay for this. While Cleanly, WA has several different cleaning services, MHCS is the only one that targets the affluent exclusively. The wealthy are consistent customers. Whether they have a house cleaning service does not depend on the finances each month. These groups always have the money for our services, just as they always need/desire a clean house.
The affluent desire quality and are willing to pay a premium for a service that they can trust 100% that extrudes professionalism. This is done in a seamless, customer-centric manner.
The company will be marketed through a three-pronged approach. One prong is the distribution of a color brochure detailing our services. The distribution of this document will be targeted to hit the chosen segment. This will be done by setting up strategic relationships with organizations or clubs whose members fit the targeted customer profile. Examples of this would be higher-end athletic clubs, country clubs, wine connoisseur clubs, etc. Access will be gained to these clubs membership through deals where the club owners will receive Mother’s services for themselves.
The second prong of our approach will be through word-of-mouth referrals. Mother’s will offer an economic incentive (such as a free visit) to customers if they bring in new business. This will be effective because the financial incentive will motivate their behavior, and people naturally like to share good deals with their friends.
The third prong will be an advertising campaign in two of the local newspapers. The advertisements will appear in the weekly home section of the newspapers.
Task 3
|
Year 1 |
Year 2 |
|||
|
Gross revenue |
$4,125,000 |
$4,207,500 |
||
|
Cost of goods sold |
$320,000 |
$326,400 |
||
|
Gross margin |
$3,805,000 |
$3,881,100 |
||
|
Other revenue [source] |
$100,000 |
$100,000 |
||
|
Interest income |
$0 |
$0 |
||
|
Total revenue |
$3,905,000 |
$3,981,100 |
||
|
Operating expenses |
||||
|
Sales and marketing |
$80,000 |
$81,600 |
||
|
Payroll and payroll taxes |
$100,000 |
$102,000 |
||
|
Depreciation |
$153,000 |
$156,060 |
||
|
Maintenance, repair, and overhaul |
$0 |
$0 |
||
|
Total operating expenses |
$333,000 |
$339,660 |
||
|
Operating income |
$3,572,000 |
$3,641,440 |
||
|
Interest expense on long-term debt |
$0 |
$0 |
||
|
Operating income before other items |
$3,572,000 |
$3,641,440 |
||
|
Loss (gain) on sale of assets |
$0 |
$0 |
||
|
Other unusual expenses (income) |
$0 |
$0 |
||
|
Earnings before taxes |
$3,572,000 |
$3,641,440 |
||
|
Taxes on income |
30% |
$1,071,600 |
$1,092,432 |
|
|
Net income (loss) |
$2,500,400 |
$2,549,008 |
Task 4
Meeting regarding the mission of the organization on 8/6/2018
Purpose of the meeting:
|
What do I need to hand in for the task |
Have I completed this |
|
Report to the contract cleaner |
ü |
|
Report to management |
ü |
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