2. Business Planning for Social Enterprise Mick Dobson

3. Business Planning for Social Enterprise Seven Stages

4. Business Development for Social Enterprise – The Journey 1. Motivation 2. Preparation – Risk assessment, Self assessment 3. Assessment 4. Test your idea 5. Exploration 6. Business planning 7. Start-up

5. Motivation Why are you doing this? Do you know enough? What options are there for you? Are your stakeholders on board? Is the proposal/idea sound?

6. Motivation Do you want to run a business? Do you seek out new challenges? Are you realistic about your capabilities? Are you prepared for the long haul? Do you fully understand the risks? Do you find change exciting? Do you have a clear social aim? Do you have the full support of your board and colleagues? Can you motivate people and take the lead? Have you got the drive and self-belief to take this forward? Can you make decisions? Are you flexible enough to learn from mistakes? Do you listen to advice? Are you determined enough and prepared to keep going when things get tough? How do your values influence what you want out of developing and running a social enterprise?

7. You Might Now Know... The social aim of your business Why there’s a need for it How you will meet that need Your legal form Your key stakeholders

8. Preparation Culture Assessment Capacity Assessment Risk Assessment

9. Culture Assessment Your style of leadership/management Your values and principles Who are the decision makers? What changes might be necessary? What relevant experience do you have?

10. Capacity Assessment Current purpose and activities How successful are you? What skills/experience/resources? What changes will be necessary? Are Board/key staff supportive?

11. Risk How are you funded now? Are your financial systems adequate? How’s your cash flow? Your relationship with your bank? SWOT of your funding

12. Assessment Ideas generation SWOT PEST Commercial appraisal

13. External Analysis PoliticalEconomicSocialTechnological These can be political factors or policy decisions that affect the operating environment These are issues that affect the purchasing power of customers and other businesses These are factors that affect customers needs and potential markets These are innovative developments or trends that might affect markets Examples: Tax Employment Environmental regulations Trade restrictions/tariffs Political stability Europe Economic growth Interest rates Inflation Unemployment Supply/Demand Demographic and cultural changes Population growth rate Social Attitudes Employment Environment Research & development Automation Technology Innovation

14. Now You Can Add: The external factors and trends affecting your business How you plan to move towards sustainability What IS your business idea?

15. Testing Your Idea Who, where are your customers? Can you reach them? What is your break even point? Social need vs Market demand Costs/overheads/equipment/premises Competitors/pricing

16. Exploration Feasibility study Market research Customer profile Competition Price Location Marketing strategy – P’s Resources and barriers

17. Draw Conclusions About: Price Place Product Promotion People Process Purpose

18. Price - This should reflect the value placed on the product or service by the customer Product - This can refer to a service as well as a physical product as it encompasses tangible and intangible characteristics. It can also be used to include people and any values associated the brand. Place - The product or service should be available when and where the customer wants it. Promotion - The promotional mix can include advertising, direct mail, PR, cold calling, trade fairs networking events, word of mouth etc.

19. People – Does your team have the necessary skills? Process – Will you have quality standards to promote, such as investors in people, Equal Opportunities or Environmental Standards? How will this inform your marketing strategy? Purpose – Will your social purpose present you with a unique place in the market? If you want to market your enterprise on its social purpose can you prove the impact you make? In some circumstances, where particular target customers empathise with your social purpose, this may get you a foot in the door.

20. Business Planning Your Business plan will: Provide you with a route map. It is not a destination; it should and will change. Give you credibility and confidence in articulating your proposal when you approach other organisations. You should consider the following questions before you start to draft the business plan: Who are you writing the business plan for? Would you fund or support your social enterprise based on the information you have provided?

21. Stages of a Business Plan Exec Summary The Business Organisation Key Staff External Relations Product or Service The Market Social Purpose Social Impact Business Environment Industry analysis C S F Development Strategy Turnover/sustainability

22. Stages of a Business Plan Marketing and Sales Premises Suppliers Production Equipment Action Plan Finance – Ops budget, cash flow Appendices

23. Executive Summary This is your best opportunity to make a good first impression. A snapshot of what the social enterprise does. A snapshot of what the organisation does, if appropriate, where you are now, where you want to go and how you will get there. The BusinessBasic details – Name, Address etc. Business Idea. Social purpose. Legal Status. Structure OrganisationBackground of the organisation. The mission statement/ aims of the organisation. The legal structure, Management structure and basic details as above. Key StaffA brief summary of the skills, experience and knowledge of all the people involved in the organisation. Roles and responsibilities. Training requirements.

24. External relationsRelationships with professional and legal representatives, funding organisations. Relationships with monitoring organisations, trade associations, networks, etc. Product or ServiceDescription of products, services or activities. The marketWho will buy your goods/services? Why will customers buy from you? What is your USP? Market research – including trends such as changing in age group, people moving in, features such as the seasonal effects of tourism. Competition. Market Testing. Similar social enterprises. Social PurposeWho will benefit? Why is there a need for a social enterprise? How will running a social enterprise meet the need? What type of social enterprise is it? What are your external stakeholders’ views?

25. Social ImpactHow will you measure your social impact? What tools can support you to do this? What evidence of impact do funders and financers require? How much will impact measurement cost? Business Environment What support is there to help you to measure your social impact? Key issues in the external business environment that may affect your business Industry AnalysisKey issues affecting the industry in which you intend to operate Critical Success Factors The main critical success factors for your business Business Development Your strategy to ensure you meet your critical success factors

26. Turnover and Sustainability Expected turnover Expected non-commercial income Expected profit How long it will take to achieve sustainability How will you achieve your expected turnover, non- commercial income and sustainability? Scenario planning Marketing and Sales What is your marketing strategy? What is your pricing strategy? What is your promotional mix? What it your customer care policy? How do you get customer feedback? Who will be involved in marketing? What is your marketing budget? What is your distribution strategy/process? What is your e-commerce strategy?

27. PremisesLocation and property details Cost and proposed method of financing (buy/rent/lease) Planning, health and safety issues, building, renovation or adaption costs Insurance SuppliersWho are your main suppliers? Who is in the supply chain? Are there any alternatives? The advantages of using these suppliers ProductionQuality standards Production methods and supervision Health and Safety

28. Equipment Description and proposed costs of equipment/ vehicles to be purchased Finance arrangements Depreciation policy Action Plan Key milestones / timelines and associated activities Costs and personnel requirements Finance Budget assumptions (Projected income & Expenditure) Realistic cash flow forecast Balance sheet/profit and loss Finance required and methods of raising finance Funding secured, previous funding or large scale funding Assets you have as security Alternative methods of finance Financial management systems and resources Previous experience of loan finance Appendices CVs of all those involved Professional adviser’s reports if used Quotations for equipment Details of premises References/letters of support (details of trade association, network memberships) Any other supporting material (Including details of bank, lawyer, accountant, monitoring agencies) Copies of previous years’ accounts if you have them

29. Sales Forecast Sales forecast JanFebMarAprMayJunJulAugSeptOctNovDecTotal Unit price 555555555555 Volume 2003005001,000 1,500 11,500 Revenue 1,0001,5002,5005,000 7,500 57,500 Sales price (per duck) £5.00 Purchase price (per duck £3.00

30. JanFebMarAprMayJunJulAugSeptOctNovDecTotal Sales revenue1,0001,5002,5005,000 7,500 57,500 Cost of sales6009001,5003,000 4,500 34,500 Gross profit4006001,0002,000 3,000 23,000 Travel expenses150 1,800 Insurance30 360 Telephone20 240 Website0050015 635 Bank charges/ interest20 240 Depreciation*105 1,260 Professional fees20 240 Drawings Total expenses345 845360 4775 Net profit552551551,640 2,640 18,225 Profit and Loss Projection

31. Cash Flow Forecast JanFebMarAprMayJunJulAugSeptOctNovDecTotal Cash Sales2003005001,000 1,500 11,500 Credit sales08001,2002,0004,000 6,000 40,000 Capital injection5,000 Total cash in5,2001,1001,7003,0005,000 5,5007,500 56,500 Suppliers6009001,5003,000 4,500 34,500 Capital equipment5,00000000000000 Travel Expenses600100 200100 1,800 Insurance36000000000000 Telephone006000 00 00 240 Website00500004500 00 635 Bank charges/ interest20 240 Professional fees0000000000000 Total cash out6,5801,0202,1803,120 3,3253,120 3,2254,620 4,72542,775 Net cash flow-138080-480-1201,8801,6751,880 1,7758802,8802,77513,725 Opening balance0-1,380-1,300-1,780-1,900-201,6553,5355,4157,1908,07010,950 Closing balance-1,380-1,300-1,780-1,900-201,6553,5355,4157,1908,07010,95013,725

32. Costs and Pricing What’s the most I can charge? Is it enough? Price elasticity of demand Never cut your prices. Well, almost never. Here’s why:

33. Let’s drop our price, that’ll get sales going..... Cost price Selling priceGP Price cut of:.... Revised SP Revised GP Sales vol Original profit £ Revised profit £ extra units to stand still % vol increas e to stand still 7510025%10%9017%500125007500333.333367% 7510025%5%9521%5001250010000125.0025% 7510025%2.50%97.523%500125001125055.5611% 8510015%2.50%97.513%50075006250100.0020%

34. Let’s drop our price, that’ll get sales going..... Cost price Selling PriceGP Price cut of... Revised SP Revised GP Original Profit Revised Profit Extra units to stand still 5 vol increase to stand still 7510025%10%9017%12500%7500%333%67% 7510025%5%9521%12500%10000%125%25.00% 7510025%2.50%97.523%125001125055.5611.00% 8510015%2.50%97.513%750062501000.2

42. Useful Links Excellent website to guide you further: http://www.wrexham.gov.uk/english/business/social_economy/se_too lkit.htm#downloadhttp://www.wrexham.gov.uk/english/business/social_economy/se_too lkit.htm#download Very Comprehensive site - full of background information and principles: http://www.forthsector.org.uk/docs/New_BusPlanGuide.pdf

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