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Why business plans matter

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Entrepreneurs are always generating business ideas. However before putting the idea into practice it’s very important that one draws up a business plan to test if this idea will be viable.

It’s not foolproof though that coming up with a business plan will ensure success of the idea but the process of preparing a business plan will be able to highlight those issues that you need to attend to before you start your venture.
You will be able to deal with the risks and challenges that you could have easily missed out had you not gone into the business planning process.

Coming up with a business idea is very crucial in business. It is commonly said that if you don’t know where you are going you will end up somewhere else. Research that has been carried out on some entrepreneurs in the US indicates that writing a business plan is absolutely worthwhile.

People have a lot of stuff, a lot of ideas in their heads that need to be put on paper and then it becomes compulsive for someone to want to ensure that these ideas become reality. You feel compelled to want to do what you have planned.
Preparing a business plan requires a lot of thinking. The importance of a comprehensive, thoughtful business plan can therefore not be over-emphasized.

Before you write a business plan you need to do a lot of research, such as researching on products and markets and then preparing financial projections. Such research helps you to refine your ideas about what you intend embarking upon.

From the research you get to know whether customers really appreciate the solution you are providing for a problem they have. You also are forced to critically look at your opportunity, and to decide on a possible team that will execute that plan.
All this thought process will then convince you if it will be possible to get into business.

There seems to be no disagreement on the importance of business plans when it comes to securing funding.
Those who are in support of having business plans before embarking on a business and the skeptics do agree on the importance of business plans when it comes to securing funding. If you have to get money from venture capitalists, commercial banks, government-backed lenders or other investors, you will need a business plan.

Investors will be prepared to release funds on a bankable project. An idea that is supported by a written down plan on how you will carry out the project and what you expect to get in terms of profits.

Investors are not really impressed by wads of spreadsheets but the action behind the spreadsheets. Investors want to see that an entrepreneur has actually examined the market for a product or service, whether he has identified potential customers, or assembled a capable team, what business model has he devised.

A business plan helps you to evaluate the feasibility of your proposal. Once you have drawn up a business plan you can carry out “what if analysis” by creating three sets of financial forecasts: a rosy picture, a more reasonable one and a disaster or worst case scenario.
You need to establish what will happen to your business in the event of certain unforeseen events happening. You should do this sensitivity analysis before you pump cash into the business. You need to at least plan for the worst case scenario.

Having a business plan does not necessarily mean that you will succeed in your business. It needs action on your part. Tim Fargo underscored the importance of action when he said that “Good intentions might sound nice but it’s positive actions that matter.”
The process of preparing a business plan is very effective as it helps the planner to identify and quantify the risks and opportunities the company is likely to face. The tendency in business plans is to overstate profits.

But if you assess the possible risks, then you will be able to adjust your projections accordingly and remove any overestimations.
Planning is bringing the future into the present.

Richard Cushing captures this well when he said “Always plan ahead. It wasn’t raining when Noah built the ark.”
The plan itself is not so important but what’s important is the process of planning because you are bound to interrogate a lot of issues in the process.

Businesses draw up plans for a variety of reasons. Some business plans are prepared to source funding, and other to attract partners into a business, or to recruit certain critical skills or for the government to approve a project.

The format of your business plan will depend on your industry, who is reading your plan and what the plan is intended for. Since a business plan serves many purposes, it’s advisable to have several versions of the plan that are tailored for specific audiences: you need to understand who you are writing the plan for and tailor it to meet the needs of your audience.

A business plan should reflect your ideas about your business and its future, and the projections. Your projections should be realistic and be supported by statistics and facts, if possible, from a knowledgeable source to give your plan some credibility.
How you present your plan is very critical. A normal business plan should be about 20 pages or so. Of course the length depends on a variety of factors: the purpose of the plan, the type of industry, whether your business is introducing a new product.

In preparing the plan, you need to start with an executive summary which explains the fundamentals of your business. An executive summary provides the description of your business model, the legal form of the business, when the company was formed, its principals and key personnel and its financial requirements.

The second section will provide the detailed plan. In the detailed plan, you start with the business description which typically gives a brief description of the industry and its outlook, the product/service you are providing, the business operation’s structure (whether it is a wholesale, retail or service-oriented), who your customers are, how you will distribute your products/services to these customers, what will give you the competitive edge against your competition.

The second area you cover is marketing. The marketing strategy is one of your plan’s most critical elements. In this section, you need to define your target market and how you plan to reach it.

You will comment on the results of market analysis you would have done in your market research. You should analyze your market in terms of size, structure, growth prospects, trends and sales/growth potential.

Also include how you will distribute the product, indicate what your promotion strategy and tactics will be.
In the third section you cover your competitive analysis. The purpose of the competitive analysis is to determine the strengths and weaknesses of the competitors within your market, strategies that will provide you with a distinct advantage, the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle.

You need to show why your business will be a success over others.
The fourth section will cover your operations and management. This section describes how the business will function on a daily basis, its location, equipment, people, processes and surrounding environment.

It will also look at how you will manufacture your product, the production facility, the personnel you will engage, requirements for any permits or special regulations or licenses, who the key suppliers are.

You also need to highlight how you will manage the organization, what will be the various responsibilities of the management team.
Lastly you need to show your financial projections. Financial data is always at the back of a business plan. The financial data usually includes startup expenses and capital, your projected cash flow statement, projected income statement and balance sheet.

You might also need to show when your business will break even, i.e. start making profits. The above format can be tailored to the purpose of the business plan.

 Stewart Jakarasi is a business and financial strategist and a lecturer in business strategy, advanced performance management and entrepreneurship. He is the Managing Consultant of Shekina Consulting (Pty) Ltd and provides advisory and guidance on leadership, strategy and execution, corporate governance, preparation of business plans, tender documents and on how to build and sustain high-performing

organisations.
For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com, call on +266 58881062 or WhatsApp +266 62110062 .

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Business

Start-up companies win big

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TEN start-up companies were awarded about M130 000 each as capital at a ceremony held at the Limkokwing University of Creative Technology yesterday.
The companies include Rosemore Couture, Techno Map ICT Company, Nkhekhe Innovative Solutions, Travel Tag Lesotho, Weekly Observer Electronic Newspaper, Media Lab Multimedia, and Green Lovers.

The awards were given under the Limkokwing Entrepreneurship Acceleration Platform, part of higher education institutions and corporations and companies that spearhead incubation programme for start-ups.

These Enterprise Support Organisations are from the Limkokwing University through its LEAP, the National University of Lesotho’s Innovation Hub, Basotho Enterprises Development Cooperation (BEDCO), The Entrepreneurs Network (TEN), and Gem Institute.

Each of these organisations was awarded M1.9 million, totalling M9.5 million.

The initiative sprang from Lesotho’s acquisition of a loan from the International Development Association (IDA) of the World Bank to execute the Lesotho Competitiveness and Financial Inclusion (CAFI) Project.

CAFI’s purpose is to enhance the availability of business support services and financial products for Small and Medium Enterprises (SMEs) and entrepreneurs, with a special emphasis on women and youths.

Limkokwing’s Enterprise Support Organisation manager, Lisema Ramaili, said the ceremony marked “a significant milestone into our journey and highlights the impactful work we are doing to support entrepreneurship and economic growth”.

“It also marks a significant step forward in our allegiance to foster innovation and entrepreneurship,” Ramaili said.

“I look back in all the journeys that we have travelled, from application to this programme, consolidating our proposals,” she said.

Limkokwing University’s Vice Chancellor, Advocate Tefo Macheli, said it is good that the small businesses are being helped to stand on their own as Lesotho marks its 200th anniversary.

Advocate Macheli said Limkokwing and the government awarded more than M1.2 million to small businesses.

“The Limkokwing University of Creativity Technology and innovation in cooperation with the Lesotho government made history that small Basotho enterprises are supported,” Advocate Macheli said.

“It has always been a challenge to the youths to start or have their own businesses because they were not supported financially” he said.

He said the Lesotho government is working hard to promote small Basotho enterprises which has not been happening in the past.

The university also provides business space with all necessary resources like water and electricity for its students in the understanding that “students are fresh from school and do not have any means of funds to have their own resources”.

Moleboheng Rose Molatelle, co-founder of Rosemore Couture, said that they first filled application forms with their business ideas and bankable business plans.

“Very fortunately I was among the top 20 that were to pitch and was able to meet the requirements,” Molatelle said.

Rosemore Couture is a clothing company.

Molatelle said the company needs equipment to grow its clothing footprint in the market.

“We need to go on with the production and add more workers so that at end of the day we could have a big company,” she said.

Staff Reporter

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Business

Khemisi bags the big prize

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HOA Hlamatseha is a Sesotho expression that means lots of riches. Econet Telecom Lesotho is running a campaign by that name.

This week, Mamiki Khemisi struck the jackpot after she won the M150 000 prize during the Hoa Hlamatseha #EconetBlueOceans campaign for January.
The winner, from Masowe in Maseru, was announced at an event held at the Sefika Complex on Monday.

The Hoa Hlamatseha campaign allows customers to participate in a series of engaging activities, ranging from sending SMSs to opting-in as they purchase data or calling bundles.

Each participation earns customers points, contributing to their overall tally and increasing their chances of winning the grand prize.

Beyond being a celebration of connectivity, the campaign demonstrates Econet’s commitment to fostering a sense of community and shared joy.

“This campaign, a hallmark of Econet Telecom Lesotho’s commitment to celebrating and giving back to its loyal customer base, represents a culmination of joy, generosity, and community spirit,” ’Mapusetso Ntšekhe, Econet’s General Manager for Marketing, Communications and Customer Experience, said.

Ntšekhe said Econet recognises the importance of cultivating lasting relationships with its customers and understands that customer loyalty goes beyond the quality of service alone.

She added that by organising such campaigns, the company aims to foster a sense of belonging and appreciation among its customer base.

“Handing over this M150 000 grand prize winner for the month of January symbolises Econet’s dedication to make a meaningful impact in the lives of its customers and the broader community,” Ntšekhe said.

“In a world where communication is crucial, Econet is not only bridging the digital gap but also creating a bridge of shared joy and celebration,” she said.

Khemisi joins a distinguished list of individuals who have been positively touched by Econet Telecom Lesotho’s commitment to excellence and innovation in Lesotho’s rapidly evolving telecommunications industry.

Her selection as the grand prize winner serves as a testament to her loyalty and the enduring bond between Econet and its valued customers.

“I’m overwhelmed and equally excited to be announced by Econet as the winner of the M150 000 grand prize,” Khemisi said.

She further noted that “this amazing reward for my involvement in the campaign will be essential towards establishing a juice bottling company that’s already in the pipeline in partnership with my mom”.

By unveiling staggering cash prizes of M100 000, M150 000 and M200 000, Econet is setting a new standard for corporate generosity aimed at alleviating challenges faced by individuals and families in tough economic times.

In addition to the grand prizes, Econet customers also have the chance to walk away with M500 in daily prizes, M2 000 in weekly prizes, and smartphones.

Staff Reporter

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Business

Chicken import ban lifted

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BASOTHO will finally have chicken on their dinner tables after the government lifted a ban on poultry products from South Africa imposed four months ago.
The Department of Livestock Services said the decision was with effect from yesterday.

Keneuoe Lehloenya, who is the Director of Livestock Services, said the department had decided to lift the ban imposed on poultry products from South Africa “except Gauteng, Mpumalanga, Limpopo, and Western Cape provinces”.

She said import permits will be issued only for compartments certified free from the Highly Pathogenic Avian Influenza (HPAI), a serious bird disease that requires a rapid response because it is highly contagious and often fatal to chickens.

Lehloenya said it is South African veterinary authorities that will issue certificates for farms that are free from HPAI.

The import permits by Lesotho authorities will not be given for poultry products from “farms situated near or epidemiologically linked with affected farms”.

“They will not be considered for import,” she said.

The lifting of the ban comes after Agriculture Minister Thabo Mofosi temporarily banned imports of all poultry and poultry products from South Africa due to the bird flu outbreak last November.

The highly infectious bird flu had struck several provinces in South Africa, affecting major chicken farms.

There were reports that South Africa had culled 7.5 million birds, between 20 and 30 percent of its production chicken stock.

Mofosi issued the directive revoking all import permits for poultry and poultry products with immediate effect.

The bird flu outbreak came as South Africa’s chicken industry was already grappling with power shortages which have hit their production.
Chicken is the most imported meat in Lesotho.

In the 2019/2020 season, chicken constituted 81.1 percent of meat imports from South Africa.
Pork was at 15.8 percent, beef at 2.3 percent and mutton at 0.7 percent.

Nkheli Liphoto

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