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Testing viability of your business idea



In my last article I highlighted how an entrepreneur can generate business ideas. After coming up with a business idea you need to check if it passes the viability test. This is done by drawing up a business plan.
The business plan could be detailed or not detailed depending on the purpose of the plan. For a start-up a business can be used to check if the business idea, when implemented, will be viable.

It can also be used as a roadmap of what you want to do. Or you might want to use the business plan to raise funding or attract investors.
The process of planning is more important than the plan itself because as you prepare the plan you are bound to interrogate a lot of issues about your idea and your business model.

The process of drafting a business plan helps in testing out the feasibility of a business idea and in highlighting any flaws in your assumptions. A business plan should not be complicated; it should be very clear to the reader.
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 is bound to be supported by investors.

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, or 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.
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.

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.
How does one prepare a business plan to satisfy the above needs? There’s a lot of ways to write a business plan.

The format of your business plan will depend on your industry, who is reading your plan and what the plan is intended for.
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. I will discuss the critical components of a business plan below.
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 presenting your business plan you need to start with an executive summary which explains the fundamentals of your business. This is usually prepared at the end after writing the whole business plan.
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 third 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 your 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 fourth section you need to 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 fifth 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 above format can be tailored to the purpose of the business plan.

l Stewart Jakarasi is a business and financial strategist and a lecturer in business strategy and performance management.

He provides advisory and guidance on leadership, strategy and execution, preparation of business plans 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: or +266 58881062 or on WhatsApp +266 62110062

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LEC to switch off households over debts



MASERU – The Lesotho Electricity Company (LEC) will from Tuesday next week begin switching off clients who owe it money.

The LEC issued a seven-day ultimatum to all customers who owe it on Tuesday last week. The deadline ends on Monday.

It is expected that the LEC will begin switching off households that have defaulted.

The state-owned power company, however, is not going to touch any government department or business entities that owe it on grounds that they are in payment negotiations.

The LEC move comes barely two weeks after it cut electricity supplies to the Water and Sewerage Company (WASCO) thus causing it to fail to pump water to communities countrywide for more than two days.

The LEC says it is owed close to M200 million by government departments, businesses and individuals.

The LEC spokesman, Tšepang Ledia, told thepost that the government and the businesses will not have their electricity cut because they are in negotiations.

“We are in negotiations with the government and businesses and hopefully they will pay,” Ledia said.

“We advise the ordinary people to pay their debts before the 20th of March 2023 or else we cut the services,” he said.

The LEC says it is running short of funds for its daily operations.

In December last year the company increased power tariffs by 7.9 percent on both energy and maximum demand charges across all customer categories for the Financial Year 2022/23.

Last week the LEC boss, Mohato Seleke, said postpaid consumers and sundry debtors owe the company M169.4 million.

He said unless the debtors pay he will be unable to buy electricity from ’Muela Hydropower Project, Eskom in South Africa and Mozambique’s EDM.

This, he said, could cause serious load shedding in the country and could be devastating for businesses.

Seleke said the LEC spends M630 million monthly to buy electricity.

“If postpaid consumers do not settle their debts this could prevent the LEC from being able to buy electricity which can lead the country to encounter load-shedding,” Seleke said.

Seleke said collecting debt from government department ministries was a challenge as there is an understanding that since LEC is a state-owned company, it will continue supplying government agencies with electricity and they will settle their bills when they have funds to do so.

Seleke said the LEC has lost M21 million to vandalism during this financial year.

Relebohile Tšepe

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Bumper payout for former mineworkers



MASERU – AT least 11 316 current as well as former mine workers are set for a bumper payout after Tshiamiso Trust began disbursing the first billion Maloti to workers who are suffering from silicosis and tuberculosis.

The payment comes two years after Tshiamiso Trust began processing claims for the historical M5 billion settlement agreement between mineworkers and six gold mines in South Africa.

Speaking at the payment announcement in Maseru last week, the Trust’s CEO, Lusanda Jiya, said it has been two years since they officially began accepting claims.

“Our people come to work every day with the mission of impacting lives for the better, and the first billion rand paid out to over 11 000 families is just the beginning,” Jiya said.

“We know that there is no compensation that will ever be enough to undo the suffering endured by mine workers and their families,” he said.

“However, we are committed to deliver our mandate and ensure that every family that is eligible for compensation receives it.”

Jiya said the Trust is limited both in terms of the time in which they can operate, and the extent to which they can assist those seeking compensation.

Broadly speaking, the eligibility criteria include among others that the mineworker must have worked at one of the qualifying gold mines between March 12, 1965 and December 10, 2019.

Secondly, living mineworkers must have permanent lung damage from silicosis or TB and deceased mine workers representatives must have evidence that proves that they (the deceased) died from TB or Silicosis.

Tshiamiso Trust has a lifespan of 12 years, ending in February 2031.

Over 111 000 claims have been received to date, through offices in South Africa, Lesotho, Botswana, eSwatini, and Mozambique.

The Trust is working with stakeholders in these countries and others to mobilise its efforts and expand operations.

The history of silicosis in South Africa goes back to the late 1880’s when the first gold mines began operations.

The gold was stored and locked in quartz, a special rock that contains large amounts of silica.

Crystallised silica particles can cause serious respiratory damage if inhaled.

In the earlier days of gold mining, dust control, health and safety standards and the use of PPE (personal protective equipment) were not as advanced as they are today.

Tshiamiso Trust was established in 2020 to give effect to the settlement agreement reached between six mining companies.

The companies are African Rainbow Minerals, Anglo American South Africa, AngloGold Ashanti, Harmony Gold, Sibanye Stillwater and Gold Fields.

The settlement agreement was reached and made after a ruling by the Johannesburg High Court as a result of a historic class action by former and current mineworkers against the six gold mines.

Justice for Miners is a coalition of interested parties in the mining sector launched at the Nelson Mandela Foundation in Johannesburg in 2020.

The Johannesburg High Court approved the setting up of the Tshiamiso Trust to facilitate payment by the companies to affected miners.

Keith Chapatarongo

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Farmers cry over cost of livestock feed



MASERU – Lehlohonolo Mokhethi is a farmer who has been running a successful poultry business, thanks to a small loan he got from a local bank.

He now has 300 chickens.

He says his vision is to rear 5 000 chickens by 2025 and employ 30 youths. But he is now grappling with a new challenge: the ever increasing cost of chicken feed.

That is threatening the viability of his business.

“The biggest challenge is that food prices increase every day, feeding is expensive,” Mokhethi said.

“It is quite difficult to make profit in business if each and every day food prices increase. Today I am buying a bag of food with a certain amount then the next day the price has increased,” he says.

“Our customers fail dismally to understand that food has increased and the Chinese are taking our market because they sell at a low price thus I run at a loss.”

Last week, a top attorney in Maseru who is also a prominent farmer, Tiisetso Sello-Mafatle, called a meeting for farmers to discuss these challenges.

She says the government must regulate the prices of livestock feed.

That is critical if the farming business is to succeed, she says.

Attorney Sello-Mafatle says farmers must come up with a structure for livestock feed prices which they would present to the government for gazetting.

“We should state our regulations and give them to the government to make everything easy for both parties because we cannot wait for the government to make regulations for us,” Sello-Mafatle says.

She adds that “farmers should be bullish about what they want and never have fear endorsing new things”.

“I will not be challenged or cry (because of) what life throws at me but I will cry when things are not happening the right way,” she says.

Mafatle says farmers need to know who they are and know the capabilities they have.

“This will help a farmer in becoming the best in any field they are in once they are confident about themselves,” she says.

Karabo Lijo, another participant, said they have to influence the cost of inputs in agriculture, especially livestock feed.

“We have to go back to cost-price analysis where as farmers we are able to derive the selling price and the break-even point in our production,” Lijo said.

“We can also derive the stable or constant mark-ups on our products,” he said.

“We need to do research to increase the ability to produce byproducts which are likely to have the longest shelve life,” he said.

The meeting urged farmers to diversify their products by introducing such things as mushroom farming. They said mushrooms can grow very well in Lesotho due to its favourable climate.

The farmers also demanded that there should be regulations on how land can be sold or borrowed in Lesotho.

Tholoana Lesenya and Alice Samuel

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