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Support systems for new activities in rural areas

Part 2 - Individual services
Drawing up a business plan



Introduction
How to use this guide & Table of Contents

 

Drawing up a business plan has become
one of the fundamental tools for
supporting new activities and
setting up of small businesses.
Formally many business plans tend to
resemble one another but significant
differences may appear in the way in
which the plans are implemented and
how useful they really are for project
promoters. This highlights the
importance of defining the strategic
guidelines beforehand.

 

Common problems and bottlenecks Recommendations and guidelines (*)
  • In some cases, there is a real danger that business plans are treated simply as bureaucratic forms to fill in so that the figures add up and justify a grant.
  • Personal problems and conflicts are underestimated.
  • Business plans can be used as participatory educational tools on a one-to- one or group basis.
  • It is not uncommon to find sales figures have been "made up" by simply calculating sales as arbitrary market shares, determined on the basis of sales figures needed to achieve financial stability.
  • If one is embarking on a fairly new area that could have important multiplier effects on the local economy, it is advisable to carry out production audits and market studies.
  • Whereas the internal logic of a business plan can be dealt with by a generalist, the market and technical data often need to be checked by a specialist.
  • There is little direct experience of the production process; figures for revenues and expenses (inputs and outputs) are therefore unreliable.
  • It is often essential for project promoters to carry out small-scale test runs before embarking on major investments.
  • Business plans are too technical and complicated for the type of project. They put local actors off.
  • It is always possible to use simplified business plans for small projects (bed and breakfasts, self-employed tradesmen, etc.).
  • The format of the business plan should be negotiated with other agencies and banks so that the final output can be used by project promoters for a whole range of applications.
  • The business plan should also be designed so that it helps the project promoter and support agency in ongoing management control and aftercare (regular checks of forecasts against outcomes).
  • Advisors substitute project promoters and write the plan for them.
  • In their desire to achieve results, advisors lose their objectivity and are over-optimistic.
  • Project promoters should always have the responsibility of collecting the basic information and writing the business plan. The adviser usually acts as a sounding board: he picks up on internal problems and contradictions and points the project promoter to sources of information (the "mirror" function).
  • There is no systematic system for providing aftercare or follow-up to groups.
  • Monitoring and aftercare should be built into the advice system and costed accordingly.
  • It is worth coming to a clear (sometimes written) agreement with project promoters about responsibilities, time-scales, outputs and any payments.
  • A calendar of regular meetings and work to be done in between should be fixed.
  • The average time spent advising each project obviously depends on the knowledge and ability of the promoters and on the complexity of the project (1).
  • Support staff should agree clear tasks, targets and timetables with project promoters. The business plan should be used together with other specific tools (e.g. records of output, sales, stocks, sales contacts, etc.) to monitor the degree to which objectives have been achieved.
  • During the aftercare period, there should be at least one yearly contact in order to monitor and evaluate progress. Collective projects may take many months of full-time resources over several years.
  • Projects promoted by disadvantaged or very inexperienced groups may require extremely intensive systematic, hands-on aftercare (e.g. quarterly, monthly, weekly or even daily at certain crucial times).
  • The frequency and duration of aftercare meetings is usually less important than the serious preparation that has to go on in between.
  • At the other extreme, the support may drag on for a very long time without tangible results.

(*) Technical factheet 4 is an example of a simplified checklist for a business plan. Technical factsheet 5 is an example of an aftercare checklist.


(1) In the case of the Galloway LAG, for example, one to two hours is normally considered sufficient for helping people to prepare their business plans for "small" business grant applications.

Business and Innovation Centres (BICs) tend to organise a programme of half- day meetings every three weeks for between 6-8 months. This enables advisors to deal with a portfolio of between 10 and 18 cases. The average time spent on providing expert advice is about 25 days.

The Mission Agro-Alimentaire des Pyrénées (France) estimates between 6 and 12 months for launching a new project (it handles around 30 files each year - divided between the director and two advisers -, many of which are joint projects).


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