BUSINESS IDEA DEVELOPMENT IN AGRICULTURAL SECTOR

• PRESENTATATION AT CITIZENS ECONOMIC EMPOWERMENT COMMISSION(CEEC)

• PRESENTED: BY DAUDEN PHIRIMINISTRY OF AGRICULTURE AND COOPERATIVESSENIOR MARKETING DEVELOPMENT OFFICERLUSAKA PROVINCE

BUSINESS IDEA DEVELOPMANT (PLANNING AND MANAGEMENT)

Introduction• A business (also known as company,

enterprise, or firm) is a legally recognized organization designed to provide goods, services, or both to consumers or tertiary business in exchange for money.

BUSINESS IDEA DEVELOPMANT (PLANNING AND MANAGEMENT

• In agriculture, agribusiness is a generic term for the various businesses involved in food production, including farming and contract farming, seed supply, agrichemicals, farm machinery, wholesale and distribution, processing, marketing, and retail sales.

• Examples of agribusinesses include Monsanto, seed and agrichemical producer; ADM, grain transport and processing; John Deere, farm machinery producer; Ocean Spray and farmer's cooperative.

BUSINESS IDEA DEVELOPMANT (PLANNING AND MANAGEMENT

• Running a business is all about making decisions timely and as accurately as possible.

• Sometimes it is necessary, and can be very effective, to make quick decisions.

• However, try not to rush into a decision. Making a mistake now may affect the business later.

• Where possible allow yourself time to think over the problem, taking into account relevant information and any advice you can get.

BUSINESS IDEA DEVELOPMANT (PLANNING AND MANAGEMENT

• What is more critical in business is that all stakeholders must be involved and actively participate at every stage to secure support and the much needed ownership.

• Therefore the purpose of this presentation is to introduce Participatory business planning and management based on proven business principles to ensure success and sustainability.

BUSINESS PLANNING

• This requires that the business first repositions its vision and aligns the mission, and then set business objectives and activities that are consistent and support attainment of that vision.

Business vision repositioning

• To reposition your business vision, the following questions would help generate the new mental picture about the future of the business:

• What do we want it to be? • Where do we want to go?

Business mission alignment

• To align the business mission to the vision, ask and answer these questions:

• Why does your business exist?• What is it involved in?• Why is it involved in this business?• How is it involved in this business?• Who is involved?• What values and norms will guide the business?

What is Co-operative business planning?

• Co-operative business planning means thinking about and working out what to do in future to start or improve your business.

1 WHAT IS A BUSINESS OBJECTIVE?

• A business objective is a measure put in place or something done to solve a business problem or ensure that a goal is accomplished. Therefore, business objectives should be practical, realistic, action-oriented, attainable, and time-bound.

Business objective setting

• Once the vision and mission have been repositioned you would have to generate business objectives consistent with the attainment of that vision.

• Convert the existing negative situation into positive future situation, by re-wording the negative into positive statements.

• The desired future situation that would be attained is the resultant and is called the business objective tree.

How to construct a business objective tree

• Restate all negative statements of the business problem tree into positive statements that are desirable and realistically achievable.

• Examine the logic of relationships of the means and ends derived to verify their validity and completeness of the business objective tree diagram.

2 WHAT IS ALTERNATIVE BUSINESS SOLUTION ANALYSIS?

• Alternative solution analysis is a process of identifying components of the business plan, select best options and assess the comparative and competitive advantages of these, and then agree upon specific strategies.

• Since the business solution tree is constructed using means and ends relationships to establish a hierarchy of objectives, several branches form groups of business units.

• Therefore, alternative analysis starts by identifying these components or branches and encircling them.

3 BUSINESS SOLUTIONS AND ACTIVITIES FEASIBILITY ANALYSIS

• Having identified and selected the most promising business solution options, you need to reflect and analyze more clearly the feasibility of the proposed business solutions.

• For each relevant cause, the proposed solutions are discussed to examine the possibility of realization.

• To do this, look at the potential (resources available) and opportunities of the solutions whose activities will lead to a desired situation.

• These are then presented in a table of business solutions below:

Table of business solutions

Business Problem

Relevant Causes

Proposed Solutions

Activities Required Resources

Budget Possibility of Realization

4 PREPARING A BUSINESS PLAN

• Every business comes from an idea. A business idea can be realized (conceived) when you identify a need for a product or service, but it is not available or is inadequate, among members or the general public.

• What is Participatory business planning?• Participatory business planning means involving members,

using participatory approaches, in thinking about and working out what to do in the near future to start or improve the business.

• Putting the stakeholders’ ideas and other information together is called making a business plan or business planning.

Importance of business planning

• A plan for the business shows;• If the business can expect to make a surplus in

future.• Which parts of the business need to be improved

upon.• What money you can expect to come into and go

out of the business.• The bank or any financier how well your business

can expect to do in future and help in deciding to fund the business.

Type and sources of information for business planning

• Business planning requires a lot of information on which to base, assumptions, the estimates and calculations for the plan.

• Some of the information required include; customers and their needs, competitors, materials sources and costs, product markets, demand and supply information and prevailing prices, and future outlook.

Type and sources of information for business planning

• Some information can be collected from members, leaders and staff.

Information and assistance can be obtained from:• Government and Non-governmental organizations• Agricultural and commercial shows • Business consultants• Commercial banks• Chambers of commerce and industry, and Business

associations • Electronic media (TV, radio, internet, etc)• Print media (newspapers, magazines, newsletters, journals,

etc)

Tips on making a business plan.

• When making a business plan;• Make it simple• Choose the most suitable planning period• Divide the planning period into months,

quarters, or business cycles• Make the plan before you need to use it • Look for and collect information for use when

preparing a business plan.

Preparing a business plan

• Participatory business planning requires that members are involved so that they own the plan and give it support for implementation to succeed.

• The details of the plan may be worked out by the leaders and management staff, but at some stage it should be presented and shared with the rest of the members, at which point they can make their contributions.

5.0 KEY COMPONENTS OF A BUSINESS PLAN.

• A business plan must contain all important aspects, outlined below, so that you don’t over look anything when starting and running the business.

5.1 Cover page

• This is the title page of the business plan, and can include the following information:

• Name of the company• Address and contact phone numbers• Logo of the company if any• Specific title of the business• Month and year the plan was prepared• Name of the one who prepared it.

5.2 Executive summary

• The executive summary is sometimes called a statement of purpose. It serves to communicate the business plan in a brief and most convincing way to important stakeholders, such as sponsors or financiers. It may entice them to read further.

5.3 Business idea description

• A business idea is a short and precise description of the basic operations of the business. The best business solution option selected is developed into a business idea by describing:

• What product or service the business will sell,• Who the business will sell to (customers),• How the business is going to sell its products or

services,• Which needs the business will fulfill for the customers. •

Business idea description

• Vision• The Company vision is hereby re-stated as a

reminder of the desired future when setting the business objectives and activities that support it.

• Mission • Similarly the mission is hereby re-stated as a

guide when coming up with supporting business objectives and activities that are in line with that mission.

Business objectives

• Business objectives are measurable performance targets or results to be achieved within a certain time frame. Business objectives must be specific, measurable, achievable, realistic, and time bound (SMART). When setting objectives, use affirmative words, like improved, increased, enhanced (affirmative desired state). Do not use words like to improve, to crease, to enhance etc, which represent wishful thinking.

Business objectives

• The company vision and members’ needs, coupled with other customer needs and opportunities, will largely determine the objectives of the business enterprise.

• Business objectives can include; • Increased production by 20% in six (6) months time• Increased sales by 10% within 12 months, • Increased profitability by 10% within 12 months, • Open new outlets in two communities within one year, • Increased outreach to co-operative members by 30% in one

year, etc.•

Business activities

• Business activities are the detailed actions necessary to achieve the business objectives within the policy/guide lines of the business.

• Thus, the solution options or objectives are the basis for generation of business activities, but the required resources and output of activities will have to be taken into consideration.

• Then a time table of key activities, called Business Action Plan, has to be drawn to high light important aspects of the activities.

Business environment analysis

• A business operates in a wider environment that influence whether the business will succeed or not.

• An understanding of this environment helps to find an optimal match between the strengths of the business with opportunities the business environment offers, to increase the chances of business success. The business environment consists of:

• External environment analysis looks at the macro-environment which includes the socio-cultural, technology, ecological, economic and political/legal (STEEP) factors.

• Internal environment analysis looks at the industry environment factors the business operates, which include; new entrants, suppliers, customers, substitute products and competitors.

5.4 SWOT analysis (Strength, Weakness, Opportunity and Threat)

• After the you have thought through and described the business, the idea should be put to test to know if it is strong and will result in a competitive and sustainable business.

• One way to test the business idea is to do a SWOT analysis.

What is SWOT analysis?

• The SWOT analysis links the business environment with internal capabilities of the business

• SWOT helps in identifying what the business is doing right or wrong and what it can do well and what it can’t, and compare that against the external environment.

• Strength is internal advantage the business has. It can be a skill, physical or financial resources, ethical or social values etc.

• Weakness is an internal disadvantage the business has in relation to the business. It can be lack of a critical skill, resource, etc.

What is SWOT analysis?

• Opportunities include any favourable situation external to the business.

• It can be the strategic location, accessibility, market/high demand, abundance or availability of supplies, economic factors such as rising prices, growing market, etc.

• Threats include any unfavorable situation external to the business that is currently or potentially damaging or threatening to its ability to compete.

• It could be entry of new competitors, government and environmental regulations, changing consumer habits away from the business products/services.

Possible Strategies from SWOT Analysis

• Following the identification of strengths, weakness, opportunities and threats, You should match its strength and weakness to opportunities and threats to come up with possible strategies.

Possible Strategies from SWOT Analysis

INTERNALEXTERNAL

Strengths Weaknesses

Opportunities Possible Strategies Possible Strategies

Threats Possible Strategies Possible Strategies

Possible Strategies from SWOT Analysis

• Now it must be clear whether the you can go ahead with the business idea and objectives, and proceed to develop a complete business plan, or change or adjust the business idea.

• Should the decision be to continue, then the next step is to develop detailed marketing plans.

LADIES AND GENTLEMEN THANK YOU VERY MUCH