6 Simple Answers Your Business Plan Should Provide

As I finish the editing on my upcoming book – How to Successfully Startup a Small Bakery Business, I cannot help but realize the importance of planning before starting any business venture. Here in Kenya, there is a particularly disturbing belief or perhaps I should say a kind of ignorance on the importance of a business plan. As I meet startup entrepreneurs and train individuals on starting up small bakery businesses; I continue to stress the importance of a business plan – even a basic one just to get you started.
Now you might wonder why I stress this point and I’ve decided to share it in a different way today. I want to give you six questions that your basic business plan can and should have answers to regarding your small startup. These answers will provide clarity and direction to your business as you start and continue growing. As I always point out, your business plan will change as your business grows and adapts; however, it’s important to have a basic plan as you start. You can then go changing it and adapting it to any business model or market changes you encounter as you progress.

It's very important!

It’s very important!

What?
The first question your basic business plan should answer is ‘what is your business?’ This is the part where you write your business name and the products and/or services it offers. Today I will use an example of a service business start-up that provides food delivery services. The ‘what’ of this business would be: Fresh Delivery Services provides food delivery services to its clients in Nairobi County.

What are you selling?

What are you selling?

Why?
The second question your plan answers is ‘Why your business offers the products and/or services?’ This is a very important question for your business since it should highlight what sets your business apart from any other businesses in that industry. To give an example of the ‘why’ using Fresh Delivery Services.
We realized that most delivery or errand service companies in the market offer delivery for many items but not for food. Those that do are not always effective or careful with the food contents and do not ensure customer satisfaction. Our errand services are targeted to only food and baked goods deliveries and we are well-equipped to assist in packaging, transporting and effective delivery of those goods.
Who?
Another important aspect of your business is who you’re selling to; your target customers. It is very important to know the types of customers you want to sell to in order to ensure the products and/or services are well suited to their needs as well as your marketing strategy. An example:
We offer our delivery services to home-based bakeries and catering businesses who deliver their food and baked products to their clients. We also make deliveries for restaurants and bakery shops who offer home or office delivery options to their clients as well.

Who is your target customer?

Who is your target customer?

Where?
Your basic business plan should state the location of your business as well as the location of your target customers who you are serving. This applies for both types of businesses who have brick and mortar locations such as shops, stores or warehouses. As well as any home-based businesses who deliver to their target customers. As we stated above, an example of our featured business is:
Fresh Delivery Services provides food delivery services to its clients anywhere in the Nairobi County area.
When?
This refers to the daily operations of your startup business. State the time schedules for both your in-house operational hours for employees; as well as for your clients’ delivery times.
Fresh Delivery Services is open from Monday to Saturday. Delivery hours are from 7 a.m. to 5 p.m. We are closed on Sundays.
Employee hours are as follows: Monday to Saturday 6.30 a.m. to 6 p.m. Closed on Sundays.
How?
Your business plan should state how you will sell products and/or services and how you will execute your daily operations. For your daily operations; it is important to have a simple system setup on daily tasks to be completed by your employees and yourself as well. You can create a basic operations manual based on the nature of your business. You should also have a marketing plan section in your business plan that describes the various marketing activities you will execute to attract your customers and therefore lead to sales for your business.
I hope these simple questions will help you while writing your basic business plan and answering them while doing so ^_^!
If you would like to get a free Basic Business Plan template, click on this link to get one.
Any questions on writing a basic business plan for your small business startup? Stuck on a specific section in your basic business plan writing? Feel free to ask below.
Please share this post if you found it helpful, help someone else who might need this information as well ^_^

4 Important Things that Start-Up Entrepreneurs need to always remember

I haven’t been posting consistently on this blog lately (I have decided to break the silence – and follow my own advice ^_^)

I was inspired to blog due to an interview I was invited to during the week of the GE Summit for a radio program called The Conversation for The BBC World Service. I was proud to be part of such an inspiring program and I met a lovely lady who was also guesting on the program; she is a co-founder of Closet 49, Serah Kanyua.

Our lovely hostess; Presenter Kim Chakanetsa, asked us several questions. One that really stood out for me and I thought was very important (enough to warrant a blog post ^_^) was: ” What do you think are the top tips for aspiring business women and men out there?” I will share my four top important tips for those who want to be or are starting out businesses.

1. Planning

Make sure before you start your business to plan ahead; make a business plan, including your start-up budget. Make an action list of what you need to do in order to get started properly. It’s also important to plan all other aspects of your life; if you’re an employee quitting a job to start a business, your personal life will change as well. Depending on what you were doing before starting your business, you need to adjust your life accordingly in order to focus completely on your business venture.

It's very important!

It’s very important!

2. Research

While you’re in the planning process for your business start-up, you also need to do a lot of research. It is imperative for your business’ success to conduct research on your business industry, your target customers, business location, whether your product or service is viable in the market and many other important aspects of your start-up. The reason it’s very important to conduct research is to reduce your business’ chance of failure. When you research thoroughly and plan properly; you have knowledge and insight that will increase your chance of success.

3. Mentorship

At any phase of starting up your business; whether it is during planning and research, after starting your business or during your entrepreneural journey – I think it’s important to have a mentor (or if you’re lucky, mentors). Mentors can be different types of people who help you gain insight into entrepreneurship. They can be individuals in your industry who guide you in the right direction while doing business; they can even be your customers or family members who also own businesses or among other individuals who offer insight and positive guidance to help improve your life. Mentors can help you “fail fast” as an entrepreneur – or at least help you avoid some business failures that slow down your business’ success. I can personally attest to the importance of having a mentor in your life as a start-up entrepreneur.

Get your own Yoda ^_^To guide you on the right path

Get your own Yoda ^_^To guide you on the right path

4. Self-Motivation

I said it on the interview and I will say it again – sometimes you don’t have someone to give you a pep talk; or to support you and inspire you daily. You have to wake up everyday and motivate yourself; you need to get up and tell yourself that you’re going to make it. You should be able to find various ways of getting inspiration to keep going; especially on those tough and challenging days. Whether it’s your favorite inspirational music, quotes that motivate you to do better or just an amazing pep talk to get you revved up for the day. Find your motivation daily, from within – then go out there and succeed!

Motivate yourself to succeed

Motivate yourself to succeed (Image Credit: BusinessDailyAfrica)

I hope those four business tips have helped you, especially if you’re planning on starting your own business soon. Make sure you are prepared before starting your venture (or as prepared as you can be).

Do you have any other important business tips to any aspiring start-up entrepreneurs you would love to share? Please do so below on the comment box – feedback is always appreciated ^_^

Don’t forget to share this awesome post with your friends – I bet they’ll thank you for it ^_^

5 Essential Accounting Records for Every Small Business in Kenya

Many small businesses in Kenya fail within their first two years of existence. There are many reasons and factors that contribute to their failure e.g. lack of capital, high overhead costs and many other reasons. One major reason however, is poor record keeping practices. A small business may have sales everyday and therefore the owner feels that he/she is making a profit because there is money everyday. When the small business can’t stay afloat and he/she has to close, they wonder what happened. It is therefore necessary to keep good records. This is because accounting records paint a picture of how the business is doing; where the sales are mainly coming from (if it’s a bakery like mine – I’ll be able to see if it’s from baking classes or cakes). Records let you know where the money is going; if it’s mostly paying for rent and payroll. You’re able to see how much you’re spending on production materials (e.g. flour, sugar, margarine, etc) and utilities (is your electricity bill extremely high compared to the sales?). If you’re able to, get an accounting software program that can assist you with record keeping and keep track of customer data as well. For my bakery, I use Quickbooks Accounting Software from Intuit. Quickbooks is great for small businesses and easy to use as well. However if you’re just starting and you cannot get the software at first; below are the necessary accounting records you’ll need to  know how your business is doing.

1. Receipt Book/ Cash Sales book When you sell an item or a service to a customer/client, you should make sure you record the transaction. Make sure you always have a receipt book to keep track of all your daily sales and to give the customer a copy when the transaction is complete. Even if you have a business in which you don’t give receipts to your customer, e.g. a local shop; make sure you record the sales so as to keep track of your daily sales. You can start by purchasing plain receipt books from supermarkets or stationery shops. Then as your budget is able to manage, you can get personalized receipt books for your business with your business name and logo on them.

Receipt  (courtesy: callumjonesdesigns.com)

Receipt (courtesy: callumjonesdesigns.com)

2. Petty Cash Voucher book It is imperative to keep track of all your small business’ expenses – and I mean all; i.e. Rent, Payroll, Utilities – water, electricity, garbage collection etc, Print material for marketing your business, Production materials, Phone and Internet costs, Travel and Transport costs, Advertising (online or outbound), Loan repayment and any other miscellaneous costs you may have. You should record any expense that is paid towards your small business, it is the only way you’ll be able to manage your business costs. A petty cash voucher is a great way to record all your expenses. Record all the expenses in the voucher book and attach supporting evidence, that is, receipts. For any purchase for your business, make sure to get a receipt. This is not only good for recording purposes, but for VAT auditing (if you have a small company and pay VAT monthly). Receipts are also evidence that you purchased an item, especially if it’s a fixed asset such as an electric mixer for a bakery, or a laptop for office use. Receipts come in handy for any warranty issues that may arise. You can find plain petty cash vouchers in supermarkets or stationery shops as well. You can also have a printing company make personalized petty voucher books for your business with your logo on them.

Petty Cash Voucher Book sample

Petty Cash Voucher Book sample

3. Business Journal A journal is another essential record to keep for your daily business activities. A journal shows your daily financial activities; i.e. how money came in and went out in your business. At the end of the day, you should know how much money you started with; what money came in from sales and how much went out to pay for various expenses. At business close, you balance and see how much money is left and then compare it with the amount of cash you have at hand to ensure that it’s an accurate record. The reason this journal is important is for accuracy and accountability purposes. It’s harder to track where money has really gone if you keep track of it weekly or monthly. However, if you do it daily, you will get any discrepancies sorted that day and the issue will be solved easily. A journal is especially necessary in a business that is busy every day e.g. shop, bakery, supermarket etc. You can start by purchasing a counter book in a supermarket or stationery shop to get started.

Daily Business journal sample (Also know as a General Ledger)

Daily Business journal sample (Also know as a General Ledger)

4. Stock Schedule It is necessary to keep track of any stock you have in your business. Stock can be tracked daily, weekly or monthly depending on the kind of stock it is. If you’re running a production or manufacturing business such as a bakery, wood workshop, metal workshop, maize or wheat milling etc; you should keep track of your production or manufacturing stock daily. For example, for a bakery, it is good to record the stock at the beginning of the day and at the end of the day. It helps you compare your sales for baked products sold to ensure they are equal to the stock used to bake the products. If there are any discrepancies e.g. too much stock was used and not enough products were sold, as a business owner you can trouble-shoot to find out what the problem is and where stock is going. For all the above businesses, you can also do a weekly general stock take to record the materials in your stock and if any are required to be purchased for replenishment. Retail businesses such as shops, supermarkets, clothes or shoe shops can also take weekly stock to see what they have sold for the week. You can also take weekly stock if your production or manufacturing business does not have a lot of daily sales. Monthly stock is taken for; production or manufacturing goods as well as fixed assets. This is necessary to keep track of your assets and to complete your monthly balance sheet (See below). You can purchase a counter book in a supermarket or stationery shop to keep track of your stock.

Inventory List for fixed assets

Inventory List for fixed assets

5. Balance Sheet A balance sheet summarizes a small business’ assets, equity and liabilities at a specific point in time. A balance sheet is best done every month for a small business so as to see the financial position of your business monthly. A great definition for a small business balance sheet from Wikipedia is that a small business balance sheet lists current assets such as cash, accounts receivable, and inventory, fixed assets such as land, buildings, and equipment, intangible assets such as patents, and liabilities such as accounts payable, accrued expenses, and long-term debt. Contingent liabilities such as warranties are noted in the footnotes to the balance sheet. The small business’s equity is the difference between total assets and total liabilities. A simple explanation of accounts receivable is – money owed to your small business by a customer/client. If your small business is a service based business such as an I.T. Company, transport or delivery service provider etc, you can write invoices to your customers (not cash sales or receipts). An invoice is a document that states the product or service supplied and cost to be paid. Different businesses can invoice their clients based on the agreed payment periods e.g. monthly or weekly payment.

Simple Balance Sheet

Simple Balance Sheet

Accounts payable describes money you owe suppliers or vendors. If you have an agreement with a supplier to supply goods to your business and you pay them monthly; the vendor writes you an invoice for the amount that is payable to them. Long term debt is usually a loan that your small business is paying slowly; taken either to start the business or boost it financially. For the first few months, if you are not familiar with a balance sheet and you do not have any accounting software; consult a book-keeper or accountant to assist you with compiling your balance sheet until you are comfortable doing it yourself. Below is a balance sheet format you can get started with, ensure that you create a balance sheet that is unique to your small business for complete accuracy.

Sample Balance Sheet

Sample Balance Sheet

Now that you know the essential accounting records required for your small business; if you already have one in operation – go buy them and record on them daily. If you would like to start a business, make sure you are prepared with all the record required to keep track of the financial progress for your small business.

All the best and work smart! ^_^