Business the plan as strategic object of the company

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1. 1 The notion of strategic management

1. 2 The essence of business plan

1. 3 Objectives and functions of business planning

1. 4 Methodology of developing a business plan

1. 5 Structure of business plan


2. 1 Business plan in the bank strategy

2.2 Bank’s business plan structure

2. 3 The process’s essence of the bank’s business plan realization

2.4 Sequential decision and early implementation stages of projects


3. 1 Widely spread mistakes and ways for their improvement

3. 2 How to improve planning with the help of modern applications





business plan

Today the world industry is full of all possible firms, corporations and organizations, but what is that distinctive line that separates and differentiates these organizations one from another? This line can be depicted as a success of a firm. But what shows us that business in this or that firm is going on successfully well? We can answer this question using simple observation data: the demand for products/services of this company (let we call it «ABS») is high, consumers are happy to have a deal with «ABS» — then they create positive reputation, the position of this firm is on the highest level, employees are happy, the working location expanding, and so on. And final question, what leads to this success? The answer is complicated one, but still can be constructively provided:

1. The management staff, which should provide the organization with work, focus, persistence, ideas and push.

2. Perfectly created strategy of the company

3. Business plan for the nearest future.

Speaking about management staff — it becomes clear, that behind every successful organization there is a successful leader. Strategy of the company is one of the core essences that helps to lead the firm through obstacles and gain profit, good reputation. The last notion is business plan.

What is important about business plan? A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. A good business plan is the most significant part of running or starting a business, expanding a business or obtaining finance for a business. If a business plan is written properly it is much easier to leave less room for error and failure. While there is no ability to predict everything that can happen in a business' future, a good business plan helps to avoid certain pitfalls, overcome obstacles, while anticipating and creating opportunities. Here we see, that business plan is a part of the strategy, that shows the activity and condition of the company from every possible angle in the market, also business plan describes all future actions and possible risks, consumers and suppliers, competitors and stakeholders, profits and failures. Business plan is an accurate guideline of business in the market.

According to the mentioned above, we can confirm, that any business plan of the company has its direct impact on the successful operation of this company in the market.

The question of this course work can be identified as «Does business plan play significant role in the strategic management of the firm?» Relating to this problem, this work will be devoted to the investigation of importance of business plan in the strategic management. The investigation will be conducted using literature search method, which involves reviewing all readily available materials. Also, several companies will be surveyed in order to detect their experience in using business plan and its successful compliance.


1.1 The notion of strategic management

Management of the firm as a scientific direction in the economy emerged in the early XX century. School of scientific management (F. Taylor, H. Gant, X. Emerson), and then classical (administrative) School of Management (A. Fayol, Weber, C. Bernard) highlighted planning as one of the main functions of management. At the same time planning was short-term, and in the form of budgeting and control. It was based on the hypothesize of stability of the external business environment and resource potential of the company, which generally characterized the economy of industrialized countries in the first quarter of last century. In these terms planning of the firm’s activities was regarded as a preparation of the annual budget of the organization, where carefully were taken into account all income and expenses from business activities. However, the materialization of strategic management as a self-sufficient science has been connected with the new conditions of corporations, there appeared a need for long-term planning and management, aimed at the future. These conditions were determined by:

— technological innovations resulting from scientific and technological revolution, which require prediction of new production and technological advances;

— saturation of the market in developed countries, which led to increasing competition;

— the beginning of globalization of markets, the emergence of transnational corporations, which raised the uncertainty and complexity of the environment of the existence of business.

In the scientific and methodical literature there are many descriptions to define strategic management, which focus on various aspects of this complex administrative process. However, they all come to one of three approaches:

1) the approach, which emphasizes the organizational parameters of the environment (environment analysis). This approach is strongly connected with the methods of strategic planning, is attractive for its simplicity in understanding the sequence of actions of strategic developers. However, when it is applied there is a great danger that the internal opportunities of the organization remain outside the scope of the analysis, although in many cases they can successfully neutralize threats deriving from the external environment;

2) the approach based on determining the long-term goals of the organization and the ways of achieving them (goals and means). According to this approach, strategic management — is the direction in decision making theory, which aims to develop an effective strategy or strategies to assist in achieving corporate goals;

3) the approach that emphasizes activities to implement the strategy (activity approach). This approach focuses on the sequence of actions for the implementation of strategic management, so it combines two previous ones.

In modern literature following definitions of a «strategy» meet:

— the art of rapid change, the portfolio of initiatives aimed at growing the company and its value;

— number of decisions that are driving or shaping force of the majority of actions taken by the company;

— set of interrelated activities aimed at achieving a sustainable competitive advantage;

— way to create a competitive advantage by implementing distinguishing characteristics;

Relying on investigated information about strategy, I have figured out my personal understanding of this term, it is following: in business life under the notion of strategy understood the general concept of how to achieve organizational goals, solve problems confronting it and distributed to the necessary scarce resources. Such concept includes several elements. First of all, this includes system of vision, mission, goals, general and specific objectives. Another element of the strategy — a policy or a set of specific rules of organizational actions aimed at achieving these goals.

Components of a market’s corporate strategy of the company — are:

1) implementation of strategies (tactics);

2) informational strategy;

3) human resources strategy;

4) marketing strategy;

5) financial strategy.

The company’s strategy as a program of action aimed at building and maintaining long-term competitive advantage in target markets reflects the quantitative development of the firm and those internal changes in the firm, which must occur to improve its competitiveness. Firm without a strategy — a set of assets burdened with liabilities.

Choosing a strategy involves the study of alternative courses of development of the organization, their evaluation and selection of the best strategic alternatives for implementation. It uses special tools, including quantitative methods of forecasting, the development of scenarios for future development, portfolio analysis. Factors influencing the choice of strategy are presented in Appendix 1.

Here it is necessary to point out, the company has strategy, when:

— The company is the initiator of innovations and leader in its market segment;

— All current activities are planned on the basis of strategic plans and goals;

— the whole staff of the company knows and shares the strategic objectives of the organization;

— strategy — is the main principle for making investment and other long-term solutions;

— every employee knows the extent of his contribution to the achievement of strategic targets of the company (both financial and nonfinancial);

— the balanced scorecard system successfully implemented;

— balanced scorecard resource substantiated and supplemented by a system of employee motivation

Next, let’s consider the main essence of business plan and its role in the strategic management.

1.2 The essence of business plan

In preparing for battle I have always found that plans are useless, but planning is indispensable.

Dwight Eisenhower,

US General and President

For the effective functioning of an enterprise there is a necessity to know exactly about all resources: material, labor, intellectual, financial. It is important to provide sources for their extraction, how to reveal resource efficiency in the enterprise’s operation. Extensive experience of kazakhstanian and foreign companies shows that the underestimation of planning activities of the business or its incompetent implementation lead to huge economic losses.

Business planning provides many benefits. Particularly:

· induces carefully examined prospects for business development;

· makes precisely define business goals and the ways to achieve them;

· identifies key business indicators required for further evaluation and controlling of results;

· makes the company more prepared for sudden changes in market conditions;

· allows to create clear coordination of all efforts to achieve organizational goals

Planning activity helps to solve the main task of any business — to achieve the maximum profit at minimum costs — identifying the most profitable sources of funding and rational direction of spending, providing a stable position of the enterprise in the market.

Business Plan — is a document which describes the main sections of the development of an enterprise in a competitive market, taking into account debt and equity funding sources, material and human capabilities and supposed risks that may arise during the implementation of different business projects.

Business plan helps to solve practically all main problems that stumble upon when creating a business:

— identify specific directions of business, its target markets and position in these markets;

— recognize the correspondence of existing staff at the enterprise and the conditions that motivate its labor requirements;

— formulate long-term and short-term business objectives, strategies and tactics for achieving them and identify special persons responsible for applying the target;

— lock stock and indices of goods and services to be offered to consumers, to estimate the corresponding production and trade costs

— define a system of marketing activities for market research, advertising, sales promotion, pricing, distribution channels, etc. ;

— optimize an organizing management structure;

— estimate the financial position of the company, the existing financial and material resources, the possibility of achieving set goals;

— identify the difficulties that can interfere with the implementation of the business plan and outline measures to deal with them.

As a result, business plan — is economically-based analytical document that shows the reality of the planned business. In this case, the extent of planning can be different: the development of organizations, activities, new products, a new wage system, etc. It provides the strategic and tactical challenges facing the enterprise, regardless of their functional direction, including: organizational, managerial, financial and economic assessment of the state enterprises, the identification of potential business opportunities, analyzing strengths and weaknesses of the parties, the formation of investment objectives for the planned period.

A business plan is complex management tool. It provides the strategic and tactical challenges facing the enterprise, regardless of its functional orientation, including: organizational, managerial, and financial and economic assessment of the state enterprises, the identification of potential business opportunities, analyzing strengths and weaknesses of the parties, the formation of investment objectives for the planning period.

The business plan demonstrates the general and specific elements of enterprise operating under market conditions, the choice of strategy and tactics of the competition assessment of financial, material and labor resources needed to achieve the objectives of the enterprise.

Business plan provides an objective idea about the possibilities of production development, ways of promoting goods to market, prices, potential profits, the major financial and economic results of the company, reveals the danger zone, suggests ways to their solutions. Such kind of plan is used, independently of the scope, size, type of ownership, organizational and legal form of company. Either internal problems related to the enterprise management can find its solution in business plan or external, due in particular, relations with other firms and organizations.

Due to the business plan an opportunity appears to look at the work of the enterprise as if from the outside. All the activities of the company are represented by two components: current and future. This is because the forms, methods, approaches to these two activities of the company are significantly different, as outlined in the following Table 1.

Table 1 — Activities of the company

Current activities of the company

Future activities of the company

Planning and budgeting

Business plan development

Quality improving

Business processes reengineering

Plans fulfilling

Projects fulfillment

Departmental employees

Special groups and teams

Does not include organizational changes

Connected with organizational changes

1.3 Objectives and functions of business planning

Business plan became a fundamentally new document to the Kazakhstan economy. The main goal of its development is planning in order to support the economic activity on a nearest and more late periods in accordance with market needs and the availability of necessary resources. Other purposes are:

— definition the viability and future sustainability of the enterprise, reducing business risk with the use of business plan;

— specification of business prospects in the form of quantitative and qualitative indicators;

— security of foreign investments.

Business plan takes into account not only the internal goals of the enterprise, but also the external goals of parties interested in participating. They are mainly investors. Business plan is a document that allows to assess the feasibility investments funds (capital) in the drafting. Substantiated business plan is the qualitative and quantitative guidance for both the entrepreneur and for its partners and lenders. Many banks even do not talk about loan terms without having a business plan. More widely spread became the requirements of foreign investors to provide estimates of the financial plan with the help of a licensed UNIDO [1] packages — COMFAR [2] and PROPSPIN [3], rely on Appendix 2. Except investors, interested parties may be potential customers and suppliers of the firm. In nowadays practice, the business plan has the following functions:

— serves as the basis for developing strategies and tactics of business;

— allows the formation and implementation of planned programs to assess the potential for new activities, to monitor the processes that take place in the business;

— attracts external funds for business development or re-engineering;

— attracts partners who are capable to invest own capital or the technology available to them.

Business plan as an integral part of the planning system in the enterprise, is it a separate part and is not limited to any one type of planning. Nevertheless, it is still characterized by sufficiently stable characteristics in accordance with the challenges ahead:

— business plan can not include the whole range of common goals of the company, but only one of them, one that is associated with the investment process (internal or external). Business plan — it is always investment (development). No investment — there can be no business plan (as opposed to other types of planning, such as strategic);

— in contrast to the strategic and tactical plan, business plan has clearly defined time frame, after which certain plan goals and objectives must be met;

— in business plan functional components (marketing plan, production plan, etc.) in contrast to all other types of plans are full and equal parts of the structure.

Since the business plan is nothing more than a development plan with a distinctive objectives, none of the other types of plans can replace the business planning process. At the same time, the business plan is subject to the common terminal of business plans and complies with the general principles of planning.

Carefully prepared and composed business plan offers the prospect of its development, that is responsible for the most important question: whether to invest energy and resources into this business, whether it will bring a profit, which will pay all costs.

Depending on the purpose of preparing a business plan (as a plan investment feasibility study, financial partners, to attract partners, contracts, personnel) sections can be developed with varying degrees of detail. When a plan requires less volume study, part of the sections may be absent. When the plan will be developed in full volume there must be conducted a wide marketing research, and the plan itself must include all documents used in its development.

1.4 Methodology of developing a business plan

In business and academic literature there is no distinct methodological approach to the content and structure of the business plan. This is due to a variety of possible goals addressed to be resolved by a developed business plan.

In general the structure of the business plan is determined by the specific type of activity, firm size, in order to develop a business plan, which must be complied with, such as small businesses seeking to lease equipment. Federal Service for Insolvency and financial recovery of enterprises developed typical structure of a business plan, which must have the following information: a general overview of the enterprise, brief information on the financial recovery plan, financial analysis of enterprises, measures to restore the solvency and support effective economic activities, market competition, marketing activities, manufacturing, financial plan.

Obviously, the larger the organization, the more complex its financial activities, the more reasonable should be developed sections of the plan, respectively, the business plan for small businesses on the composition, structure and volume can be much easier. Later, in practical part of this course paper, obvious example of implementing business plan in large organization — bank, will be provided.

The composition and structure of the business plan also depends on the size of the proposed market, the presence of competitors and the growth prospects of an enterprise, since the larger the market, the greater the number of its segments must be considered, but with a large number of competitors is required to study the largest of them, their goods and services and, therefore, the complication of the business plan. Especially important for enterprise market segments or the most important competitors for closer examination may be carried in a special section of the plan.

Currently, in Kazakhstan market the UNIDO development as one of the western methods is best known for developing countries to prepare industrial feasibility studies and its electronic version COMFAR. In addition, the popular development of Tacis — EU program, developed for the CIS countries (plus Mongolia) to subsidize the purchase of modern technology, as well as some others.

We can distinguish the basis of all the above methods of business plans. This basis has the following sections:

— the financial plan;

— the marketing plan;

— the system of production.

Mentioned sections are linked by organizational plan (a specific scheme of the project), with corresponding calculation of risks and the allocation of compensatory measures. Particularly these key sections have laid the fundamental element of the Kazakhstan standards of forming business plans.

Recently, on the basis of these methods appeared the text templates for writing a business plan. Such a pattern in the development of a business plan acquires the corrected information, calculations, tables and graphs. Thus, achieving maximum simplification of the work on the textual part of the business plan.

The business plan serves as a mean of effective advertising for prospective investors and partners. Therefore, it must be written on business language, understandable to financiers, bankers, and business partners. Quantitative information that characterizes parts of the business plan should be clear and capacious, but at the same time, relatively brief. The volume of business plan depends on the purpose (the project), but the main thing — it must specifically describe ultimate goal, and all the activities, as a result of which will ensure the achievement of goals. Typically, a business plan is developed for a few (3−5) years, but for the first year it should be specific planning documents.

A key section on the basis of the main goals of the business plan is always a financial plan. Accumulating information from other sections, the financial plan provides an answer to the most important question — what you need to invest and what returns, because entrepreneurship is like work at your own risk for profit.

1.5 Structure of business plan

The business plan as the document is endowed with specific, inherent features, but it will wrong to talk about it as a document with a strictly specified parameters. There is no clear regulation for the structure of the business plan. However, there are a number of points that are essential and without which the business plan cannot play the role entrusted to it: it’s sections, covering ideas, business goals, product-specific company, determining the structure of the future of the enterprise, its financial projections and prospects, offering a specific strategy firm behavior in real market conditions. Thus, when creating own business, entrepreneur should prepare a business plan with the desired consideration of the following points:

1. Company profile — this provides a description of the company and of its activities from its establishment to the present day;

2. Market and competition analysis — here is a general depiction of the market in which the company functions and a detailed description of its competitors. The market depiction will include a description of the size of the market and the trends within it (both technological and financial), the market segmentation, the problems that exist in the market, the main competitors, barriers to entering the market, and potential customers. This section of the business plan should contain the results of detailed primary and secondary research conducted by the company;

3. Vision and strategy — in this part, the company should identify its vision and its strategy for realizing it;

4. Product/service description — this part focuses on the solution offered by the company, including a detailed description of the product and the technology, the company’s intellectual property, competing products, and why the product is superior to them;

5. Development plan — describes the whole development process, the present development status of each product and service, and the scope of the development team and budget;

6. Operating plan — describes the company’s organizational structure, such as the structure of the production system, the costs of labor and materials, logistics and service;

Marketing plan — this part describes the company needs to specify, among other things, its objectives with respect to each segment of the target markets, the existing and planned marketing channels, the pricing of the products for distributors and the structure of their remuneration, the advertising plan, and the incentives to be given to customers;

7. Management and ownership -this part is about the management team, including brief resumes of the senior management. The structure of ownership of the company will also be described here.

8. Financial forecasting — the forecasts need to be attended by full and detailed statements, and usually include the projected operating budget, projected financial statements, economic analyses, and sensitivity analyses (the projected effect of any change in the various parameters on the forecasted business results).

9. Application — here will be found a specification of the expenses, table of comparison to competitors, full executives bios, letters from customers, and so on.

The most common documents that are included in the application:

— technical products data;

— executives forms;

— organizational and other schemes;

— results of audits;

— consultants and experts opinions.

The next main step in building this course paper is considering written above theory on practice. As I have mentioned, the larger the organization the more obvious the necessity of business plan. In these terms I have chosen and fully investigated the bank structure, to show all importance of implementing business plan into its strategy.


2.1 Business plan in the bank strategy

Business plan of the bank is connected with the future activities of the bank. It should cover all areas of work and all departments the bank. For the separate projects of the bank such as: branch office, the acquisition of a building, complex technical systems and so on, establish separate business plans (often in short form), which calculated the economic efficiency of the planned projects of the bank. It is necessary to understand that the bank can make expenditures appointed not only for economic benefits, but also for reducing risks, which, however, may also, in case of implementation result in additional costs of a bank or even a loss. For external projects, in which the bank is planning to take participation, the business plan is the basis for the development of schemes of financing the project, validate the extent and form of participation in the bank, as shown in Figure 1.


Figure 1. Organizational scheme of project financing

In fact, in its submission, business plan is formulated, recorded and justified the bank’s strategy for the next two (three) years. From the mentioned above it is obvious that it is impossible to write a business plan of the bank, not having a strategy. At the same time it is possible to formulate some strategic alternatives without having a business plan. The difference between a business plan for bank and strategic alternatives is that the business plan is a quantitative assessment of strategic alternatives, test potentials and effectiveness of their achievement, the calculation of the expected financial impact and formulate proposals for the selection of a strategic alternative. Bank’s strategic options adopted by the owners and top managers is accepted as a strategy for the bank, and then work on its implementation organizes. The business plan of the bank should be present:

- when creating a credit institution;

— changing the form of a credit institution (non-bank credit institution — on a bank, or a bank — on a non-bank credit institutions);

- when expanding the credit institution by acquiring additional licenses for banking operations;

- when the reorganization in the form of merger, separation, transformation;

- when the reorganization of credit institutions in the form of a merger.

According to this paper business plan of bank is an instrument for the next two (three) calendar years containing the planned program for credit institutions, including the parameters (indicators) and expected results of operations and allows the bank to assess:

a) the ability of the credit institution to provide financial stability to fulfill prudential activities and obligatory reserve requirements, regulatory requirements to ensure the interests of creditors and depositors;

b) the ability of the credit institution for long-term survival as a profitable credit institutions;

c) management adequacy of the credit institution.

2.2 Bank’s business plan structure

Here is the typical structure of the business plan of the bank:

1. General information about the credit institution

1.1. Name of the credit institution;

1.2. Information about establishment of a credit institution;

1.3. Location of the credit institution;

1.4. The authorized capital of credit organization;

1.5. Information about the audit organization (auditor);

1.6. Persons with whom the cooperation in the process of reviewing the business plan is held;

2. Business prospects of the credit institution

2.1. Goals, objectives and market-oriented policies of the credit institution;

2.2. Influence of economic and legal conditions in the country and regions attend on the activities of credit organization;

2.3. The main parameters of active and passive operations, expected financial results;

2.4. Risk management of the credit organization;

2.5. Assessment of compliance with obligatory standards and obligatory reserve requirements;

2.6. Status, possibilities and limitations of the customer base;

2.7. Capabilities and limitations of branches network, representative offices, separate departments and exchange offices;

2.8. Participation in the banking groups and bank holding companies;

3. Management system of the credit institution

3.1. Scheme and the development of the credit institution;

3.2. Internal control system;

3.3. Internal documents regulating the conduct banking operations;

4. Founders (participants) of credit institution

4.1. Information about founders (participants) of credit institution;

4.2. Nature of relations between the founders (participants);

4.3. Financial position and business activities of founders (participants);

5. Features of the credit institution

5.1. Material and technical support;

5.2. Personnel policy;

6. Other significant factors that, in the opinion of the credit institution are required to reveal the main objectives of the business plan.

As attachments business plan should also include:

— balance of payments with a breakdown of some of its articles;

— plan of income, expenses and profit with a breakdown of some of its articles;

— the forecast performance of certain obligatory standards;

— assumptions admitted?? in the business plan.

The information contained in the business plan must necessarily reveal the contents of the following aspects of the credit institution.

Revelation of these aspects should include the results of the SWOT-analysis, which allows to identify the strengths and weaknesses of a credit institution, as well as potential opportunities and threats.

1. Goals, objectives and market-oriented policies of the credit institution. In determining the goals and objectives of the credit institution there should be reflected the long-term vision the role and place in the banking market, the specific features of its positioning in the market environment, as well as the most important principles of commercial activity.

Principles of commercial activity:

— in relation to the commercial activities (the target orientation on market segments of banking and financial services, the definition of market specialization of credit institution, the regional aspect of the business of credit institutions);

— in relation to the client (the target orientation related to the customer base, short and clear description of what needs which customers do have and how is going to provide a credit institution);

— in relation to managers and employees (the target orientation with respect to the business culture of the credit institution);

— in relation to the founders (participants) (description of the interests of the founders (participants), arising from the goals and objectives set by them before a credit institution, and how is going to meet the credit institution);

— in relation to banking technologies (task orientation on the use and improvement of banking technologies).

Market-oriented policy of the organization should include a description of the spectrum of its banking operations and transactions (planned change in the spectrum compared with the actual state — for operating credit organizations created as a result of conversion, the planned range of — for credit institutions, created as a result of other forms of restructuring, as well as newly created credit institutions).

Influence of economic and legal conditions in the country and regions on the activities of credit institutions. A credit institution should present its assessment of the impact dynamics of economic indicators and indicators of financial markets, the main areas of business, taking into consideration, including, product orientation, and prospects for business activity in the regional context, including:

— results of marketing research (types of services that are highly demanded, key customers and their preferences, potential competitors, the benefits of the credit institution, the activities of capturing the market niche of banking services, ongoing activities, opportunities and limitation to expand the niche and scope of banking operations — for credit institutions, capabilities and limitations in capturing a niche — for newly established credit institutions);

— the actual distribution of the business volume of the credit institution, by regions (the possibilities and limitations of existing branches, representative offices, internal departments and exchange offices);

3. Description of the main parameters of active and passive operations, expected financial results should include:

— analysis of active operations (performed from the position of operations like liquidation, profitability, risk, timing of placement);

— analysis of passive operations (performed by type of transaction, terms of borrowing, cost of funds, contractors);

— analysis of the status and dynamics of the capital;

— analysis of volume and structure of incomes, expenses and profit, the rationale for indicators.

4. Risk management in the credit institution (credit risk, liquidity risk, currency risk, market risk, operational and other risks). A credit institution shall reveal intra-bank principles of risk management, measures for the prevention of financial difficulties.

5. Assessment of compliance with obligatory standards and obligatory reserve requirements:

— calculation of prudential norms that have a quantitative assessment, substantiation and evaluation of conformity of the planned indicators established criteria;

— calculation of allocations to legal reserves (as at the beginning of each year of operation) based on indicators of «Explanation of individual articles account balance», «The structure of assets and liabilities of credit organizations».

6. Status, possibilities and limitations of the customer base, including the actual state of the customer base and planned changes in comparison with the actual state.

7. Capabilities and limitations of a branches network, representative offices, separate divisions and exchange offices in the regions for which the credit institution intends to extend its influence.

8. Participation in the banking groups and bank holding companies.

9. Information about management system, which includes a description of the following elements:

— scheme of the credit institution, the principles of the distribution of administrative functions between the management of the credit organization and power between leaders of this organization, including the subordination of the functions and departments, committees (with their names and planned staff departments);

— development of the credit institution, including organizational structure, improvement of banking technologies, the development of internal control, accounting management system, the transition to accounting in accordance with international standards of accounting and financial reporting;

— internal control system — a description of the system of internal control in credit institutions, including quantitative and personal composition of the internal control, a description of intra-bank system about counteract the legalization (laundering) of proceeds of crime;

— documents that regulate banking operations, procedures for their approval;

10. The list of founders (participants).

11. Information about securing the credit institution, including:

11.1. Material-technical base of the credit institution — a description of security of the credit institution:

— Building, where is (will be) a credit institution located, indicating the proper use of it or it is carried out (will be) on the basis of the lease (sublease), indicating the duration;

— office equipment and banking facilities;

— vehicles, including special technical devices for the formation of the security staff and banking activities (including software tools to protect information against unauthorized access), as well as fire safety systems;

11.2. Personnel policy.

— internal documents relating to the corporate culture of a credit institution, the prospects of developing corporate culture credit institution;

— number and qualifications of personnel, changes in these parameters in the planning period, the basic qualification requirements for managers of medium and low-level qualifications for staff;

— incentive system of labor motivation inside the organization.

2.3 The process’s essence of the bank’s business plan realization

To put into practice a business plan — means to fulfill all work tasks inside and outside the bank. It is necessary for transformation a business project from the business plan stage into a real production stage. It is necessary to create a real schedule for various stages of project implementation. Such schedule should initially identify the various stages of implementation and duration of each stage. The implementation plan should contain a timetable for uniting the various stages of implementation in a coherent framework for action. This detailed schedule must cover the entire investment phase, including the period of decision on investment to the initial stage of production and the continued functioning of the project. It is very important to prepare the implementation phase of the business plan as well as deviations from the original data, that can put in danger the entire business plan. Implementation schedule should reflect the costs of the project and the final cash resources in order to determine the appropriate inflow of funds required for financing. For different stages of implementation of business projects require differing periods of time. It depends on the circumstances prevailing in the country, the specific nature of the plan and special requirements for organizations implementing a specific business plan. Between the decision making moment on investment and the actual launching, considerable time passes by. This period includes the following basic steps:

— Appointment of the team that will implement the business project;

— Foundation of the bank;

— Finance planning;

— Finance design;

— The acquisition and transfer of technology;

— Basic engineering;

— Selection of contractors, consultants and suppliers;

— Preparation of application documents;

— Display of the proposals;

— Offer product price;

— Offer assessment;

— Negotiations and contract signings;

— Detailed engineering;

— Purchase of the land;

— Construction works;

— Equipment installation;

— Purchase of raw materials;

— Pre-production marketing;

— Training and job appointment;

— Start a business project and production.

In the realization of business plan of the bank there may be involved both local and foreign parties. In some cases, the implementation period can be so long that these business plans become an outdated and will need a revision. It is necessary that data on costs have been dated and documented so that it was fashionable to continuously monitor the prices as a method of forecasting, as well as by collecting real information. Comparing the actual data accumulated during the implementation phase, with the data presented in the study stage, we can determine the impact of any exceedings of the costs of liquidity, financial requirements and the overall profitability of the business project of the bank

Figure 2. Business plan realization scheme

Planning the business plan of the bank and budgeting include the following main tasks:

1) identification the type of work tasks inside and outside the firm that are necessary for project implementation;

2) determining the logical sequence of events in the business objectives;

3) preparation of implementation the schedule, which determines the workers' problems, adjusting the time necessary to complete each individual task;

4) determine the resources needed to complete individual tasks, and identifying the relevant costs;

5) preparation of budget implementation and the flow of funds to provide financing throughout the phases of implementation and operation of the business project;

6) documentation of all data implementation, allowing to adjust plans and budget implementation, as well as projections made at the time of preparing a business plan.

2.4 Sequential decision and early implementation stages of projects

In the process of business planning in the bank a final decision about the beginning of project implementation is delayed until the approval of business plans by management. This is explained by the fact that some decisions can not be taken until the moment by which the essence of the project would be clarified. Such approach is not always acceptable. In this case, slightly different way can be used. It contains the fact that in the end of each module it becomes clear the necessity to act independently from the findings at a later stage. For example, after analyzing the prospects it becomes clear that the ability of the bank to observe the external environment is insufficient. At the end of the competitiveness analysis it may occur that the bank has no future in some traditional segments, and therefore it is necessary to stop investing in these areas in order to avoid further losses. In such cases, the rearrangement of action, which ultimately must still be taken, will give nothing. Hence, the corresponding program must begin at the end of each module. This offers the whole row of advantages.

1) Dispersal decisions over time provides a uniform workload of senior executives of the bank, removes the overload, the accompanying decision-making in the usual manner.

2) Early beginnings of the programs similarly can disperse the load associated with the implementation, and provides an early completion of the process changes.

3) The implementation, which occurs during parallel planning, provides continued feedback on the additional justification of planning decisions and their assumptions.

4) Early beginning of implementation develops and improves the capacity of making strategic decisions about implementation, which will follow at the end of the planning process.

5) The possibility of an earlier decision making enables managers to control the duration of the change process, confirming it with the decision.


3.1. Widely spread mistakes and ways for their improvement

There is nothing perfect in this world. From described above, it is already known, that for effective creation and leading business, companies need bright and detailed business plan. By the way, while constructing such kind of document, many mistakes can be admitted. The business plan can make or break an idea. If vital pieces are mislaid or handled poorly, investors will quickly move on to the next potential entrepreneur. By adhering to time-tested principles and avoiding common mistakes, business owners can earn the second look that may lead to the funding they need.

The great amount of explored information helped me to reveal several major pitfalls and I’ve generated effective tips, how to avoid them. These tips are effective not only for credit institutions, but also for all types of business: developing and developed, small, medium and large, etc.

1. Creation of a vision.

Problem. Sometimes, when people create business, they are too enthusiastic, they are eager to start business planning as faster as it is possible, they dive into the details of business: evaluating products, studying market segments and sizing up competition. Yet it’s possible to get so caught up in the process of planning a business that they lose sight of what they’re planning for.

Suggestion. Before getting lost in the details, there is a great necessity to take a step back. Outline a clear vision and a coherent set of values for company. Develop a mission statement and use it to define short-term goals and priorities.

2. A budget isn’t the same thing as a plan.

Problem. It is impossible create a solid business plan without a budget and a financial forecast. But a budget should be the product of all the other elements in the plan.

Suggestion. In order to get actual data and numbers, that will reflect to the reality, there is a need to achieve a clear picture of the industry, customers, competitors and market conditions before the development of a budget.

3. Customers — essential part of every business.

Problem. This may sound obvious, but too many entrepreneurs assume they know exactly what their customers need without bothering to ask. Still, analyzing the customer situation of different not very successful companies, it became evident, that issue connected with entrepreneur’s blindness becomes a relevant pitfall, that lead to certain losses of the company.

Suggestion. Customers — is the driving force of any company. They bring profit. The only possible way to earn customer preference and loyalty -is to conduct various surveys, open questionnaires, interviews in order to learn about customers, and build business plan around their needs and desires.

4. Competition

Problem. Most of the companies underestimate the power of competition. Some of them suppose, that their firm will be the only game in town, another just fail to take existing competitors seriously, for such companies it is going to bea real trouble.

Suggestion. Actually, it is very useful and helpful to look after competitors, because usually they can be a great source of information about what works and what doesn’t. With the help of competitors it is possible to avoid many drawbacks and earn positive moments for the company.

5. Taking risks

Problem. The commonly spread problem — misunderstanding the role of business plan in the risks sphere. Creating a business plan isn’t about avoiding risk; it’s about understanding and managing risk.

Suggestion. That’s why a good business plan anticipates possible challenges and includes a variety of scenarios for meeting those challenges. There’s a difference between a calculated risk and recklessness, and right business plan can help to make that distinction.

4. Second (or third) opinion.

Problem. Some of the entrepreneurs mistakenly think, that they know everything about their organization, and do not need the help of third parties. This can become a serious drawback. More often people are blinded with their personal achievements and do not notice possible negative outcomes, that can occur with their business.

Suggestion. The most experienced entrepreneur can still benefit from a different point of view. Moreover, if several independent persons will be involved in examining business plan — more alternatives and mistakes they will be able to find. Even if there is the only person involved in business, it will be helpful to find someone who can study the plan objectively and point out possible weaknesses that might have been missed.

5. Expect the unexpected.

Problem. As we live in an instable world, many different unexpectedness may happen. The majority of such surprises are negative.

Suggestion. Every business plan needs some wiggle room to allow for unexpected changes. Part of this involves creating budgets and marketing plans with some built-in flexibility; but adapting to change also requires the acceptance that business practices that worked well in the past might have been modified or even abandoned.

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