3 - Business Planning Flashcards
This competency is about the principles and tools of business planning.
Business Planning - Extract from Candidate Guide - Aug 2018 (updated Feb 2022)
What is a business plan?
A business plan is a document provided to lenders/investors which sets out the reasoning and evidence to obtain funding.
The plan will highlight the reasons for the set up of the business as well as provide an outline of the goals and objectives along with how and why these are achievable - like a roadmap.
What are the main headings you would see under a business plan?
- Market analysis
- Competition analysis
- Description of organisation structure
- Breakdown of services offered
- Planned timescales and milestones.
- Current financial position
What are the short, medium and long term goals of your company ?
Short term - Continue to provide a high level of service
Medium term - Build relationships with new clients to continue the business, continue new revenue streams
Long term goals - Embrace emerging technologies in the industry and target work areas and new sectors.
How would you prepare a long term strategy?
- Create a description of the strategy
- Identify the key stakeholders and their needs
- SWOT analysis – Strengths, Weaknesses, Opportunities and Threats
- PESTELE analysis – Political, Economical, Social, Technological, Environmental, Legal, Ethical Factors
- SMART goals – Specific, Measurable, Attainable, Realistic and Time
- Prepare a marketing strategy – identify audience, market research, promotions etc.
- Organise resources – funding, staff etc
- Review performance indicators – areas of development, improvement and growth
- Monitor and review the progress on a regular basis.
How can/have you measure performance on a project?
With the use of KPI. On a recent project, one of my clients key performance indicators were time. By regularly reviewing the project programme and ensuring the contractor was on schedule, I was able to measure how well the project was meeting the KPI’s
What is the purpose of a business plan?
A business plan is a document usually provided to lenders and investors. It sets out the reasoning and evidence to obtain funding. The plan should highlight the reasons for set up as well as provide an outline of goals and objectives as well as assess the value of the business idea.
What is Porters 5 forces?
A tool to analyse the attractiveness and profitability of a business. The forces include:
1) Competitive Rivalry (amount of competition)
2) Supplier power (how easy it is for supply cost to increase)
3) Buyer power (how easy it is for buyers to drive your prices down)
4) Threat Substitution (likelihood of customers finding a different way of doing what you do)
5) Threat of new entry (the ability for others to enter the market)
How does a feasibility study differ to a business plan?
A feasibility study will carried out before starting a business to determine the viability of it.
A business plan will then detail how it operates and done on the basis that the feasibility study was positive.
What is the difference between a Sole Trader, Partnership, Limited, and a LLP?
Sole Trader - A person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses (unlimited liability).
Traditional Partnership - A business organisation in which two or more individuals manage and operate the business. Both owners are equally liable for the debts from the business
Limited Company - The shareholders’ liability is limited to the capital they originally invested. If such company becomes insolvent, the shareholders personal assets remain protected. Shares in a private limited company are not offered to the general public (distinguishing it from a public limited company - plc.)
Limited Liability Partnership (LLP) - A LLP is a partnership in which one partner is not responsible or liable for another partner’s misconduct or negligence. Essentially self employed - they do not pay corporation tax.
How would you assess a contractors financial accounts?
Request a copy of the contractors company accounts for the last 3 years which would include the Profit & Loss Statement, Balance Sheet and Cash Flow Statement. I would then be able to assess:
• If the contractor had been profitable in the last few years.
• Calculate their liquidity ratio by looking at their assets vs their liabilities to see if they would be able to cover losses under a contract and stay solvent.
• I would always caveat any advice given to a client on a contractors financial position and recommend that further advice is sought through financial reports and a qualified accountant.
How could you check a companies financial standings pre tender ?
A credit check, check companies house, news articles and a google search.
What do you look for when analysing consultant fee proposals?
- Total fee and how it was calculated.
- Level of resources; seniority, experience and allocation;
- Fee drawdown;
- Agreement of client Terms and Conditions;
- Agreement of client payment terms / period;
- Agreement of scope of services;
- Exclusions;
- Assumptions e.g. programme.
What would you need to set up as a company ?
- public liability.
- PI cover
- buildings insurance.
- employer liability cover.
- locum agreement
- register with RICS for regulation
- register with companies house
- contents insurance.
- business interruption insurance
- suitable policies
What might be included in a SWOT analysis?
SWOT analysis is analysing Strengths, Weaknesses, Opportunities and Threats. It may review competitors, gaps in the market, new technologies, assets and liabilities.
How often might you update a business plan?
Business plans should be reviewed and possibly updated at least once a year, especially for younger companies
What are the different types of business plans?
Start up plan – how the business will operate long term
Annual Growth Plan – financial, marketing and operations
Scenario Plan – for companies in rapidly changing industry
Do you know what is included in your employer’s business plan?
2030 Strategy
* Meet quarterly / yearly financial targets
* Team growth and WIP growth
* Work area targets, e.g. offices in city centre
Give me some examples of some new business areas you could considering moving into.
- Moisture mapping
- Drones
- Cladding replacement
- Fire door inspections
Explain how you manage your own time to ensure you deliver projects in a cost-effective manner.
I set out my in house programmes and align with my diary and shared calendar. I logically assess inspection locations and delegate to individuals who live nearer.
What current challenges is Covid and/or Brexit bringing to Business Planning?
Brexit has caused a shortage of staff and materials. It has changed the prices of material and resources causing prices to increase. This has also caused issues with working from home, companies becoming insolvent and closing down.
What goes in a long term strategy?
A description of the strategy, identification of stakeholders, SWOT/PESTELE/SMART, potential marketing strategies, resources, KPI’s, regular review.
How can/have you measure performance on a project?
With the use of KPI. On a recent project, one of my clients performance indicators were time. By regularly reviewing the project programme and ensuring the contractor was on schedule, I was able to measure how well the project was meeting the KPI’s
What is your understanding of a succession plan?
The procedures in place to replace senior members of the team/company.
What is a mission statement?
Formal summary of the aims and values of a company
What is a fee forecast?
Allows the future financial position to be assessed and ensures records are maintained for potential fees.
What is a LLP?
A limited liability partnership. This requires 2 or more members. Each member pays tax on their share of profits and is liable for their responsibilities within the partnership.
What is a limited company?
General form of incorporation that limits the liability undertaken by shareholders. The liability of a company’s members is limited to their stake in the company.
What is a sole trader?
A Self employed person running their own business as an individual. There is no separate legal identity to the owner. The sole trader is liable for the business’s debt.
What is the difference between LLP and Ltd?
Partnership must have a minimum of 2 partners, a Ltd company can be non-profit/charity whereas LLP is always profit making. Ltd pays Corp tax and LLP doesn’t as they are classed as self employed.
What is a SMART Goal ?
To make sure your goals are clear and reachable, each one should be:
- Specific (simple, sensible, significant).
- Measurable (meaningful, motivating).
- Achievable (agreed, attainable).
- Relevant (reasonable, realistic and resourced, results-based).
- Time bound (time-based, time limited, time/cost limited, timely, time-sensitive).
What are the different types of business set ups ?
- Sole Trader
- Partnership
- Limited company
- Limited liability company
Where would you find details of a company’s assets?
Business assets are itemised and valued on the balance sheet, which can be found in the company’s annual report.
They are listed at historical cost, rather than market value, and appear on the balance sheet as items of ownership.
What is a business plan ?
A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals.
What would the contents of a business plan be ?
A full guide to the business plan contents including the standard business plan format for these 10 basic elements:
- Executive summary
- Company description
- Market analysis
- Competition analysis
- Description of organisation structure
- Breakdown of services offered
- Marketing plan strategy
- Funding requests
- Financial records
- Appendix
What affect has Covid 19 had on your business planning ?
High contractor demand, material delays, labour shortages etc
What new business could you move into as an opportunity ?
- Digital scanning
- Drones
- Party wall
What is contained in an appointment document?
- Clarification of work scope
- Agreed fee bid (aligned to work scope)
- Terms of Business
- Contact Details
- Detail of CHP
- Date
- Unique identifier
- Fee basis
- Inclusions
- Exclusions
What are the three levels of business management?
- Corporate Level
- Management Level
- Operational Level
Why would you create a business plan?
- To help achieve funding
- Set business objectives
- Create a business direction
What is a Mission Statement?
A formal summary of the company aims and values.
What is a Key Performance Indicator?
A measurable value to determine the success of project/venture.
Why is Market Analysis important?
Increase sales through identifying areas of strength, and aligning these with opportunities.
What is PESTELE analysis ?
Marketing framework or tool used by marketers to analyse and monitor the external marketing factors that have an impact on an organisation. Resulting information then used to identify threats and weakness used in a SWOT analysis.
- P- Political
- E- Economic
- S- Social
- T- Technological
- E- Environmental
- L- Legal
- E- Ethical
Can you give me some example of the Political Factors from PESTELE analysis ?
Examples include : * Government policy * Political stability or instability * Foreign trade policy * Tax policy * Labour law * Environmental law * Trade restrictions
Can you give me some example of Economic Factors from PESTELE analysis ?
Examples include : * Economic growth * Interest rates * Exchange rates * Inflation, * Disposable income of consumer
Can you give me some example of Social Factors from PESTELE analysis ?
Examples include : * Population growth * Age distribution * Health consciousness * Career attitude
Can you give me some example of Technological Factors from PESTELE analysis ?
Examples include :
* New ways of producing goods and services
* New ways of distributing goods and services
* New ways of communicating with target markets
Can you give me some example of Environmental Factors from PESTELE analysis ?
Examples include : * Availability of raw materials * Pollution targets * Doing business as an ethical and sustainable company * Carbon footprint targets
Can you give me some example of Legal Factors from PESTELE analysis ?
Examples include : * Health and Safety * Equal opportunities * Advertising standards * Consumer rights and laws * Product labelling and product safety
Can you give me some example of Ethical Factors from PESTELE analysis ?
Examples include : * Fair trade, * Modern Slavery acts * Child labour * Corporate social responsibility
What is a circular economy ?
A circular economy is “a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible”.
What are the contents of a business plan ?
- Overview
- executive summary
- general company description
- opportunity
- industry and market
- strategy
- team
- marketing plan
- operational plan
- financial plan
- appendix
What is your companies short and long term goals?
Short term is to recover and move on form COVID affects.
Long term to continue to serve out existing a new clients, considerations of future market spaces.
How did you generate the fee? what other methods could you use?
- Hourly charge
- % of project value
- Fixed fee
How would this feedback have been dealt with if the feedback was negative?
- Discuss initially with the client
- Consider in reflection what could be done differently
- Implement these into future project and share with the team as lessons learnt
How do you protect your client when you are advising them, but they don’t know what they want?
Discuss their requirements with them if there is a brief this may require some development. For example, they may request a building survey of a premises they are about to take a new lease on and after discussing with them, a Schedule of Condition may be more beneficial as this can be appended to the lease and limit a dilapidations claim at determination. Their objectives and goals will need to be reviewed so the right service agreement is prepared.
How do you protect yourself?
- Ensure that all correspondence is documented, phone calls, emails and messages.
- Ensure there is a service agreement in place which is clear, transpiration and understood by myself and the client.
- I will need to ensure I am competent to do the work and have suitable PII cover.
- Agree any limitations for the survey, agree timescales, a break down of the fee so its clear (fee proposal) and reference my firm operates a complaint handling procedure.
What do you do to help you business remain solvent ?
- Forecasting
- Reviewing profit margins
- Marketing
- Ensuring repeat custom
- Working within my competence.
What could you do to help evaluate the business ?
- SWOT Analysis
- PESTELE Analysis
- Cash flow forecasting
- Credit Check
- Pipeline review
What is a business plan and when would you use it ?
A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals. It is used when seeking funding or expansion.
What is the contents of a business plan ?
- The overview
- Executive summary
- General company description
- SWOT
- PESTELE
- Industry and market
- Strategy
- The team
- Marketing plan
- Operational plan
- Financial plan
What is solvency ?
The possession of assets in excess of liabilities; ability to pay one’s debts.
When would you use a business plan ?
Seeking funding or expansive to justify and explain the case for this.
Why might you use a SWOT Analysis?
Within a business plan
What is the purpose of a business plan?
The 3 most important purposes of a business plan are :
- To create an effective strategy for growth
- To determine your future financial needs
- To attract investors and lenders
How often might you update a business plan?
Dependent on market conditions, growth and the direction of the business. An example could be every 12 months.
Briefly explain the cost recovery fee model.
Cost recovery is a method of accounting in which a business only records the revenue it earns from a transaction at the time that the client has paid enough of the invoice that the business has recouped all its costs on the transaction.
What is the current RICS Business Plan
Building Towards a New Future 21/22
How does a company ensure it is profitable?
*Resource tracker / WIP
*Compare to target profitability
*Timesheets
*Business development strategies
*Yearly reviews
How does a business plan help a business be profitable?
- Demonstrates the need for funding to secure it
- SWOT Analysis for opportunities/threats that may have a financial impact - e.g. prepare for threats or grow existing service offering
What is the 6 day rule?
Day 1 = Assessment
Day 5 = Successful
Day 6 = Set Up Own Firm
What might help determine what company you set up as?
- The market
- Your arrangements e.g. who you’re setting up with
What was the Bichard Review
Comissioned following the Levitt Review to review the review of the RICS’ purpose, governance and strategy
What is an example of a KPI in your business?
- Profitability against time and expenses
What were some of the recommendations of the Bichard Review?
- Global strategy of incorporating regional boards
- Commercial activity be separated from other activities at RICS
- Give younger members a stronger voice (elect them onto GC)
- D&I panel to report into RICS Board
- Reaffirm commitment to work for the public interest
- Improve its technology, including it as a strategy and in business plans
What was the Levitt Review?
Investigate articles in the press that alleged that RICS ‘tried to supress a critical internal report into its finances in 2018/2019 and then unfairly dealt with those who sought to explore the issue’. The report found it was not supression but more a power-struggle.
- sound governance principles were not followed by RICS; CE and COO operating with little scrutiny
- The non-Executive Board members’ concerns were legitimate, and would have failed the RICS if they had backed down. They were wrongly dismissed - legal fees reimbursed
How do you calculate fees?
- Scope
- Expenses
- Experience of surveyor
- Length of time required on site
- Length of time required to prepare reports
- Any management/appointment of sub-consultants
What is a Dunn and Bradstreet Report?
Helps assess business credit. How company’s payment behavior affects its contractual obligations and future health.
What goes in an Appointment Document?
- Fee
- Scope
- Experience Level of Surveyor
- Inclusions/Exclusions
- Date
- Names & Addresses of Parties
What are your firms T&Cs
What are the different types of organisational structure?
- Flat/Linear
- Hierarchical
Both can have departments
What were some recommendations from the Levitt Review?
- Wide-ranging external review of purpose, governance and strategy, led by an independent reviewer, such as a retired senior civil servant
- Greater oversight for Governing Council, which should be provided with the Minutes of all Boards and committees
- More frequent meetings of the Management Board
- Management Board should be recognised as having responsibility for all operational matters
- Financial bonuses at senior executive level should be reviewed if appropriate
- The whistle-blowing procedures overhauled - senior management complaints straight to third party
What would a SWOT analysis on your company reveal?
S - independent global reach
W - Reliance on government contracts
O - Private sector, RLB Digital
T - impact to government spend
What are the principles of ISO9001?
Leadership. …
Involvement of People. …
Process Approach. …
Continual Improvement. …
How does Kaizen work?
Kaizen generally means continuous improvement. It challenges the top down approach and is a circular approach to identifying a problem, proposing a solution, implementing the solution, reanalysing and repeat.
