Business Planning (Checked) Flashcards
What is Lendlease’s business plan?
- Global business with three core business units across each region
- Listed on Australian Stock Exchange
- Share price has dropped
- Simplify organisation structure and right size its cost base
- Exit international construction, accelerate release of capital from offshore developments, recycle 4.5 billion by completing transactions underway
What are Lendlease’s objectives?
‘Create places for people to work, live, connect and enjoy’
Financial:
- Simplify organisation structure and right size its cost base
- Improve share price
How is my team’s performance measured?
- Planning approvals
- Plot completions
How does Lendlease market itself over the short, medium and long term?
Social, economic, environmental
Short - medium: Creating homes, jobs and improving the environment
Long: Tackling UK housing crisis, creating growth in areas, leaving the environment better than how we found it
What is included in a business plan?
- Opportunities and risks
- Resources required to service clients
What is a SWOT analysis?
Strengths, weaknesses, opportunities, threats
- Anticipate different SWOTs which helps with strategic thinking
- Helps decision making
- Helps set realistic objectives
- Allocate resources
How can firm’s plan for future business activities and ensure they hit the required profit margin?
Fee forecasts
How can firm’s allocate resources and expenditure?
- Budgets
- Cash flows
- Financial / audit controls
How would you set up as a sole practitioner?
RICS requirements and Statutory requirements for starting a a firm
I would then put business plan together
What is a sole practitioner?
Individual who works independently without any partners
What is a partnership?
Partners share responsibility of the firm
What is an LLP?
Limited Liability Partnership - Partners have personal liability
What is a limited company?
Owned by shareholders, liability limited by shares, formally register on Companies House, shareholders don’t have personal liability
What is a PLC?
Public Limited Company - Shareholders own company, directors manage it, listed on stock exchange
How could a firm monitor its performance and what key management tools would be needed?
Financial - Revenue, profit margin, return on investment
Operational - Production output (number of flats delivered per annum)
Employee - Turnover rates
Customer - Customer retention rates, complaints
Quality - Defect rates, compliance with industry standards (construction - how many incidents)
What is the RICS motto?
There is measure in all things
Business plans can MEASURE performance
What is a strategic business plan?
Strategy devised to achieve overall goals set by a business - for the future rather than the present
What are the steps in a strategic business plan?
- Identify and approve framework, vision, long-term goals and objectives
- Position company in terms of marketing capabilities, technological advantages and available resources
- Sets foundation for tactical plan to achieve goals
What is another type of business plan?
Departmental Business Plan
- Review of periodic metrics
- Do metrics meet goals?
- Do annual goals need adjusting?
- What are the departmental needs to meet the goals?
- Individual staff metrics
What is an operational business plan?
Work planning stage
- Requirements for professional service
- Criteria (legislation / rules of Conduct)
- Resources (what do you need to undertake work)
- Acceptance by client
- Documented information (any deliverables to produce or retain)
Delivery phase
- Customer communication
- Determine requirements
- Change of requirements
- Review requirements
What is a corporate business plan?
- Vision statement
- Mission (how you will achieve business plan)
- Resources (and scope of works)
- Objectives (corporate objectives, need to be measurable)
- Strategies (how to reach objectives)
What is an organisational structure?
Functional structure (hierarchical):
- Managing Director
- Then Building Surveyors, QS, Architects
- Then Placement student, CAD technician
Divisional structure (each discipline is split by division):
- Managing Director
- Then Surveying division (with admin and finance, marketing)
- Alongside QS division (with admin and finance, marketing)
Matrix structure (each team reports into head of team and head of function):
- Managing Director
- Delivery Manager
- All delivery team report into Delivery Manager and Project Lead
Flatarchy (not flat, not hierarchical):
What is working capital?
A company’s ability to pay it’s working liabilities with its current working assets
What is a stock?
Also known as equity
Ownership of a fraction of an entity
Units of stock are called shares
What is a debtor?
Company / individual who owed money
If debt is from a financial institution, the debtor is called a borrower
If the debt is in the form of bonds, the debtor is called an issuer
Someone who files for bankruptcy is called a debtor
What are the two types of debt?
Loans
- Trade debtor - Someone who hasn’t paid you for your goods or services yet
Creditor
- Party that is owed money by another party
What are current ratios?
A type of financial benchmarking
Current ratio = Current Assets / Current Liabilities
If ratio is below 2:1 it is a cause for concern for a business to repay it’s debts
Nowadays businesses trade on a 1:1 ratio basis
What are quick ratios?
Measures liquidity quicker than the current ratio, because turning stock into cash takes times
Quick ratio = Current Assets less Stock / Current Liabilities
What is gross profit margin?
Gross profit as a percentage of turnover
Gross profit % = gross profit / turnover x 100
What is breaking even point?
Break even = Fixed expenses / gross margin
What is net profit margin?
Net profit % = Net profit / turnover x 100
If net profit is declining, look at which costs increased the most
What is return on capital employed? ROCE
Return on capital employed = Net profit / net assets x 100
What do you mean by short, medium and long term goals?
1 years
5 years
10 years
How often are your team meetings and what project milestones do you speak about?
Fortnightly
- Planning applications submitted / validated / consented
- Design updates like starting / ending a design stage
- Construction updates like topping out / PC
How often are your development team meetings and what business updates are given?
Monthly
- New business strategy (e.g. reduce head count, cash back into business, selling construction business)
- Role as Development Manager rather than Developer
- Options for projects with new strategy
What business operations have you undertaken outside your role that align with LL business strategy?
The Ministry for Housing, Communities and Local Government does consultations on planning issues and I have provided responses on behalf of Lendlease in relation to:
- Planning fees
- Brownfield development
What is a business plan?
- Formal statement of goals, why they are achievable, and the plan for reaching these goals
- Background info of team / firm
- Presented to funders / investors
What are general contents of a business plan?
- Exec Summary
- Business concept (Property Developer and Investor)
- Strategy and actions
- Case studies / products / competitive advantage
- Markets pursuing
- Management team and employees
- Competition
- Financial statements
- Financing needs
What are the key headings you would find in a business plan?
- Intro
- Short, medium, long term goals
- Financial performance targets
- Market analysis - opportunities and threats
- Business analysis - Strengths and weaknesses
What targets might you pursue in a business plan?
- Growth of fees / profit
- Growth into certain markets
- Building relationships with clients
How would you prepare a long term business strategy?
- Description of business
- Identify stakeholders and needs
- Analyse existing strategy is applicable
- SWOT
- PEST (political, economic, social, technological)
- SMART (specific, measurable, achievable, realistic, timebound)
- Marketing strategy
- Resources (labour / capital)
- Implement strategy
- Review KPIs and areas for improvement
- Monitor and review progress
What is an investment appraisal?
Techniques used to assess if a firm is a good investment.
- Payback (time it takes for capital investment inflows to equal initial cash outflows)
- Rate of Return (want a high one)
- DCF (converts future PV into PV, accounts for inflation)
- NPV (inflows minus outflows, used discounted cash flows to calculate NPV of a series of cashflows, measures delta in shareholder wealth over time)
What is the RICS business plan?
- Ensure it is trusted by their stakeholders and society
- Ensure the RICS qualifications are in demand
- Ensure the RICS is an influential thought leader
- Ensure members are involved and engaged
- Ensure it is a sustainable 21st century professional body
What is an outline business case?
- Early reporting of reasoning for initiating a project
- Entails project background, basic costs, risks, options
- Opportunity cost of doing nothing
- Case informs the business case
- Clients should always have more than one option
How / why do you need to assess different project options?
- Feasibility study
- Intro, brief, analysis, identify best option, cost analysis, appendices
What are current macroeconomic trends?
Inflation: 2.8 - 3%
Base Rate: 4.5 - 4.75%
What are current development and construction industry trends?
Development:
- Following NPPF 2024 update, more landowners are looking to bring sites forward in 2025
- House price growth expected to increase by 4% which is good if you are looking to sell
- High demand low supply set to continue and push rental prices up
- Build to Rent
- Life Sciences
Construction:
- Building costs increase by 17% over next 5 years
- Tender prices (cost to client) will increase by 15% over next 5 years
