Developing a Business Plan

Perhaps (1) … most important step in launching your own business is planning. You need to develop (2) … written statement that explains what you are going to do. Your plan should describe (3) … basic idea for your business and set forth (4) … specific goals and objectives. This plan not only guides your efforts but also helps convince (5) … lenders and investors to finance your business.

(6) … business plan should highlight (7) … following information for (8) … investors.

1. Summary. (9) … crisp overview will help investors decide whether reading (10) whole plan is worthwhile. (11) … potential investors spent (12) … average of five minutes screening (13) … plan. If you don't grab their interest at (14) … beginning, your plan will probably disappear into the wastebasket. It should include:

● A brief description of your product and market;

● (15) … brief description of your company and its principles;

● (16) … summary of your financial projections and expected return on (17) … investment;

● (18) … amount of money you now seek, in what form, and for what purpose.

2. Company and industry.

3. Products.

4. Market.

5. Marketing strategy.

6. Design and development plans.

7. Operations plan.

8. Overall schedule.

9. Critical risks and problems.

Although the business plan has (19) … simple, straightforward purpose, it required (20) … great deal of thought.

20. Fill in each of the numbered blanks in the following passage with the words you find appropriate. Use only one word in each space.

John and Mary are in many ways typical of young entrepreneurs today. They have their ……….(1) business, a hamburger restaurant in a shopping centre …….…(2) the South of England. They already have a ……….(3) of over 40 people, because ……….(4) the restaurant is quite small, it has to ……….(5) open for long hours.

They bought the business a couple of years ……….(6) and spent the first few months working ……….(7) hard that they rarely saw any of ……….(8) friends. But once they had got ……….(9) to the way the restaurant worked, they did not ……….(10) to work such long hours and were ……….(11) to take more time ……….(12). Since then they ……….(13) improved efficiency by installing a new computer system.

The restaurant has been very successful, and …….…(14) the competition from another fast food restaurant nearby, the ……….(15) of customers ……….(16) increased steadily. As a ………. (17), they are planning to enlarge the restaurant ……….(18) buying the hairdressing salon ……….(19) door and turning it ……….(20) another seating area.

Speaking

Case Study: Applying for a Bank Loan

a) Mr Brown is talking to his bank manager. He would like to have a loan to start a small business.

Read the conversation and fill in the details required by the bank manager on the interview sheet.

Bank managerGood morning, Mr Brown. Do take a seat. How can I help you?

Mr BrownGood morning. Yes, you may be able to help me. You see, I'm thinking of starting a business of my own and I need some financial advice.

Bank managerI see. What sort of business are you thinking of going into?

Mr BrownWell, I suppose the best way of describing it is tourism. I'd like to organize European tours.

Bank managerMay I ask whether you have ever worked in this field before? I mean you're a teacher, aren't you?

Mr BrownYes, I am – a French teacher – and I've organized lots of trips abroad for children.

Bank managerYes, but have you really looked into the arguments for and against going into business on your own? Have you fully researched the field you're interested in? Have you done a market survey? Have you looked at the competition?

Mr BrownI must admit I haven't got that far yet. In fact, what I would really like to know from you is, would I be able to get a loan, just short term, to cover the start-up costs?

Bank managerWell, we would have to look very closely at the venture, get the key facts straight. We'd look at the type of company you intend setting up. Then we would need a breakdown of the start-up costs: premises, staff, advertising costs, etc. Then calculate your present assets and liabilities. Let's consider the last point first. What assets do you have which you could offer as security for the loan?

Mr BrownWell, there's my house; that

must be worth at least £200,000. Then I have some savings, around £50,000, and I have some shares. I would think my total assets would be about £350,000.

Bank managerShares, eh? And what can happen to share prices?

Mr BrownWell, yes, I have made some small losses occasionally but I've taken that into consideration.

Bank managerDo you actually own your own house or have you got a mortgage or some other sort of loan?

Mr BrownI have a very small mortgage.

There's only about £20,000 left to pay over the next eight years and I have no other liabilities.

Bank managerMmmm. What size loan do you have in mind?

Mr BrownI thought £400,000 would be enough to get the business off the ground.

Bank managerMay I ask how old you are?

Mr BrownForty-eight next November.

Interview Sheet

Name ________________________________________________

Age ________________________________________________

Type of enquiry Loan to start up a new business

Type of business ______________________________________

Present occupation_____________________________________

Preparation for business Yes No

Market survey□ □

Competition checked□ □

Breakdown of start-up costs□ □

Present assets Present liabilities

House £_______ Mortgage £______

Savings £_______

Shares £_______

Amount required for loan £_________

b) Discuss with your partners what the bank manager's decision will be in this case. Make reasoned assumptions, using functional words of 'probability' given below.

He'll definitely get the loan because…

He might get the loan because…

He probably won't get the loan

He definitely won't get the loan because…

Role play

Three different groups of inexperienced young business people require capital for their businesses. They all apply to the local branch of Megabank.

The roles are:

1. A junior manager (and assistants) at the bank, responsible for new local small businesses.

2. A group of young people who want to open a small specialist shop selling CDs of black music – jazz, soul, funk, reggae, rap, and some latest trends.

3. A group of young people who want to buy an existing take-away pizza business (the lease on the premises, the kitchens, the delivery scooters, and so on),

4. A group of students who already operate a part-time computing consultancy service, advising small businesses on what hardware and software to buy and how to set up an Internet home page. They need money to buy more computers, on which to try out elaborate new software.

Choose the roles, study further details given in the role cards below, discuss your questions or arguments in groups and act out an interview with the bankers, following the pattern of the conversation in 1.

Role 1

Your bank recently launched a big advertising campaign announcing that it was the friend of small businesses, with the result that everyone with half an idea is coming to you and asking for money. Your superiors expect you to pick out good local investment opportunities. On the one hand, you have previously lent money to young people who lost it all within six months. You want facts and figures – about costs, sales projections, profit margins, repayment periods, existing competitors, the possibility of new competitors entering the market, and the long-term prospects for the market.

_______________________________________________________________

Role 2

You are fans of black music; you think you know what the market wants; you think the market is big enough to make a small shop profitable; you think the existing competition is weak – inadequate selection of music, wrong ambience, etc. Remember that you will probably be talking to someone who knows nothing at all about the kind of music you are interested in. He/she wants numbers. You have to convince him/her that your business will be successful – that is will have, and keep enough customers to make a profit. You have to pay three months' rent in advance for the small shop. You have to buy display racks and lots of CD players and headphones. Your suppliers (record companies, exporters, distributors) expect to be paid within 60 days.

Role 3

Members of the group have been working in the business – answering the telephone, making pizzas and delivering them – for over two years. You know that the business is profitable. The owner wants to leave quickly and is keen to sell to you. You have enough money to pay the rent and the normal bills, but the equipment will cost $40,000. Not only do you have experience in the take-away pizza business, but as business students you know all about accounting, promotions, etc.

Role 4

You are what other people call 'computer nerds'. You know everything about computers. You have spent several hours a day in front of a computer screen since you were nine years old. You have been advising small local businesses for two years and earning good money, but you would like to buy better hardware for yourself. $40,000 would be perfect.

__________________________________________________________________

3. Which definition of the word ‘entrepreneur’ do you find the most comprehensive? Explain your choice.

a. Someone who uses money to start businesses and make business deals.

b. A person who is willing and able to convert a new idea or invention into a successful innovation.

b.A person who attempts to make a profit by starting their own company or by operating alone in the business world, esp. when it involves taking risks.

c. A person who shifts economic resources out of an area of lower and into an area of higher productivity and yield.

d. A person who takes the risks necessary to organize and manage a business and receives the financial profits and nonmonetary rewards.

4.Comment on the following quotation:

"Business is a game, the greatest game in the world if you know how to play it." (Thomas J. Watson Sr.).

5. Give arguments to prove the need for more governmental support of small businesses in the Republic of Belarus.

6. Get ready to discuss the topic "Keys to Success in Business", use the following outline:

- Are entrepreneurs born or can entrepreneurial skills be acquired?

- What are the major personal traits that a person must possess to be a successful entrepreneur?

- What knowledge and skills are necessary for a successful entrepreneur?

7. Find detailed information about a business success story and present it to your group mates; make an emphasis on the reasons of success.

Writing

1. You just nabbed a plum job (заполучить теплое местечко) joining a team of consultants writing an advice column, "Dear Dr. Decisive," for the local newspaper. Yesterday you received your first letter.

Dear Dr. Decisive,

Yesterday, my boyfriend and I got into a high-spirited discussion about lucky people in business. I say that most successful businesspeople are just plain lucky. They've been in the right place at the right time. He says that these successful people have worked hard preparing themselves for the time when they will be in the right place at the right time. OK, I think we're saying the same thing. He says there is an important difference. Now he won't call me unless I admit I'm wrong (which I'm not) or until you say I'm right. I'm right, right?

Call me "Lucky."

Write a response to "Lucky."

2. Write an essay of 250 words about the role of small business in your own country, support your judgements with statistics.

3. Imagine that you are thinking of starting a business of your own. Give a short description of this business in a paragraph of about 70-100 words.

KEY VOCABULARY

U N I T VI

E M P L O Y M E N T

Lead-in

1. What education do people need to work?

2. What do people get out of their work?

3. What attitudes to work could be?

4. When do people feel happy in the job?

5. Why is it important for employees to be motivated?

6. In what kinds of firm would you like to work?

Reading

Text 1

Read the text and explain the meaning of the words and in bold type. Be ready to answer the questions given below.

Why Work?

Why do people work? Is it just for money? Or because they are genuinely interested in what they do? Or because they would be bored if they did nothing? Or because they like working with other people? Or because they take pride in doing something better than other people? All these questions are importantfor business. If people did not work, the business world and the wholeeconomy would collapse overnight. So business must try to understand why people work and provide the right motivation, such as money or interest to make them work more keenly and efficiently.

One of the main reasons for working is money. How many people would work if they did not get paid? Basically people work to get enough money to satisfy their basic needs for food, water, shelter, clothes and warmth. Even when those needs have been met, money still remains a strong motivation, as it buys the luxuries that most people cannot afford - a country mansion, a Rolls Royce, a diamond necklace.

Money is rarely the only motivation! People want more out of work than that. Some people, but not all, would prefer to do any kind of job rather than sit idly at home. They would miss the company of their workmates. The sense of affiliation, of having friends, of belonging to a group, is a strong motivation for all kinds of working people. Businesses can use this personal need to motivate the work force by: providing company uniforms or overalls, organizing company entertainments and sports events providing free company trips for employees - and sometimes their wives or husbands too, producing a company newsletter or magazine, forming working groups in the factory, so that the members feel part of a team.

A sense of security is another basic humanneed for most people. Until recently, many businesses in both the private and the public sectors provide jobs for life. Employees knew for certain that there was very little possibility of their losing their job and that annual increases in their salary were guaranteed. When they retired, the company provided them a pension.

That kind of security has gone, even in the civil service. The greatest security most people can now obtain is having a job while millions of others do not. Even so, businesses can still increase their employees' sense of security to a certain extent by providing good pension schemes, providing sick-pay schemes and private healthcare, giving priority to promoting company employees when job vacancies occur, making sure that the work force knows of any changes in company policy or working conditions.

Another strong motivation for people is a sense of self-importance. Everyone likes to feel important, but these people want to feel much more important than others. Money in the form of large salaries or big expense accounts is one way in which this need can be met and another is by offering fringe benefits, such as company cars ranging up to Rolls-Royces and other luxury extras.

Some people can become almost entirely dependent on company approval. To gain more and more approval they become workaholics, unable to stop themselves working and perhaps putting in 16 hours or more a day.

Job satisfaction - a sense that your work is worth while, that you are doing something you really want to do and using all your skills and creativity - is just about the hardest thing to get from work. Low income and job satisfaction don't always go together. Many sports people, professional and self-employed persons get a large amount of job satisfaction and a much higher income.

Finally, there is a group of people who work outside the mainstream economy, on the borders of legality. The shade economy is growing fast, encouraged by the high rate of unemployment. Its total turnover is estimated at billions of pounds, all of it untaxed!

1. What is the main reason for working?

2. Explain how a sense of self- importance can motivate people at work.

3. Define job satisfaction. Give two examples of people who obtain it.

4. What do members of your family and other people you know obtain from work apart from money?

Text 2

Read the text and identify the problems discussed in it. Be ready to answer the questions given below.

Wages

Most manual workers receive wages calculated on an hourly basis, e.g. £5.50 an hour. Non-manual white-collar workers receive salaries, calculated for the whole year, e.g. £12,000 a year. Although there are still big differences between wages and salaries and the ways in which they are paid, there have been some major changes in the last few years.

• Although some manual workers are still paid in cash, since the U.K. 1986 Wages Act employers have the right to pay all new manual workers by cheque. (This was done to reduce wage robberies.)

• Wages used to be lower than salaries, but many manual workers now earn more than office workers. Some, with overtime, earn more than their salaried supervisors and a few earn more than some professional people.

• Unions used to be concerned mainly with negotiating wages. They now negotiate salaries for many white-collar workers too, e.g. bank workers or clerical staff.

A few firms have tried to get rid of the distinctions between manual and white-collar workers by paying annual salaries to both. However, most manual workers are still paid by the hour.

The national basic wage, or time rate, is agreed once a year in some industries by the employers and unions involved. The basic wage is decided mainly by the supply and demand for of labour. Generally, wages will be low if a job can be done by almost anyone and high if a job requires qualifications and training. Other factors, such as work conditions or health risks, are also taken into account. The strength of the union involved, the skills of its negotiators and the personality of its leader will also have a great influence on the agreed basic wage.

Workers can receive many extra payments on top of their basic pay. Some of these are negotiated nationally and some at the firm where they work. They include:

Overtime pay for work done outside normal working hours, such as at weekends or on holidays. Payment can vary from time and a quarter to double time. Increased supervision may be needed to prevent workers deliberately slowing down in working hours so that they can do more of the better-paid overtime.

Shift premium payments for working anti-social hours late at night or early in the morning.

Price rate, which pays workers a set rate for each article produced. This was popular in the past when more goods were produced individually. Some firms still use it, but it is more usual for home-workers. One drawback is that low-quality goods may be produced, so careful inspection is required.

Bonuses which are paid for producing beyond an agreed amount. A standard rate of production is fixed for each job by measuring the time taken to do it. A bonus is paid to a worker if more goods are produced in the stated time. Individual bonuses may be replaced by group or team bonuses, but this can cause resentment if there are slow-work­ing members of the team. Company bonus schemes are based on the total output of the whole factory, but the bonus is often too small to motivate individual workers.

Profit-sharing schemes set aside a proportion of a firm's profits for distribution among the work force. A reasonable percentage needs to be set aside to have any motivating effect on the workers.

Merit pay for constant good performance at work. This may cause resentment among other workers who think their work is just as good.

Employers must make certain deductions under PAYE from theiremployees' gross pay. Income tax and national insurance are statutory deduc­tions, which must be made by law. Other items, such as union fees, subscriptions or savings, are voluntary deductions. What is left after all deductions is the net pay, or take-home pay.

1. Which kinds of employee are usually paid wages?

2. What is the difference between gross pay and net pay?

3. Who sometimes settles the time rate for an industry?

4. What is the main drawback of piece rates? Where might they be used as a method of payment?

5. State three kinds of bonus scheme. What are some of the advantages and disadvantages?

6. Why can wages of newly employed manual workers be paid by cheque?

Text 3

Read the text. Put down the key words of each paragraph. Be ready to answer the questions given below.

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