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1.

1
Business Planning: Business planning is the process of
constructing a formal statement of a set of business goals, the
reasons they are believed attainable, and the plan for reaching
those goals. It should also contain background information about the
organization or team attempting to reach those goals.
Crimson: CHCs Business Plan is based on excellence in very specific
market segments it serves throughout Asia Pacific and primarily
Australia. Our Business Plan details every aspect of our business on
its website: www. EducationClub.com.au

Strategic Planning: Strategic planning is an organization's process


of defining its strategy, or direction, and making decisions on
allocating its resources to pursue this strategy. In order to determine
the direction of the organization, it is necessary to understand its
current position and the possible avenues through which it can
pursue a particular course of action. Generally, strategic planning
deals with at least one of three key questions:

1. "Where do we wish to go?"


2. "How do we intend to get there?"
3. "How do we improve to excel as we proceed?"
Crimson: CHCs mission is to be the best hospitality and MICE
provider in all the segments of market it targets. Their mission is to
serve limited segments but serve them well. Their strategies are
lined up with this very mission. Market penetration, Process
Efficiency, Staff Training and Education are all such strategies in
CHCs portfolio.
Operational Planning: Operational planning is the process of
linking strategic goals and objectives to tactical goals and
objectives. It describes milestones, conditions for success and
explains how, or what portion of, a strategic plan will be put into
operation during a given operational period, in the case of
commercial application, a fiscal year or another given budgetary
term.

Develop and Implement a Business Plan Assignment

An operational plan is the basis for, and justification of an annual


operating budget request. Therefore, a five-year strategic plan
would typically require five operational plans funded by five
operating budgets.

1.2
CHCs mission, vision and goals all have to face in the same
direction. All these must collaborate and coordinate with others to
attain the final vision of the company. Crimson defines the following
as:
Mission
Our mission is to deliver genuine and trustworthy hospitality by
making a difference in the lives of the people we touch every day,
including our associates, guests and owners.
Vision
Our vision is to be the most preferred brand in each customer
segment that we serve for our associates, guests and owners.
Values
We aim to foster a common purpose and culture within the Crimson
family through shared core values of mutual respect, intellectual
honesty and integrity, humility, fun, creativity and innovation.
My decision to opt for the Italian Restaurant is perfectly aligned with
the above three. The new establishment is going to be the uptown
venue to see and to be seen. It will be a place through which we will
fulfill our mission to deliver nothing but excellent service. This also
helps us build stronger community ties, goodwill and market value.
All three are critical ingredients to our attainment of our vision. And
finally, whatever we do, our values guide us. Thus, I see the
restaurant as an outstanding opportunity to establish in the market
as a premium fine dining venue.

1.3
A key priority for the CHCs project development is to build
employee and stakeholder confidence. We are committed to
achieving this by ensuring our initiatives are recurring and
consulting regularly with stakeholders and our employees.

Develop and Implement a Business Plan Assignment

The initiatives include:

Ongoing identification of our key internal and external


stakeholders
Continued development of a stakeholder mapping so all areas
can identify and categorise stakeholders and communicate
with them effectively
Consulting with key stakeholder groups in relation to our
overall approach and performance
Application of government and international good practice to
the operational and managerial environment
Review the scope and performance of our current formal
structures
Develop systems to monitor and measure the effectiveness of
our stakeholder engagement.

Focusing on the high-power/high-interest stakeholders first and the


low-interest/low-power stakeholders last, we will devise a practical
plan that communicates with people as effectively as possible and
that communicates the right amount of information in a way that
neither under nor over-communicates.
Think through what we need to do to keep our best supporters
engaged and on-board. We will have to work out how to win over or
neutralize the opposition of skeptics. Where we need the active
support of people who are not currently interested in what we are
doing, we will have to think about how we can engage them and
raise their level of interest.
Also, we will consider how what we are doing will affect our
stakeholders. Where appropriate, we will let people know as early as
possible of any difficult issues that may arise, and discuss with them
how we can minimize or manage any impact.

1.4
It is important that sufficient and convincing homework is done
before a heavy investment is made creating a product, which is
bound to fail in the market. One of the most important tasks in
evaluating the economic viability of a niche market is determining
the size of the market. If the market is too small, there will not be
enough sales available to cover start-up, capital, and operating
costs. Conversely, if the market potential looks quite large, it is not

Develop and Implement a Business Plan Assignment

a niche market and direct competition in the form of commodity


markets will likely prevail, unless a competitive edge that others
cannot replicate can be created.
The population of the total trade area is now estimated to be
462,000, which is a 4.6% increase over the same time period.
Looking forward, Claritas projects the population of the total trade
area to increase further to 642,000 million (0.98%) while that of
the secondary trade area is expected to become 540,000 million
(1.69%) by the year 2015.
The median effective buying income (EBI) or disposable income
after federal taxes in the Sector 10 Metropolitan Area is currently
estimated to be $43,800. Throughout the entire metropolitan area it
is estimated that 20.4% of the 1.925 million households have an
effective buying income under $35,000 annually while 42.0% of
households have yearly EBI in excess of $50,000.
Income levels, whether on a per capita, or per household basis,
indicate the economic level of the residents of the trade area.
Median household income, when combined with the number of
households, is a major determinant of an area's retail sales
potential. According to Claritas, the total trade area of The Sector
10 has an estimated household income of $70,025, which is more
than that of the region as a whole. Focusing on the smaller primary
trade area, the current estimated household income is $74,742,
reflective of the high incomes in neighboring areas such as
GigaMetro and MegaMetro.
2011 Estimated Sales
Potential

20 Km Radius

40 Km Radius

Total Area

551,039

1,476,825

2,027,864

Times: % earning over


$35,000

72.6%

68.2%

69.4%

Equals: Potential Visits

400,054

1,007,195

1,407,249

Times: Ratio of Interested


Holds

50.0%

25.0%

32.1%

Equals: Net Potential Visits

200,027

251,799

451,826

1.5

0.75

1.08

300,040

188,849

488,889

$100

$100

$100

$30,004,073

$18,884,900

$48,888,973

Households

Times: Average Visits per


Year
Equals: Net Yearly Visits
Times: Average Spending
Allowance
Equals: Sales Potential

Develop and Implement a Business Plan Assignment

Market Research Results:


LUNCH

195 lunches per day (on average), 12 months per year


Typical lunches per year (in full year) is 70,200
$10.50 per person average

DINNER

195 dinners per day (June, July, August)


130 dinners per day (remainder of year)
Typical dinners per year (in full year) is 52,650
$20.00 per person average

Based on the current prices in the restaurant market, Delizioso has


the potential of high net worth by year four and that is based on
very conservative estimates and under-inflated projections. With
good management, a tremendous revenue growth is expected. The
equity for each investor will be based on his or her investment.

1.5
Vision should not be a stand-alone item. It works in conjunction with
the other parts of the business plan. The forward step is to form a
goal-vision connection to introduce goals into the planning model. It
is common to treat vision and goals as separate units without a
relationship. This goal-vision disconnect is frequently found in
planning. A team develops a vision and somewhere later in the
agenda the team develops a set of goals.
To effectively convert vision into daily objectives and goals, the
management has to bear full responsibility and the team should
believe in managements vision. There are several ways in which we
will be able to set performance targets in our new restaurant and
also manage and monitor employee performance.
We have over past few years specialized in defining KPIs for our
employees and contractors. KPIs will be developed by senior
members of the management in appropriate consultation with
stakeholders. Stakeholders are involved at different levels within the
company and thus, different functions and processes require
Develop and Implement a Business Plan Assignment

different KPIs in consultation with relevant stakeholders. Some of


the KPIs would include:
1.
2.
3.
4.
5.

Project to be completed by Nov 15, 2013.


Restaurant to establish a Weekly Base of at least 250 guests.
Revenues should progress at an increment of 3.5% per annum
Salaries and Wages must not exceed 18% of the total revenue.
Our wastage should be less that 2.5% over a period of 6
months.

1.6
Our start-up costs are mostly expensed equipment, furniture,
painting, reconstruction, rent, start-up labor, liquor license, six
months operating cash, and legal and consulting costs associated
with opening the restaurant. These are the start-up requirements to
the best of our knowledge and experience in the industry. Our
bidding conference fixes prices with typed bids and solidifies costs.
A number of items are self-explanatory.
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$315,431
$63,878
$379,309

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$23,878
$40,000
$0
$40,000
$63,878

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$0
$0
$0
$0

Capital

Planned Investment
Owner Equity
Investor
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital

Develop and Implement a Business Plan Assignment

$30,009
$349,300
$0
$379,309
($315,431)
$63,878

Total Capital and Liabilities


Total Funding

$63,878
$379,309

1.7
CHC will need to file for a Restaurant Licence in order to legally
operate a liquor selling premises anywhere within the country. A
restaurant licence authorises the consumption of liquor and the sale
of liquor for consumption on the premises at any time with or
ancillary to a genuine meal. The Liquor Licensing Act 1997 defines
a meal as a genuine meal eaten while seated at a table.
A restaurant licence also authorises the following:
Supply of liquor without a meal
A condition that allows the sale of liquor for consumptoion by a
patron seated at a table or attending a function where food is
provided. This condition allows a person to consume liquor while not
consuming a meal.
BYO with meals
A person may bring liquor onto the licensed premises with the
consent of the licensee to consume with or ancillary to a meal
provided by the licensee on the licensed premises. The person can
then take the unconsumed portion of that liquor from the premises
when they leave.
Trading Hours
A restaurant licence allows the licensee to trade at any time,
provided the sale and consumption of liquor occurs with or ancillary
to a meal.
However, in some cases trading hours may be restricted by a
condition on the licence. Trading hours are usually subject to local
council consents so it is advisable to check with our local council.
Other Authorisations

Develop and Implement a Business Plan Assignment

An applicant for a restaurant licence or an existing licence holder


may apply to the Liquor and Gambling Commissioner for any of the
consents listed below:
1.

Extended Trading Authorisation (ETA)


If a licensee wishes to trade (without a meal) between
midnight and 5 am Monday to Saturday, or between 8 am or
11 am or 8 pm and midnight on a Sunday, or between
midnight and 2 am on Christmas Day, the licensee may apply
for an Extended Trading Authorisation. This authorisation can
not operate on Good Friday, the day after Good Friday or the
day after Christmas Day.

2.

Entertainment Consent
If a licensee intends to provide entertainment on the licensed
premises, the licensee must apply for an Entertainment
Consent. An Entertainment Consent will only be granted for a
restaurant licence provided the licensee can show that
entertainment is ancillary to the primary business, being the
supply of meals.

3.

Extension of Trading Area


If a licensee intends to trade in an area adjacent to the
licensed prmises, then a Extension of Trading Area
authorisation is required for example drinking and/or dining on
the footpath adjacent to the premises.

1.8
Vision
To be the best name in hospitality in Asia Pacific
Mission
To create an environment where ladies and gentlemen can serve
ladies and gentlemen for their ordinary to discerning needs

Values

Do the Right thing


Show We Care

Develop and Implement a Business Plan Assignment

Celebrate the Difference


Work Better Together
Aim Higher

Keys to Success

Quality
Presentation
Service
Knowledge

Strengths

Weaknesses

Threats

Strong Management Team


Experienced Staff
Trustworthy suppliers

Poor communication with


some keyholders
Seasonal Cycle demands a
dynamic system

Opportunities

Marketing Fails
Poor Customer Service
consistently.
Consumer expects more
than that can be offered.

Untouched market of new


booming singles and
couples are nearby.

Implementation

Step 1: Identify key business processes and functions


Step 2: Identify what business stands for and what business is
meant to be
Step 3: Record all this information into a single report
Step 4: Such gathering of facts and figures supported by
assumptions and figures is a Business Plan
Step 5: Once written, it is implemented through daily
procedures, timed controls and direct management
involvement.

PESTEL Factors
Political

Government
policies

Educational

Local economy
Taxation

Social

Demographics
Media views of

Develop and Implement a Business Plan Assignment

Technological

Emerging
technologies

Econo

Env
reg

Government
term and
change
Trading policies
Funding, grants
and initiatives
Lobbying and
pressure groups
Wars, terrorism
and conflicts
Elections and
political trends
Internal political
issues
Inter-country
relationships
Local
commissioning
processes
Corruption
Bureaucracy

Inflation
Interest
Economy
trends
Seasonality
issues
Industry
growth
Import/export
ratios
International
trade
International
exchange
rates

the industry
Work ethic
Brand,
company,
technology
image
Lifestyle
trends
Cultural
Taboos
Consumer
attitudes and
opinions
Consumer
buying
patterns
Ethical issues
Consumer role
models
Major events
and influences
Buying access
and trends
Advertising
and publicity

Develop and Implement a Business Plan Assignment

Maturity of
technology
Technology
legislation
Research and
Innovation
Information
and
communicatio
ns
Competitor
technology
development
Intellectual
property
issues

10

Eco
reg
Red
carb
foot
Sus
Imp
adv
wea

2.1
It is crucially important to stakeholders that organizations are well
led and know what they want to be famous for. At its core is having
strong organizational vision and direction, and having the
confidence to make decisions to follow this through. It is quite
undoubted that those organizations that rate best among their
stakeholders are those with the greatest clarity of purpose
stakeholders want to know what an organization is doing to add
value to them.
Based on the same thought principle we at CHC have sworn in to be
proactive in our approach to keep our stakeholders informed and
satisfied. Just as with customer satisfaction, stakeholder perceptions
while influenced by communications have to be built on a solid
base. An organization that is clear about its objectives and
successfully meets them will be recognized as such by stakeholders.
Communication and stakeholder involvement are not always easy
since there may be a wide variety of organizations, people,
perspectives, and concerns involved. Be ready to assume the
responsibilities as well as the benefits that come with increased
involvement:

Have a clear understanding of objectives


Design a reasonable timeline
Be prepared to pay for the best assistance, including an
independent, third-party facilitator
Be prepared to work together towards open communication
with stakeholders
Envision and work toward mutually beneficial outcomes
Accept that in some circumstances even the best
communication process will fail to achieve consensus.

Below is a list of variety of tools that can be used for communicating


with stakeholders, internally and externally:

Corporate & Site Reports


Surveys
Sustainable Development Agreements
Website
Presentations
Voluntary Agreements

Develop and Implement a Business Plan Assignment

Pamphlets/Brochures/Newsletter
Personal Contact
Displays/Posters
Site Visits/Open Days
Advertising
Press Releases
Public Meetings
Letters
Stakeholder Interviews
Announcement Signs on Site
Focus Groups
Community Responsible Plan
Briefings
Incident Report
Immediate Response Statement
Response Case Study/Working Paper
Media Interviews
Education and Training Materials
Surveys

2.2
Human resource required to carry out the business will be allocated
through our resources plan. Our resources plan should include
documentation of what has to be marshaled to support our
operational and organizational plans. One purpose of a taking a
systemic look at resources is to glean every edge we can develop to
make our business plan fully operational. The company-level
resources plan is developed in conjunction with the other parts of
the business plan during the planning conference. A few resources
that our plan must address are:

Staffing levels
Information requirements
Facilities
Technology
Dollars
Time
Relationships with Business Partners and other companies
Market Image
Leadership

Develop and Implement a Business Plan Assignment

Some of these elements are hard-core mechanical things the


resource planner must consider. Others may be new to the planner
and are sometimes overlooked as resources.
How many people will it take to carry out our operational plan? How
many are required to achieve our strategic plan? These are two
basic, critical questions to ask when considering the personnel
required to support our business plan. It is called staffing levels
because it considers how many bodies are required to fill out our
organizational structure. The people who work for CHC are one of
our most important resources. They, not our product, will be the key
to our organization in the future.
Any city, town or region has many potential sources of skilled labour.
Apprenticeships and traineeships are the most obvious means of
developing skilled staff. Traditionally, most apprentices come
straight from school so a good first step is to establish contact with
schools and career advisers.
Another untapped source of labour is under-employment people.
Frequently these are people who would like to work more hours. As
an employer, we need to offer part-time or casual work
opportunities so that these people can fit more than one job into
their schedule.

2.3
At CHC we have developed a new approach to addressing our
Performance Management needs. The following process outlines six
key steps in the cycle and how we must focus on the system itself if
we want better results from our employees:
Evaluate our current performance appraisal process. Look at
what type of feedback we are providing to our employees.
Determine if there is anything we need to change or add to the
evaluation itself. We may decide to build on what we already have
or to develop a new system altogether.
Identify organizational goals. Performance management
systems help rally staff members around our organization's goals
because they help staff know how they are to be involved in
reaching that goal. Take the time to clarify what our goals are for the
next year as a company.
Develop and Implement a Business Plan Assignment

Identify processes or procedures that could be simplified or


done more effectively.
Declare our sales goals for the next year or new products we
would like to develop.
Share our hope for better communication between
departments and staff members.

Set performance expectations. As we sit down with each


employee, clearly lay out our expectations for them.

Acknowledge what they are already doing well. Use this to


encourage them.
Share some weaknesses that we have observed in them and
in their work habits, and how overcoming those would help
their performance in the company.
Identify specific things we would like them to accomplish over
the next year, or whatever time frame works best for we.
Prioritize these so the staff member knows which is most
important and make sure to give them a deadline for each
task.

Monitor and develop their performance throughout the year.


As employees begin to work on their performance, keep an eye on
how they are doing. If they appear to be struggling to meet
performance expectations, talk with them and see if we can offer
any support or coaching.
Evaluate their performance. At each performance review, let the
employee know how they are doing. It is often helpful to assign a
numeric value on a scale, rating the employee from "not meeting
expectations" to "meets expectations" to "exceed expectations."

Provide feedback on their performance. Be as specific as


possible, noting key examples of when they demonstrated a
certain quality.
Talk about the consequences or rewards of their performance.
Let them know if they are on probation, are getting a raise in
pay, changes in vacation days, or any other relevant action.
Discuss any problems they may be having. Listen to their
concerns or worries as we talk through potential solutions.

Set new performance expectations for the next year. Some

Develop and Implement a Business Plan Assignment

items may be the same. However, since these are also based on
organizational goals, we will need to re-examine our goals for the
upcoming year.
There are four key steps in a performance measurement framework
the strategic objectives of the organization are converted into
desired standards of performance, metrics are developed to
compare the desired performance with the actual achieved
standards, gaps are identified, and improvement actions initiated.
These steps are continuously implemented and reviewed:

Establish Measurement Metrics

Understand Performance Levels

Initiate Improvement

Develop and Implement a Business Plan Assignment

Implement and Review

Establish Key Goals

2.4
Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$46,455

Assumptions:
Average Percent Variable Cost

33%

Estimated Monthly Fixed Cost

$31,125

Profit and Loss Statement

Profit and Loss


Sales
Direct Cost of Sales
Other
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses
Payroll
Sales and Marketing and Other
Expenses
Depreciation
Leased equipment
Professional fees accounting
Professional fees legal
Licenses and permits
Office Supplies
Postage
Utilities
Insurance
Rent
Payroll Taxes
Other
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense

Year 1

Year 2

Year 3

$943,882
$311,481
$0
$311,481
$632,401
67.00%

$1,085,465
$358,203
$0
$358,203
$727,262
67.00%

$1,248,285
$411,934
$0
$411,934
$836,351
67.00%

$236,592

$301,512

$307,512

$55,897

$75,564

$85,291

$0
$2,004
$2,004
$2,004
$996
$2,004
$996
$20,004
$15,000
$36,000
$0
$0
$373,501
$258,900
$258,900
$13,139

$0
$2,004
$2,400
$2,400
$1,152
$3,200
$2,300
$21,996
$18,000
$36,000
$0
$0
$466,528
$260,734
$260,734
$11,532

$0
$2,004
$3,000
$3,000
$1,320
$4,800
$3,300
$22,992
$21,600
$36,000
$0
$0
$490,819
$345,532
$345,532
$9,747

Develop and Implement a Business Plan Assignment

Taxes Incurred
Net Profit
Net Profit/Sales

$84,637
$161,123
17.07%

$87,220
$161,981
14.92%

$116,125
$219,659
17.60%

Balance Sheet
Assets
Current Assets
Cash
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Year 1

Year 2

Year 3

$222,186
$0
$222,186

$367,268
$0
$367,268

$540,938
$0
$540,938

$0
$0
$0
$222,186
Year 1

$0
$0
$0
$367,268
Year 2

$0
$0
$0
$540,938
Year 3

$21,213
$0
$0
$21,213
$177,050
$198,263
$185,000
($322,200)
$161,123
$23,923
$222,186
$23,923

$51,121
$0
$0
$51,121
$152,443
$203,564
$185,000
($183,277)
$161,981
$163,704
$367,268
$163,704

$59,270
$0
$0
$59,270
$126,055
$185,325
$185,000
($49,046)
$219,659
$355,613
$540,938
$355,613

2.5
To produce high quality products in an increasingly competitive
marketplace, the ability to efficiently discover, track, and correct
incidents or failures found during product development, testing,
and operations is crucial.
A failure reporting, analysis and corrective action system (FRACAS)
is a system, sometimes carried out using software, that provides a
process for reporting, classifying, analyzing failures, and planning
corrective actions in response to those failures. It is typically used
in a business environment to collect data, record and analyze
system failures.

Develop and Implement a Business Plan Assignment

A FRACAS, or Failure Reporting, Analysis, and Corrective Action


System, is a closed loop system used to improve the reliability of a
product, service, process, or software application. The closed loop
in a FRACAS refers to the systematic manner in which every issue
that is reported is addressed, ensuring that no failure or incident is
missed. The need for a FRACAS spans all industries and
classifications, including hardware, software, process management,
and services in both government and commercial sectors. Softwarebased FRACAS processes offer the added benefit of built-in
analytical capabilities, allowing organizations to track key system
metrics that include Failure Rate, MTBF, MTTR, Availability, Cost,
and user-defined calculations, among many others. Built-in
reporting and graphing features mean these metrics to can be
trended with regards to time, severity, and many other factors. In
addition, the effectiveness of the FRACAS itself can be monitored by
tracking the overall improvement of the system as a result of the
FRACAS.

Record the Failures or Incidents: Using a database


management system and an established procedure, critical
data associated with each failure or incident is recorded, and
the process is initiated
Analyze the Reported Failures or Incidents: Using the
same database management system into which the failure or
incident data was entered, established procedures are used
to determine and record the root cause of the failure or
incident
Identify Necessary Corrective Action: Using the same
database management system to track its development,
implementation, and result, a corrective action plan must be
developed and implemented to reduce or eliminate the
reoccurrence of the failure or incident
Review and Verify the Corrective Action: The
effectiveness of the corrective action must be reviewed and
recorded, using the same database management system, and
the incident closed out per established procedures

No one attempts a business anticipating


sometimes ventures do not fulfill their promise.

failure,

however

We at CHC are committed to our concept and its viability. In the


event that our venture cannot achieve profitability and retire the
encumbrances; we will first attempt to sell the operation and use

Develop and Implement a Business Plan Assignment

the proceeds to clear all outstanding balances. If we are unable to


sell the operation for sufficient proceeds we will forced to default
whereby the NAB loan will be in senior standing. Any further
outstanding balances will be borne by the investors on a weighted
percentage basis of the total amounts due in bankruptcy
proceedings.

3.1
The question is simple: Did the company hit the plan it established?
If yes, the organizational performance is acceptable. If the answer is
no, then excuses are not acceptable. If a company fails, then the
president must be responsible and should answer to the board of
directors for his or her failure to provide appropriate leadership and
managership of the organization and its plan. It is that simple.
Managers are held accountable for their teams using the same
command responsibility concept. The vice president is held
accountable for making the sales figures or the research and
development vice president is responsible and accountable for
bringing new products in on schedule. Vice presidents answer to the
president in the same fashion as the president answers to the board
of directorsno excuses. Their appropriate bosses likewise hold
other team leaders such as plant managers accountable.
We know from research that clear objectives with effective
measures can improve performance by over 30%. So that we can
have effective measures we need to monitor performance against
the objectives. The key to effective monitoring performance is to
identify a range of methods so we can then choose the method
thats easiest to apply and most effective. Lets begin with the easy
part monitoring performance against quantifiable objectives.

Monitor staff
objectives

performance

against

Methods:

Develop and Implement a Business Plan Assignment

quantifiable

Sales reports
Deadlines met
Error reports
Accuracy reports
Documents
Proposals
Plans
Budget forecasts
Widgets produced

These tend to be the monitoring methods many managers are


comfortable with because theyre about what the staff member
does. Its not too difficult to see if the staff member is submitting
accurate work or achieving a sales target and these are great
monitoring methods for the quantity, quality and time elements of
the job
Where difficulties arise is when these are the only monitoring
methods a manager uses because most jobs arent just about the
what, theyre also about how the staff member does their job.
Such as how the staff member:

Works as a team member


Works with customers
Deals with problems
Deals with change and so on

In summary, the staff members behaviours


When managers only monitor the what of the job they only monitor
staff performance for part of the job (and sometimes a relatively
small part). If managers only monitor staff performance for part of
the job then, usually, that is the only part that the staff member will
feel its worth focusing on (no surprise there then!) What managers
need to do is

Monitor staff
objectives

performance

against

behavioural

Here are three ways to monitor behaviours

Observation:

Observation is about the manager taking a

planned approach to watching their staff member in action.

Develop and Implement a Business Plan Assignment

The idea is that the manager plans to observe the specific


behaviours that they have described as performance
objectives. For example, if the manager has agreed that one
of the performance objectives for team work is contributing to
team meetings then those are the specific behaviours they
will plan to observe. Its about the manager:

Report

Looking at the performance objectives they have


agreed that relate to behavioural elements of the
job and then
Planning how they will observe those behaviours
e.g. Paying particular attention to the staff
members behaviour in the next team meeting
back: Report back is about the staff member

reporting back to the manager on their performance. This is a


really useful technique where the staff member is responsible
for evidencing their performance against the objectives the
manager has agreed with them A good example would be if
the manager had an agreed a performance objective for
effective time management which included takes action to
manage interruptions. Then the staff member would simply
report back to the manager with some examples of when they
had taken action to manage interruptions

Feedback:

Feedback is about the manager getting feedback

from people on the staff members performance. This could be


from:

Customers
Suppliers
Team members
Other departments

Its important that managers only look for feedback:


a) As agreed between the manager and the staff member and
b) Described in the performance objectives
For example, an objective related to Client Servicing is Client
feedback reflects a high level of satisfaction . This is the feedback
the manager and / or the staff member would focus on collecting

Develop and Implement a Business Plan Assignment

How
to
Monitor
Staff
Objectives A Key Principle

Performance

against

The wider the range of methods the manager uses, the more
effective the monitoring will be because using a range of methods
means they will gain a more balanced view of the staff members
performance
This means managers can then give their staff the type of
performance feedback that staff tell us they want more of, because
they find it constructive and motivational, and which improves
performance
And of course we know what gets measured gets done and its
impossible to measure without monitoring!

3.2
An effective performance measurement system helps to drive an
organization towards the achievement of its strategic goals and is
the basis for management decision making. Key areas of focus
(Strategic Success Factors) are defined to identify areas where a
company must be ahead of its competitors to achieve competitive
advantage and Key Performance Indicators measure the
achievement of strategy implementation.
A strategy should be cascaded down an organisation to measure its
achievement at both enterprise-wide and business unit levels and to
define a decision-making framework and to motivate management
and employees.
Among the most frequently encountered issues in corporate
performance measurement at CHC is:

Finance-dominated approach, focused on budget variance

Develop and Implement a Business Plan Assignment

analysis
Lack of support for business decision making
Lagging result measures. Historical view of the business
Lack of clarity and consistency in management reporting
procedures, responsibilities, data sources, number and
contents of reports
Inaccurate and untimely management reporting
Excessive manual efforts in the reporting process that create
an administrative burden.
Performance measurement not linked to strategic goals
Insufficient control over corporate strategy execution.

KPIs are critical metrics that measure actual performance against


predefined goals and objectives. There are typically two types of key
performance indicators. The first measures real-time performance or
predicts future results. These are helpful in ensuring that critical
objectives aren't missed. The second type of KPI measures results of
past activity. These indicators are like a report card to see how we
did in a particular area.
Crafting sound KPIs is more of an art than a science. Although there
are guidelines for creating effective KPIs (see sidebar), they do not
guarantee success. A KPI team may spend months collecting
requirements, standardizing definitions and rules, prioritizing KPIs
and soliciting feedback in short, following all the rules for solid KPI
development but still fail. In fact, the danger is that KPI teams will
shoot for perfection and fall prey to analysis paralysis. In reality, KPI
teams can only get 80 percent of the way to an effective set of KPIs;
the last 20 percent comes from deploying the KPIs, seeing how they
impact behavior and performance, and then adjusting them
accordingly.
Metrics used in performance dashboards are typically called key
performance indicators because they measure how well the
organization or individual performs against predefined goals and
targets. There are two major types of KPIs: leading and lagging
indicators. Leading indicators measure activities that have a
significant effect on future performance, whereas lagging indicators,
such as most financial KPIs, measure the output of past activity.
Leading indicators are powerful measures to include in a
performance dashboard but are sometimes difficult to define. They
measure key drivers of business value and are harbingers of future

Develop and Implement a Business Plan Assignment

outcomes. To do this, leading indicators either measure activity in its


current state (i.e., number of sales meetings today) or in a future
state (i.e., number of sales meetings scheduled for the next two
weeks), the latter being more powerful because it gives individuals
and their managers more time to influence the outcome.
At CHC KPIs must adhere to the new 10-point rule in order to be a
valid KPI. A valid KPI should:
1. Reflect Strategic Value Drivers
2. Defined by Executives
3. Cascade throughout an Organization
4. Be based on Corporate Standards
5. Be based on Valid Data
6. Be Easy to Comprehend
7. Always Relevant
8. Provide Context
9. Empower Users
10.
Lead to Positive Action

3.3
Establishing effective performance management systems can have
significant benefits for our business, as it can lead to happier, more
motivated and better performing employees. Reviewing, refining
and implementing performance management systems are ways of
helping achieve these significant benefits.
Underperformance or poor performance can be exhibited in the following
ways:

Unsatisfactory work performance, that is, a failure to perform the


duties of the position or to perform them to the standard required
Non-compliance with workplace policies, rules or procedures
Unacceptable behaviour in the workplace
Disruptive or negative behaviour that impacts on co-workers.

Underperformance is not the same as misconduct. Misconduct is


very serious behaviour such as theft or assault which may warrant
instant dismissal. In cases of misconduct employers should seek
specific advice about how to proceed before taking any action.
There are many reasons why an employee may perform poorly. Some of

Develop and Implement a Business Plan Assignment

the common reasons include:

An employee doesnt know what is expected because goals


and/or standards or workplace policies and consequences are not
clear (or have not been set)
Interpersonal differences
There is a mismatch between an employees capabilities and the
job they are required to undertake, or the employee does not
have the knowledge or skills to do the job expected of them
An employee does not know whether they are doing a good job
because there is no counselling or feedback on their performance
Lack of personal motivation, low morale in the workplace and/or
poor work environment
Personal issues such as family stress, physical and/or mental
health problems or problems with drugs or alcohol
Cultural misunderstandings
Workplace bullying.

Underperformance should be dealt with promptly and appropriately


by an employer, as employees are often unaware they are not
performing well and so are unlikely to change their performance.
Best practice employers understand that issues that are not
addressed promptly also have the potential to become more serious
over time. This can have a negative effect on the business as a
whole as it can affect the productivity and performance of the
entire workplace.
A clear system for managing underperformance is good for both a
business and its employees.
Best practice employers are aware that ineffective performance
management can dramatically reduce the level of performance in a
workplace. Employees that perform well can lose motivation if they have
to carry the burden of poor performing colleagues. Also, most employees
who are not performing well would like to improve.
Negative attitudes to performance management, or a lack of credibility
with the process, can be an indication of an inadequate performance
management system. A consistent approach to performance management
provides opportunities to address problems and generate effective
solutions. A successful performance management process is one that
supports the workplace culture and is accepted and valued by employees.
Here is an easy
underperformance.

to

follow

step

by

Develop and Implement a Business Plan Assignment

step

guide

to

managing

Step 1 Identify the problem


It is important to understand the key drivers of performance or
underperformance within the workforce.
It is also important to correctly and specifically identify the problem. Some
common reasons for underperformance are identified later in this guide.
Step 2 Assess and analyse the problem
We should determine:

How serious the problem is


How long the problem has existed, and
How wide the gap is between what is expected and what is being
delivered.

Once the problem has been identified and assessed, we should organise a
meeting with the employee to discuss the problem.
We should let the employee know the purpose of the meeting in advance
so they can adequately prepare for the meeting.
The employee should be allowed to bring a support person of their choice
or a union representative to the meeting. Employers working at best
practice will inform the employee that they can bring a support person as
a matter of process.
Step 3 Meet with the employee to discuss the problem
It is important that the meeting takes place in private and in an
environment that is comfortable and non-threatening, away from
distractions and interruptions.
We should begin by holding a discussion with the employee to explain the
problem in specific terms. From this conversation, the employee should
be able to clearly understand:

What the problem is


Why it is a problem
How it impacts on the workplace, and
Why there is a concern.

We should discuss the outcomes they wish to achieve from the meeting.
The meeting should be an open discussion and the employee should have
an opportunity to have their point of view heard and duly considered. We
should listen to the explanation of why the problem has occurred or to any
other comments the employee makes.

Develop and Implement a Business Plan Assignment

When having this type of meeting, it may be useful in facilitating


discussion to refer to recent positive things that the employee has done to
show them that we also recognise and appreciate their strengths.
Key points for employers to remember when holding the meeting are to:

Talk about the issue and not the person


Explore the reasons why there is an issue
Clarify details
Stay relaxed and encouraging, and
Summarise to check our understanding of the situation.

And, when discussing shortfalls in any area, it is important to check that


the employee:

Is aware that it is a task that is required of them


Has been shown what is required, and
Understands the gap between what is happening and what is
required.

Step 4 Jointly devise a solution


Where possible, it is important that a solution is jointly devised with the
employee. An employee who has contributed to the solution will be more
likely to accept and act on it.
When working out a solution, we should:

Explore ideas by asking open questions


Emphasise common ground
Keep the discussion on track
Focus on positive possibilities, and
Offer assistance, such as further training, mentoring, flexible
work practices or redefining roles and expectations.

A clear plan of action should be developed with the employee to


implement the solution. This can be in the form of a performance
agreement or action plan. A performance agreement or action plan can:

Reflect an understanding of performance expectations and what


is to be achieved over the specified time period (performance
improvement milestones)
Clarify roles and responsibilities of the employee
Include strategies for training and career development
Include timeframes for improvement (these may vary depending
on the issue and needs of the business, however it is important
to give an employee adequate time to improve their
performance)

Develop and Implement a Business Plan Assignment

Reinforce the value and worth of the role being performed.

A date should be set for another meeting with the employee to review
progress and discuss the employees performance against the agreed
action plan.
We should keep a written record of all discussions relating to
underperformance in case further action is required. Generally, it may also
be used as evidence if legal action is taken about the matter.
Step 5 Monitor performance
We should monitor the employees performance and continue to provide
feedback and encouragement.
A meeting to review and discuss the employees performance should be
held even if there is no longer an issue. This enables both parties to
acknowledge that the issue has been resolved. We should provide both
positive and negative feedback to the employee and should work with the
employee to ensure that performance improvements are sustained.
More serious action may need to be taken if the employees performance
does not improve including further counselling, issuing formal warnings
and ultimately if the issue cannot be resolved, termination
of employment.
Termination of Employment
If an employees performance does not improve to an acceptable
standard, termination of their employment may be an option.
Employers cannot dismiss their employees in circumstances that are
harsh, unjust or unreasonable. What is harsh, unjust or unreasonable
will depend on the circumstances of each case. However, it is important to
be fair to employees particularly when it comes to termination of
employment. They should be given reasons for dismissal and an
opportunity to respond to those reasons.
Importantly, employers with fewer than 15 employees (based on a simple
headcount) will be covered by special dismissal arrangements, which are
different to those that apply to larger businesses. The special
arrangements that apply to employers with fewer than 15 employees are:

Employees will need to have worked for the business for 12 months
in order to be eligible to make a claim for unfair dismissal, and
If a small business employer strictly follows the small business

Develop and Implement a Business Plan Assignment

fair dismissal code and the dismissal of their employee is not


harsh, unjust or unreasonable, then the dismissal will be
deemed to be fair. It is best practice to follow the code and fill
out the small business fair dismissal code checklist at the time
an employee is dismissed and we should keep the checklist
with our records as it will assist us if an employee makes an
unfair dismissal claim.

3.4
By moving beyond basic employee evaluation, job assessment and
performance management we can strategically improve employee
engagement, development and more. CHC has developed this fivestep process that can significantly help us improve our performance
management strategies.
1. Provide employees the opportunity to assess themselves. At
the same time a manager or supervisor completes a
performance appraisal, give the employee an evaluation form
and have them complete a copy as well. While you may think
that an employee will gloss over his own weaknesses, the
opposite is more often the case. People are typically harder
and more critical of themselves than others are. Getting their
input on their own performance can open up lines of
communication and allow the manager to more easily discuss
the differences in opinion and perception between the two
assessments.
2. Gather information from a variety of sources. Rather than
getting feedback and input only from the employees direct
supervisor, ask those who interact with the employee to
evaluate his performance as well. This might include
customers or clients, coworkers, other departmental and
executive level managers, team members, or anyone else who
regularly communicates or collaborates with the employee
and can provide information on his strengths and weaknesses.
3. Help employees to understand how their performance ties into
the companys overall vision. By letting an employee see the
big picture, reminding her often of the companys mission
statement, and clarifying how her contribution helps to fulfill
the goals and strategies of the business, you give an
employee a sense of purpose in her work. That makes it much

Develop and Implement a Business Plan Assignment

more likely she will perform her job as well as she can.
4. Provide continuing opportunities for employee development
and advancement. Using the performance evaluation as a
door to open discussion about the employees advancement
and training needs allows you to determine areas that need
improvement and help the employee work toward increasing
his skill and knowledge. Online training courses that
specifically address the recognized deficiencies can get the
employee back on track and moving toward increased
efficiency and effectiveness.
5. Employee evaluations offer a strategic means for rewarding
employee performance. Ensuring that employee performance
evaluations are directly linked to compensation and employee
rewards provides a fair system for monitoring pay raises and
company bonuses. Such a system can help motivate
employees to perform well, knowing that their future income
depends on it.
Effective performance management can be dramatically improved
by implementing these simple strategies and communicating their
importance to every employee prior to annual evaluations.

Develop and Implement a Business Plan Assignment

4.1
Benchmarking
Benchmarking is a systematic process of searching for and
encouraging the introduction of best practice. The three main forms
of benchmarking are:
(1)Results benchmarking (comparing performance within and
between organisations using performance indicators of
effectiveness and efficiency);
(2)Process benchmarking (analysing systems, activities and tasks
that turn inputs and outputs into outcomes); and
(3)Setting best practice standards (establishing goals and
standards to which organisations can aspire).
Benchmarking typically involves a number of steps. Whatever the
chosen approach or focus, the steps usually include:

Deciding why, when, and what to benchmark


Analysing plans and performance (reviewing objectives and
identifying performance indicators and own performance)
Establishing benchmarking partners
Obtaining performance data and analysing differences in
performance
Identifying best practice and the most useful improvements
Implementing improvements in practice
Assessing improvements and re-benchmarking

4.2
You have four basic approaches to preparing your business plan:
(1)Prepare it yourself the old fashioned way. This means
scouring websites and reading books to learn how to prepare a
business plan.
(2)Prepare it yourself using business plan software. Most
software packages cost less than $100. They guide you

Develop and Implement a Business Plan Assignment

through the process by asking you a series of questions about


your business.
(3)Hire an inexpensive business plan consultant to write
the plan for you. Caveat emptor. You get what you pay for.
(4)Hire an excellent business plan consultant to write the
plan for you. If you do your homework, you get what you pay
for.
The advantages and disadvantages of each of these methods are as
follows:
ADVANTAGES
Do it yourself

DISADVANTAGES

It costs relatively little


(the price of a few
books).

Very expensive in
terms of your time,
especially if you do
not have a strong
business and
financial background
(you can count on
300-500 hours in
most cases).

Many free outlines can


be found on the web.

Mistakes can be very


costly, especially if
you are seeking
equity funding (you
only get one shot
with most investors).

It can be a great way to If you're not a good


think through the many writer, you'll have to
issues facing a young
find a good editor.
venture.

Develop and Implement a Business Plan Assignment

COMMENTS
This is probably
most appropriate for
an Idea Business
Plan or an Operating
Business Plan that
will not be shown to
investors.

It will force you to learn


about subjects that fall
outside of your core
expertise, whether it is
finance, marketing,
sales, management,
product planning,
competitor analysis, or
whatever.
ADVANTAGES

If you're not adept


with accounting and
finance, creating a
financial forecast
that is free of errors
will be extremely
difficult.

DISADVANTAGES

COMMENTS

Most software
packages are not
very flexible.

This option may be


appropriate if you
plan to start a lowtech business like
a restaurant or a
store and are
seeking bank or
possibly even
angel funding.

The result looks


"cookie cutter."

However, you
should be very
wary about using
this plan for VC or
corporate
investors, since a
poorly written
business plan will
blow the only
chance you have.

Do it yourself
WITH
software
Relatively inexpensive.

Some software comes


with sample business
plans for many
industries that you can
use as a starting point.

The rigid structure


makes sure that you
don't leave out
anything important.

You still have to


write all of the text
yourself, so if
you're not a good
writer, you'll have
to find a good
editor.

Develop and Implement a Business Plan Assignment

Still quite time


consuming,
although less so
than doing it
without software.

ADVANTAGES

DISADVANTAGES

Relatively inexpensive
(under $5,000, and
sometimes even under
$1,000).

Most mass produce


business plans using
business planning
software. They ask
you a series of
canned questions, fill
in the blanks in the
software, and send
you the results with
little or no valueadded consulting.
You are essentially
paying them to type
your responses into
the software for you.

Saves you time.

Many are part-timers


who have never
started a business
themselves.

Hire an
INEXPENSIVE
business plan
consultant

Develop and Implement a Business Plan Assignment

COMMENTS

Same comments as
above. If you are
lucky, you may find
one of the few
inexpensive
consultants who
produce reasonably
good results. But do
you really want to
rely on luck as a
strategy?

More often than not,


the business plan will
Quick turnaround times. require a complete
rewrite if you plan to
seek equity funding.

ADVANTAGES
Hire an
EXCELLENT
business plan
consultant

The best consultants


have written many
plans that have raised
capital, and they
understand what
investors want to see

You can save literally


hundreds of hours. This
is time you can spend
building your business:
team, product,
intellectual property,
customer base,
distribution channels,
etc.

DISADVANTAGES

COMMENTS

Fairly expensive
(usually well over
$10,000).

If you are
preparing an
Equity Funding
Plan and you have
never written a
funded plan
before, you should
give this option
serious
consideration.

It can be difficult to
distinguish between
the excellent and
the average
business plan
consultant (hint:
look at their track
records).

Develop and Implement a Business Plan Assignment

Even if you know


how to write a
plan, you should
be devoting your
time to building
your business.

They can generate


value-added ideas in all
areas, and can help
you position your
company for success.

They provide an
objective outside
perspective, and will
challenge your
assumptions.

They perform
independent market
and competitor
research.

Develop and Implement a Business Plan Assignment

The business plan


is often the only
basis a potential
investor has to
decide whether or
not to invite you to
their office for that
all-important first
meeting. If you
need medical
attention, you hire
a good doctor. If
you need a
contract, you hire
a good lawyer. If a
business plan is
critical to your
success, why
wouldn't you hire
the best consultant
you can find?