MNS Insights is published by the Management Consulting division of MNS Holdings Inc. It deals with issues which we believe are currently important. We welcome your comments.

We would like to share with you the following two articles:

• What's the Big Fuss over Business Plans?
• Management Consultants? Myths versus Facts! Rrread on...

WHAT'S THE BIG FUSS OVER BUSINESS PLANS?

Entrepreneur (E): Hello, I'm here for a business loan
Banker (B): Sure, do you have a business plan?
E: No
B: Sorry, we need one
E: But, it's all in my head and I know exactly what I'm gonna do with the money!
B: Sorry, I still need a formal business plan
E: BBBut...
B: Sorryyyy...
E: What's with the business plan? RRRR
Spouse: Honey? Didn't I tell you that you needed a business plan?

No Business Plan? You're in trouble!
Business plans serve two key purposes; financing and direction. If you're cash rich, initially you don't have to worry about a plan. If you're cash poor and plan on seeking financing from financial institutions/venture capitalists, you better have one.

A Good Business Plan Should Specifically Include:
Executive summary. Business history. Product description and analysis. Management and personnel. Markets and marketing. Research and development (if applicable). Manufacturing process (if applicable). Financial information. Risk factors and rewards . Implementation plan (timetables).

Tips, Tips, Tips

• Generally, lenders don't read the whole plan
• Be professional, specific and straight to the point
• Sell your business to the lenders. Give them solid reasons to why they should grant you the loan, such as:
• You/your team have the business experience
• The business will be profitable in year 1 or 2. Make sure that this is reflected in the executive summary and financial projections. Lenders want to know how and when they'll get their money back (with interest)
• Do yourself and the lenders a favour by highlighting the Risk Factors. This adds credibility to your plan and demonstrates that you've identified the risks in advance and thought of how they can be overcome
• Most lenders never had their own business. So, if there is no chemistry between you and the lender, go see another one. You're going to be 'married' to that person until your loan is paid back!

Always, Always, Always negotiate the terms and conditions of your loan.
Shop around for a better deal. Go to a different institution.
Go to a different branch within the same institution.

A Business Plan Provides Direction
If you're cash rich and don't need to apply for a loan, you still need a business plan. It's amazing the number of people who spend days thinking and worrying about the future of their business, but lack the added discipline and focus of putting these plans down on paper.

This takes us to the second key purpose of business plans, i.e. direction. Think of a business plan as a compass that leads you to where you want to go. Without one, you could be easily lost. Especially, during these economic tough times we're in.

A business plan helps to communicate a positive management style to those who are involved in your business. It will help convince you, your management team and staff of the strength of your business goals and direction. Also, a business plan establishes a method of control or a benchmark against which you can monitor your business performance, allowing you to identify problems and resolve them quickly. Business performance is financially monitored through the use of annual budgets, broken down by month and quarter.

In conclusion, preparing a comprehensive business plan may be difficult and time-consuming, but it is an important part of running a successful business (of any size).

MANAGEMENT CONSULTANTS? MYTHS VERSUS FACTS!
RRREAD ON...

If all management consultants were the same, wouldn't choosing the right one be easy? Certainly! But it's not the case!

First, let's find out why a company or an individual hires a consultant? In brief, consultants are brought in (on a temporary basis) to advise on feasibility or on change that will benefit an organisation. Consequently, a good consultant convinces the client of the effectiveness of his/her recommendations and the desirability of implementing them.

Does this mean that the management of the company or the person seeking the assistance of a consultant is uninformed or doesn't know what he is doing? Not at all! The circumstances in which a consultant's advice is sought are varied.

Typically, consultants are approached to fulfil the following needs:

• An outsider's objectivity and confidentiality
• Specialised knowledge and skill not available within the organisation
• The organisation is in no position to handle the job internally due to day-to-day demands (too busy)
• The benefit of the consultant's experience in resolving similar problems elsewhere
• Temporary skilled assistance, pending recruitment of the appropriate staff
• Cost effectiveness to use outside consultants when specific needs arise rather than employ a specialist who may not be fully occupied over the long term.

Skeptic Views of Consultants
Recently, there has been some skepticism about the value of hiring consultants:

• Here it is 3 months after the consultants have left, and it's still not working
• Consultants give you only quick fixes to problems
• Wow! Consultants dream up new 'buzz words' such as restructuring, reengineering, empowerment just to sell you an old method of doing things, using a new term
• Consultants 'slash-and-burn people' in a company resulting in employees' self-worth taking a beating and confidence between worker and company seriously underscored
• Consultants are smart! They show you how to solve one problem and purposely ignore the other two problems. Why? To call them back again!
• Some of these consultants are young wonder boy graduates! How do you expect them to solve practical problems using theoretical solutions?

While some of these views are quite valid, it's the responsibility of the employer/person engaging the services of a consultant to 'beware' by doing their homework before a consulting firm comes on board.

Tips on Hiring the Right Consultant
A potential consultant must:

• Possess the required knowledge and experience (read their promotional material, resumes, ask for references...)
• Possess the right credentials (e.g. Certified Management Consultant, CMC)
• Be able to primarily generate ideas from within your organisation and masterfully combine them with the consultant's to reach the optimum recommendations
• Be able to clearly and more than adequately explain the value and method of introducing changes/solutions
• Provide more than one solution to a problem, and let the company's management make the decision
• Provide you with a detailed proposal outlining the work to be carried out, the method/approach to be followed, the deliverables, a timetable, the fees...
• Be willing to work on a contingency basis: 10-20%, payment of fees upon acceptance of proposal; 30-40%, upon delivery of draft report(s); remaining balance, upon completion of assignment and acceptance of recommendations by management.

Copyright 1996/97, MNS Holdings Inc.