Organizations are usually, in fact almost invariably, in the business of adding value to bought-in resources. These may be as trivial as stationery for correspondence, packaging for software, or as complex as the many ingredients needed to make a computer or a motor vehicle.
Your business plan needs to show how you have addressed these crucial issues, as in the first place you must demonstrate that you have thought through how to turn what is in effect at this stage a concept into a ‘concrete’ product or service that can be brought to market. You also need to show an awareness that value added is itself determined by the careful management of costs.
If you need specific machinery, the general rule is that you should buy as little as possible as inexpensively as possible, as there is one certain fact about a new venture – after a few weeks or months of trading it will resemble less and less the business you planned to start. That in turn means that your initial investment in equipment could be largely wasted when you find you need to re-equip. Look back to the section on ‘Outsourcing’ in Assignment 10, and consider whether there are any less risky or costly methods of getting your product ready for market.
For machinery and equipment you should use a trade magazine to search out suppliers. Alternatively Friday-Ad (www.friday-ad.co.uk), and Machinery Classified have second-hand machinery and tools of every description for sale.
If your business involves making or constructing products, then you should address the following issues in the business plan:
CASE STUDY
One Cranfield graduate enterprise programme had these examples of different types of operation:
Table 14.1 Example showing goods needed, their purpose and cost
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Plant/equipment |
Process (what does it do?) |
Maximum volume |
Cost |
Do you already own it? |
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There are a number of well-regarded quality standards that may help you monitor and control your quality. The BS/ISO 9000 series are perhaps the best-known standards. They can ensure that your operating procedure will deliver a consistent and acceptable standard of products or services. If you are supplying to large firms they may insist on your meeting one of these quality standards, or on ‘auditing’ your premises to satisfy themselves. The British Standards Institution (www.bsigroup.co.uk) can provide details of these standards.
A number of commercial organizations will provide user-friendly guide-lines and systems to help you reach the necessary standard. Searching the web using key words such as ‘quality standards’ (or ‘measurement’) will bring you some useful sites.
Your business plan should also explain what bought-in materials you require, who you will buy them from, and how much they will cost. Finding suppliers is not too difficult; finding good ones is less easy. Business-to-business directory, such as Kelly Search (www.kellysearch.co.uk), Kompass (www.kompass.co.uk) and Applegate (www.applegate.co.uk) between them have global databases of over 2.4 million industrial and commercial companies in 190 countries, listing over 230,000 product categories. You can search by category, country and brand name. You should check the supplier’s:
Keep stock cards so that you can identify fast- and slow-moving stock.
Aside from searching out suppliers through directories and word of mouth, consider one or more of the following strategies.
You can save using up your cash by bartering your products and services for those of other businesses. Organizations that can help you get started with bartering include Bartercard (website: www.bartercard.co.uk; tel: 01753 422962) and Barter Buddies (www.barterbuddies.co.uk).
There are over 200 price comparison websites covering computer hardware and software, phones, travel, credit cards, bank accounts, loans, utilities, electrical goods, office products including inkjet and printer supplies, and a few thousand more items a business might purchase. Paler.com, a quirky website run by Petru Paler (www.paler.com>UK Price Comparison Sites) has a directory listing these sites, with brief explanations and a helpful comment page where users have inserted more sites and additional information. There is a similar directory for international supplier comparison sites (www.paler.com>UK Price Comparison Sites>US/International).
You will need an ‘office’ to work from, but this should not be a costly affair at the outset. There are plenty of sources offering good-quality office furniture and equipment at a low cost. For new furniture supplied to most European countries and around the world, check out Amazon (www.amazon.co.uk>Home & Garden>Office) and IKEA (www.ikea.com/gb/en/>Home Office). For second-hand office furniture search Wantdontwant.com (www.wantdontwant.com), London Re-use Network (www.londonreuse.org/ for businesses) and Office Furniture Online, where between them you could fit out a basic office for less than £50. See also Assignment 17 for information on equipping for communications and your website.