Business Planning

Why You Need A Business Plan

As noted in a previous section the foundation required for the co-op is the members’ common understanding and vision for the co-op, how it will meet their common and individual goals and the co-op’s business viability. As with the feasibility study, the business plan is a great learning tool for the members to understand the key factors, on both the co-op and the business side, that will determine the co-op’s long-term success.

The business plan is the articulation of the common understanding of the members. It gives a complete picture of the co-op, its goals and organizational structure. The business plan is used both for internal and external purposes as it guides members, directors and management decisions and also shows interested outsiders – bankers, credit unions, community groups, individuals, government and other development agencies – who you are, what you hope to accomplish, and how. Bankers and credit union managers particularly need to see the business plan to determine if they will provide financing to the co-op because it helps them to assess the co-op’s ability to pay back its loans.

This handbook doesn’t give you detailed instructions for developing your business plan. There are many books and software programs readily available that can be of assistance. (See appendices) The following outline does provide you with a brief description of the key elements of a plan. In addition much of the research and analysis done during the feasibility analysis is used in writing the business plan.

Putting together your plan

1. Title page

  • Includes the date and your co-op’s name and address.

2. Table of contents

3. Co-op/Business concept

  • A clear description of your business and the co-op’s organization, its past history, the type of product or service it will market and where.

4. Market

  • What, where and how big is your target market?
  • Who is your competition? What share of the market do they have? How can you improve on their product or service? Why are people going to buy your product over the competition’s?

5. Marketing Strategy

  • What price will you charge? How will you advertise and promote your co-op (posters, a grand opening, the Internet, newspaper or radio ads)? What are your unique selling features (price, service, accessibility, etc.)? How will you get your product to market and ensure repeat customers?

6. Management and organization

  • Outline the co-op’s structure (responsibilities of members, board of directors and management), including how management duties will be carried out (by an appointed manager or shared among the members).
    Detail qualifications and experience of individual members of the management team.

7. Operations

  • Describe how the co-op will provide its product or service.
    Identify equipment, facilities, how the work will be organized and how long each task will take.
    Identify raw materials and supplies required, and also secured suppliers.

8. Financial data

  • Project your start-up costs and breakeven analysis.
  • Complete pro forma income statement and balance sheet for at least 3 years.
  • Produce a monthly cashflow for the first year. If it will be several years before the business has a positive cash flow (more cash coming into the business than being spent) then additional years on a monthly or a quarterly basis will be required.
  • Outline sources of financing and their uses.

9. Personal profile/résumé of individual members’ skills, experience and background.