Post by Trade facilitator on Jul 27, 2020 21:40:36 GMT 1
Introduction
Even the most carefully researched and prepared marketing plan will succeed only if resources are made available to carry it out.
These resources are of four types:
Material
Exportation requires that you have adequate access to commodities and adequate capacity to fulfil orders. At THE THY CONSULTING LTD., we have sometimes experienced disappointment by certain suppliers because of shortage of materials, which of course, might have been unforeseeable that a shortage would occur after an order has been accepted. Still, you must do everything possible to find alternative sources of supply in case the unforeseen actually happens. In business, it is always worthwhile to have what we call 'contingency plans' - an alternative course of action if something goes wrong. Supplies must be guaranteed for the product you are offering and also the packaging.
Human
Invariably, the greatest weakness of small export businesses throughout the world is their management capacity. This is because most producers are not business people by tradition or inclination. Though they understand the product and its production method, they have less experience of the rest of the marketing process: promotion, distribution and even pricing. They struggle to find a market because they do not know how best to price, promote and place their product. It is certainly true to say that much of the exportation made is not yielding real market worth, because plans are not tightly matched with productivity.
It is unlikely that a single person can deal adequately with every aspect of the complex activities involved in managing an export business. Exporters who adopt a business approach to the whole sales process, while at the same time pursuing the welfare of his workers in order to achieve overall success, are the exception. There are suppliers whose business plans are excellent, but whose customer service is poor. Others are the opposite, and although they offer an excellent service, we are aware of difficulties in their relationships with the buyers.
Exporters must be competent and committed and also have the time to undertake the set tasks. Otherwise, the tasks will not be done. Human beings like to organise themselves, rather than be organised. And if as a manager you want to commit an employee to a task, it is a much better approach to discuss it with the employee than to issue an order that it be done. The employee must feel a personal commitment in order to undertake the task dynamically, otherwise it will probably be done to a lower standard. Training is also essential. People need not only motivation to perform business tasks competently, but training. A training plan should be part of the activities of every business. For example, does the person who will be responsible for contacting customers overseas know the procedures for export?
THE THY CONSULTING LTD experiences with our trainees have shown that people tend to invest so much money in production, rather than in management training. Many feel professional training is unnecessary, whereas, a business which seeks to increase its sales must ensure that there is constant effort to upgrade skills, or perhaps introduce new techniques or technology. Export sales require training related to the standards necessary in the new markets. Exporters are strongly advised to regularly attend trainings and seminars on export and related trades.
Physical
This means the equipment, workshop space or storage capacity that a business might need in order to grow. At THE THY CONSULTING LTD., we understand this very well and we instill it in our trainings and seminars. We understand that it is a major requirement.
Our own growth over the years has led to significantly increased stockholding levels, which in turn has caused us to acquire more warehouse space. Many export products are extremely bulky, especially as we deal in many product ranges.
Equipment can improve production efficiency. Also, the introduction of small -scale technology will not only increase output, but also improve quality, and reduce production costs. A production unit should know what equipment is available, and judge at what stage in its development it would be appropriate to acquire some.
Financial
This is actually the height of all. All plans must be looked at financially. Your export plan should Centre on these two questions:
1. What will be the financial consequences of the plans we have made?
2. What financial resources shall we need in order to undertake our plans?
It is by adding the financial consideration that the marketing plan becomes an overall business plan. A business needs to prepare financial projections as part of its planning. A profit and loss (or income) statement will estimate the financial results of the activities it plans.
To avoid loss, a small new exporter for instance does not need a trip to the importing countries, because the cost of undertaking the export promotion trip is estimated to turn the venture into a very slight loss unless sales exceed expectation. As your business grows, such trip could however, be necessary.
The projected financial performance on your business serves as the vital check at the planning stage that the plan is realistic.
Checking Your Business Performance
The profit and loss statement in any business is the basis for review during the year of how performance is matching up to plans. It is from the comparison of performance with plans that the business knows when to take corrective actions in the present, and for the future how to adjust its plans and allocate its resources in the most effective manner. For example, a Catfish Exporter might decide that it is sufficiently profitable to start up a new export network, or lower its selling prices in the hope of being able to achieve more sales and employ more staff, while mapping out this, he must always know what the business financial position is, and what the financial consequences of his actions will be.
If profit is what enables a business to grow, cash is what keeps it alive on a daily basis. A business needs to make a second financial projection in its plans, which is a cash-flow statement. This shows when and to what level cash resources will be needed in the business in order to achieve the plan.
The cash-flow statement also includes any other expenditure, such as purchases of capital items. These are not treated in the profit and loss statement, which is basically a trading account-but they have to be paid for.
An investor should work at how his planned activities will affect not only its profitability, but also its cash situation. When making financial plans, remember three things:
Add a margin of safety: Some planned sales may not actually be achieved; some customers might not pay when they are supposed to. Your plan should identify the maximum funding requirement you could need, so that you could take steps to cover this.
Include selling expenses: It is a common error for small businesses to overlook the costs of promotion. The consequence may be that you cannot then afford to undertake the activities needed to sell your products. There can be no rule as to how much a business should spend on promotion, but it is unlikely you will spend much less than 10 per cent of sales turnover, if you are giving the selling effort the attention it needs. It might be spent in different ways-such as recruiting a sales manager, making an overseas visit, producing a catalogue, exhibiting in a fair. Do not make the mistake of thinking that the customers will find you; they will not, or anyway not enough of them.
The cost of money: Exporting usually means enduring a considerable delay in the receipt of payments. In several producing countries, banks are slow in processing international payments. There can be long delays between incurring production expenditure and receiving sales revenue. This can adversely affect the cash flow of a business, and also its profitability. For example, if a business borrows money at 20 per cent per annum and sales revenue takes three months to arrive in its bank account, its costs have effectively increased by 5 per cent.
Conclusion
Having financial projections help to make realistic action plans. Unless each stage of planning is expressed in financial terms, you cannot be sure that cash exists to carry plans out, or that the resulting gain or loss to the business is an acceptable result of undertaking them.
A business must ensure that it has the material, human, physical and financial resources required to implement its plans. It needs to make financial projections of its profit and its cash flow in order to ensure it can remain operational.
The Thy Consulting Ltd.
Address: 4, Ismail Abdul-Azeez Street, Singer Bus stop, Ewupe-Ijaniye, Sango Ota, Ogun State.
Website: www.thethyglobalexport.com.ng Tel: 08023050835, 07033632285 or e-mail us at info@thethyglobalexport.com.ng
Our areas of specialization include, Mentoring Service, Export Planning Service, Contract Securing Service, Export Market Info.
Even the most carefully researched and prepared marketing plan will succeed only if resources are made available to carry it out.
These resources are of four types:
Material
Exportation requires that you have adequate access to commodities and adequate capacity to fulfil orders. At THE THY CONSULTING LTD., we have sometimes experienced disappointment by certain suppliers because of shortage of materials, which of course, might have been unforeseeable that a shortage would occur after an order has been accepted. Still, you must do everything possible to find alternative sources of supply in case the unforeseen actually happens. In business, it is always worthwhile to have what we call 'contingency plans' - an alternative course of action if something goes wrong. Supplies must be guaranteed for the product you are offering and also the packaging.
Human
Invariably, the greatest weakness of small export businesses throughout the world is their management capacity. This is because most producers are not business people by tradition or inclination. Though they understand the product and its production method, they have less experience of the rest of the marketing process: promotion, distribution and even pricing. They struggle to find a market because they do not know how best to price, promote and place their product. It is certainly true to say that much of the exportation made is not yielding real market worth, because plans are not tightly matched with productivity.
It is unlikely that a single person can deal adequately with every aspect of the complex activities involved in managing an export business. Exporters who adopt a business approach to the whole sales process, while at the same time pursuing the welfare of his workers in order to achieve overall success, are the exception. There are suppliers whose business plans are excellent, but whose customer service is poor. Others are the opposite, and although they offer an excellent service, we are aware of difficulties in their relationships with the buyers.
Exporters must be competent and committed and also have the time to undertake the set tasks. Otherwise, the tasks will not be done. Human beings like to organise themselves, rather than be organised. And if as a manager you want to commit an employee to a task, it is a much better approach to discuss it with the employee than to issue an order that it be done. The employee must feel a personal commitment in order to undertake the task dynamically, otherwise it will probably be done to a lower standard. Training is also essential. People need not only motivation to perform business tasks competently, but training. A training plan should be part of the activities of every business. For example, does the person who will be responsible for contacting customers overseas know the procedures for export?
THE THY CONSULTING LTD experiences with our trainees have shown that people tend to invest so much money in production, rather than in management training. Many feel professional training is unnecessary, whereas, a business which seeks to increase its sales must ensure that there is constant effort to upgrade skills, or perhaps introduce new techniques or technology. Export sales require training related to the standards necessary in the new markets. Exporters are strongly advised to regularly attend trainings and seminars on export and related trades.
Physical
This means the equipment, workshop space or storage capacity that a business might need in order to grow. At THE THY CONSULTING LTD., we understand this very well and we instill it in our trainings and seminars. We understand that it is a major requirement.
Our own growth over the years has led to significantly increased stockholding levels, which in turn has caused us to acquire more warehouse space. Many export products are extremely bulky, especially as we deal in many product ranges.
Equipment can improve production efficiency. Also, the introduction of small -scale technology will not only increase output, but also improve quality, and reduce production costs. A production unit should know what equipment is available, and judge at what stage in its development it would be appropriate to acquire some.
Financial
This is actually the height of all. All plans must be looked at financially. Your export plan should Centre on these two questions:
1. What will be the financial consequences of the plans we have made?
2. What financial resources shall we need in order to undertake our plans?
It is by adding the financial consideration that the marketing plan becomes an overall business plan. A business needs to prepare financial projections as part of its planning. A profit and loss (or income) statement will estimate the financial results of the activities it plans.
To avoid loss, a small new exporter for instance does not need a trip to the importing countries, because the cost of undertaking the export promotion trip is estimated to turn the venture into a very slight loss unless sales exceed expectation. As your business grows, such trip could however, be necessary.
The projected financial performance on your business serves as the vital check at the planning stage that the plan is realistic.
Checking Your Business Performance
The profit and loss statement in any business is the basis for review during the year of how performance is matching up to plans. It is from the comparison of performance with plans that the business knows when to take corrective actions in the present, and for the future how to adjust its plans and allocate its resources in the most effective manner. For example, a Catfish Exporter might decide that it is sufficiently profitable to start up a new export network, or lower its selling prices in the hope of being able to achieve more sales and employ more staff, while mapping out this, he must always know what the business financial position is, and what the financial consequences of his actions will be.
If profit is what enables a business to grow, cash is what keeps it alive on a daily basis. A business needs to make a second financial projection in its plans, which is a cash-flow statement. This shows when and to what level cash resources will be needed in the business in order to achieve the plan.
The cash-flow statement also includes any other expenditure, such as purchases of capital items. These are not treated in the profit and loss statement, which is basically a trading account-but they have to be paid for.
An investor should work at how his planned activities will affect not only its profitability, but also its cash situation. When making financial plans, remember three things:
Add a margin of safety: Some planned sales may not actually be achieved; some customers might not pay when they are supposed to. Your plan should identify the maximum funding requirement you could need, so that you could take steps to cover this.
Include selling expenses: It is a common error for small businesses to overlook the costs of promotion. The consequence may be that you cannot then afford to undertake the activities needed to sell your products. There can be no rule as to how much a business should spend on promotion, but it is unlikely you will spend much less than 10 per cent of sales turnover, if you are giving the selling effort the attention it needs. It might be spent in different ways-such as recruiting a sales manager, making an overseas visit, producing a catalogue, exhibiting in a fair. Do not make the mistake of thinking that the customers will find you; they will not, or anyway not enough of them.
The cost of money: Exporting usually means enduring a considerable delay in the receipt of payments. In several producing countries, banks are slow in processing international payments. There can be long delays between incurring production expenditure and receiving sales revenue. This can adversely affect the cash flow of a business, and also its profitability. For example, if a business borrows money at 20 per cent per annum and sales revenue takes three months to arrive in its bank account, its costs have effectively increased by 5 per cent.
Conclusion
Having financial projections help to make realistic action plans. Unless each stage of planning is expressed in financial terms, you cannot be sure that cash exists to carry plans out, or that the resulting gain or loss to the business is an acceptable result of undertaking them.
A business must ensure that it has the material, human, physical and financial resources required to implement its plans. It needs to make financial projections of its profit and its cash flow in order to ensure it can remain operational.
The Thy Consulting Ltd.
Address: 4, Ismail Abdul-Azeez Street, Singer Bus stop, Ewupe-Ijaniye, Sango Ota, Ogun State.
Website: www.thethyglobalexport.com.ng Tel: 08023050835, 07033632285 or e-mail us at info@thethyglobalexport.com.ng
Our areas of specialization include, Mentoring Service, Export Planning Service, Contract Securing Service, Export Market Info.
