Plan your Business

Plan for your business

Introduction

The Business Plan serves both as a company manual that will guide future development and a vehicle to access financing from banks and government grants. It is also a powerful tool for attracting investors and forming strong partnerships.

A solid plan can help you identify the right tools and methods to effectively implement your strategy and get the maximum return on your investment. A strategic business plan also allows you to understand and filter through the vast amounts of information available and to choose the ideal financing tools for your business.

Financing options include debt financing (bank and fund loans), grants (from the EU or national programmes) and/or investment schemes by private investors looking to invest in new businesses. A combination of the above tools, as well as investing one’s own resources can be the best way forward for those embarking on a new venture.

Overview

Business planning

The business world relies on the development of ventures that serve both domestic and international markets. “Glocal” ventures have the highest potential of success: they can make use of financing tools faster and better, through loans, grants or private investments.

With the exception of specific types of businesses that are by nature restrained to local markets, (e.g. restaurants, hotels, advisory services), having the potential of a global reach remains vital.

Advice, support and resources

Cyprus acts as one of the main service hubs for businesses in Europe. As such, both local and multinational advisory groups that have their offices in Cyprus can provide advice related to financing, tax planning and global venturing.

Entrepreneurs can always seek support for their planning and capital-raising from the private sector by turning to specialised advisory firms. Management consultants, financial advisory firms and legal offices can also provide support, both directly and indirectly, throughout the process of collecting market data and putting together a reliable business plan.

Additionally, entrepreneurs can seek industry- or sector-specific support and information through their local chamber of commerce, as well as dedicated governmental authorities. These are listed below:

The Cyprus Chamber of Commerce and Industry
The Nicosia Chamber of Commerce and Industry
The Limassol Chamber of Commerce and Industry
The Pafos Chamber of Commerce and Industry
The Famagusta Chamber of Commerce and Industry
The Larnaka Chamber of Commerce and Industry

For official data on the Cypriot market, please refer to the Statistical Service.

International entrepreneurs should contact embassies, consulates and business associations linked to their country of origin. These missions safeguard the interests of their home country nationals abroad and can be of great assistance. For more information, see the list of foreign embassies and trade commissions in Cyprus.

International entrepreneurs can also seek support from the Cyprus Investment Promotion Agency (CIPA) whose mission is to support large investments projects in Cyprus from foreign countries, companies or individuals.

Business plans

Why do I need a business plan?

Developing a business plan is a key strategic step in establishing your business. It can also provide benchmarks against which you can check how your business is progressing and whether it is meeting the targets you have set for it. It can also be used to attract investors, for funding applications (e.g. government grants) and for debt financing. It is also useful in assessing the value of your business in the present as well as its potential value in the future.

Before you write your business plan

Before you put pen to paper, you should take some preparatory steps. This is the time to closely study all the available information related to your industry and area of business.

Below, a list of important factors to consider before writing a business plan:

a) Identify the consumer need you are addressing – whether it’s business to consumer (B2C) and/or business to business (B2B) – and why that need has not yet been addressed;
b) Identify and quantify the potential market (domestic and international) and the tools or channels that are necessary to successfully penetrate that market;
c) Find the right experts to support you in building a business that can sustain a competitive advantage. Explore their availability as well as their market rate (i.e. fees for advisory services);
d) Identify sources of capital, debt financing, grant schemes and their relevant cost for your business;
e) Create a financial model in order to identify sources of revenue (revenue streams), types of costs, as well as the ratios and cash flows related to your business;
f) Check whether you can create a Minimal Viable Product (MVP) to present to users for assessment.
g) Determine the final form of the product / service that you want to launch in the market;
h) Design a brief implementation strategy to identify the technical and financial feasibility of the project.

Researching the market

Before you begin your business activity, you need to identify the categories of potential customers (segments), as well as the volume of customers and/or relevant transactions that you need to sustain your business.

Customer segmentation (categorization) and defining the behavior of the different customer groups is key to creating a tailored a communication, promotion and marketing strategy that will maximize customer reach and acquisition.

Writing a business plan

A business plan has to include information and analysis that demonstrates a comprehensive picture of your business, as well as its potential for growth.

When picking a template, consider who the business plan is for. Are you presenting your plan to venture capitalists? Go with a compact, to-the-point business plan that can be easily adapted as a presentation. Is the purpose to raise capital through governmental / EU funding? Your business plan should be fully detailed, and provide in-depth analysis. Whatever the purpose, your business plan must be structured to cover every relevant aspect of your venture.

Below, you can find a provisional structure for a detailed business plan.

Chapter 1: Company background
1.1 Company background, including owner profile and current internal conditions;
1.2 Physical location;
1.3 Company assets;
1.4 Human resources;
1.5 Market opportunities;
1.6 Strategy.

Chapter 2: Products / services and business model
2.1 Products / services;
2.2 Business model canvas;
2.3 Secondary / supporting services;
2.4 Road map for securing licence(s) and procedures to undertake (optional).

Chapter 3: Market analysis
3.1 Consumer segmentation and target groups;
3.2 Market conditions and competition (incl. statistical data);
3.3 PEST analysis;
3.4 Porter’s five forces analysis;
3.5 SWOT analysis.

Chapter 4: Sales strategy and promotion / marketing plan
4.1 Company vision and mission statement;
4.2 Marketing plan with a customized strategy (Marketing mix 7Ps).

a) Product;

b) Price;

c) Place;

d) Physical evidence;

e) People;

f) Promotion;

g) Process.

Chapter 5: Finances
5.1 Cost analysis for current and future position.

a) Investment costs;

b) Fixed costs;

c) Variable costs (cost of sales).

5.2 Sales forecast segmented by service and consumer category;
5.3 Income statement (profit & loss analysis);
5.4 Break-even analysis;
5.5 Financial ratio analysis;
5.6 Cash flow analysis.

Financial plan

Why do I need a financial plan?

Your financial plan is key to assessing the viability of your entire business and should be the last section to be addressed in your business plan. The reason for leaving it last is twofold:

It summarizes the information that was presented in the preceding sections in numbers.
It presents your projected cost and revenue.

The financial plan breaks down the potential the business has in terms of future revenue, cost-saving and market penetration (market share). It can also surface imprecise estimations or expectations in the business model canvas and the elements that should be adjusted to make the best of the company’s potential.

Financial planning is integral to securing debt acquisition and grant support. Having a professionally drafted and comprehensive financial analysis can provide the information that financing institutions and governmental authorities require in order to assess and evaluate a business and its potential.

Furthermore, the financial analysis can be used for future benchmarking and internal efficiency control. Comparing the projected financial analysis with the actual / “realized” results, can reveal the measure by which the business has been successful.

Marketing plan

Why do I need a marketing plan?

The marketing plan is another important part of the business plan. It shows the company’s go-to-market strategy, and maximizes the potential for customer acquisition. It also shows the knowledge and expertise of the company owners regarding business development.

The marketing plan should set out the sales strategy and prioritize promotional activities. A good marketing plan must include:
a) The strategy of the business for maximizing its market share;
b) The promotion budget required to secure the targeted market share;
c) The channels through which the company will deliver value to the market.

Develop a strategic marketing plan

Your marketing strategy, which must be defined prior to any promotional activity, must take into account the basic pillars of promotion and positioning in both the domestic and international markets. Market research is key here, as it allows you to identify the needs of the market and your competition in terms of your products or services.

Based on market research findings, you can then decide on how to best promote your products or services.

The methodology for developing a marketing / promotion plan is as follows:
a) Identify your targets;
b) Choose your promotional tools;
c) Establish a promotional budget;
d) Plan to implement on a schedule.

The marketing mix model

One of the most popular methods of marketing planning is the marketing mix model, which asks you to classify marketing ideas under four or seven categories. The exercise of placing the ideas in the right category can help you conceive and present the right marketing plan for your business.

If you plan to sell physical products, you should use the four-category model (4Ps) that includes product, price, place and promotion. If the business provides services instead, then you should use the seven-category model (7Ps).

In the table below, you can see each ‘P’ and examples of what can go under each section of the 7Ps model:

PRODUCT	PLACE	PRICE	PROMOTION	PROCESS	PEOPLE	PHYSICAL EVIDENCE
Design	Retail	Cost-plus	Advertising	Consumption method	Culture	Design
Technology	Wholesale	Penetration	Direct mailing	User friendly	Customer services	Interface
Usefulness	Online	Loss-leader	Newsletters	Automated tools/	Management	Endorsements
Value	Multi-channel	Discounts	Leaflets	UX/ UI	Training	Rating
Quality	Peer-to-Peer	Loyalty prices	Posters	Payment Safety	Appearance	Comfort
Packaging			Gifts			Facilities
Accessories			Competitions
Warranties			TV spots

Positioning your business

Positioning is a strategy that aims to make a company stand out in the market by differentiating it from its competitors. Positioning also establishes the product’s image and what it stands for, essentially projecting the company’s identity and real value to the market.

Before positioning your product, service or company, you should answer the following questions:

What are customers really buying from your business?
How are your products or services different to those of your competitors?
What makes your products or services unique?

Legal considerations in marketing

Marketing is of course essential for the commercial success of your business, however, it’s also a balance between reaching as many potential customers as possible while also staying within the confines of certain rules and regulations.

Marketing as an area makes extensive use of market intelligence, which can include the personal data of potential customers. You must be aware of consumer rights so as not to breach privacy regulations, especially at the start, before the customer has officially consented to the use of their personal data by your business.

Regulated areas of marketing are presented in brief below:

Competitions

Competitions, lotteries or promotions are regulated on the national level and often require a special permit. For more information, visit the National Betting Authority.

Direct marketing
Check that you comply with the relevant legislation around privacy and spam prior to engaging in direct marketing activity. Information can be found at the Office of the Commissioner for Personal Data Protection.

Privacy
As a business owner, you’re responsible for protecting your customers’ personal information. Take care when you collect, use or disclose customer details and make sure that you comply with the applicable laws found in the link above.

Intellectual property

Intellectual property (IP) regulations come into play when you’re using a name, brand or logo, whether it’s your own or someone else’s. To check the regulations concerning IP rights protection, visit the Intellectual Property Section of the Registrar of Companies and Intellectual Property.

Trade mark legislation

A trade mark must differentiate the products and/or services of a company from those of others. It must contain a precise description of the object of protection. The cost of securing such protection is not only connected to the number of regions or countries that the trade mark is protected in, but also to the scope of the brand name’s activities (activity classes). As an EU member state, Cyprus offers protection of trade marks at the European level, which maximises the scope of protection while controlling costs. For more information follow the link.

International regulations
When you export or expand overseas, your products or services may fall under different sets of rules than they do domestically. The Trade Service of the Ministry of Energy, Commerce and Industry can provide information regarding rules and licensing abroad.

The General Data Protection Regulation (GDPR)

The EU’s General Data Protection Regulation (GDPR) contains a set of data protection requirements.
Your business will have to comply with its requirements if it:

is established in any EU member state;
offers goods or services in any EU market;
has a website that targets EU customers (either by permitting the ordering of goods or services in a European language (other than English) or accepting payment in euros);
has a website that mentions EU customers or users.

More information about this important topic can be found here.