The Permacultivator - Journal of Cool Climate Permaculture
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The Permacultivator - Journal of Cool Climate Permaculture |
Permaculture principles reward us in many ways, more than just dollars and cents with the chance to produce our own food and materials for living in a sustainable environment.
However there comes a time when we may have a need or a desire to make or supplement our income, using either our knowledge and services, or surplus products. Before venturing into the world of business we need to consider the importance of a permaculture business plan. 85% of small businesses fail within 5 years; 75% within 2 years, due to major problems for example: lack of planning, poor record keeping skills, poor time and self management, inadequate cash flow controls, poor economic understanding (eg markets and production), under capitalisation.
You may ask "Why do I need to plan?"
As permaculturalists, we are aware of the importance when developing a site, of analysis and planning in order to develop a system that is efficient in use of energy, use of resources and production. As permaculturalists embarking on a small business venture of any size there is also a need to apply the same techniques of analysis and planning in order to ensure the business not only runs efficiently but is also worth our while ie.. we achieve our objectives whether they be financial or otherwise.
It makes no sense just keeping your ideas in your head! Just as when doing a permaculture design we need to not only visualise our concepts but also develop our design on paper, we need to consider the importance when planning a business, of having our plan written down in a format that is an easy reference point for the future. Hence the above title The Permaculture Business Plan.
Mostly we begin with an idea, or perhaps an opportunity.
Write this idea down, in order to visualise both mentally and on paper. It is also important to have an idea that you are passionate about ie. enthusiastic, as you will sometimes need this energy to keep you going when things get difficult or you have to cope with the unexpected. This last point leads us to the next step when considering our business:
To look on problems as opportunities, as a challenge to our aim and objectives and as a chance to develop our skills and knowledge. When you have developed a plan for your business this enables you to use your energy and resources in the most efficient way as you:
Consider what is most important, and in doing so the waste of time, energy and resources is minimised. This can also help to maintain your enthusiasm as you will not feel ‘bogged down’ or trapped in your business.
Research
You have your idea, now the most important step is to research that idea. This can be likened in permaculture design to the site analysis phase. Research the external environment in your local area - the population, housing, income, transport as well as preferences, spending habits in relation to your business idea. Potential sources for this information can be through:
• Observation
• Local Council/Australian Bureau of Statistics demographic studies
• Talking to people
Researching your potential market
It is better to cater for a need that no one else is filling in order for your product to be attractive to others.
Find out what your potential customers would like to buy and cater to their expectations as well as endeavouring to educate them in what you are trying to achieve.
Without customers you have no business!
The local industry environment can also be researched in order to see where your ideas fit. For example, it is no use selling products at a market if there are already too many others selling exactly the same thing.
Information on your particular industry can be obtained from
• Observation
• Financial Management Research Centre Business profiles
Ph: (02) 6772-5199
• Suppliers
• Trade associations
• Library
Resource Analysis
Write down the resources that you have to work with in developing your idea.
• Financial Resources - Money available to set up the business as compared to money needed to commence trading and to keep trading ie. cash flow
• Human Resources - Who is going to do the work and when are they available? Skills needed.
• Operational Resources - Methods, raw material, production systems
• Marketing Resources - Where and how can I ‘sell’ my product?
Aim and Objectives
• Why am I doing this?
• Where am I heading?
• Goals for the immediate future
• Goals in the long term
• Timetable - How long will it take to achieve my aims?
The reason it is important to write all of the above down is to give you a purpose to refer to and to keep your energy and enthusiasm flowing and maintain momentum.
The Organisational Chart
• Who does what? Checklists are useful.
• List all the work that needs to be done and assign roles to that work so that both you and those who may help you know what they are supposed to be doing. This is likened to planning the elements in a permaculture system and the role they play in maintaining the equilibrium in that system.
• Write down what is expected of each person so that they are able to refer to this rather than always asking you, thus freeing up tour time to do other things.
Operations Chart
Describe the processes involved in producing your particular product or service.
• Where is the work to be done?
• How is the work to be carried out?
• The processes involved need to be listed in stages from start to finish.
• How much needs to be produced in order to meet the demands of your markets
• The quantities of raw materials needed to produce the goods
Financial Plan
Financial planning does need some knowledge of budgeting and in order to minimise mistakes it is helpful to research and study. This could be done through reading, networking, attending courses. Another way to help with this planning would be to enlist the services of an accountant.
The importance of financial planning cannot be emphasised enough as this is one of the ways a small business can see where it is developing and if it is achieving its financial objectives. The following budgets are relevant to this plan and are projections of the expected figures based on industry research:
• Profit and loss
• Budgeted Balance Sheet
• Cash Flow Budget
• Longer Term Budgets: over 2-3 years
If your idea only involves small amounts of money it is still important to keep track of where it is going otherwise it is money wasted.
Administrative Plan
• The organisational chart is part of the system
• Financial Record keeping: how is this going to be done? This is not an ‘if’ as it is necessary if you are producing income to keep appropriate financial records.
• Resources needed: where/an area set aside for an office, equipment required
• Who is going to do work and when
• Other records: suppliers, banking, correspondence, brochures etc.
• Organising suppliers
• Employment strategies - if needed
• Ongoing research
Marketing/Promotion Plan
• Who will want your service/product?
• Customer expectations - quality, price
• Place and distribution - Where and how are you going to ‘sell’
• Product - mix of products to cater for market
• Promotion - advertising strategy, logo, leaflets
The most important aspect of any plan whether it be a permaculture garden/property design or a permaculture business is to continually review and then further fine-tune the plan in order to remain on track and realise your goals. This process can be seen as a cycle.
By approaching a business plan as a cycle this system can be incorporated into the permaculture system and the interaction between the business and the rest of the system can be monitored and further adjusted in order for balance to be maintained. That is : you want your business to work for you!
FURTHER READING AND REFERENCE
J25 Autumn99