Sample Potential & Opportunities Report

for

Electrical Pty Ltd

This sample report is intended to give you an idea of the structure of the Potential and Opportunities report outlined in Business Planning. You can use the software outlined in Business Planning to develop components of your own report by simply inputting the required data directly into the individual software.

---

CONTENTS

1. Introduction

2. Business Breakdown by Customers

3. Market Breakdown by Competitors

4. Market Breakdown by Customers

5. Potential & Ability

6. Current Performance

7. Segment Surplus

8. Forecasts

9. Investment

10. SWOT Analysis

Appendix 1 - Data Tables

Appendix 2 - Instructions

---

Based on details provided by:	Jim Jones
On the:	04 April 2000

---

1. Introduction

The information presented in this report is based on details provided as input for stage one of the BIZPEP Business Planning and Coaching Program. This information has been distilled and utilized in models to highlight business potential and opportunities. The document is designed to provide insight into the business and instigate actions to improve business performance. It forms the basis of Stage two, Decisions and Actions. Data tables not presented in the body of the report are included in Appendix 1. The methodology is outlined in the input instructions. A reference copy is provided in Appendix 2. Green table cells represent data provided as input.

A combination of tables, charts and findings are given for each section. The SWOT Analysis acts as a summary of key points identified during input and processing. Consider the points given and their effect on your business. Use them to develop a vision of potential and opportunities. The next stage is to convert the vision to Decisions & Actions. To achieve this BIZPEP will provide a worksheet to distill and define your actions. It will be processed using our Decision Assistant Model. This will indicate possible outcomes (helping you to make the best decision) and establish means to monitor performance.

• Follow these guides to gain the most out of this report:
• Review the contents.
• Do not over analyze.
• Consider the points raised and their value to your business.
• Identify the points that add most value.
• Develop a vision for your business.
• Define the areas you wish to focus on.

To convert the vision to reality set a time to complete the Decision & Actions stage. This requires approximately one hour of your time and should be undertaken within one week of receiving your Potential & Opportunities report.

2. Business Breakdown by Customers

Critical findings

• Customers are spread across four main segments providing a broad base but this may contribute to resource conflict from different customers. Does the business know what it wants to be? What are its strengths and how do they support each customer base.
• Unsecured revenue ($42,000) exists with current customers, why does this go to competitors?

3. Market Breakdown by Competitors

Critical findings

• Small market share (1%) presents opportunities to target competitors core customers. This could provide substantial revenue increases with limited competitor impact or reaction.
• High number (70) of competitors in Individual Contractors segment. Successful differentiation would place the business above the crowd providing customers with real choice.
• The high average revenue of Maintenance firms (1,000,000) may present a specialist opportunity by targeting a specific customer base. These competitors account for the largest portion of the market 32%. This also indicates an opportunity for development.

4. Market Breakdown by Customers

Critical findings

• Revenue opportunity in excess of $1,000,000 exists in all segments except Local Councils.
• The highest market share (12.5%) is held in the segment offering the least growth opportunity, Local Councils.
• Two segments, Industrial R&M and Installation, offer revenue opportunities in excess of $10,000,000.

5. Potential & Ability

Based on inputs provided the Potential & Ability matrix table recommends actions for each segment. These are represented graphically in the chart. The Value is a product of the Potential and Ability inputs. It is used as an overall indicator of a segments opportunity for the business. A recommendation is made based on the size of opportunity. The value is indicated on the chart by the size of the bubble.

Critical Findings

• Industrial maintenance provides the best Value and consideration should be given to developing this segment.
• Three segments Real Estates, Data & Control Systems and Local Councils are rated as review.
• Effort directed in other segments should be minimized.

6. Current Performance

Using the performance data provided a Breakeven Point has been determined. This represents the number of sales and revenue required for the business to generate a surplus (profit). This is provided as yearly monthly and weekly values in the Breakeven Point Business Surplus table. The Breakeven Business Surplus plots Overheads, Cost of Sales and Business Surplus over a range of sales quantities.

Critical Findings

• Overheads at 11% are minimal, Cost of Sales expenses account for 82% of revenue leaving 7% as business surplus. The largest COS item is Materials & Supplies, at 40% of revenue. Improvements in COS efficiency will provide high returns.
• Calculated breakeven point is $3,667 per week. This is currently equivalent to 10.4 sales per week. Revenue and Sales targets should be established and monitored weekly. Use the Breakeven Chart to estimate required revenue and sales to generate your target business surplus. Convert these to weekly numbers and use them to monitor performance and initiate actions.

7. Segment Surplus

To assess the "profitability" of customer segments the level of segment surplus has been estimated. This is based on the revenue generated for each segment and an allocation of service costs based on the level of resources utilized.

Critical Findings

• A negative surplus (loss) is indicated in the General R&M (-$1,433) and Installation (-$580) segments. These are diluting business performance. Effort should be redirected into segments that provide improved return on resources.
• All other segments provide comparable and acceptable surplus for effort. The best returns are secured in the Industrial R&M and Local Council segments.
• Industrial R&M contributes 77% of the current business surplus.

8. Forecasts

Forecasts adjust the current performance data based on the relative indicators provided. To improve business performance actions must be undertaken which impact on its costs, market position and, efficiencies. For the forecast to be realistic the impact of these actions must be equivalent to the relative indicators used. The level of competition relative to market strength will tend to level out unless a business is able to establish a unique position from the customer perspective.

Critical Findings

• Solid growth in revenue and profit is achievable with limited impact on competitors.
• To secure increased revenue real revenue generating actions must be undertaken. These must be defined in the Decisions & Actions stage to secure business growth.
• Improved revenue conversion to profit can be achieved by reviewing Materials & Supplies and implementing Labour efficiencies. This could be achieved through customer segment targeting resulting in less customer resource conflict and "running around".

9. Investment

Critical Findings

• The business currently generates a low Business Return on Sales 6.5%. This could be substantially improved.
• Business Return on Investment is strong due to the low investment level. Low investment requirements result in lower barriers to entry for competitors. In these instances the business must differentiate itself or compete on cost with a large number of competitors.

10. SWOT Analysis

Strengths	Weaknesses
Personality and character of owner.	Limited management expertise of owner.
Industry knowledge of owner, particularly Industrial R&M.	Skills of staff.
Strong industrial base with 100% of current customer business secured.	Maintaining quality staff.
Low investment requirements.	General R&M and Installation segments are not providing a surplus, recommend disposal.
	Resources are spread across four main segments, two are generating losses.
Opportunities	Threats
Data & Control Cabling.	Resources stretched.
Targeted development of Industrial R&M segment. Become experts this will provide customer and staff benefits.	Large number of competitors with limited differentiation.
Redirect resources used in General R&M and Installation segments to Industrial R&M.	High Materials & Supplies cost.
Gain labour and materials efficiencies by specialization.	Unable to service current customers efficiently due to conflicting demands from non-complimentary customer base.
Substantial market opportunities are available due to small current market share with limited impact on competitors' positions.
Improve staff motivation by decreasing running around to different jobs and segments.
Establish a plan for action implementation and review. Let staff know where the business is going.

Appendix 1 - Data Tables

Appendix 2 - Instructions