A Winning Business Plan

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Branch Business Planning

System

Author

Sohailuddin ALAVIInternational Training Adviser, AIBF

(Consultant and Instructor in Management)

March 2012


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Contents

1. Executive Summary ................................................................................................. 1

Section Two: Role of your branch in the overall management of the Bank value .......... 2

Section Three: Corporate Directions and the Branch mission statement ....................... 3

Section 4: Branch SWOT and Competition Analysis ...................................................... 4

Section 5: Branch Performance Goals, Objectives and Indicators .................................. 6

N.B. Refer to appendix for reviewing assumptions and detailed workingSection Six:

Action Plan .................................................................................................................. 8

Section Six: Action Plan ............................................................................................... 9

Building Customer Focus .................................................................................................... 9

Corporate Customers ............................................................................................................... 9

Retail Customers .................................................................................................................... 10

Walk-in Customers ................................................................................................................. 10

Corporate Customers ............................................................................................................. 11

Retail Customers .................................................................................................................... 11

Walk-in Customers ................................................................................................................. 11

Competitive Analysis .............................................................................................................. 12

Marketing Strategy (Mix) ....................................................................................................... 13

Enabling Objectives ................................................................................................................ 13

Organization and Human Resources Development ............................................................. 14

Organization Structure ........................................................................................................... 14

Position wise Performance Management Plan ...................................................................... 15

Employee Rotation, Training, and Development Plan ........................................................... 16

Risks and their Mitigates ........................................................................................... 17

Appendix I ................................................................................................................. 18

Assumptions: - .................................................................................................................. 18

Projections Worksheet ...................................................................................................... 19


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1 Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

1. Section One: Executive Summary

(This section presents a synopsis of the entire business plan. It should be written in

essay format).

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Section Two: Role of your branch in the overall management of the Bank value

As Strategic Business Link between the bankand its constituents define your branchs

role in the overall management of Banks Value:

To describe the role of your branch in the overall value management of the bank. Beginby answering the following question:

What is the role of your branch in the overall profit function of the bank? For instance atypical branch ideally operates as a strategic link for:- Quality customer prospecting and retention- Mobilizing quality deposits- Selling quality credits- Selling other financial services

- Building and sustaining bank image

It is not necessary that your branch can perform all activities in a profitable manner.Therefore you should only focus on what your branch can do in a profitable manner.

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Section Three: Corporate Directions and the Branch mission statement

3.1 The Corporate DirectionsCorporate direction is a broad level commitment and strategies of the seniormanagement in terms of where they wish to take the bank in future. This statement ofintent should be considered by the branches, to gear their business planning in thedirection the bank wants to move. Branch planning in isolation is likely to jeopardize theharmony of directions critical for the overall success of the organization

Exemplified Corporate Directions: -The bank aims to accomplish the followings Increase profitability (RoE) through bettermanagement of financial assets and liabilities; improved customer focus; increasedmarket share; operational efficiency; better internal controls; enhanced regulatorycompliance; lower cost of operations; and, professionalism...

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3.2Branch Mission StatementA mission statement is a broad level description of what the branch intends to

accomplish and how will it accomplish it? It therefore consists of two segments, namely;the goals [impact] that are to be accomplished, and the strategies [means] whereby thegoals will be accomplished.

Exemplified Mission Statement: -Being an extension of the bank, we shall improve our market share and profitabilitythrough differentiated financial services; building customer loyalties; focusing oncustomer relationship management; improving employees work performance;continuously increasing operating efficiencies; and, last but not the least minimizing the

risks

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Section 4: Branch SWOT and Competition Analysis

4.1 SWOT Analysis

The focus of SWOT analysis is on unraveling the opportunities and challenges (threats)in the permeable external environment; and, strengths and opportunities in of theorganization. The analysis is essentially made with reference to the Mission Statement.Meaning, external factors are neither opportunities nor threats unless these are analyzedin the context of accomplishing the mission statement and so are internal characteristicsof the organization.

Strength refers to an internal characteristic that enables the organization to realize itsgoals in an effective and efficient manner, while weakness is the characteristic that islikely to hinder effective and efficient accomplishment of goals. For instance, highdeposit base could be strength for the branch (bank) if there is sufficient demand for

loans from good borrowers. However, it can turn into weakness if the weighted averagecost of the deposits is higher than what the branch could earn on loans.

External factors, which are likely to increase business potentials for the branch, aretermed as opportunities. For instance; credit culture, saving habits, etc. However;existence of too many branches in a close proximity, bank avert attitudes, etc. are likelyto posse significant challenges (threat) for the branch in realizing its goals.

Please identify Strengths; Weaknesses; Opportunities; and, Threats faced by yourbranch

Strengths Weaknesses

Continued on next page


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Opportunities Challenges (Threats)

4.2 SWOT Recap:Make a conclusive summary of the SWOT-Analysis to aid formulating the branchperformance goals, objectives and indicators realistically...

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Section 5: Branch Performance Goals, Objectives and Indicators

5.1 Goals and Objectives

Financial Goals:

- To increase branch profitability by ______%- To increase average income on loans by ______%- To increase other income by ______%- To decrease average cost of deposits by ______%- To decrease branch expenses by ______%- To reduce loan defaults by ______%- To reduce operating risks ______%

__________________________________ ______%

Business Objectives:

- To increase deposits by ______%- To increase loans by ______%- To increase other business by ______%- __________________________________ ______%

Qualitative Objectives:

- To improve customer satisfaction ________- To improve service standard ________- To improve employee performance ________- To improve branch environment ________- To improve internal controls by ________- ____________________________ ________- ____________________________ ________- ____________________________ ________- ____________________________ ________-- ____________________________ ________- ____________________________ ________

(Check [X] the appropriate objective(s). Use extra spaces to include more objectives)


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5.2 Performance Indicators:

Deposit (Liability Products):

Exemplified: To contain the weighted average cost of funds (deposits) @ 5% + 10 basis points:

Type of Deposit Percentage Share Cost WAC

Savings Account 30% 5% 1.5%

Short Term Deposits 20% 8% 1.6%

Long Term Deposits 20% 10% 2.0%

Current Deposits 30% Nil Nil

Total 100% 5.1%** The WAC will change if the % share of each category of deposit is altered.

Projections: Weighted average cost of funds is projected @ % + basis points

Type of Deposit Percentage Share Cost WACSavings Account

Short Term Deposits

Long Term Deposits

Current Deposits

Total

Loans and Credits (Asset Products):

Exemplified: To achieve the weighted average return on loans and credits @ 12% + 10basis points

Type of Loan Percentage Share Rate WAC

Working Capital Running Finance 30% 20% 6.0%Working Capital Term Finance 30%% 15% 4.5%

Project Loans 20% 16% 1.2%

Consumer Finance 20% Nil Nil

Total 100% 11.7%** The WAC will change if the % share of each category of deposit is altered.

Projections: Weighted average return on loans is projected @ % + basispoints

Type of Loan Percentage Share Rate WAC

Working Capital Running Finance

Working Capital Term FinanceProject Loans

Consumer Finance

Total


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Non Fund Based Business:

Exemplified: To earn gross revenue of Rs.125,000.00 + 10% from non fund based services

Type of Service Project RevenuePercentage

Documentary Credits 60,000.00 50%

Guarantees 30,000.00 25%

Inland Remittances 10,000.00 8.33%

Exchange Business 10,000.00 8.33%

Safe Deposit Lockers 5000.00 4.16%

Miscellaneous Services, such as UtilityBills

5000.00 4.16%

Total 120,000.00

Projections: To earn gross revenue of Rs. + % from non fund based services

Type of Service Project Revenue Percentage

Documentary Credits

Guarantees

Inland Remittances

Exchange Business

Safe Deposit Lockers

Miscellaneous Services, such as UtilityBills

Total

Others:Key Areas Expected impact/outcome

- To improve customer satisfaction ________________________________________________

- To improve service standard ________________________________________________

- To improve employee performance ________________________________________________

- To improve branch environment ________________________________________________

- To improve internal controls by ________________________________________________

- ____________________________ ________________________________________________

- ____________________________ ________________________________________________

- ____________________________ ________________________________________________

N.B. Refer to appendix for reviewing assumptions and detailed working


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Section Six: Action Plan

This section elaborates upon the strategies and tactics used in accomplishing the above

mentioned branch targets.

6.1Branch Marketing PlanEach customer (or group of customers) has unique needs and expectations. A branch isfaced with the challenge of satisfying different customer groups, simultaneously. Inorder to do this, it is undoubtedly essential for the branch to better understand theirvarying needs and expectation and to deal with them accordingly.

This entails a systematic planning process. It consists of building customer focus;assessing branchs competitive position and determining appropriate marketing mix.

Building Customer Focus

Example

CustomerSegment(s)

Financial Status /Preferences

Financial Needs Expectations

Entrepreneur Affluent;Comfortable Life,

Convenience,Respect.

Business LoansIntl Credit Card

Funds Management

Priority BankingPre-approved Status

Relationship

Corporate CustomersThese are businesspersons who conduct diversified business

transactions with your branch on rather continued basis. These may be your existingcustomers; potential customers; and, past customers.

CustomerSegment(s)



Corporate Customers

Big Entrepreneurs

SMEs

Micro Entrepreneurs

Govt./Public Offices


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Retail CustomersCustomers who bank with your branch for their personal financialrequirements. They maintain deposit accounts, borrow for their personal requirements,or avail of other financial services again in their personal context.

CustomerSegment(s)



Retail Customers

Professionals / Sr.Executives

EmployedIndividuals

House Wives

Students

Retired / SeniorCitizens

Walk-in CustomersCustomers who happen to visit your branch once in a blue moonto avail of a service, such as to purchase foreign exchange travelers cheques;remittance of funds; claim pension; and, even payment of their utility bills.

CustomerSegment(s)



Walk-in Customers

Core Services

Non Core Services


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Consolidated Customers Profile

CustomerSegment(s)

Preferred FinancialProducts and Services

Price Sensitivity(High Mod Low)

% TotalRevenue

Corporate CustomersBig Entrepreneurs

SMEs

Micro Entrepreneurs

Govt./Public Offices

Retail Customers

Professionals / Sr.Executives

EmployedIndividuals

House Wives

Students

Retired / SeniorCitizens

Walk-in Customers

Core Services

Non Core Services


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Competitive AnalysisHere the Branchs competitive power is measured verses other bank branches operatingin the permeable vicinity. This analysis together with customers profile helps to identify

ideal branch positioning; the areas requiring attention; and, also in formulating theenabling objectives.

BranchRanking

(a)

Average CompetitorRanking

(b)

RelativePosition(a b)

Corporate Customers

Brand Image

Financial Products & Services

Service Quality

Customer Loyalty

Retail CustomersBrand Image


Service Quality

Customer Loyalty

Walk-in Customers

Brand Image


Service Quality

Customer LoyaltyRelative Ranking Scale: 01 Inferior 05 Average 10 Superior.

Conclusion:

Relative Advantages

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Relative Disadvantages

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Overall Branch Positioning

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Marketing Strategy (Mix)Elaborate the plan-of-actions with respect to improving and/or sustaining branchpositioning, business development, and customer relationship management.

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Enabling ObjectivesEnabling objectives refer to specific actions planned in the context of accomplishingmarketing strategy. These actions should essentially be written on SMART criteria i.e.Specific; Measurable; Attainable; Realistic and Relevant; and, Time bounded.

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Organization and Human Resources Development

Living the branchs business plan can never become possible without the development oforganization and human resources in harmony with the mission statement. Organization

development refers to defining (or redefining) the organizational structure, processes,and interdependencies within the branch. Human resources development is twinconcept. It essentially entails empowerment setting shared direction, buildingcommitment, up-scaling competencies and defining roles and responsibilities in harmonywith the mission statement.

Organization Development PlanOrganization structure (organogram) should preferably be process oriented andempowering, especially for the front-end positions. Moreover, structure should clearlydefine the roles, responsibilities and interdependencies of each position.

Organization Structure


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Human Resources Development Plan

Position wise Performance Management Plan

Team Member Title/Position KeyResponsibilities PerformanceIndicators Goals / Targets


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Human Resources Development Plan (Continued)

Employee Rotation, Training, and Development Plan

Team Member Current Position Next Movement CompetenceGap TrainingRecommended

Competence= Morale and Motivation; Work skills and knowledge; Attitude; Moral and EmotionalDevelopment; and, Soft skills.


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Risks and their Mitigates

Risk refers to adverse impact on the branch business plan as a result of expected andunexpected contingencies both in the internal and external scenarios. Such as, change in

the Govt. regulations may limit branchs lending opportunities, entry of new players inthe financial market may affect branchs ability to mobilize deposits at lower interestrates. Similarly, exit of key persons from the branch may affect its working adversely, inthe short run. Happening of such contingencies may erode the branchs prospects if noalternative arrangements (mitigates) were already planned (or made).

Projected Risks and Possible Mitigates

External Contingencies Internal Contingencies

Mitigates for External Contingencies Mitigates for Internal Contingencies


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Appendix I

Use this page to list your assumptions underlying the business projections

Assumptions: -

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Appendix II

Projections Worksheet

Use additional worksheets if required

A Winning Business Plan

Documents

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