PPP Development Stage – Preparing Business Plans

14.1 What are the objectives of business plans?

A business plan is a key part of running a partnership successfully and achieving a strategy. It provides discipline for the municipal management to review progress thoroughly and to set objectives, and for the directors to commit to supporting the budget and investment plans. The plan is a concise summary of activities surrounding the creation or expansion of the partnership. It describes the service, the customers, the competition, the production and marketing plans, the management, the financing and anything else relating to the service that the PPP option will provide. The business plan is the game plan. It sets objectives and how they will be obtained on paper.

A business plan is necessary for three main reasons:

• it gives the municipal management a current assessment of the partnership as well as a roadmap for the future;
• it helps a PPP option grow, both organically and through outside funding; and
• it is essential to have an up-to-date business plan in order to secure financing.

Few people would attempt to build a new house without first preparing detailed plans. The same is true for planning to build a partnership, no matter the size of the business. It is a means of discovering the problems and pitfalls managers might encounter before they happen, so that they will be able to make the right moves to avoid them and take advantage of opportunities as they come along. A good plan puts a lot of valuable information at the managers’ fingertips, ready to make tough decisions and manage change in their operations.

A business plan is mandatory if the municipal management wants to obtain capital from private investors, venture capitalists or commercial lenders such as banks or trust companies. More government financial assistance programmes are requesting a business plan to be submitted with applications for assistance. This is because a well prepared plan serves as tangible evidence of an organisation’s ability to manage, plan and communicate – that is, all skills needed to operate successful businesses or partnerships.