MicroStart: A Guide for Planning, Starting and Managing a Microfinance Programme.
CHAPTER ONE
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A. PLANNING OVERVIEW

1. The Planning Cycle
2. Planning Tips
3. Team-Based Planning
4. The Proposal Outline

(1) The Planning Cycle

Credit activities should be seen as a process involving planning, research, design, implementation, and feedback. It is a continuum of learning by doing, where feedback leads to change in design and implementation.

The first basic step is planning, which encompasses both research and design.

(2) Planning Tips

First a few guidelines ...

Follow the outline in the MicroStart Guide:
This manual presents a number of well-tested guidelines, tips, and suggestions. If you follow the recommended outline, your plan will be comprehensive and organized in a format familiar to most potential funders.

Describe your plan and capacity to reach these key objectives:

Make a persuasive argument:

  • Thoroughly address the issues indicated in the outline
  • Describe the reasoning behind your choices
  • Present your plan clearly and concisely.

Get the job done:

  • Assign one person the task of writing the proposal or delegate sections to different staff. Set clear and realistic assignments. Be sure to include enough time for editing.

Remember to ...

Be concise:

  • Make your document brief. 7-12 pages of description and financial information is the right length.

Focus on your reading audience:
Most likely, you will submit your plan to donors, bankers, and prospective advisors. These individuals review many documents, so make yours professional.

Pay attention to presentation:
Readers will pay more attention to your ideas if your plan is well-written and is visually pleasing. If you are uncertain about your writing skills, ask a skilled writer to edit and proofread your document.

Revise regularly:
Your plan is a road map and as you begin to find new roads, your plan will change. Revise your plan once a year to. reflect changes in your objectives, methods, and strategies.

1. Sustainability implies that the costs are covered by income. Operational self-sufficiency is usually said to be achieved when interest income and fees > operating costs + costs of loan principal lost to default + depreciation of fixed assets. Financial self- sufficiency implies that the costs of capital are also covered by income (Holcombe, 1996).

(3) Team-Based Planning

Planning a start-up should foster a robust exchange among staff and management, and lay the foundation for a highly successful project in microfinance. Treat the planning process as a serious undertaking worthy of the full attention of all planning participants.

It is recommended that a team of three to five committed professionals, at least two of which have "practical" experience at the community level, develop the plan for the start-up activity.

Begin the planning process with brainstorming sessions.

First a few questions ...

Who will lead brainstorming sessions?
The team leader leads brainstorming sessions. Others may facilitate discussions once the leader becomes comfortable with the progress of the planning sessions.

Who is the final decision maker?
When consensus is not possible, someone must make decisions. We suggest the person most responsible for the project be the final decision maker.

Remember to ...

Use visual aids!
Use flip charts, blackboards, or other materials to record key ideas. Written notes in full view of participants help to focus brainstorming. Later, notes will refresh your memory in areas of consensus or topics to emphasize in your proposal.

Keep sessions organized and a manageable length!
Make sure you have an agenda for each session. Long sessions tax creativity. Try to keep discussions less than three hours long. Hold sessions in the morning before the day has begun and while thoughts are fresh. Serve food and beverages to promote a friendly atmosphere,

Create an open, trusting atmosphere!
Let participants know you value their opinions. Their honest discussion will help reduce the risks of gaps in planning.

(4) The Proposal Outline

This section outlines the range of issues to be tackled in creating a plan of action and documenting that plan in writing . A time frame of two to five weeks is recommended for the entire planning process, which includes: research, interviews, brainstorming, writing, etc...

The outline contains the following sections:

SECTION PAGES CONTENT
Cover Page 1 Include the organization name, address, phone and fax, key contact person and title. Date the proposal.
Table of Contents 1 List page references for the major sections.
Executive Summary 1 Summarize the important points of your proposal in one page. Include whom you will reach, how many you intend to reach, how you will staff your project and when you intend to become financially self-sufficient.
THE PLAN up to 12 pages Include the following sub-topics:
1.
Mission and Summary 		1 What is the problem your microfinance project will solve? Whom will you reach? How will you reach them? What changes do you expect to see?
2.
Organization Review 		1/2 For existing organizations: What does your organization do now? What are its strengths and weaknesses? How would microfinance further your organization's objectives? How is your organization qualified to manage a successful microfinance project?
3.
Strategic Environment		 1 What is the socio-economic environment in your target area? Is inflation high? Can you charge interest? What are the traditional informal sector financial practices? What affects the self-employed (climate, transportation, economic factors)?
4.
Market		 1 Who are your target clients: their income, sex, age, literacy? What types of economic activities are they now engaged in? Where will you work? In which communities or neighbourhoods? How much demand do you think there will be for these services?
5.
Marketing Plan		 1 How will you identify and interest new clients? What are your strategies and approaches for communicating with the target group?
6.
Financial Services		 1 What are your loan and savings services? How do they meet the needs of your clients? How have you priced them? Why? Will you use a bank partner for a source of loan capital? How will savings be handled securely? Who handles the cash?
7.
Organization		 1 What is your organizational structure? How will you staff your project?
8.
Work Plan		 2 What is your plan for the next three years? Which areas will you serve and when? How many clients do you expect to serve each year? How many loans will you disburse and at what amount? What is your interest rate strategy? What are your loan capital needs? How will you manage delinquency and risk?
9.
Governance, Management &
Advisors		 1 Who will manage your project? What are their credentials? Who will be advising you? Will you pay your advisors or will they serve on an advisory board as volunteers? What is your governance structure?
10.
Budget		 1 What is your expense budget and income for the next three years? When will you begin covering costs from interests and fees?
11.
Funding		 1/2 How do you plan to fund your project? Consider start-up, operating cash, and loan capital. Where do you plan to get this funding and how?

Formats for this section are in attachment I of the Tool Kit.

The sections that follow present:

  • a step-by-step guide to planning a microfinance project;
  • examples to illustrate the planning process.
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