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STOCKPORT CREDIT UNION
BUSINESS PLAN 2013-2016
Version 2.0
Table of Contents
Executive Summary ....................................................................................................2
1. Introduction.........................................................................................................2
2. Vision and Objectives ..........................................................................................3
3. Review of Stockport Credit Union .......................................................................4
4. Development Plans .............................................................................................6
5. Financial Projections ...........................................................................................7
6. Risks and Opportunities ......................................................................................8
7. Managing this Plan .............................................................................................9
APPENDIX A - Detailed financial schedule ...............................................................10
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Executive Summary
Stockport Credit Union’s vision is secure savings and affordable loans for everyone living or
working in Stockport.
To deliver this vision, the credit union has determined a growth strategy to become more
sustainable. This strategy aims to deliver an improved offer to members, an increased ability
to be financially self-supporting and reduced risks to the business. This Business Plan for the
financial years 2014-2016 summarises the intentions of the credit union, developmental
priorities and performance targets. Growth will be based on recruitment of new members,
steady enhancements of products and services and development of effective partnerships.
The credit union has taken steps to secure its relationships with Stockport Homes and
Stockport Council, who have both made generous financial and non-financial commitments.
The credit union is seeking to make short-term improvements in its capacity and resilience
to ‘Get Fit’, starting with the appointment of a Development Manager, funded by Stockport
Homes, in November 2013. Wider development of products, services and operational
strength are planned for the medium term.
This Plan includes a financial projection for KPIs. It is owned by the Board and will be
reviewed and updated appropriately.
1. Introduction
A Business Plan for sustainability
This
Business Plan aims to provide a summary of Stockport Credit Union’s (SCU) ambitions for
the future, based on a realistic but positive view of its current position. The Plan includes a
financial projection that reflects its objectives.
Following a consideration of its options in the early part of 2013, the Board has agreed a key
objective of achieving sustainability and independence through growth. The strategy is to
expand its membership across the Stockport community, supported by updated products
and more efficient operations, and supported by key partners.
The credit union has created a new role of Development Manager, funded by Stockport
Homes. The role-holder starts in November 2013.
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This is a critical resource that will enable the directors to focus on the strategic leadership of
the organisation, while the Development Manager leads the staff and volunteer team to
implement the initiatives set out in this Plan.
The Plan covers the period October 2013 – September 2016 in terms of financial planning
and overall strategy, but the focus of activities is for 2013/14. In this period, while the
Development Manager funding is guaranteed, the credit union hopes that several important
steps will be taken towards future sustainability. A focused review of progress should be
undertaken in April 2014, with a full review after 12 months.
The credit union’s immediate priorities are:
• Creating capacity for growth
• Implementing new loan pricing to improve income to cover service costs and bad
debts
• Growing membership to increase savings, loans and net income
• Confirming partnerships / external resources
• Putting staff employment and management on a more robust footing.
The medium term objective is to achieve sustainability through:
• Improving the offer for existing and potential new members
• Improving the efficiency and capacity in the operation
• Strengthening governance.
2. Vision and Objectives
Vision
Secure savings and affordable loans for everyone living or working in Stockport
Objectives for the credit union 2013-2016
Members and the community
• Visible and present in Stockport communities, including physical presence (e.g. a
shop, outreach)
• Ensuring the community understands the credit union
• Developing a diversity of members that reflects the community, including corporate
members
• Working in partnership with like-minded organisation
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Operations
• An optimal blend of employees and involved volunteers, providing the right resource
to meet expanding member needs
• More / easier ways to pay in and withdraw (cards, internet and telephone services)
• More efficient back office systems and processes, including fit-for-purpose IT
infrastructure
• Healthy environment for staff and volunteers
• Fit for purpose offices
• Business-minded in approach and operations
Finances
• Over 50% self-funded
• Diversity of funding
• Maximised income
Unique selling points
• Membership and community
• Sustainable and independent
• Range of products and service that meet members’ needs
By 2016, SCU aims to have:
• Reduced financial risks
• Significantly improved its services to its members
• Created a strong platform for future sustainability
• Consistently paid a dividend to its members.
3. Review of Stockport Credit Union
A community finance co-operative with great potential
Profile
SCU was formed in 2005, from a merger of several community credit unions that had been
in place since 1989. It is a member-led community organisation, with two part-time paid
staff funded mainly through a three-yearly grant from Stockport Council and a large number
of volunteers. Membership is just over 1,600, and most transactional activity takes place
within its 12 local collection points located across the Stockport area. Low cost affordable
loans and convenient saving are the two core services currently offered.
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Additional funding from external sources is secured from time-to-time to support
operational activities, such as a favourable office rental arrangement from Stockport Council
and ‘in kind’ support from Stockport Homes and other key partners.
Environment
There is potential demand across the community: Stockport has relatively well-off residents
with pockets of deprivation – the third most-polarised borough in the country. The welfare
reform agenda means there is a need for credit union services. In addition, high street
providers are not trusted and there are no other credit unions active in the community.
In recent years, as it has grown, the credit union has struggled to make a volunteer-based
operating model work sustainably, and the availability of grant-funding to support this
model is much-decreased. However, there are opportunities to develop partnerships with
like-minded organisations. For example, various advice services are referring to credit
unions, and while it is under significant funding pressure, the local authority sees a role for a
credit union in Stockport. A concrete example is already in place with Stockport Homes,
where following the credit union has identified shared objectives with a partner with
longstanding and long term commitment and willing to provide medium term funding.
There is a strong challenge to the credit union from payday lenders, cash generators and
weekly payment stores.
Summary
SCU has achieved a great deal to reach its current level of membership, and the value it is
offering to so many members.
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The current position of the credit union is fragile in terms of finances and personnel, but it
provides a platform with considerable opportunities to explore.
4. Development Plans
Getting fit for the future and developing
There are two key themes to the development of SCU: Get Fit and Development
(respectively strengthening and growing the credit union). Priorities are summarised below.
Get fit and keep fit:
• Address bad debt risks
• Strengthen governance
• Increase income
• Address employer obligations
Development:
• Improve the member offer and grow membership
• Improve efficiency
• Develop professional, active partnerships
The following opportunities are expected to be relevant to plans from mid-2014 onwards:
• Extension of web and phone services
• Physical presence in shopping and / or population centres (e.g. a shop, outreach)
• Current account.
Action Plan
SCU will develop an Action Plan to support its progress. This Plan will cover the main tasks
required to deliver the Business Plan, but not the day-to-day operational activities required
to run successfully the service for members. The Development Manager will advise on
alignment of resources and activities; it will also require regular review and updating by the
Board. For this reason, the Action Plan is not appended to the Business Plan.
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Capacity
It will be critical to the success of the Plan for SCU to increase its capacity: staff and
volunteers are already very stretched. There are a number of short and medium term
opportunities to increase capacity.
These include:
• Short term - reviewing processes to work ‘smarter’, e.g. electronic transfers for share
withdrawals rather than cheque issuance; reviewing allocation of staff and volunteer
resource to tasks and processes
• Medium term – introducing new facilities, such as debit card payments for loan
repayments; review of collection points.
The Development Manager brings considerable experience of alternative approaches.
Capacity will need to be released in parallel with building new products and income, in
order that progress towards sustainability is made as fast as possible.
5. Financial Projections
Growing, without undue risk
A
three-year financial projection has been prepared that reflects these plans. The financial
schedule is set out in Appendix A.
The key assumptions are:
• Growth continues at the recent historic rate of 10% annually for members, 15% for
loans (net of bad debts) and 13% for shares. Growth is supported by marketing
campaigns, in particular in areas where payroll deduction is most straightforward
• Trading income builds in new pricing, although the impact is of recent changes is yet
to be fully examined
• Grant income assumes the Council funding endures throughout the Plan period, but
Stockport Homes funding reduces by 50% in 2014/15 and 50% again in 2015/16
• Operating costs are lifted significantly by the Development Manager role (funded by
Stockport Homes). Otherwise costs grow by inflation of 2.5% where relevant
• Marketing expenditure has not been included and would be treated as a investment
• Bad debts and provisions reduce on average by 5% annually and from 5% of loans
currently to 3% of loans
• Reserves are c.8% of total assets.
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Key Performance Indicators
Indicator
1
Members (adults)
2
Loans (£, net of bad debts)
3
Shares / savings (£)
4
Surplus before dividend (£)
5
Bad debts to loans
6
Reserves: total assets
Sep-13
1,922
422,628
727,535
6,703
5.1%
8.1%
Sep-14
2,114
489,027
823,754
18,581
3.2%
8.3%
Sep-15
Sep-16
2,326
2,558
559,399
643,126
921,404 1,043,752
10,375
2,820
3.2%
2.6%
7.9%
7.1%
Dividend policy
This Business Plan aims to describe a strategy to build the long-term sustainability of the
credit union. A modest target of 1% for dividends is built into the Plan.
6. Risks and Opportunities
Keeping an eye beyond the Plan
These are the key risks and opportunities to this Plan.
Risk
Mitigation
Impact
Probability
Risk Level
01
Lending growth is not
sustained
Invest in marketing
Reduce costs
High
Low
Medium
02
Significant local employer
closes, driving bad debt
upwards
Monitor loan applications
and performance; review
credit policy
Medium
Medium
Medium
03
No additional material
support forthcoming from
partners
Only secured funding
included in plans;
relationship development
Low
Medium
Low
04
Net loss of directors
Recruitment of directors;
management of workload
High
Low
Medium
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Opportunity
Taking advantage
01
Successful external grant
funding bid
Frequent review of
opportunities; quality
submissions
02
CUEP becomes an option,
offering additional support
Regular review of CUEP
opportunities
Impact
Probability
Potential
High
Low
Medium
Medium
Low
Low
7. Managing this Plan
Implementation is a collective effort
The Board is accountable and responsible for the shape and implementation of the Business
Plan, and for guiding and supporting the Development Manager, staff and volunteers to
complete the actions. The Development Manager will provide progress reports to the Board
at each meeting. The Board will determine any changes to the Plan, provide guidance on
priorities and ensure that the necessary resources are available to the Development
Manager.
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APPENDIX A - Detailed financial schedule
Source:
SCU_BP
Projection_base model_Jan14update.xlsx
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