Over the past 20 years a microfinance industry has emerged in response to the lack of access to formal financial services for most of the world’s poor. Microfinance institutions serve an ever-increasing number of poor clients, but the demand for such financial services still far outstrips their capacity. To meet this demand, most microfinance institutions plan to increase their outreach. But rapid growth strains an institution’s systems and changes its financial dynamics. Without effective planning and projection tools microfinance institutions can—and often do—undermine themselves | CGAP THE CONSULTATIVE GROUP TO ASSIST THE POOREST A MICROFINANCE PROGRAM Business Planning and Financial Modeling for Microfinance Institutions A Handbook Tony Sheldon Charles Waterfield Technical Tool Series No. 2 November 1998 Contents Foreword xi Acknowledgments xiii Chapter 1 Introduction 1 How the handbook is structured 1 Learning to use the model 2 Intended audience 4 Part One Strategic Planning Chapter 2 Developing a Strategic Plan 9 Articulating the mission and goals 9 Defining markets and clients 10 Markets 10 Clients 11 Analyzing the environment 11 Competition 12 Collaborators 12 Regulatory factors 12 Other external elements 12 Performing an institutional assessment 13 Credit and savings program 13 Board and management issues 13 Human resource management 15 Administration 15 Financing 16 Financial management 16 Choosing a strategy 16 Product and market options 17 Institutional development 18 Objectives and activities 18 Case Study The Freedonia Enterprise Development Association and Its Strategic Plan 20 .
