Planning your business… it is "mission possible"!
by Joanne Mansell.
Cliches are so for a reason: If you fail to plan you plan to fail.
We all seem to know we "should" have a business plan but how do you write a good one? What do you do with it once it is written? This getting started guide covers what a business plan is for as well as the elements of a good plan and some sources of help.
What is the purpose of a business plan?
A business plan is a road map for your business. In writing the plan you will identify your market, products and customers. You will also be setting policies or guidelines about what your business does (and doesn’t) have involvement in – this will keep you focussed.
The plan is useful to a number of audiences, each for particular reasons:
What are the elements of a business plan and why do we need them?
The business plan covers the goals and objectives of the business, as well as explaining the venture. From there it builds to cover how you will implement these plans. The plan contains supporting information which justifies and explains the strategies. It should discuss discarded or alternate strategies.
Business formalities including contact details (business name, address, telephone and ABN), the type of business, commencement date, ownership structure and owners names. Include the date the plan was written (and a revision/version number, if applicable). A confidentiality statement is also recommended.
What is your business about? What do you plan to achieve? These are often prepared as vision and mission statements and short, medium and long term goals. This section also includes an executive summary, usually a page long overview to entice the reader into the body of the plan.
ORGANISATION AND MANAGEMENT
This section covers the (proposed) structure of the business and how it will be managed. Include information on the business history as well as a description of the current position with respect to competitors and internal and external issues. These ideas will be expanded upon in the SWOT analysis [see the May edition of Work from Home]. The organisation description should include skills and experience for each stakeholder – much like a resume. The organisational structure and responsibilities are usually diagrammed in an organisation chart. Job descriptions are useful for all of the tasks or roles – even if they are all fulfilled by the one person (sole trader) at the moment.
If the plan is intended as a business proposal, this section will include establishment costs (the one offs such as licensing, deposits, capital acquisitions). Check with your accountant whether these are tax deductible. You may include floorplans and photos with information on the location expenses and future plans for location, modification, equipment or refurbishment. A time line or calendar is a useful way to illustrate arrangements, commencement of activity and cycles (product lifecycles or seasonal variations in projections).
Like job descriptions, it is useful to set policies even if you are currently the only person working on or in your business. Policies should cover employing and training staff; performance measures; disciplinary procedures; money handling and security; absenteeism; theft, intellectual property ownership (copyright) and confidentiality; accident, fire evaluation and first aid procedures. Generally you will cover compliance for intellectual property, occupational health and safety and workers compensation/payroll. The policies section often also includes an asset register (a list of the assets you own or require such as a car, computer etc) and insurance details for both compulsory insurance (Compulsory third party, workers compensation and superannuation) and non compulsory insurance such as public and product liability, professional indemnity, accident insurance etc. The policies section also includes plans for business development – usually over the next five years.
What do you sell or provide to customers? This section covers the product lines and services. For each product briefly outline the features (and unique selling proposition), history, uses, warranties/guarantees, policies and information on competitors. Product information should also cover future opportunities and anticipated trends for the product or product line, as well as information on suppliers and production.
This provides background on the market place and your customers. Keep an eye on Own Your Own Business – there will be more on market research in a coming edition. Briefly you want to include information on your target market – who will buy your product? This can include demographics, geographics and psychographics. Market research will include information on your competitors and peers/alliances, as well as possible product substitutes.
MARKETING PLAN (and customer profile)
Here we discuss how you sell what to whom. The marketing plan tells how – what is your marketing strategy? How will you create and maintain customers? How are you using the "marketing mix"? Keep an eye on Own Your Own Business – there will be more on the marketing mix in a coming edition. This is the combination of price, position, product and promotion. You will include sales forecasts here and methods to measure promotional responses/feedback – where did people hear about you? This way you can relate leads to the marketing budget – how much you will spend and on what media. Another element of marketing is customer relations and service/warranties.
FINANCIAL PLAN (and finance requirements)
Different elements may be included in the financial plan if the business is new or established, or if the owners’ assets are included in the business – for example if you offer your house as security for a business loan. Therefore the financial plan may include personal financial requirements and assets/position. It will usually include information on finance requirements – basic needs and what it is for, potential sources, return on investment and information on other investors (most often personal funds and existing balances). The financial plan must demonstrate the viability of the business – that is that it can repay borrowings and when it is likely to become profitable. Cashflow projections, profit and loss statements and budgets can be included here, or as appendices.
How will you achieve the goals you have set for the business? What are the next steps? Who will assist you? Often this will be a coach or mentor. What strategies will you use? What timeframes relate to these goals and who is responsible for their attainment?
Remember that once the business plan is "done" you are not! It should be a "living document" which means that you review it at least twice a year. Ideally you will review it quarterly so you can check you are on track.
It may sound like a lot of work to write the business plan – it is more work to work without a plan! You are likely to be wasting time, money and effort.
If you are in business most of this will be in your head already. Getting it down on paper gives you a plan to work towards, strategies to get there and may create the opportunity for you to draw investors or borrow capital. Just make a start!
Remember, a coach or mentor can be a great asset. Check out the Kaizen Coaching website for the new small business section (due online late July) for tools to help you create your business plan. Keep reading Own Your Own Business for more articles in this series on business planning.
Does it still seem hard? Take us up on the offer of a free half hour coaching session whether you need help to plan your business or your personal life. Call the author, Joanne Mansell from Kaizen Coaching on 0416 181 654. For more information see the website atwww.kaizencoaching.com.au
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