Why should I have a Business Plan?

Following on from our recent article on Why should I have a Business Plan – Part 1, we outline below what that business plan should contain.

By now you understand why you need a business plan and you’ve spent some time doing your homework gathering the information you need to create one.

First of all, the business plan should be kept short and to the point, that means making it no longer than 15-20 pages. Your appendices can house all of the other documents you deem essential.

 

Executive Summary

The summary should tell the reader what you want. All too often, what the business owner desires is buried. This section should be no longer than a page but could be shorter depending on the target audience. It needs to contain the key elements of the business plan, which are broadly:

  • The business idea
  • Current position
  • Future direction
  • Major achievements
  • Financial highlights
  • If the business plan is going to be used for funding then the financial requirements.

 

The Business – How does the business make money?

In this area you describe the business, both from a legal perspective and what the business does, including:

  • Legal structure and government registrations
  • Management, ownership and key personnel
  • Organisation chart
  • Business location
  • Products and/or services
  • Operations
  • Other considerations e.g. legal, risk, insurance, innovation, sustainability.

 

The Market

What industry or industries does the business operate in? Don’t forget to include information about all the various markets within the industry. Some market research could prove useful here.

It is almost inevitable that you will need to research and cite facts and figures. Reference these to provide credibility to your information.

The remainder of the section is devoted to:

  • Customers
  • Position within the market
  • Competitors
  • Marketing or advertising strategies.

This area would not be complete without a SWOT analysis of the business’ Strengths, Weakness, Opportunities and Threats.

 

The Future

This is when you really start getting into the core of why your business exists, what you hope to accomplish, and what you actually stand for.

Firstly, you need to clarify your Vision, Mission and Value statements. These can sometimes be difficult concepts to commit to paper.

Vision

What impact do you envisage your business having on the world? This statement should be inspirational and aspirational. No more than a single sentence, the shorter, the better.

Mission

Why is the business in existence? This statement should be concise and outcome-orientated. It should ground your vision statement in practical terms. You can have more than a single sentence for this one, but don’t go over three.

Values

The values are a list of beliefs that are shared among the stakeholders. Take into account all the various stakeholders that your company is accountable to, including owners, employees, suppliers, customers, and investors.

Goals/Objectives

Goals usually revolve around achieving big picture business intentions like:

  • market position
  • customer service
  • growth
  • company culture

Objectives on the other hand focus more on practical, day-in day-out metrics that revolve around revenue, number of customers, and product-related measurements.

Possibly the most important part of the business plan is your objective setting. Everything else you write might be fantastic, but if you don’t write down your objectives; and make them SMART (Specific, Measurable, Actionable, Realistic, and Time measured) the remainder of your plan could be a waste of time.

 

The Action Plan

The action plan describes in detail exactly how your strategies will be implemented in order to accomplish the set objectives. Components of the Action Plan include:

  • Action Steps; What will happen
  • Person responsible; Who will do what
  • Completion Date: Timing for each action step
  • Resources and support required: Both what is needed and what is available
  • Resistance or barriers, if any, and a plan to overcome them
  • Collaborators; anyone else who needs to know about or be involved in this action step

 

The Finances

This isn’t just a copy of your budgeted Profit and Loss and Balance Sheet. Depending on what the business is, you might also include all or some of the following:

  • Key financial objectives
  • Assumptions
  • Start-up costs
  • Expected cash flow
  • Break-even analysis

 

Supporting documentation

This area is for any backing or detailed information you consider important enough to make it into your business plan.

 

Where do I start?

There is a wealth of information and support available out there for preparing business plans. One such example is the Australian Government guide and template at:

http://www.business.gov.au/Howtoguides/Thinkingofstartingabusiness/Whatplanningtoolscanhelpme/Pages/Businessplanguidesandtemplates.aspx

Should you require any assistance in preparing a plan please contact us. Depending on your industry, you may even be eligible for government assistance. See our previous article on Government Grants.