21 Apr What do I need to succeed? – Your business plan
Your business plan is your guidebook. As a minimum the plan defines the ‘business’ and outlines structural and operational requirements. It is traditionally a start-up document that serves as a detailed one year set-up plan, but can be and should be used throughout the life cycle of any business. In contrast, a strategic plan (as discussed in The Planning Process-Fail to Plan…. plan to fail!) traditionally covers a longer period (three – five years) and serves to build and improve performance with specific reference to your current operating environment.
A business plan is not a complex task …however it is time consuming. Make no mistake – it needs to be comprehensive and detailed. An effective plan requires detailed research and requires careful thought to ensure the messages link effectively to create understanding of the ‘how’ the ‘why’ and the ‘what’. The key here is a clear and logical structure which talks to you. Note that the document will have an audience other than yourself, such as financiers, however to gain the greatest benefit it must be relevant to yourself as it serves as both a guidebook and benchmark for your initial year of operation.
Note that you may not be able to complete all elements of the plan but you should at least have an idea of most if not all them. Working through a business plan you may be required to make several decisions that you have not considered, are not confident of an answer or simply require expert assistance to complete. This is all part of the process and should be expected. A simple approach is to ask yourself the question – what do I need to succeed? It is worth noting that areas you find difficult are essentially your ‘weak spots’ and awareness of such is a useful product of the process.
The next question is the content – what is required for a business plan? As a guide your plan should aim to include the elements below. Note that basic organisational details are essential and should be detailed at the beginning of the plan. As a minimum, these should include; –
- Registration details – Business name, ABN, registered address, date of commencement
- Legal structure – company, trust, partnership, sole trader
- Business address
- Website address
- Insurance details
- Key contact details
- Key personnel & experience bio’s
- Organisational chart if applicable
- Key suppliers
- Business offering – products/services – what exactly is it that the business aims to ‘do’
The detail of the plan then follows. This is where the analysis comes into play and will outline just how the business will operate, why it will succeed and how long it will take to succeed. This area requires an honest assessment of the environment you aim to operate within together with the boundaries and limitations that encompass the business. It has four essential elements;
- Marketing plan,
- Financial plan,
- Risk analysis,
- Success measurement.
Often overlooked, the marketing plan is crucial to your business plan. Without a marketing plan, you have no plan for sales and growth. Elements of your marketing plan should include: –
- Market analysis
- Competitor analysis
- Customer analysis
- S.W.O.T. analysis (Strengths, Weaknesses, Opportunities, Threats) – note that it is one thing to list these – the important consideration is to outline the implications they will have.
- Key and critical issues – these should become apparent once the above is outlined and considered.
- Marketing plan and budget – this should include a launch budget.
This is a critical element and will attract heavy scrutiny from potential funding partners, such as banks. If you do not have expertise in this area it is highly recommended to seek professional assistance. The financial plan should be as detailed as possible and include; –
- Start-up costs and budget
- Funding details
- Break even analysis and date
- Balance sheet forecast
- Profit & loss forecast
- Cash flow forecast
It would be foolish to dismiss risk aspects of the business particularly in a start-up phase. Accordingly, an assessment of your significant risks listed in an order of likelihood and potential impact. A brief discussion as to how these risks will be mitigated will help to build comfort in both yourself but more particularly external partners to the business such as financiers and suppliers.
This is where the long-term sustainability is discussed. An important consideration is future growth prospects and forecasted growth. Success needs to be firstly defined and then an outline of how it will be measured. This is the area where specific milestones, targets and KPI’s are set within realistic timelines. Another aspect that needs attention is the mission, goals and objectives of the business. This is arguably a section and could be placed after the organisational details but I prefer it towards the rear of the plan and discussed in a forward-looking context. This provides a positive perspective to the prior analysis and should be clearer at this point rather than earlier in the document.
An important credibility aspect of the document is data. How the data is used and applied but most importantly the quality and currency of the data. In such instances data is not often close at hand and the question of sourcing is a common issue. There is quite a great deal of publicly available data and in this regard, I would start with the Australian Bureau of Statistics (ABS) website. Other areas are government industry portals (a good one is the Office of the Chief Economist), trade journals, industry associations and their websites, and individual company websites and annual reports. Further to publicly available information detailed industry reports can be purchased (such as IBISWorld) but note these can be expensive but in many instances worth the investment.
At this point you should be complete or close to complete. There are quite a range of templates out there in cyberspace, with many of the bank offerings quite good. My recommendation is to use any template as a guide and to include the above as you feel appropriate. A business plan is your guide and to be relevant needs to talk to you. It is a guidebook and a critical element is a start-up journey and ongoing. It can in many cases be confronting but note this is a positive aspect of the process and above all needs to answer the question – What do I need to succeed?