Article 2 – Business Planning
How to Write a Business Plan that Works!
If you are a new start up business operator then you should have already completed our Feasibility Study available on our website and you have determined that your new business idea is in fact a viable business venture…Congratulations! Now we carry what you have found throughout your Feasibility Study and move that information into a plan that is going to work for you, every day in helping your drive your business forward towards a profitable success.
If you are a current business owner and you feel you may have lost your direction or you are lacking the ability to drive your business forward, then our business plan is going to change all of that and hand you back the reigns to your business! You will take this plan and implement it and immediately notice results easing the pressure on you as a manager and helping you see the light at the end of that tunnel.
So why do we do a business plan? Usually if you require funding for your business you are going to need a business plan to prove that you are going to spend the banks money in a way that they see is planned, fair and organised. You must prove that you know where you are heading, in great detail. However the real reason every business owner must operate with a plan is because without one you are simply treading water. I know you are groaning at me right now because you believe all of your wonderful ideas are up there somewhere in your head and you believe that you are somehow implementing those ideas into your business everyday. Chances are if you are reading this article, that you have realised that ideas in head = confused business operator who cannot grow and drive their business forward.
We do a business plan so that day in day out we have one very important thing; Clear Direction. Clear Direction = Profitable Business.
Let’s take a look at what your plan should include. We will then discuss how to implement it. It’s dead simple.
Step 1 – What are the Primary Objectives of Your Business The Primary Objective Section is simply a short paragraph that outlines your overall intention for the business, or your mission statement. Do not fluff or overdo your mission statement. Keep it clear, short and concise. All you are doing here is stating exactly what it is you intend to do.
Step 2 – The Summary of Your Plan In a nutshell, describe each section of your business so that it is clear in your mind just how this business will run.
The Concept – Where has your idea come from and what do customer need do you intend to fill by starting this business?
The Product and Service – What do you intend to produce and supply and briefly how you to intend to do this?
Market Research – What has your market research revealed? Is there a dire need for your product and service and how will your product or service fulfil that need? What will you do that your competitors are not?
Marketing Strategy – What strategies are you going to outline in your plan that can demonstrate how you will reach your customers?
Funding – What will the initial funding be and where will it come from? What other funds do you have to pay for the first year of expenses and what earnings do you expect to see within the first 12 months of operation.
Step 3 – Brief Description of Your Business
This is where you:
Describe the core activities of your business?
Business name and details?
The current position of the business; new or established?
Where will the business be located/where is it already located?
Where the business will be in 2 and 5 years?
What Structure have you chosen and why?
Step 4 – SWOT Analysis Strengths, Weaknesses, Opportunities and Threats?
This is where you outline your strengths and weaknesses as a business and opportunities and threats outside the business. Under each heading, use bullet points to outline your advantages and disadvantages and be completely honest; especially when considering your weaknesses as a business or individual and what will threaten your business. Only by being honest in these areas can you identify which areas of your management ability and the business requires the most attention.
Step 5 – Analyse Your Market It is essential to show that there is a sound customer base for the business or that you get to know your customers better than they know themselves. Provide a description of the market in terms of the following:
o Who are the customers?
o What is their geographical location?
o How many customers are there in this location?
o What is their purchasing power?
o How are they accessed?
o What is the stability of the market and expected growth (or decline)?
o What are the seasonal trends?
o What influences the customers?
o What is the price sensitivity?
o What is the competitive edge? How have you determined this knowledge? What proof do you have to support your research? Be thorough here and provide proof of your findings.
Step 6 – Marketing Strategies How do you intend to market your business both offline and online? Break your marketing strategies into the following sections and bullet point your answers:
Unique Selling Position/Competitive Advantage
By completing the BusiWIzard ECourse you will master this field.
Step 7 – Sales and Production Targets/Working Capital In a dollar value and product amount, what do you intend to sell each month/year and how are you going to fund your working capital each week/month until you are paid? You must be able to outline where your funds are coming from to fund a service (if need be) until you are paid. Outline in words how you intend to do this by breaking down your estimated profit per month and your estimated working capital requirements. Also determine how you will pay for your operating and advertising costs until you begin to see profit. If your business is already operating, outline how you are doing this currently.
Step 8 – Business Growth and Development How do you intend to grow your business? How will you increase your sales, optimise the use of the business infrastructure that you have created? How will you improve and become more efficient? What management skills do you have to be able to do this and how do you intend to do it step by step? This is the most crucial part of your plan as this will determine whether your business grows with market trends and whether you have the ability to consistently give your customer what they want as your customer base grows and as you grow busier, prove how you are going to continue to drive your business forward whilst still running it each day? What systems and structure will you have in place to do this? Be very, very specific throughout this section and break it into the following areas:
Management Processes; what account and customer management processes will be in place to ensure the business runs smoothly?
Financial Position; how will you monitor your financial position? What percentage of your profits will you allow to grow the business? Products and Services; How will you continue to monitor your products and services compared to that of your competitors?
Marketing and Advertising; What marketing and advertising will you use to ensure your business grows?
Step 9 – Production Provide an outline of how the products and services will be produced:
o The skills, qualifications and experience of the proprietors
o The equipment required
o Sources of raw materials
o Technical requirements
Step 10 – Financial Requirements It is vital to assess total funds required to set up a business and cover its operating costs until it becomes profitable. At first glance, it may appear that all that is required is stock, basic fixtures and perhaps the first month’s rent. However, there are many other costs and expenses in starting a business and you should consider every possible expense. Above you have already outlined in words what kind of profit you intend to see, what type of funding you are going to acquire and how. Now you are simply going to pinpoint what your exact expenses will be and whether your funds will support your expenditure.
Our ‘Pull Out Business Template’ supplied with a video tutorial in our ECourse covers this section in great detail so be sure to grab yourself the course if you require further assistance fleshing out the following areas of expense.
– Pre Business Costs
– Initial Costs
– Capital Costs
– Possible Direct/Renovation Costs
– Possible Overhead Expenses for the First Year
Step 11 – Projected Profit and Loss/Cashflow Now that you have outlined your expenses, you can project your profit for each month of the year and establish your profit or loss… When estimating your profit, it is important to be realistic about what you are going to sell. Work on minimal figures to be safe. For example, if you are an electrician and you are starting a new business. You may estimate an average of two small jobs per week for the first 2 months and then build your job list from there. You would estimate the profit received from those jobs and this will become your profit projection for each month and for a whole year. To calculate your projected profit and loss simply add all outgoings for the first year to establish your required capital (this will include all direct or initial set up costs). Subtract your outgoings from your incomings and there you have your estimated profit or loss. When costing your products or services be sure to include your profit in the price so that the business is sure to stay afloat. To establish what your bottom line will be, simply take out the estimated profit and there you have the bottom line financials that you must make to stay afloat. It is possible that for the first year you will have a loss so you will need to determine how you are going to fund your business until you begin to see profit. Factor into your monthly profit or loss statement that your business will require cash flow. Cash flow shortages can arise from customers not paying on time or from an over order of stock etc so you must understand that your projection is simply that, a projection. Allow a certain amount of profit or funds to be available for business cash flow. Talk to your accountant or book keeper to certify what kind of cash flow you will require and to double check that your estimated figures are realistic estimates. To grab yourself a free profit and loss projection form google Microsoft Templates and search for P and L forms.
Step 12 – Personnel The proprietors and staff are the most important resource of a small business and good arrangements between the business and its personnel is necessary to ensure the success of a business, especially in the long term. The following matters need to be considered:
o Arrangements between the proprietors?
o Involvement of family members?
o Assessment of staff and subcontractors’ performance?
o Contribution of staff to the development and implementation of business plans?
o Training programs?
Step 13 – Administration What records do you have to keep and how are you going to keep them? Some items to consider may be:
o Cash book
o Receipt book
o Invoices, received and sent
o Bank deposits and statements
o Petty cash expenditure
o Wage, WorkCover, superannuation, long service leave records, and employee details
o Capital assets register
o Materials purchased and allocated to each job or temporarily as floating stock
o Contact details of all enquirers, existing clients, suppliers and subcontractors
o Individual job records showing progress
o Job estimates Provide a detailed summary as to what type of account, customer relationship management and office organisation system you intend to use.
Outline your experience in using these types of systems and if none, outline personnel who will be hired to undertake the job for you or training that you will undertake to ensure you can manage the administration side of your business.
Wow, that is your plan complete! I know what you are thinking… You are cringing at the thought of putting a document like that together. But here’s the good news. It doesn’t have to be long and complicated, it can be 3 pages long if you stick to the important information and keep it clear and simple.
Now, how do we implement it into everyday business life? This is the really easy part. Gab a white board and a diary and plan ahead every month including everything from your plan you decided to work on for the whole year. Yes this requires effort, but once you begin to start using your plan everyday by taking what you set out to do and sticking it right under your own nose everyday it will become like second nature and yo will start to see your processes streamlined as your business continues to grow with ease. You have outlined in your plan your marketing principles, your projections for profit, your management and structural processes and much more. Now take that information and decide for the first 3 months what you are going to achieve. Tick it off as you go. Now for the next three months repeat the process ensuring that you are taking on more marketing and systemising your business as you go. This is how you drive yourself forward. Allow time to implement and take responsibility for your plan.
The only way to implement your plan is to do just that. Take it, read it, write it down on your weekly to do lists and actually start physically implementing it!
So off you go, right now write your plan and start implementing it immediately. Don’t forget our comprehensive ECourse that covers everything from planning to management and marketing for small business operators just like you. A Step By Step Guide that is absolutely packed with resources, useful information, templates, tutorials and more to walk you through your daily journey as a business manager. It will save you hours of time, oodles of cash and give you the freedom you deserve to have as a business owner. Best Wishes! Heidi Shannonwww.busiwizard.com
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