Business Planning

A completed business plan is a summary and evaluation of your business idea. It is the written result of the planning process.

It shows the probability of success and your ability to make it work. A business plan may be the only tangible aspect of a new business in its early stages of development.
It provides the means to think through all facets of a new business and to examine the consequences of a range of strategies relative to management, marketing, finance and people.

It is a management tool to provide guidance to you as the business owner. If you are starting a business, the process of preparing a business plan provides an opportunity to test your commitment and motivation.

Why do a Business Plan?
A business plan will enable you to take an objective look at your business, identify areas of strength and weakness, pinpoint needs that might otherwise be overlooked and eliminate problems before they arise. If your venture is at best marginal, the business plan will show you why.

A business plan can demonstrate whether the new enterprise being considered is viable and it provides a basis for monitoring the progress of a business once it starts operating.

Finally, and most importantly, your business plan provides the information needed by others to evaluate your venture, especially if you will need to seek external financing. A thorough business plan automatically becomes a complete financial proposal that will meet the requirements of most lenders and investors.

Understand What Business You Are In
In practice, most business operators devote a lot of time to thinking about the future of their business, but only a few get down to formal business planning; i.e. setting down what they are doing, why they are doing it and how they could do it better. It is the added discipline and focus of putting these plans down on paper and critically analysing each alternative strategy that is missing.

Guidelines for Preparing the Plan
Many formats can be used for preparing a business plan, but commonsense should be used in selecting topics to suit your particular business. The following model business-plan format may assist you to develop your own business plan.

Model Business Plan

Table of Contents

1. Introduction

Purpose of Business Plan
Objectives of Business

2. Executive Summary

Current Analysis
Profit Projections
Capital Funding Requirements
Key Factors

3. Industry Analysis

Overview of the Industry
Industry Characteristics
Economic Trends
Consumer Trends
Social and / or Political Considerations
Price Sensitivity of Industry

4. The Business

Resume of Owner(s) / Proprietor
Organisation Structure - Partnership, Pty Ltd, Company, etc
Main Activities
Location
Starting Capital
Unique Features
Business Advisers
- Accountant
- Solicitor
- Banker
Strengths and Weaknesses
People Relationships
- Customers
- Staff
- Suppliers
Past Performance
Current Performance/Overview

5. Product Range / Service

Product Description
Strengths / Weaknesses
Opportunities
Threats
Future Development

6. Manufacturing / Production

(For manufacturing concerns)
Quality Control
Strengths / Limitations
Expansion
Capacity
Scheduling
Equipment Requirements
Material Requirements
Human Resources

7. Marketing

Marketing Strategy
Target Market
Customer Profile
Market Size
Market Share
Market Potential
Key Factors Influencing Market
Pricing Policy
Competition
Research and Analysis
Advertising and Promotion
Sales and Distribution

8. Financial Information

Current Position
Income and Expenditure Projection
Profit Budget
Balance Sheet
Cash Flow Forecast
Break Even Analysis
Sources of Finance
Capital Requirements
Timing and Stages of Finance
Fixed Asset Requirements

9. Management and Staffing Strategy

Key Management
Staffing Requirements
Duties and Responsibilities

10. Supporting Documents and Miscellaneous

Legal Documents
Leases or Contracts
Letter of Intent
Research Documents
Patents or Trademarks

Follow the headings of the model, and include the detail outlined in this section. The process highlights lack of information and where decisions need to be made. It also provides an effective working document for the management of your business.