Putting together a business plan will make you outline your business goals, get clear on your customers and products, sales forecasts and cost estimates and consider the true profitability of your business.
You will need one when applying for a business loan or if asking venture capitalists to invest in your business. Each business will have its own unique plan. While it is good to work from a template, make sure that you focus on areas of the plan that relate specifically to your business.
View this exercise as a way of testing your ideas, and deciding on strategies that will help you to reach your goals. After all, a solid business plan is essential for long-term business success. Where to start?
Business plan templates
There are many good free business plan templates around, such as the Federal Government’s business.gov.au template page. A good business plan takes time, planning and research to put together, and it’s worth the up-front effort to assess if your idea is viable as a business and how you’re going to make it happen.
What should be in your business plan?
Generally the headings in a business plan and the information you’ll need to consider are:
The Executive Summary: The highlights of your plan
Location and History of Business, Facilities and Equipment; Legal Structure; Insurances: This section describes the legal entity and ownership structure, gives an overview of start-up costs and initial funding.
Products and Services: Describe the products or services you offer. Emphasise why buyers purchase those and what benefits they get. Show how much it costs to deliver what you’re selling.
The Industry and Market Analysis: Describe your target market and segment you will focus on, including market demographics, market growth, trends and forecast. Describe the nature of your industry and your competition.
Strategies, Mission, Objectives and Milestones: Marketing Strategies, Advertising and Promotion; Sales forecast and cost of sales; Distribution, Plans for Growth – Define your milestones with dates, budgets and specific responsibilities.
Management Structure and Staff Positions: Name and describe the key members on your team. List management team gaps, if any, and show how they’re being addressed.
Financials: Include a detailed financial plan and needs summary; sales forecasts, annual income and expenditure, profit and loss statement (P&L), cash flow statement and balance sheet.
Some key points to focus on are:
1. The Business
Outline what your core business will be. Also what is your offering and who will be your customers. This section should also detail your management structure, key products and services, innovations and insurance and legal considerations. It can be as simple or as complex as your business is.
2. The Market
- Defining your market is important to help focus your marketing strategies. Are you looking to focus on your area, region, Australia-wide or go international?
- Consider your products and services closely. What is the benefit you are selling? What makes you stand out in the market? How are you going to promote your business?
- Who is your target market? Where your customers and much do you know about them?
- SWOT Analysis – this is where you look at the Strengths and Weaknesses internal to your business and the Opportunities and Threats coming from outside of your business.
- Your competitors – who are they and how are they performing? They are your benchmark, and the more you know about them, the more you’ll learn about your company and potential customers.
- Advertising and sales – what marketing strategies are you going to use? What is your budget for this and how will you measure their success? How are customers going to find you? Consider short and long term strategies and options.
3. The Future
- Vision and mission statements (what you stand for) - these will help you and your company stay focussed within its market boundaries and not spread itself too thin.
- Goals and objectives – these are the next level down from mission statements and are more defined and targeted. For example: increase sales in widgets by 10%.
- Action Plan – this will outline your marketing strategy with timings and priorities.
- You’ll have fixed costs you have to spend to set up your business and then ongoing costs. Consider how you will manage the start up phase when outgoings can exceed income for some time.
- Develop a month by month cash flow budget. This will help you forecast whether you have sufficient cash in the bank to cover the bills each month.
- You will need to plan when to spend, when sales will be made and the cash payments arrive.
- This will help you predict your cash flow, profits and loss, and your break-even point, and most importantly, a positive balance sheet.
Templates will differ, but the basic approach is the same for all business plans. It’s the time to assess your business closely, see what has worked in the past, consider what will work best in the future and produce costed plans that quantify these steps.
Your business plan is your roadmap to success. It needs to be fluid and flexible, reviewed and revised at regular intervals throughout the year. And like any roadmap, it’s a plan. You can take a side trip or take a different route. But it helps to have something with a destination, to keep you focussed on the goals ahead.
Next steps: Watch Foundations of Business Planning Webinar
This 20 minute webinar will showcase the difference that a business plan could make for your business, and will guide you on how to develop and maintain your plan.
This webinar is produced by the Davidson Institute, Westpac's home of free financial education resources, building confidence today for a better financial future.
Things you should know
To be eligible to apply for Business One – Low Plan, your business must be registered in Australia.
General advice: This information is general only and does not constitute any recommendation or advice. It is current at the time of publication, and is subject to change. It has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on the information, consider its appropriateness, having regard to these matters. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this document, including when considering the finance options for your business.