You've got a great idea and you're keen to get started. But for the best chance of success it's important to put together a detailed business plan that describes and establishes key aspects of your new enterprise.
- Business plans serve multiple purposes
- Time spent on developing one is a good investment
- You should review and update your plan regularly
Why do I need a business plan?
There are three very important reasons for writing a business plan:
1. A period of reflection
It's a really good idea to step back and give some considered thought to your proposed business. Taking the time to outline your goals, think carefully about your products and services, identify key customer types, and delve into the financials, helps provide clarity that can be hard to achieve during the exciting ideas phase of a new venture.
2. Securing finance
You will be expected to have a sound business plan if you are applying for a business loan or asking venture capitalists to invest in your company. They will be keen to see your sales forecasts and cost estimates, to consider the true profitability of your business.
3. Planning for future success
Your business plan isn't a fixed entity. You should review it on a regular basis as your business develops and market forces change. Use it to assess your business closely, see what has worked in the past, consider what will work best in the future, and produce ongoing costed plans that quantify these steps.
What goes into a business plan?
Your business will be unique, so it needs its own bespoke 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 specific circumstances – and don't worry about any that aren't particularly relevant.
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.
Is there a business plan template I can use?
There are many good free business plan templates around ranging from the basic to the highly detailed, so it's worth looking around for one that reflects the nature and scale of your business. A good starting point could be one of the options published by the Federal Government:
Remember, 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 my business plan?
Generally, the key points to focus on are:
This should be a succinct summary of all that follows. It's best to write this page last.
Here you should list all the details of your company such as:
- Key areas of operation
- Registrations and legal compliance
- Ownership details (including initial funding)
- Key dates (founding etc.)
- Insurance details and attitudes to risk
You should also describe your products and/or services:
- What are they?
- What are their benefits and any unique qualities?
- What makes you stand out?
- What is the history behind them, including patents and other intellectual property?
Also cover employment:
- Management structure
- Key and other staff members
- Business mentors
- Retention and recruitment policies
- Who is your target market, where are your customers and how much do you know about them?
- Are you looking to focus on your area, region, Australia-wide or go international?
- How much are these markets worth, what share are you aiming for and what does the future look like?
- What are the key benefits you are selling and how are you planning to promote them?
- What marketing strategies are you going to use, how will you measure their success, and what budget have you allocated to them?
- Who are your competitors, what and how are they promoting, and how are they performing?
Your competitors are your benchmark, and the more you know about them, the more you’ll learn about your company and potential customers.
All the information above can be used to create a SWOT Analysis, where you look at the Strengths and Weaknesses internal to your business and the Opportunities and Threats coming from outside it.
Here's where you describe where you want to be and what business principles and actions will help get you there. Areas you should consider include:
- Vision and mission statements. These declarations articulate what you stand for and will help you and your company stay focussed within market boundaries, not spreading yourselves 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%’ or ‘take 20% of the widget market share’.
- Action Plan. This will summarise your marketing strategy with timings and priorities.
- Itemise the fixed costs you have spent / are spending to set up your business.
- List projected ongoing costs.
- Explain 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 enough cash in the bank to cover the bills each month.
- Consider how you will plan when to spend, when sales will be made, and the cash payments arrive.
- Use this information to predict your cash flow, profits and loss, and your break-even point, and most importantly, a positive balance sheet.
Your business plan can be as simple or as complex as your business is, but the more time you devote to getting it right the better. Imagine everything a potential buyer of your business would want to know, and you won't go too far wrong.
Things you should know
The information in this article is general in nature and does not take your objectives, financial situation or needs into account. Consider its appropriateness to these factors; and we recommend you seek independent professional advice about your specific circumstances before making any decisions.