Planning for an unpredictable world
The importance of planning
As you would have seen since the start of 2020, pivoting your business is one of the biggest buzz words in the Covid19 environment. Pivoting essentially means changing your business to make the most of certain situations and we’ve seen over the last 6 months three distinct examples of businesses that have fallen into this category. The first are the lucky ones where they haven’t needed to change (e.g. supermarkets, online shopping platforms), secondly are those that have been devastated (e.g. anything tourism related) and thirdly those that have been able to alter/ change their business and adapt (e.g. gin companies now making anti bacterial hand wash, clothing companies now making masks).
The point I’m trying to make is that if you were setting up a business 12 months ago would you have taken into consideration Covid 19? The answer is of course no, however for those now setting up a business you will take this into consideration and ensure that you have multiple plans for any sort of contingency.
Saying that, whether you're starting a small business or exploring ways to expand an existing one, a business plan is an important tool to help guide your decisions. Think of it as a roadmap to success, providing greater clarity on all aspects of your business, from marketing and finance to operations and product/service details.
The key elements for a business plan include:
1. Executive Summary
Your executive summary should appear first in your business plan. It should summarise what you expect your business to accomplish. It is probably the most important component of your business plan as it is the one thing you can guarantee will be read. Since it’s meant to highlight what you intend to discuss in the rest of the plan, you write this section last after everything else has been considered.
A good executive summary is compelling. It reveals the company’s mission statement, along with a short description of its products and services. It might also be a good idea to briefly explain why you’re starting your company and include details about your experience in the industry you’re entering.
2. Business Description
The next section that should appear in your business plan is a business description. It’s best to include key information about your business, your goals and the customers you plan to serve.
Your business description should also discuss how your business will stand out from others in the industry and how the products and services you’re providing will be helpful to your target audience.
3. Market Analysis
Ideally, your market analysis will show that you know the ins and outs of the industry and the specific market you’re planning to enter. In that section, you’ll need to use data and statistics to talk about where the market has been, where it’s expected to go and how your company will fit into it. In addition, you’ll have to provide details about the consumers you’ll be marketing to, such as their income levels.
4. Competitive Analysis
A good business plan will present a clear comparison of your business to your direct and indirect competitors. You’ll need to show that you know their strengths and weaknesses and you know how your business will stack up. If there are any issues that could prevent you from jumping into the market, like high upfront costs, it’s best to say so. This information will go in your market analysis section.
5. Description of Management and Organisation
Following your market analysis, your business plan will outline the way that your organisation will be set up. You’ll introduce your company managers and summarise their skills and primary job responsibilities. If you want to, you can create a diagram that maps out your chain of command.
Don’t forget to indicate whether your business will operate as a partnership, a sole proprietorship or a business with a different ownership structure. If you have a board of directors, you’ll need to identify the members.
6. Breakdown of Your Products and Services
If you didn’t incorporate enough facts about your products and services into your company description (since that section is meant to be an overview), it might be a good idea to include extra information about them in a separate section. Whoever’s reading this portion of your business plan should know exactly what you’re planning to create and sell, how long your products are supposed to last and how they’ll meet an existing need.
It’s a good idea to mention your suppliers, too. If you know how much it’ll cost to make your products and how much money you’re hoping to bring in, those are great details to add. You’ll need to list anything related to patents and copyright concerns as well.
7. Marketing Plan
In your business plan, it’s important to describe how you intend to get your products and services in front of potential clients. That’s what marketing is all about. As you pinpoint the steps you’re going to take to promote your products, you’ll need to mention the budget you’ll need to implement your strategies.
8. Sales Strategy
How will you sell the products you’re building? That’s the most important question you’ll answer when you discuss your sales strategy. It’s best to be as specific as possible. It’s a good idea to throw in the number of sales reps you’re planning to hire and how you’ll go about finding them and bringing them on board. You can also include sales targets.
9. Request for Funding
If you need funding, you can devote an entire section to talking about the amount of money you need and how you plan to use the capital you’re trying to raise. If you’ll need extra cash in a year or two to complete a certain project, that’s something that’s important to disclose.
10. Financial Projections
In the final section of your business plan, you’ll reveal the financial goals and expectations that you’ve set based on market research. You’ll report your anticipated revenue for the first 12 months and your annual projected earnings for the second, third, fourth and fifth years of business.
If you’re trying to apply for a personal loan or a small business loan, you can always add an appendix or another section that provides additional financial or background information.
Further guidance for business plans and templates can be located in a variety of places including:
Worth looking at bank sites for this (NAB being the business bank)
Government sites (government grants are available as well as tax relief for those wishing to start a business)
There are also a lot of support sites available such as state government, business communities and industry associations
Also don’t forget that there will be a lot of people willing to help you out, whether that be with advice, referrals and or guidance so don’t be afraid to ask. People love talking about their journey and are often very generous with their time and advice. Personally with my last business venture, people were very generous with their time, advice and keeping me on the right path.
What to expect
Business plans are pretty much the same in terms of what is required, however it does make sense to involve specialists such as your accountant and lawyer to navigate you through the complexity.
A business plan is simply a check list that articulates your plan for starting a business, it also provides comfort for others that you have spent the necessary time and effort in respect to your idea.
The more thorough you are with this plan, the better you will be in the long run. Like with building a house, the more time and effort that you take with the base and structure will have a flow on effect to the quality of the finished product.