Small Business Planning

This analyses the feasibility of a business idea. An assessment of the practicality of a proposed project or system. A feasibility study aims to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture.

The use of the feasibility study can;

• Show narrow business alternatives and explore options.
• Allow analysis of the issues and come-up with a solution.
• Mitigate the risks and take precautionary actions.
• Attract equity investments with solid research data.
• Provide quality information for the decision maker.
• Well documented process about a new venture.

Some of the key requirements of a successful feasibility plan are;

• Adequate market research.
• Analysis of data that is real and comparable.
• Discussions with similar venture owners.
• Correct analysis of feasibility financials.

Source: http://businessplanspro.com.au/feasibility-plan

A financial plan is simply an overview of your current business financials and projections for growth. Think of any documents that represent your current monetary situation as a snapshot of the health of your business, and the projections being your future expectations.

The components of a financial plan include;

• Forecasted revenue, or income and expenditure projections.
• Profit and Loss Account.
• Balance Sheet.
• Cash Flow.
• Cost of Goods Sold.
• Annual Maintenance, Repair and Overhaul, and investment budget.
• Asset Depreciation (Depreciation Schedule).
• Tax.
• Inflation.
• Product Price Increase.
• Funding or borrowing requirements.

A marketing plan helps you promote products and services in your business that meet the needs of your target market.

It allows you to;

• Identify your target market and understand how your product or service meets their needs.
• Identify your competitors and what your target customers think about your competitors' strengths and weaknesses.
• Position your brand, products and services so that your target market sees your business as better than, or different from, the competition.
• Set specific, measurable goals and time frames for your marketing activities.
• Map out a strategy to reach your target audience, including the messages, channels and tools you will use.

The operational plan is a description of the systems involved in the day to day running of the business - how you make things happen! This will also cover how goods are produced, what policies and procedures will be followed and how the business will be monitored.

Operational plans should contain;

• clear objectives of the plan.
• activities to be delivered.
• quality standards.
• desired outcomes.
• staffing and resource requirements.
• implementation timetables.
• a process for monitoring progress.

A strategic business plan provides a high-level view of a company’s goals and how it will achieve them, laying out a foundational plan for the entire company.

While the structure of a strategic plan differs from company to company, most include five elements;

• business vision.
• mission statement.
• definition of critical success factors.
• strategies for achieving objectives.
• an implementation schedule.

A start-up plan covers all topics relevant to new venture creation, including;

• company information.
• information on the financial analysis of the business.
• the milestones for implementation.
• the management team.
• the strategy of the business.
• the marketplace.
• the product or service offering of the organisation.
• various forecasts.

Notable among the plan's forecasts are predictions for the sales, profit, loss, cash flow and balance sheet of the company, financial analysis, as well as the monthly projections for the first year.

Any business plan you do not prepare with the intent to show a financial institution, an external investor or any other third party is known as an internal business plan. Internal business plans target a specific audience within the business, for example, a business unit that needs to evaluate a proposed project. Internal plans do not require details about the organisation or the management team. 

The plan will describe the company’s current state, including operational costs and profitability, then calculate if and how the business will repay any capital needed for the project. It will provide information about project marketing, hiring and equipment costs. a market analysis illustrating target demographics, market size and the market’s positive effect on the company income. 

Some business plans do not concern themselves with the entirety of the business. They are only interested in a part of the business or a specific area of interest. These are called growth plans, new product plans or expansion plans, depending on what they are looking to achieve.

Growth plans or expansion plans are in-depth descriptions of proposed growth and are written for internal or external purposes. If company growth requires new investments or loan applications, a growth plan may include complete descriptions of the company, its management and officers. The plan must provide all company details to satisfy potential investors. This plan should include comprehensive forecasts of sales and expenses for the new venture/product/etc.

Does your business plan have more than one purpose?

Will you use it internally, or will you involve external parties, such as an investor or bank?

Deciding what your purpose is, can help you develop your plan for the right audience.

If the plan has been developed for third parties, you will need to determine what they’ll be most interested in. Don't assume they’re just interested in the financial part of your business. They’ll be looking at the whole package.

You’ll need to make quite a few decisions about your business including its structure, marketing strategies and finances before you can complete your plan.

Research can help you develop goals and targets, as well as a better understanding of where your business should be heading.

Market analysis - A company needs a good handle of the industry as well as its target market. It will outline who the competition is and how it factors in the industry, along with its strengths and weaknesses. It will also describe the expected consumer demand for what the businesses is selling and how easy or difficult it may be to grab market share from incumbents.

It's important to make sure your research is up-to-date and accurate before presenting to lenders or investors as market conditions can change over time.

nationalindustryinsights.aisc.net.au data on Australian fitness industry including key occupations.

www.franchisehelp.com article on a general analysis of fitness industry cost trends in US market.

www.gminsights.com report on US fitness equipment market.

Lenders and investors need to know your finances are in order and your business is in a strong financial position.

Both lenders and investors will want to know how much money you currently have, how much money you need and how much you expect to make in the near future.

Financial planning - In order to attract the party reading the business plan, the company should include its financial planning and future projections. Financial statements, balance sheets, and other financial information may be included for already-established businesses. New businesses will instead include targets and estimates for the first few years of the business and any potential investors.

Budget - Any good company needs to have a budget in place. This includes costs related to staffing, development, manufacturing, marketing, and any other expenses related to the business.

While a bit of extra funding will help you ensure you’re covered for unexpected costs, be realistic and avoid asking for more than you need.

Summarise the main points of your business plan using as few words as possible.

You want to get to the point but not overlook important facts.

This is also your opportunity to sell yourself, but don't overdo it.

The summary should include details about your business, market, goals, current financial position, how much finance you're seeking and what it will achieve.

If you aren't confident in completing the plan yourself, you can enlist the help of a professional to look through your plan and provide advice.

There are a number of government services available to help you plan, start or grow your business. These services can provide general advice, workshops, seminars and networking events, and can even match you with a mentor or business coach.

Review your plan regularly. As your business changes many of the strategies in your plan will need to change to ensure your business is still heading in the right direction.

Having your plan up to date can keep you focused on where you are heading.

It's a good idea to keep a record of each version of your business plan as they may contain some important historical information as well as your intellectual property.

Having an understanding with third parties when distributing a plan could be enough protection for some businesses. However, others who have innovative business practices or products or services may wish for each person to sign a confidentiality agreement to protect their innovations.

It may also be a good idea to include some words in your plan asking the reader not to disclose the details of your plan.

Specific goals are well-defined and focused. The goal should be clear and detailed enough that you know exactly what you are trying to achieve. 

Make it Measurable - Specific goals and objectives provide you with milestones that indicate your progress. You will learn to estimate the time it takes to achieve the results you want. When you are asked to nominate the time it will take to complete a given task you will be able to measure your progress against the goals/objectives you have set.

Be realistic. Goals must be Attainable. There is no point in setting unreachable targets. Make sure you have the resources to achieve the goal, make sure it’s feasible. Check with your industry association to get a handle on realistic growth in your industry to set attainable goals.

If the goal is not Relevant or the team is not particularly concerned about achieving a certain outcome then motivation will slip. Work with the team and customers to determine what is relevant to them and to you.

Set a Timeframe - Objectives must have deadlines if they are to be effective. If you do not have a schedule to work to, your goals/objectives may be pushed aside by the inevitable day-to-day problems. Setting deadlines helps you to estimate your progress and focus on your achievements. Set realistic timeline in which to see real improvement and schedule in reviews at appropriate intervals. 

If you're having trouble deciding what your goals and objectives should be, here are some questions you could ask yourself;

• How determined am I to see this succeed?
• Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?
• What's going to happen to me if this venture doesn't work out?
• If it does succeed, how many employees will this company eventually have?
• What will be its annual revenue in a year? Five years?
• What will be its market share in that time frame?
• Will it be a niche marketer, or will it sell a broad spectrum of good and services?
• What are my plans for geographic expansion? Local? National? Global?
• Am I going to be a hands-on manager, or will I delegate a large proportion of tasks to others?
• If I delegate, what sorts of tasks will I share? Sales? Technical? Others?
• How comfortable am I taking direction from others? Could I work with partners or investors who demand input into the company's management?
• Is it going to remain independent and privately owned, or will it eventually be acquired or go public?

Source:  http://www.entrepreneur.com/article/38292

Also called the Executive Summary, this section outlines the company and includes the mission statement along with any information about the company's leadership, employees, operations, and location. It should briefly summarise your more detailed information provided throughout the body of your plan.

Include;

• Business name - Enter your business name as registered in your state/territory, or your proposed business name.

• Business structure - Is your business a sole trader, partnership, trust or company?

• ABN - Enter your Australian business number (ABN).

• ACN - Enter your Australian Company Number (ACN). Only fill this in if you are a company.

• Business location - Enter your main business location. Briefly describe the location and space occupied/required.

• Date established - The date you started trading or date your purchased the business.

• Business owner(s) - List the names of all business owners.

• Relevant owner experience - Briefly outline your experience and/or years in the industry and any major achievements/awards.

• Products/services - What products/services are you selling?

• Target market - Who are you selling to?

• Marketing strategy - How do you plan to enter the market? How do you plan to attract customers?

• Vision statement - The vision statement briefly outlines your future plan for the business.

• Goals/objectives - What are your short & long term goals?

• The finances - Briefly outline how much profit you intend on making in a particular timeframe. How much money will you need up-front? Where will you obtain these funds?

This section outlines the company and includes the mission statement along with any information about the company's leadership, employees, operations, and location. It should briefly summarise your more detailed information provided throughout the body of your plan.

• Registration details - Includes, business name, trading name(s), date and location registered, ABN, business structure, domain names, and licence/permits.

• Business premises information - Includes, business location, and buy/lease details.

• Organisational chart - The organisation chart is a quick way of representing your business structure or proposed structure.

• Management & ownership - Includes, names of owners, details of management & ownership, and experience.

• Key personnel - Here, you would outline details of current and required staff, recruitment options, training programs, and skill retention strategies.

• Products and services - Here, the company can outline the products and services it will offer, and may also include pricing, product lifespan, and benefits to the consumer. Other factors that may go into this section include production and manufacturing processes, any patents the company may have, as well as proprietary technology. Any information about product research and development (R&D) can also be included here.

• Innovation and development - Includes, research & development (R&D)/ innovation activities, and intellectual property strategy.

• Insurance - Includes, business revenue, business assets, product liability, professional indemnity, public liability insurance, and workers compensation.

• Risk management - This would be a table listing the potential risks (in order of likelihood) that could impact your business.

• Operations - Includes the production process, suppliers, plant and equipment table, inventory table, technology (software), trading hours, communication channels, payment types accepted, credit policy, warranties & refunds, quality control, and memberships and affiliations.

• Legal considerations - For example, consumer law, business law, or specific legislation to your industry.

• Sustainability plan - This can include, environmental/ resource impacts, community impact and engagement, risks/constraints, strategies, and action plans.

This section should include details of;

• Market research - Statistical research have you completed to help you analyse your market, such as surveys or questionnaires.

• Market targets - Outline your planned sales targets. What quantity of products/services do you plan to sell in a planned timeframe? 

• Environmental/industry analysis - Detail the results of regional market research you have performed. 

• Customer demographics - Define who your target customers are and how they behave.

• Key customers - Identify your key customers.

• Customer management - Have you introduced customer service standards?

• S.W.O.T. analysis table - List each of your businesses strengths, weaknesses, opportunities or threats in the table.

• Your competitors - How do you rate against your competitors? 

• Competitor details table - For each competitor enter; competitor name, established date, size, percentage of market share, unique value to customers, main strengths, and main weaknesses.

• Advertising and promotional strategy table - what strategies do you have for promoting and advertising your products/services in the next 12 months?

• Sales and marketing objectives - What sales goals/targets will the team meet, and how?

• Unique selling position - Why do you have an advantage over your competitors?

• Sales and distribution channels table - For each channel enter; channel type for e.g. Shopfront, internet, direct mail, export or wholesale, products/services sold via this channel, percentage of sales, advantages of using this channel, challenges you expect to face using this channel.

This includes;

• Vision statement - The vision statement briefly outlines your future plan for the business. It should state clearly what your overall goals for the business are.

• Mission statement - What is your business' mission statement i.e. how will you achieve your vision?

• Goals/objectives - What are your short and long term goals? What activities will you undertake to meet them?

• Action plan table - What are the business milestones that you need to complete starting from today? When do you expect to complete them? Who is responsible for delivering this milestone?

This section includes; key objectives, financial review, and assumptions. 

• Financial objectives - List your key financial objectives, sales targets or profit targets, also list main financial management goals such as cost reduction targets.

• Finance required - How much money up-front do you need? Where will you obtain the funds?

• Assumptions - List your financial assumptions. These can include seasonal adjustments, drought, economy or interest rates etc.

• Start-up costs for [YEAR] table - The start-up costs table contains a list of costs a typical business may incur in its first year of operation. Fill in Actual or Estimated figures against the items in the table.

• Balance sheet forecast table - The balance sheet forecast contains a list of assets and liabilities a typical business may have.

• Profit & loss forecast table - The profit and loss forecast contain a list of profit items and expenses a typical business may have.

• Expected cash flow table - The Expected cash flow contains a list of incoming and outgoing cash items a typical business may have.

• Break-even analysis table - Calculations to include here must cover, Total sales needed to break-even, Number of units sold needed to break-even, Percentage of price that is profit.

List all of your attachments here. These may include but not limited to, resumes, inventory list, survey/questionnaire and/or financial documents.

Viability and practicality of original plan. 

• While starting up your business, there may have been many assumptions you made that do not translate well into the functioning of your business.
• Look for the gap between these assumptions and the reality of your business.
• Make adjustments and corrections to ensure that your business plan is more realistic and in touch with the current and future scenarios of your business.
• Create a Business Action plan based on this evaluation and ensure it works well with your strategies for growth.

Your employees are involved in the details of the running of your business.

• Share your Business plan with them and ask for their feedback.
• This will allow you to gauge how the plan actually impacts the running of your business.
• Ask them questions such as; Do they have suggestions to improve ways to provide better customer service? Do they feel the objectives laid out in the business plan align with the way they currently do their jobs? Do they feel that the correct target audience is being reached? Is there any possible target group that could also be targeted for your business?

Before starting your business, you may have listed out your ideal consumer based on age, income, gender and so on.

• After your business has been running for a period of time, you will need to look at these demographics.
• Check if your assumptions were right. Does this group make up a majority of your customer base?
• Can you find a way to widen your Target Group by enhancing your products or services.
• Getting a good grip on which is the right Target group for your business, will enable you to make better marketing decisions as well as allocate funds in a better, smarter way.

When evaluating your Business Plan, it is important to look at industry trends. Have industry trends changed much since the business plan was last implemented?

• Ensure that you are making the best of current trends that impact your business.
• Examine the ways in which competitors have changed their functioning to accommodate the change in trends.
• How does this impact your products or services?
• This does not mean that it is necessary to mirror competitor moves but rather look at the best way you can better your service and deliver benefits to consumers that your competitors are unable to.

Every month, spend an hour with your accountant or set up a weekly meeting in order to get a clear picture of how your resources are being spent.

• Were the original budget estimates of the plan reasonable or accurate? If not, why not?
• How can cashflow/finances be improved?
• Discover if there are other ways in which your resources can be optimised
• Explore how you can reach more people by concentrating on more marketing channels or focusing on the ones that will reap you better benefits for the money, time and effort spent on them.