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Developing Your Business Plan

Written by: Lawrence Atkinson

Article Overview: Why Plan for a Business That Already Exists? There are plenty of reasons. The ability of a small business to react quickly to market impetus gives you a substantial advantage over your larger competitors. However, resources in a small business that are in short supply must be used to their fullest potential. This makes such businesses highly vulnerable to failure if their progress and development is not tightly controlled. A business plan provides a vehicle for the strategic planning and continuous monitoring of your business - allowing you to avoid the pitfalls of haphazard growth, such as cash flow starvation, reduced profitability and loss of custom.

Developing Your Business Plan

The benefits of preparing a business plan are many and varied. They include:

Gaining a better understanding of your business, the market in which you compete and your competitors;
An expansion of focus from short-term local issues only to include an awareness of longer-term issues that may affect ongoing viability;
Creation of an information system that will promote more effective decision-making within your company;
Identification of key areas of product and service development (both current and future) and the finances and resources that will be required to develop them;
An evaluation of current internal systems, their efficiency and effectiveness, and ways in which they can be improved;
Providing a means of communicating with staff and other interested parties (bankers, financiers, business advisors, suppliers, customers, partners, etc);
Providing an ongoing resource in relation to both planning for future action and monitoring progress towards set objectives;
Providing a means of identifying and achieving both the personal and altruistic goals of the business owner, and of optimising the development of the asset which every business represents.

A business plan not only analyses the performance of your business to date, but also appraises the current and future potential of the market, the strategies most likely to capitalise on that potential and the organisational requirements for efficient and profitable operation.

Who should be involved in business planning?

The answer to this question is simple and direct... you!

What Does the Business Planning Process Involve?

Business Planning is a structured enquiry, geared to ensuring research and analysis into all facets of your business, preventing areas being overlooked by virtue of your familiarity with the subject matter.

The information below provides a hands-on description of the process, which will allow you to use the "skeleton" provided to attach the "flesh" relevant to you, and to develop a comprehensive business plan, useful both in the short term and as a planning guide for the future.

The sequence followed in the table of contents is the sequence in which you should prepare your business plan.

On the basis that it is impossible to proceed with any research without having firmly defined the business itself, the core or mission statement must be determined. This may, of course, be modified as you proceed. For example you could start with something like:

"The major goal of XYZ Business Pty Ltd is to provide the catalyst for both personal and company change, in an ever evolving environment, acknowledged as a company of outstanding ability, equalled by few, if any, in the industry in which it participates."

The next step is the identification and analysis of the market itself, providing the basis for all planning which follows it. Having identified the market, you next need to formulate the strategies, which will allow it to be reached most effectively. The marketing plan, which is tackled next, fulfils this plan.

Identification of the means and method of producing your services, resources required and schedule of operations come next. To this end, the production plan is followed by the implementation schedule. Having collected all the data necessary to define your business and your operations, it becomes possible to make some realistic statements relating to funding your operations. The financial plan is therefore the final step in the planning process.

A summary and recommendation (including an executive summary) can then be formulated in the light of what is now a complete study of the market and the business itself. These will summarise your findings and highlight the changes and tactics that your business should pursue.

Your business plan will have the following ingredients:

Executive Summary

Statement of Business Objectives:
Core/mission statement
Objectives

Company Background and Organisation:
History and background
Company organisation
Financial results

Analysis of Market Structure:
Technical description
Market size
Market segmentation
Market growth potential
Seasonality
Competition
Pricing
Promotion
Market trends
Key success factors
S.W.O.T. & R. (strengths, weaknesses, opportunities, threats, and restraints) analysis

Marketing Plan:
Analysis of objectives
Marketing strategies
Growth projections
Measurement of objectives
Sales forecasts
Risk assumptions
Other strategic issues

Organisational Plan:
Ownership
Management planning
Organisational planning
Training
Administration

Production Plan:
Information sourcing
Inventory (staff)
Equipment and accommodation
Impact of seasonality
Output (time period)
Costing
Workflow and office layout
Quality, performance, staff, and waste control

Implementation Schedule:
Human resource issues
Marketing issues
R & D

Research & Development Plan:
Product and service development
Processing development
Research development

Financial Plan:
Analysis of sales, profitability, cash flow, and overheads to date
Cash flow forecasts
Profit and loss forecasts (including return on investment)
Break-even and sensitivity analysis
Sources and application of funds

Summary:
Conclusion
Recommendations

Many business owners will read through this article and complain that they just don’t have time to spend putting their plan together. Once a business plan, as described above, is completed it is highly unlikely that the business owner will ever need to go into that level of information again. Indeed these days, many existing businesses are resorting to a “One Page” Business Plan, which is just as effective – providing you have done the in-depth plan first.

This is where we can help. We have produced a 42-page workbook, where all you need to do is fill in the blank spaces – and you can handwrite it in! No special software or computer skills are needed. If you would like to have a business planning session facilitated, this too can be arranged – from one to three days depending on your needs.

Remember the old saying: “Most businesses don’t plan to fail, they just fail to plan.”

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Article Tags: advantage, business, business plan



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