INTRODUCTION

One of the major reasons for business failures has been the lack of, or inadequate, planning. It is vital therefore, that all businesses are operated in accordance with a plan. Even if forecasts don’t necessarily eventuate the benefit of planning would have been achieved. These include:

1.      You have considered and understand the market in which you are competing or plan to

         compete;

2.      You understand the competition you will encounter;

3.      You have analysed your business, its strengths, weakness, opportunities and threats;

4.      You understand what are likely to be the requirements for success in that particular industry;

5.      You realise whether you have the ability, necessary resources and capital to adequately 

         compete in that market.

These would place you in a good position for success or, alternatively, provide you with enough insight to realise that perhaps you would be unlikely to succeed. This can be a wonderful realisation when achieved at the right time – before spending significant amounts of time and capital.

While there are many types of businesses, in different markets and with different structures each requiring a different type of plan, the following outlines general considerations regardless of industry or business type.

BUSINESS PLAN OUTLINE

1. EXTERNAL ANALYSIS

            Details of the overall market/industry

Market segments

Customer characteristics, needs & buying decisions

Supplier characteristics

Changes in the market/industry

Target market & customers

Nature of competition in the industry & target markets

Major competitors, their strengths, weaknesses, products and services

Changes the target market

Opportunities, threats & risks

2. INTERNAL ANALYSIS

This is a statement of where you are now.

Your own business – Strengths, Weaknesses, Opportunities & Threats (SWOT)

Business structure

Customers

Suppliers

Staff

Technology

Performance

Financial situation

Basis for growth

Sustainable competitive advantage

3. OBJECTIVES

Establish objectives, targets and performance measures for all aspects of your organization. These are statements of where you want to be in the future.

4. STRATEGY DEVELOPMENT

            You have an understanding of the market/industry in which you operate, your business as it currently

            operates and you have decided upon your objectives – where you want to be and what you want to

            achieve. Strategy development is the process of choosing the means by which you will achieve your

            objectives (goals) given the nature of the market and your existing situation. You may need to

            consider:

            Marketing

            The products & services to be delivered

            The product & service range to be supplied

            Positioning – product/service differentiation and/or pricing approach

            Target market

            Innovation

            Logistics management

            Sales activities

            Advertising, promotion, publicity etc

            Key staff

            Operations

            Production capacity, scheduling

            Process innovation

            Research & Development

            Equipment requirements & layout

            Material requirements & suppliers

            Location & distribution

            Quality control

            Inventory management

            Human resources – key staff

            Financial

            History

            Profit & loss projections

            Cash flow projections

            Balance sheet projections

            Capital requirements

            Break-even analysis

            Sensitivity analysis

            Management & Ownership

            Key managers

            Intentions of how to attract & compensate people with the required skills

            What are the required skills?

            Organisation structure

5.    IMPLEMENTATION

Once the plan has been formulated and tested from a financial point of view (projections & sensitivity analysis) an implementation plan is required for the purpose of detailing:

a)      Specific actions required for each strategy implementation

b)      Responsibilities for the implementation of each action

c)      Timing requirements for the implementation of each of the actions

d)      Key success factors and measurements for each of the actions

e)      How will progress be reviewed & what evaluation processes will be employed to measure & adjust the business plan.

6.      MONITORING & ADJUSTMENT

The business plan should be monitored against the key success factors, performance targets, deadlines and evaluation criteria. This monitoring process will provide information of how things are going, why are they different to the original assumptions and supply current information which may lead to adjustment of the plan.

Please note that this is just a basic outline of things that should be considered. It is not an exhaustive list and different things may apply in different markets/industries. The process, if done correctly, is quite detailed and can be time consuming. However, the benefits are significant and should be undertaken at regular intervals.

DISCLAIMER:

The information provided is not substitute for professional advice. We disclaim all responsibility for full or partial reliance on the information provided. Obtain advice from your accountant or financial adviser before proceeding.