Saturday, 17 March 2018

Why Use a Business Plan

Prospective business owners contemplating going into Business who develop and follow a formal Business Plan generally have a higher degree of success compared to those who do not develop a Business Plan.

This can be attributed to the process of evaluation that a Business owner undertakes, especially at start up, to ascertain whether the Business is feasible and to keep the Business on track.

A properly prepared Business Plan guides and focuses the Business owner's attention on matters relevant to their Business, such as:

Structuring

What structure will be uses: (a) sole proprietor (b) partnership (c) company or (d) trust. Each have different advantages and disadvantages depending on the Business owner's particular circumstances.

Direction

Creating a road map for the development and growth of the Business.

Finance

Planning out the Business and placing you in a stronger position to obtain finance or interest from investors.

Assessing how much finance the Business owner will need at start-up and ongoing.

Vision & Mission

Developing a mission and vision for the Business.

Determining what is the future plan for the Business.

Culture
Determining the values and culture of the Business.

Benchmarking

Establishing benchmarks to compare Business performance and make appropriate alterations.

SWOT
Analysing the Business owner's strengths and weaknesses, opportunities and threats.

Target Market
Better identifying the target market for the Business.

Competitors
Identifying competitors.
Developing strategies to achieve a competitive advantage.

Goals/Objectives

Setting short, medium and long terms goals for the Business.

Timeline
Developing a timetable for achieving goals and objectives.

Products/Services
Fully describing the products and services the Business will offer.
Marketing
Creating marketing strategies.

Pricing

Determining a pricing strategy.

Costs, Income & Profits
Analysing start up and ongoing costs, projecting income and profits.

Suppliers

Identifying preferred suppliers and how supply will be effected.

Employees
Determining staff requirements.

Plant & Equipment
Assessing what plant & equipment will be required.

Inventory
Calculating the type and amount of inventory needed.

Location
Evaluating the location where the Business will trade.

Premises
Determining the type and size of premises required.

Information Technology
Confirming the computer systems and software needed.

Communications
Determining internet, email, fax, PO Box, telephone, mobile, etc.

Intellectual Property

Identifying Business IP and protection strategies.

Payment/Credit Policies
Determining mechanisms by which customers can pay, such as: cash, credit card, cheque, EFTPOS, etc.
Insurance
Evaluating what insurance is required.

Legals
Identifying legislative and regulatory obligations and how to comply.

Conclusion

A Business Plan is a living document and a management tool.  It should be reviewed and adapted to changes in the Business and the external business environment.

Reviewing the progress of the Business against the Business Plan on a regular basis is a good way to measure actual performance, and will provide relevant information upon which the Business owner can revise and update their plans. 

The content and structure of a Business Plan will vary depending on the nature of the business.

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Disclaimer

The material provided in this document is for general information only and is not to be relied upon as advice. No responsibility is accepted for any loss, damage or injury, financial or otherwise, suffered by any person or organisation acting or relying on this information or anything omitted from it.


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