I wanted to start by talking about the importance of having a business plan… for your business. I emphasised that last bit, because it’s vital to what we’re talking about - it has to be a plan for your business. You can have a standard format, but you should not have standard content. There is no one-size-fits-all formula for writing a business plan.
I often talk about the importance of knowing your ‘why’. What is the purpose or reason for being of your business? Why are you doing – often at great effort and expense – what you’re doing? You need to be able to answer this before you can even start your business plan. Once you have, then developing your business plan will be like a roadmap for your business to achieve your objectives and vision.
A thorough business plan is priceless for any business, and if you’re trying to grow your business in a crowded marketplace, it could be your biggest asset.
Here are a few things every business plan should include:
- A statement of where you are now (a situation analysis)
- Your ‘why’. The purpose or reason for your business
- Where you want to go (your goals and objectives)
- How you are going to get there (the strategies)
- When you intend to get there (the time frames)
- Key performance indicators (KPI’s)
Business plan contents
1. Executive summary
This contains the major objectives and how they will be achieved. It is a concise overview of the whole business plan including a description of your products and services, marketing strategy, management structure, and financial projections. This should be not more than one page, and is often best written after you finish writing the plan itself.
2. The industry
A market overview - an analysis of the industry you are or wish to operate in as it presently stands and its future prospects.
3. The business
Define the purpose of the business. Give details of its main activities, relationships, owners, location, and facilities. Clearly state your vision, mission, goals and objectives. If you are taking over an existing business describe previous business history and details of how you intend to improve the business.
4. The product or service
Define precisely what you intend to make, develop, or sell. Emphasise what makes the product or service ‘different’ to what is already available on the market. Give details, including costs, of any work that needs to be carried out to enhance or continue the development (eg. legal protection or design work), and details of production and delivery.
Want to get started right away?
We've created a free Business Plan template to get you started. As I said, there is no one-size-fits all, so we've made it a document that you can tailor and edit to your specific businesses needs, and it's much easier than starting from a blank page!
The purpose of your business
As part of your plan you’ll need to explain how your business is different from your competition, why you have the products or services you’ve developed and define your competitive advantage.
- Where the opportunities are for your business – are there gaps in the market that you can exploit with a new product or service?
- Your strengths and weaknesses – what does your business do well and where is there space for improvement? For example, do you have outstanding customer service?
- Any threats to your business on the horizon – are you aware of any new competitors or marketing campaigns from your rivals that could impact heavily on your bottom line?
Formulate a SWOT analysis
Have a brainstorming session with your staff (or friends and family if self-employed) to identify your business’s strengths, weaknesses, opportunities and threats. You can even ask your loyal customers for their opinions.
A SWOT analysis helps you pinpoint the positives and negatives of your business, both internally and in your control (strengths and weaknesses), and externally and outside of your control (opportunities and threats).
Your competitive advantage
A competitive advantage is simply what you do better than anyone else. It’s important to be specific about why consumers choose your business over your competitors’ businesses. What exactly is it about your operation that is an advantage?
- Prime location – say you have a burger joint that’s in a prime location, on the main street with huge foot traffic. Your competitors are off the main street, giving you a key competitive advantage over them.
- Regular cut-price discounts – perhaps you sell electronics and are well known for having sales competitors can’t match every two weeks. This would mean your sales can be marketed as a main advantage.
- Personalised after-sales service – perhaps you have a business that sells and installs ovens, and sends staff to people’s homes one month after each sale. If competitors aren’t offering similar after-sales service, this is a crucial competitive advantage.
The smarter you can be about developing and promoting your competitive advantage, the better placed your business will be to succeed. Be careful not to generalise with words like ‘price’ or ‘quality’ – you have to be more specific.
Scope out your competitors
When you’re building your business plan, describe your main competitors. Consider all possibilities – you may have competitors on the same street, elsewhere in your town or city, throughout the country, worldwide and on the Internet. As soon as new competitors enter the market, you’ll want to know about them too.
There may be competitors who aren’t in your precise sector of business, but you may still be competing with them for the same consumer dollar.
It’s a good idea to also do a SWOT analysis on each of your main competitors. Then make use of this information by assessing how your business could reduce your competitors’ strengths and opportunities, while taking advantage of their weaknesses and threats.
No market without marketing
How you’ll position your business in the marketplace and how you’ll continue to trade in the long-term should be answered with an intelligent marketing strategy. Plan your marketing budget and how you’ll use it to help return a profit.
Market research will enable you to focus your marketing budget on targeted consumers, rather than just sporadic advertising.
Detail how you’re going to get the information you need to target potential consumers with print advertising, TV, radio, social media or the Internet.
Implementing your business plan
Here’s a few additional points to consider while you’re implementing your business plan, because business plans need to be lived and breathed, not just put on a shelf and forgotten about.
- Make sure it’s easily accessible and top-of-mind for you and your team.
- Reflect your goals in the day-to-day operations of your business.
- Outline the most practical and cost-effective way to achieve each goal – make a note of any extra resources you’ll need.
- Make it clear these goals are the top priority for the business.
- Business performance may vary, so the plan must be constantly reviewed to compare the expectations with the realities. This will enable you to ensure that your objectives are workable and up to date with the current market conditions.
- That’s why it’s important to check how you’re tracking to reach key milestones in your business plan every month, and celebrate when these have been reached. Also, stay on top of industry trends and stay connected with your customers – this will help you stay ahead of any changes needed in your business.
takeaway tips – and reminders – for preparing your business plan
- Be clear and focused about what you want to achieve – this will help align your team so you’re all working toward the same thing.
- Keep it short, simple and easy to understand.
- Keep your goals realistic and relevant to what is going on in the economy and in your industry.
- Get out and speak with your customers to gain understanding of how your product works for them and whether it’s something they would pay for.
- Do a SWOT analysis to determine your strengths, weaknesses, opportunities and threats.
- Ask your advisor or mentor to review your plan and give you feedback and suggested improvements.
Be aware of these common mistakes when creating your plan:
- Not being able to clearly articulate your business and the value it offers to customers.
- Making assumptions about your customers rather than speaking with them.
- Not reviewing and monitoring your business plan.
- Setting unrealistic or uninformed targets.
Some final thoughts on business goals
No matter what stage of business you’re at or if you’re self-employed, taking time to look at how your business is sitting, and where it’s heading, is key to achieving the business – and the lifestyle – you want.
It’s important to set key goals before you launch a business, or go out on your own. But it’s just as important once you are beyond start-up phase. Set aside time to regularly review your goals and your progress, especially at key business milestones.
Goals affect all aspects of the business, from what you charge, to the quality of your product or service, to which opportunities you follow up, and which you turn down.
Starting a business takes resources. Before you start, you need to understand the business you’re getting into – what product or service you’re going to sell, who is going to buy it, how much it’s going to cost and what your income will be.
You should also be clear about what you’re trying to achieve personally by starting a business – do you want to build it up and sell it for a lot of money, or create something that will support your lifestyle or allow you to work part-time?
Common business goals include:
- Provide the best quality product or service
- Provide the best customer service
- Exploit a gap in the market
- Be the workplace of choice
- Use innovation to reduce costs
- Create a business empire.
A mixture of personal and business goals will give you a reference point for every decision you make. Every decision should actively move you towards achieving your goals or, at the very least, should not distract or detract from your goals.
Auckland Business Chamber