Renowned American scientist, inventor and politician Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.” Is that what you want for your new business venture?
It is vital that anyone about to embark on such a major step in their working and personal life takes the time to plan before the venture starts and continue to update the plans throughout the life of the venture. Your plan should be a fluid one, able to change shape according to changing circumstances because, as we all know, the odds are stacked against us that any plans we make will not be challenged by outside forces along the way. And it’s not just one plan you will need, but a good starting point is to have a business plan. Other plans you would benefit from include a budget, a marketing plan, risk management plan and a succession plan (see future posts).
Business plans provide you with an opportunity to commit to writing such important thoughts as:
- What your business is about;
- What you want to get from your business in the short, medium and long term;
- How your business currently sits against competition;
- Strengths, weaknesses, threats and opportunities of your business;
- How you intend achieving your businesses goals.
If you question the value of planning, since quite often we have the rug pulled out from underneath us, consider that one of the advantages of a business plan is that it can show you other opportunities if your plan slips up and it can also provide a road map for you to see some potential derailing of your plans before the train even leaves the station. Wouldn’t we all like to be able to see potential trouble before it happens rather than have to deal with it on the run in a crisis situation?
Although you can engage a professional such as CJ’s Business Solutions (www.cjsbusinesssolutions.com.au) to assist you with the preparation of your business plan, if you have the time and the mindset you can also undertake the project yourself. The internet offers many templates that can be downloaded to assist you and the local regional development organisation can often also assist with tools such as this. See the Reference section below for links to some valuable websites for business plans.
If you are going to need to seek finance to establish your business a business plan will be essential. You can choose to include specific budget figures within your business plan, or you can choose to run the budget as a separate tool. Remember, the hardest business plan you will do is your first because after that you will simply be updating the framework that you already have in place.
A very simple business plan could contain the following:
- Introduction: An overview of what your business is about, particularly if it a new business. Include your goals too as it’s important to keep these in your mind when considering planning strategies.
- The History: If your business has already been running, this could be a brief overview of what has occurred over the past 12-24 months, depending on the nature of your business. You could look back on your previous business plan and see if you achieved what you set out to achieve. It’s important to consider changes in competitor behaviour, how you believe your product or service is faring against your competitors, innovations that have been introduced and anything else that has had a bearing on your business either positively or negatively in the recent past. This is important for (a) it provides an overview for any potential future purchaser of your business and (b) it also gives you a focus on what has happened so you can learn from the mistakes when you get ready to plan ahead.
- SWOT Analysis: This is a great analysis that needs to be updated regularly as things will change. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. Bear in mind when you’re writing these down that some comments and situations may fall into more than one category eg a strength of a regional business may be its close proximity to a metropolitan market (to attract new markets), but this could also be a weakness (loss of potential local customers who go to the metro area to shop).
- Strengths: These are the good things about your business. Examples might include loyal, professional staff; quality product; exclusive product; new modern equipment; strong, established customer base; reputation etc
- Weaknesses: These are what could be seen as the problems of your business. They might include such as things as: highly-stressful environment; unskilled team; unreliable equipment; small base of customers; limited market reach.
- Opportunities: These can often be taken from some of your weaknesses eg a limited market reach might mean there’s an opportunity to expand into other areas; an unskilled team might mean there’s an opportunity to build a highly skilled team through training and therefore boost efficiency.
- Threats: This is fairly self-explanatory – anything that has the potential to threaten the success of your business. Some examples might include: a new competitor; illness for a sole operator; not keeping up with technology; business too busy to properly service customers.
- The Year Ahead: This is a little like crystal ball gazing, but it should be done with knowledge of your market and your products and services and based on your SWOT analysis too. Consider what you see as the challenges that lie ahead for your business. This will lay the foundation for the development of your strategies.
- Strategies – Short Term: Your strategies should be what you aim to do in the short term (for many businesses this could be over the next 12 months). Strategies should cover what you plan to do with prices, strategies for cost cutting, expansion plans, any strategies to deal with items you’ve listed in the Weaknesses and Opportunities sections in particular. Don’t forget that your strategies might also include focusing on your strengths too. For example, you might want to promote your strengths harder as one of your strategies.
- Strategies – General: These are more your long term strategies. This is a good place to also try to record your thoughts and proposals to deal with the threats. If the threat arises it’s far better to have given thought to it in the clear light of day rather than when you’re under pressure. Consider too how you might make the most of the opportunities you’ve listed because, realistically, you are not likely to be able to take advantage of all of these in the short term.
Remember, although you can prepare your business plan yourself, getting feedback or input from another party, particularly on your SWOT analysis can be very insightful. You may not see all the strengths, weaknesses, threats and opportunities that are there because you’re too close to the business. The exercise may take you more time than you’d like to give, but it will be well worth the investment. You can update your document as often as you like. You will find writing your first version will take the most time. A handy tip is to keep it electronically on your laptop or tablet so you can update and print as your circumstances change and so you can refer to it to help you stay on track.
Handy links to websites:
- The Australian Government’s business website is a great place to find tips and even templates to help you write your own business plan.
- Sample business plans relevant to a range of businesses.
- Tips and tricks on writing a basic, simple business plan.
By failing to prepare, you are preparing to fail. – Benjamin Franklin