Whether you are setting up a business, looking to buy an existing business or planning to grow or franchise an existing small business, writing a business plan is an important step towards achieving your business goals.
What is a business plan?
Put simply, a business plan is a document that outlines your business goals and how you are going to achieve them. Think of it as a roadmap to help you get your small business from where it is to where you want it to be.
“A good business plan can help you get clear on the direction of your business, identify strategies and an action plan for you to achieve your business goals, and help you secure the financial backing you need to start or grow,” said Martin Hoffman, BOQ Business Head of Corporate, Victoria and Western Australia.
If you are starting a new business, writing a business plan will be a vital first step in helping you identify if your idea is viable and what business funding you will need. Importantly if you need to secure funding for your start up, you will also need a business plan to apply for a small business loan or write a business case for potential investors.
“Writing a business plan is often overlooked or not taken seriously by small business owners. It may not seem an important requirement when you are juggling the excitement of starting your business but having a business plan is a good blueprint for how you wish your business to operate. If undertaken diligently, your plan may address a number of issues and contingencies that you may not have otherwise considered. It also demonstrates the capabilities of sound management to your business financier or other potential stakeholders,” Martin said.
How to write a business plan – what you need to include
A good business plan will outline the operational and financial aspects of your business including:
- A situation snapshot including a brief background about your business (such as who started it, when it was started, your business structure, current status of the business and how you plan to launch and/ or grow)
- An outline of your business showing the products and services you offer (or plan to offer if you are a start-up business, or launching a new online business or franchise business model as part of your growth strategy). This section should also outline what makes your offering unique.
- Your short-term and long-term business goals for the next 12 months at least. Depending on the nature and purpose of your business plan you may need to include forecasts and plans for a few years ahead.
- A market analysis that outlines of your target market and competitors, with a simple SWOT (strengths, weaknesses, opportunities and threats) analysis to help you identify your business and marketing strategy.
- A summary of your marketing and sales strategy – including your brand positioning, pricing strategy, distribution channels, planned marketing and sales activities .
- An operational plan encompassing your management plan and staffing requirements (including a plan for hiring and retaining key personnel) and a description of your facilities, equipment, inventory and supply chain requirements.
- A financial plan outlining your projected profit and loss summary, an operating budget and an indication of how you plan to manage your cashflow .
- Think about who you are writing your business plan for (e.g., is it primarily for yourself, your employees, potential investors or creditors, external consultants?) as your audience will determine what elements and level of detail to include. If it is primarily for external audiences (such as your business bank or investors), don’t assume they will just be interested in the financials – they will also want to see how you plan to meet your business objectives.
- Do your research before you sit down to write your business plan. This should cover market trends, details of how big the market for your products and services is, and other factors that might impact your business and marketing strategy, as well as your ability to attract business funding.
- Be realistic – make sure that you set realistic and achievable business goals. This should be a document that you refer to regularly as a benchmark for how your small business is tracking.
- Make sure you update your business plan every year – taking into account any changes to your business, the industry you are in, or macroeconomic factors (such as changing interest rates, pandemics etc) that may impact your business.
- Avoid using overly technical language or jargon particularly if the intended audience includes people who work outside your business or industry.
- Ask for help from your accountant or small business banking expert if you need it.
It’s worth noting that there are no set rules for what to include in a business plan or how long it should be. The level of detail will depend on what the purpose of the plan is and who will read it. Your plan doesn’t need to be ‘War and Peace’ and even a simple one-page business plan may be all you need. It is easy to find a sample business plan through and online search.
The Australian Government’s business.gov.au website includes valuable information for small business owners including details about government support and assistance available, tips on how to develop your business plan and a free business plan template.
Contact us to find out more about how BOQ Business can support your small business