I recently assisted a client to write a business plan for a start-up business. The client was applying to become the Australian distributor for a US brand of very high end sporting equipment. The US parent company had requested a Business Plan, including financials and cashflow forecast to assist them in selecting a sole Australian importer and distributor for their new brand.
A business plan is a formal statement of a set of goals, the reasons they are believed attainable, and the plan for reaching those goals.
It may also contain background information about the key personnel attempting to reach those goals. It encapsulates all aspects of the business planning process from the vision and strategy to sections covering marketing, finance, operations, human resources, market dynamics as well as a legal plan, when required.
It’s the journey, not the destination, when it comes to writing a business plan for your start-up.
I would argue that the greatest value you will gain from writing a business plan is the time you spend thinking about your business before you write the first words. Expect to spend 8 to 10 times the amount of time thinking about your business and business plan as actually writing the plan – this includes thinking about it in the shower, on the treadmill and at 3 am in the morning!; discussing with trusted advisors; jotting ideas on your iPad notes; trawling the internet to research and understand the market and the competition; gathering facts and testing your assumptions.
5 Tips for Writing your Business Plan
- Allow sufficient time and head-space for the thinking and preparation phase of your planning process. Don’t underestimate the time you will need to research, think about and formulate your ideas. It will typically take several weeks to complete a good plan.
- Seek out and talk to a trusted colleague, neighbour or advisor who runs a small business (not necessarily in the same industry or market) to gain input to your plan around areas you may not have previously thought of. For example: What type and level of insurances does a small business need? How much time do they spend on non-productive activities such as preparing BAS? What options are available to small businesses to finance working capital? What terms of trade are they using? Where do you go to find information about current and proposed legislation that will have a bearing on your business?
- Be conservative in your sales forecasts and generous in your cost assumptions.
- Keep notes on your sources of information and the assumptions underlying your financials and forecasts so that these can easily be adjusted as your thinking evolves.
- Your business plan is there to make a good impression. Ask an impartial person to proof read your final plan to ensure there are no errors in content or layout. Always proof read from a printed version (never attempt to proof read online).
Putting pen to paper or finger to keyboard
The Australian Government website www.business.gov.au has an excellent set of How To guides and templates for writing a business plan. The business plan template is particularly helpful as it not only sets out the key headings and content to be included in the narrative section of the business plan, it also has easy to follow speadsheets for cashflow, profit and loss, balance sheet and break-even analysis embedded into the word document. Work through the business plan template section by section, except for the Executive Summary which should be completed last. Skip any sections that do not apply to your business. Have your trusted colleague, neighbour or advisor look at, question and debate your financial assumptions and double-check each of the spreadsheets. You may also seek guidance from a Business Enterprise Centre or Enterprise Connect Centre in your local area. When preparing your business plan, most of the time will be spent in researching and re-thinking your ideas and assumptions. But then, this is the value of the business planning process.