Do you have time to fail?
Twenty one percent of small business owners obviously do, claiming they don’t have time to write a business plan, yet one third of small businesses fail because they lack one, according to an NAB survey. Overall, the survey continues, 40% of small businesses don’t have a plan, which means about 800,000 Australian enterprises are flying by the seat of their pants. So what exactly is this elusive plan statistics and experts alike say we need? Many liken it to a road map, but I’d like to suggest it’s more than that: a business plan doesn’t just tell you how to get somewhere; it also helps you decide exactly where it is you want to go. Put simply, your business plan is a written document that defines your goals and sets out procedures to help you achieve them.
It’s not just about preventing failure
Of course, despite what the shocking statistics above may suggest, a business plan is not just a tool to reduce your chances of failure. It’s far more exciting — it actually maximises performance, so much so that independent studies in the US suggest businesses with a good one enjoy a whopping 63% higher sales growth and 58% higher profit growth than those without.
Need more incentives? How about:
- Reduced costs
- Better cash flow
- Higher moral
- Less uncertainty
- Faster decision
- Improved competitiveness
- More efficient use of resources
A word of warning Are business plans a “subgenre of contemporary fiction” as writer and television presenter Alain de Botton accuses in his book The Pleasures and Sorrows of Work? As much as I hate to admit it, he’s right to some degree. Unfortunately, it’s easy to look good on paper, but too much “creative license” or even just going through the motions because you know you need a business plan doesn’t fool anyone, especially banks and investors. What’s more, it won’t make an ounce of difference to your success or failure. The key is to keep it real and to do that you:
- Research, research, research… verifiable statistics from agencies like the Australian Bureau of Statistics are your best friend.
- Back up everything you say about your business and industry with evidence and examples (see above).
- Speaking of examples, read other business plans… take the time to go through the links at Business Victoria and you’ll uncover gold.
- Get credible, independent advice when developing those parts of your plan that are subject to speculation or “guestimates,” such budgets and sales forecasts… head straight to your nearest Business Enterprise Centre or state government small business website.
What to include While there’s no set presentation and contents for a business plan, you need to cover six basic sections:
- Executive Summary: a one or two page synopsis of your plan, which you write last
- Business Goals:
- Vision
- Mission
- Goals
- Milestones/benchmarks
- Management Plan:
- Operations
- People
- Products/services
- Suppliers
- SWOT analysis (strengths, weaknesses, opportunities, threats)
- Marketing Plan:
- Industry overview
- Target market/customer profiles
- Competition and competitive advantage
- Distribution/sales channels
- Pricing policy
- Sales and advertising strategies
- Financial Plan:
- Start-up costs
- Profit or loss forecast
- Cash flow forecast
- Sales forecast
- Assets
- Sources of finance
- Supporting Information:
- Resumes
- Statistics in graph format
- Logo
- Floor plans
Phew… what a ginormous list! The bad news is that it’s just the beginning, but the good news is that there are a tonne of resources to help you flesh out your business plan. Check out business.gov.au for a comprehensive array of guidelines and templates that walk you through every step of the process. Put it into action This is where the rubber hits the road, where your business plan gets dog-eared and covered in coffee cup rings! You need to USE it every day as you manage operations, measure performance and plan ahead… and, most important, remember that your business plan is a “living” document that needs to be reviewed and updated as you reach your goals and your business grows or changes. Admin Bandit won the Business Plan category at the 2008 Canberra BusinessPoint Gala Awards.
