An essential roadmap for any business
A vital document for any business is a carefully written business plan outlining what your plans are and how you are going to achieve them. A business plan serves as a blueprint to guide your business objectives, vision and strategy. The purpose of the business plan is to:
- Help you focus on the core aims of your business by considering all possible options and anticipating any potential difficulties.
- Assist with securing finance by convincing lenders and investors that you are in control of the project and that your business is worth investing in.
- Serve as a guide which can turn your idea into a viable business.
- Provide a benchmark for future business decisions and outcomes.
- Give you a place to list specific goals and objectives for your business, helping you set out clearly how you plan to meet these goals and on what sort of timescale. It forces you to commit to that course of action
A well written business plan is a viable tool that can enable you to outperform your competition.
Key items a business plan should include
Executive Summary
This is best written last and should provide a concise overview of your business plan. Anyone reading this should be able to have a clear idea of what your business plans are.
Business Overview
This should include business description, vision, ownership structure and what the business has done in the past and what you intend to do going forward. Look at the industry you are in and include a brief overview of this, including what products or services you offer.
Goals & Objectives
State your goals and objectives clearly. Goals should be SMART i.e. Specific, measurable, attainable, realistic and timely.
Your business will have a number of objectives such as Financial, Strategic, Operational and Marketing etc. By making your objectives specific, you can measure progress towards them. For example, increase in sales this year by 10% and Gross Profit margin by 3% is lot better then just stating ‘increase turnover’.
Strategies
Consider the following when developing strategies: How do you plan to achieve your goals and objectives, your competitive advantage, go to marketing, pricing and operational strategies.
Situation Analysis
You should conduct a SWOT analysis (Strength, Weaknesses, Opportunities and Threats) that your business faces and go through each of these in detail. This will help you understand your business, your competitors and the current business environment.
An example of a SWOT analysis for a Golf club would be as follows:
| Strengths | Weaknesses | ||
| Location and proximity to facilities | Financial position and bank overdraft | ||
| Scenery | No marketing plan | ||
| Big clubroom & good conference facilities | Lack of CRM system | ||
| Easy Walk with gentle sloping hills | Inconsistent levels of catering | ||
| Sand based greens | Lack of practice facilities | ||
| Internationally designed course | Signage | ||
| Strong junior membership and academy | Drainage issues | ||
| Opportunities | Threats | ||
| Potential closure of other golf courses | Severe weather | ||
| Better use of existing facilities e.g. | Loss of existing members | ||
| – Conference room for meetings | Other nearby courses especially their | ||
| – wedding venue | pricing policies | ||
| – Other functions i.e. birthday etc | Lack of resources to maintain/develop course | ||
| Become a community facility | |||
| Social membership esp. for locals | |||
Management
Show how your business will be managed and staffed. Document the key personnel in your business and what are their job description and responsibilities.
Financial Plan
A business plan should include a comprehensive financial plan. A fully integrated forecasted Profit & Loss statement, Balance Sheet and Cashflow statement helps you determine what profits you are able to generate. Going through the process of preparing these budgets increases your understanding of the critical factors to making a business successful. You get to learn how items such as debtor collection days, stock turnover, and interest cover affect your business and how a small change in these can either improve or have a detrimental effect on the bottom line of your business. You should keep a list of all the assumptions made as you go along. Include this as an appendix as this will demonstrate that you have considered all the variables.
Succession Plan
Succession planning is one of the most important aspects a business owner should consider. This helps to show that you have thought of how the business will work in the future. Identify and put measures in place to develop key internal personnel. These staff should be groomed to fill in key business leadership positions in the firm.
Conclusion
A business plan is a working document and needs to be regularly revisited during the life of the business. Many make a mistake and limit the use for a specific purpose and then forget about the document.
This article has been written by Anit Patel an Associate Director in the business advisory division at DFK Oswin Griffiths Carlton Ltd. He can be reached on 09 379 3890 or anit.patel@dfkogc.com.
