Assess the weaknesses and threats
If you want your business to succeed, it’s important to take the time to identify not only its potential and strengths, but its weaknesses too.
One area in which business plans often fail is in the accuracy of assessing the weaknesses and threats of the plan. It’s often what you don’t know or didn’t consider that can doom a plan.
For example, while having a correct understanding of the current regulatory environment is important, it’s not as important as the potential impact of pending regulations being considered for the future. Pending regulations are often driven by the political structure that will be in power a few years from now. They can make or break an industry as well as the businesses in those industries.
Now some say gathering smart critics and having them tear your plan apart is not a good thing for your self confidence, however they are good at finding your weaknesses and issues as well as making sound advice. Once you’ve addressed the issues they’ve brought to light, you can let them have another go at it. You can repeat this process until most of them are confident in your plan.
Once you feel confident that your idea has a good chance of being successful, it’s time to flesh out your ideas and start planning for the future. So here are the most important elements of a simple business plan.
The title page is the first page of your business plan and should include the following:
- Your company name and logo
- The names of the business owners
- Your main business address
- Business Number
- Company Number (only if you are a company)
- The date your plan was completed
- A table of contents
The executive summary is a brief overview of the ideas and information you’ve laid out in your business plan. Although it appears at the beginning of your plan, it’s the last section you’ll complete. It should generally be no longer than one page and will provide a compelling description of your business.
Here are some of the points you may want to include:
Relevant owner experience
What qualifies you to run this business? How many years of experience do you have? What are some of your achievements?
Products or services
What services or products will you provide? What is the anticipated demand?
What are your plans for the future? What are your goals and objectives?
Who are your customers? Why will your products or services appeal to them? How do your products or services differ from those of your competitors?
What is your sales forecast? How much money do you need to get started? How much of your own money do you intend to contribute? How much do you need from outside sources? Remember, this is just a summary, so keep each point as brief as possible by leaving out any detailed explanations, and using bullet points and short paragraphs.
Along with a brief vision statement that outlines the purpose of your business and what your goals are, this section will provide details about the history, structure and location of your business.
You’ll need to indicate what type of business it will be, whether wholesale, retail, manufacturing or service-oriented, and list any permits, licenses or domain names you’ve registered. Include the size of your business, whether it’s a sole trader/proprietorship or a partnership and who the owners are.
You should also include information about your main business location, such as the city or town you’ll operate from, whether you’ve purchased or leased a space and why you’ve chosen this specific location.
Products and services
This section will look at the products and services you intend to provide and should address the following questions:
- Are your products or services a luxury or necessity?
- How do your services or products differ from what’s already out there?
- What qualifies you to provide these products or services?
- What is the anticipated demand?
- How much does it cost to deliver what you’re selling?
- Who will your suppliers be?
The market analysis section is one of the most important parts of your business plan as it will help you gain a better understanding of your industry. You’ll need to look at demographics, the target market, market needs, competition, barriers to entry and regulation.
It’s best to gather information on your potential market from as many sources as possible, but a good place to start your search is the Australian Bureau of Statistics, where you can find economic, environmental, industrial, demographic and regional statistics. For specific legal, operational and business requirements check out these industry fact sheets.
Conducting a SWOT analysis is also good way to identify the strengths, weaknesses, opportunities and threats your business may face.
Because each business has to generate revenue, the template lists the questions that need to be answered in order to develop a realistic assessment and business plan.
To identify the internal strengths and weaknesses that can impact your business, you’ll need to look at your organization honestly and objectively. For the opportunities and threats, you’ll need to look at things that are beyond your control to change, but which nonetheless must be factored into your plan.
A good way to think of the opportunities and threats is as the wind to a sailboat, You can’t change the wind, but you can and should adjust the sails.
Once you have a better understanding of your customers and competitors, it’s time to create a marketing plan that will help you develop strategies to attract and retain customers.
Your marketing plan should include:
What are your business objectives? For instance, you may want to enhance your web presence or introduce X number of people to your brand.
A distribution plan
How will your customers buy your products? Will they buy directly from your store or website, or through other retailers and distributors?
A pricing and positioning strategy
How do you want to position yourself in the industry and how will your pricing support this position? For instance, if you’re looking to position yourself as an affordable alternative to high-end brands, your pricing will need to reflect this.
Key marketing strategies
What strategies will you employ to reach your objectives? For instance, if you want to enhance your web presence, you might optimise your website for smartphones and tablets or focus on specific SEO strategies.
Your proposed budget
How much of your total budget will you spend on marketing your product or service? How much will you be allocating to each activity?
A timeline and schedule
What objectives will you aim to reach within the next six months or one year? What marketing strategies should be prioritised? How will you measure your progress?
This section looks at how your business or will be or is currently being managed. You can list the names of all the owners and how much involvement each one will have in the running of the business, as well as each person’s strengths and expertise.
Describe other key members of the team too, such as marketing managers, office managers, accountants or other experts, and include details of any openings that still need to be filled.
You can also provide a brief overview of the salaries for each position and how much you might need to spend in order to attract qualified candidates.
The operations section of your business plan will deal with the materials, facilities and processes that are necessary for the running of your business. What sort of information you should include here depends on the nature of your business, but below are a few points you may want to include.
Who are your main suppliers? What exactly will they be supplying? What agreements have been put in place if any?
What equipment will you need to get the job done? For some businesses, equipment might be as basic as a computers and photocopiers, while for other types of businesses such as restaurants or hair salons, it may include a longer list of items such as stoves and kitchen essentials or hairstyling and barber chairs.
What will your normal trading hours be like? What are the expected peak trading times? An online store would likely be able to trade at all hours, whereas a brick and mortar store might operate from 9 to 5.
How will customers be able to contact you when they need assistance or have a complaint? Some options include email, telephone, in store or through 24-hour chat support.
Payment and credit policies
What payment types will you accept? Cash, credit card, debit card, cheques, PayPal? Will customers have the option of paying in instalments?
How will you ensure a consistently high standard of products or services? Who will be in charge of quality control? What procedures will be put in place?
The financial plan is often one of the most challenging sections to complete, especially if you’re starting a business from scratch, so it’s always a good idea to seek advice on how to create a realistic financial forecast and identify any hidden expenses.
You should include two types of expenses in your financial plan; one-time start-up costs and regular monthly expenses. One-time start-up costs may include things like your business license and equipment, while regular monthly expenses include things such as salaries, stock replenishment and marketing.