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How to write an effective

Business Plan

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Introduction There are 3 types of people: -

1. People who make things happen

2. People who watch things happen, and

3. People who ask “What happened?”

If you do not have a business plan, your future can only ever be an extension of your

past. Goals and strategies are a must unless you want to stand still. Writing a

business plan forces business owners to think through the business in detail and

think about where the business is headed, or where they want it to go, rather than

being taken along with it.

“We cannot solve our problems with the same level of thinking that created

them” - Albert Einstein

Do you have a clear idea of what you want out of your business and your life, and

how you're going to achieve these goals? If you're like most people, chances are

you've never thought very much about this sort of thing - which means that no one

else knows what you really want either. And not knowing what success means to you

makes it harder for others to give you the right assistance and support.

In order to put a plan in place, it makes sense to start by looking at the current status

and also the history of the business, strengths and weaknesses in your business and

your environment. You'll identify issues that need to be addressed and opportunities

you can develop.

At the end of the process you'll evaluate and prioritise your issues and opportunities

according to how important they are against how easy they would be to address.

You'll then select your high-priority issues and opportunities and develop these into

Action Points.

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My Business is? What business are you in, what do you sell?

What need do your products or services satisfy?

Explain your market niche or your competitive advantage in the marketplace?

List your competitors

How do you think your industry will change in the next 3 – 5 years and what do you

need to do to adapt?

What makes you confident your business will continue to grow and be sustainable?

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Values & Motivations Most business people are in their own business for very specific reasons.

One of the main requirements for success is the ability to clearly identify and express your values and the motivators that drive you. Your values are a central part of who you are – and who you want to be.

If you can find out what motivates you and what values you have, then you can achieve your business goals by setting in place those ideas and actions that continually support and reinforce your values and motivators.

What is really important to you? What do you value?

The following is a list of common values.

Circle the ones that are most important to you.

Accountability Accuracy

Achievement Altruism Authority Balance

Being the best Challenge

Commitment Community Compassion

Competitiveness Consistency

Continuous Improvement Control

Cooperation Creativity

Customer service Decisiveness Effectiveness

Efficiency Environment

Excellence Expertise

Faith Family Fitness

Free time Fun

Growth Happiness Hard Work

Health Helping others

Honesty Independence

Innovation Integrity

Leadership Legacy

Making a difference Money

Personal development Professionalism

Quality Recognition Reliability

Resourcefulness Respect

Responsible Results-oriented

Risk taker Security Speed

Spontaneity Stability Strategic Success Support

Sustainability Teamwork Tolerance

Traditionalism Trustworthy Uniqueness

Wealth

Now select for top 5 values

1. _____________________________________

2. _____________________________________

3. _____________________________________

4. _____________________________________

5. _____________________________________

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Core Values of your business – what do you stand for?

We do what we say

We do it fairly

We execute with speed

We take prudent risks

We work as a team

We support each other

We are accountable for our actions

We make tough decisions

We are performance driven

We are dedicated to satisfying customer needs

We help our community

We are concerned about the environment

We act with honesty and integrity

We are proud of our work

We deliver high quality products and services

We respect our team members, customers, partners and suppliers

We listen and share ideas

We communicate openly, honestly and frequently

We optimize our financial and physical resources

We continuously simplify and improve our processes

We work together to meet our common goals

We are creative in delivering value

We anticipate change and capitalize on opportunities

We lead by example

We seek sustainable and profitable growth

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Vision A business vision describes in a few words your long-term aims for the business and a broad outline of how you're going to get there.

Think about the industry you're in, what's important to you, and what you might want to achieve. Consider: -

What does success look like to me?

Why is achieving this important to me?

How will I achieve it?

You can write a business vision, a personal vision, or a combination of both. Your vision creates a destination point for your business plan, enabling you to map out what you need to achieve to get you there.

“To succeed you have to believe in something with such passion that it becomes a reality” – Anita Roddick

Write your vision in the box provided below, but remember, if your vision does not motivate you enough, you may need to reconsider.

Your Vision

.............................................................................................................................................

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.............................................................................................................................................

.............................................................................................................................................

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Key Success Factors

How do you define and measure success in your business? How do you know if your business is a success? Can you tell if you are on or off course? If you are off course, what corrective action(s) can be taken? To create effective measures, you must first identify the key things that, if you do them well, will ensure the success of your business in your industry?” Once you have listed your Key Success Factors (KSF), it is then important to identify ways of measuring your success in each area. These measures are called Key performance indicators or KPIs, For example, if your business success is dependent on the standard of service you provide you might want to create a way of measuring customer satisfaction..

Instructions 1. In the first column are key success factors. Because these vary with each market,

you may want to add some of your own. 2. In the cell labelled "My business," state honestly how you think your business

stacks up in the marketplace. 3. Then decide whether you think this factor is a strength or a weakness for your

business and whether any action is required.

Key Success Factor My business Strength / Weakness

Cashflow / working capital

(Manage and monitor)

Profit margins

(Manage and measure)

Debt collection process

Stock and stock turn

(Manage and measure)

Product range (limited,

extensive)

Target Market (budget,

mid range, high)

Product/service quality

standards

Customer service

standards

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Key Success Factor My business Strength / Weakness

Reliability

Speed of delivery

Market stability

Distribution channels

Expertise you/staff

Brand image and

awareness

Customer satisfaction and

loyalty

Reputation

Location

Appearance

Market niche or point of

difference

Market penetration (low/

high)

Marketing strategy –

including online

Competition (high, low)

Ongoing competitor

analysis

Ongoing market analysis

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SWOT Analysis Template State what you are assessing here. Examples shown are not exhaustive. You should identify and use any other criteria that are

appropriate to your business.

Criteria examples

Advantages of proposition?

Capabilities?

Competitive advantages?

Existing “Point of Difference”

Resources, Assets, People?

Experience, knowledge, data?

Financial reserves, likely returns?

Marketing - reach, distribution, awareness?

Innovative aspects?

Location and geographical?

Price, value, quality?

Accreditations, qualifications, certifications?

Processes, systems, IT, communications?

Cultural, attitudinal, behavioural?

Management cover, succession?

Strengths

Weaknesses

Criteria examples

Disadvantages of proposition?

Gaps in capabilities?

Lack of competitive strength?

Reputation, presence and reach?

Financials?

Own known vulnerabilities?

Timescales, deadlines and pressures?

Cashflow, start-up cash-drain?

Continuity, supply chain robustness?

Effects on core activities, distraction?

Reliability of data, plan predictability?

Morale, commitment, leadership?

Accreditations, etc?

Processes and systems, etc?

Management cover, succession?

Criteria examples

Market developments?

Competitors' vulnerabilities?

Industry or lifestyle trends?

Technology development and innovation?

Global influences?

New markets, vertical, horizontal?

Niche target markets?

Geographical, export, import?

New “Point of Difference”

Tactics: eg, surprise, major contracts?

Business and product development?

Information and research?

Partnerships, agencies, distribution?

Volumes, production, economies?

Seasonal, weather, fashion influences?

Opportunities

Threats

Criteria examples

Political effects?

Legislative effects?

Environmental effects?

IT developments?

Competitor intentions - various?

Market demand?

New technologies, services, ideas?

Vital contracts and partners?

Sustaining internal capabilities?

Obstacles faced?

Insurmountable weaknesses?

Loss of key staff?

Sustainable financial backing?

Economy - home, abroad?

Seasonality, weather effects?

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Goal setting The vision that you have created for the future may seem unachievable at the moment, or a long way off. Once you have analysed the current status of your business, you can measure the gap between where you are now and where you want to be. To get there may require several steps, so it’s important to take it one step at a time and break the task down into smaller more achievable chunks. This process involves setting a series of shorter term goals that bring you closer to your vision. No business or individual can focus on or accomplish more than 5 things at a time. In considering your business objectives, start by identifying and prioritising the top 5 activities that will deliver the results that you are looking for. Goals formatted in S M A R T way are more likely to deliver results.

• SPECIFIC - if they’re too general you lose focus

• MEASURABLE - because you can’t manage what you can’t measure

• ACHIEVABLE - if they’re too tough you may become disillusioned and give up

• RELEVANT - your goals should relate to you and your business

• TIME RELATED - without a deadline, your goal is just a dream that you have forever to achieve

Having the goal is not enough to achieve results; you also need to identify the actions that will enable you to achieve it. Example Goal: You may have identified that to grow your business you want to grow your net profit by 10% per annum Actions: Analyse profit and loss statements over the previous 3 years to identify your current gross and net

profit margin.

Calculate how much additional revenue you need to generate to increase your net profit.

Consider raising prices and or negotiating with suppliers to increase profit margins.

Identify the products or services that give you the best profit margins and identify ways to sell more of them.

Work out your average conversion rate from customer enquiries to actual sales and identify the number of enquiries and sales required each week.

Establish a system to track actual results against your forecasts to keep you on track.

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When setting your goals, check that they are achievable within the timeframe. If not, break them down into a series of more achievable goals.

Decide what actions will be required, the timeframe that it will be completed, who will take responsibility and how you will measure success.

GOALS / OBJECTIVES ACTIONS REQUIRED MEASURE BY WHO BY WHEN

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GOALS / OBJECTIVES ACTIONS REQUIRED MEASURE BY WHO BY WHEN

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Examples of other possible actions

Identify your target market and or ideal customer

Establish a customer database. If possible record what and how frequently customers buy.

Find out and record the reasons customers don’t buy from you. If they buy from your competitors, find out why.

Take time to complete a competitor analysis to identify your strengths and weaknesses in the market place and also identify if there are any opportunities that you can leverage or any threats that you need to action.

Establish a point of difference between your business and your competitors, how can you market it?

Identify additional products or services that you could offer that your competitors don’t.

Create a website

Create a social media strategy

Identify people or businesses that you can team up with to create more business.

Identify what constitutes great service in the eyes of your customers.

Establish a system of recording and monitoring customer satisfaction and identify ways to keep existing customers.

Measure skill level of staff and identify training needs

Ensure staff are trained and motivated to do their job effectively.

Create a complaint handling process

Calculate breakeven for you business and set monthly sales targets.

Identify at least 5 ratios to track and monitor the performance of your business.

Create a profit and cash flow forecast for your business.

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Market Research - My typical/Ideal customer is Private individuals Commercial Businesses Male / Female Small / Medium / Large

Marital status Location Married/ De facto Local, National, International Single Accommodation Status Age Home owner < 10 years Renting 10 – 20 Gen Y Financial status Gen X Wealthy Baby Boomer Disposable income Elderly On a budget Do you have a customer database? Do you know how often your customers buy from you? Weekly Monthly Yearly Other ………………………

What is the average purchase value? $ ................................................... What motivates your customers to buy your product or service? Is their purchase demand driven or discretionary? Based on your typical customer, what is the size of the market? ………………………. Why do they buy from you rather than your competitors?

Who are your most profitable customers?

What market research have you done?

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Marketing

What media do your customers use to look for a business?

Newspaper ............. Radio ..................... Flyers ...................... Recommendation ...... Yellow Pages ........ Street signage ......... Online Search Engine Facebook .............. Local directory ......... Any other methods

What marketing methods do you currently use?

Do you have a marketing plan and budget? Do you monitor to see if your marketing methods are successful? Yes / No

How do you know whether your existing customers are satisfied?

How do you encourage referral business?

Do you have any strategic alliances that will assist you in reaching your target

market?

How do your competitors promote their products & services?

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Financial Analysis

How frequently do you look at your profit and loss statement and balance sheet?

How do you measure financial and business performance? E.g.

o Gross profit to sales ratio

o Net profit to sales ratio

o Conversion rate (% of customers that buy)

o Average sale per customer

o Stock turnover days

o Average debtor days

o Average creditor days

o Work in progress days

o Other …………………………..

Every business is different, so it’s a good idea to talk to your accountant to help you identify the relevant ratios for your business

Are sales on an upswing, level or on a decline?

What is your break even point?

Do you have a credit policy?

Have you established Terms of Trade with your customers?

What profit assumptions have you used for the business?

Have you obtained any Industry Benchmarking in respect of financial performance indicators?

What systems do you have in place to monitor financial performance

What cashflow assumptions have you made?

Have you allowed for seasonal variations and potential cash flow shortfalls? Assistance with calculating these items can be found at www.anz.co.nz/bizhub

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Technology What technology are you using now?

......Accounting software package ......Website ......Social Media e.g Facebook, Twitter, Linkedin ......Using email to communicate with suppliers & customers? ......Setting up an email newsletter? ......Writing a Blog? ......Sending an invoice by email? ......Surfing the web for market research on your competitors and/or new

products & innovations? ......Google alerts to send you industry updates ......Having EFTPOS and Credit card facilities available for customers? ......Using electronic banking ......Ordering office supplies over the internet

What technology could you be using?

Think about what types of technology your customers might be using? (The age groups of your existing and/or prospective customer might provide a clue.)

Are your competitors using technology or could you use of technology give you a competitive advantage?

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Team and management structure

Have you created an organisational structure for your business, outlining roles and responsibilities?

Outline the skills and experience of yourself and management team and identify any skill gaps?

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How do you currently train your staff and do you have a training budget?

To achieve your business vision, will you need to recruit staff in the future? What skills will be required?

Advisors A business does not achieve success without help. List your:

Lawyer

Accountant

Business mentor

Other advisor Management systems Describe the business systems you have in place.

Do you have a written operations manual for the business?

What accounting software or systems do you use?

How regularly can you produce financial reports and analyse key business ratios?

Do you have systems to deal with compliance issues such as: payroll and employment issues, tax and GST obligations, OSH, etc.

www.anz.co.nz/bizhub

Contact me: e-mail: stephen.caunter@anz.com Post: P O Box 40, Nelson Ph: 03-5463409, 027 2705980 Also on LinkedIn