SMALL BUSINESS PLANNING - Evolve · So you are considering starting a business - What is your understanding of what ... We know that it is a choice to provide services or products

Small Business Planning v16.10

SMALL BUSINESS PLANNING Student Manual

BSBSMB404 UNDERTAKE SMALL BUSINESS PLANNING

EVOLVE COLLEGE Page | 2

Small Business Planning © Evolve College Pty Ltd 2016

© Evolve College Pty Ltd, 2016 This document is copyright. This document may not, in whole or in part, and in any form or by any means (electronic, mechanical, micro copying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission.



CONTENT

1. IDENT IFY ELEMENTS OF THE BUS INESS PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1.1 AN INTRODUCTION TO BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 T H E P O T E N T I A L I N B US I N E S S - W HA T D O ES T H A T M E A N ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1.2 THE PURPOSE OF THE BUSINESS PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

B U S I N E S S P L A N N I N G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1.3 ESSENTIAL COMPONENTS OF THE BUSINESS PLAN AND BUSINESS PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

T H E C OM P O N E N T S OF A B US I N E S S P L A N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2

O T H E R K E Y E L E M E N T S O F T H E B U S I N E S S P LA N T H A T R EQ U I R E R E V I EW . . . . . . . . . . . . . . 1 6

B U S I N E S S G O A L S A N D O B J E C T I V E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 7

S . M . A . R . T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 8

G O A LS A N D O B J E C T I V E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 9

H O W A N D W H E R E T O B E S T US E G O A L S A N D O B J E C T I V E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1

S T R A T EG Y F O R M A T I ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1

2. DEVELOP A BUS INESS PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

2.1 RESOURCES, LEGAL AND COMPLIANCE REQUIREMENTS IN RELAT ION TO WHS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

B U S I N E S S P L A N – T A B LE O F C ON T E N T S / I N D E X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

L E G A L A N D C O M P L I A N C E R EQ U I R E M EN T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3

D U T I E S OF E M P L OY E E S A N D C ON T R A C T OR S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6

R E S P ON S I B I L I T I ES W H EN S E T T I N G U P A B U S I N E S S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7

2.2 MARKET NEEDS, MARKET S IZE AND POTENTIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

M A R K E T N EE D S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2

M A R K E T S I Z E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4

C O M P ET I T O R S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5

C U S T O M E R S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6

M A R K E T F A C T O R S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6

C A S E S T UD I E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6

P O T E N T I A L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 7

2.3 L IQUIDITY AND PROFITABIL ITY FOR THE BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . 38

B R I E F F I N A N C I A L P L A N S E T UP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 0

S T A R T UP EX P E N S ES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3

O P E R A T I N G E XP E N S ES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3

T H E I N C OM E S T A T E M EN T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5

T H E C A S H F L O W P R OJ E C T I ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 6

T H E B A L A N C E S H E E T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8

S O U R C ES A N D C OS T S O F F I N A N C E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0

2.4 MARKET EXPOSURE OF THE BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

M A R K E T I N G S T R A T EG I E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5

M E T H O D S T O P R O M OT E T H E M A R K E T E X P OS U R E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5



A T T E N D A N C E A T T R A D E S H O W S , C ON F E R EN C E S A N D O T H E R E V EN T S . . . . . . . . . . . . . 6 0

U S I N G T H E I N T E R N E T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 0

2.5 PRODUCTION/OPERATION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

O P E R A T I ON S I N Y O UR S M A L L B U S I N E S S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5

M E T H O D S O F P R OD UC T I ON / OP ER A T I ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5

2.6 STAFF ING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

C O M P EN S A T I ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 0

P R OD U C E/ D E L I V E R P R O D U C T S / S ER V I C ES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1

2.7 SPECIALIST SERVICES AND SOURCES OF ADVICE . . . . . . . . . . . . . . . . . . . . . . . . . . 73

E X T E R N A L M A N A G E M E N T R E S O UR C E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4

C O N S U LT A N T S A N D C O N T R A C T OR S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4

3. DEVELOP STRATEGIES FOR MINIMIS ING R ISKS . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

3.1 SPECIF IC INTERESTS AND OBJECTIVES OF RELEVANT PEOPLE . . . . . . . . . . 77

I N T E R ES T S A N D O B J EC T I V ES O F R E L E V A N T P E O P L E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 7

3.2 RISK MANAGEMENT STRATEGIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

I D E N T I F Y I N G A N D D EV E L O P I N G R I S K M A N A G E M E N T S T R A T EG I ES . . . . . . . . . . . . . . . . . . . 8 3

R I S K M A N A G E M E N T S T R A T EG I ES A C C O R D I N G T O B US I N E S S G O A LS A N D O B J E C T I V E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 5

C O N S EQ U EN C E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 5

E X T E R N A L/ S T R A T EG I C C ON T E X T O F R I S K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 6

3.3 CONTINGENCY PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

P E R S ON N EL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 0

ASSESSMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93



1. IDENTIFY ELEMENTS OF THE BUSINESS

PLAN

1.1 AN INTRODUCTION TO BUSINESS

Business is more than what just meets the eye.

A ‘business’ is involved in the trade of goods, services or both to consumers (whether a doctor, a clinical practitioner, a plumber, a manufacturer, a restaurant or take-away shop, a farm, or a multinational corporation) in exchange for other goods, services or money. Businesses may also be not-for-profit or government owned. A business can also be more generally referred to as an entire market sector such as “the music business”.

So you are considering starting a business - What is your understanding of what that might mean – or how it needs to look or be? Where do you start?

We know that it is a choice to provide services or products to people whether on a large or small scale, to the local community or wider general public so it is equally important to know what understandings and foundations will support us to do that.

THE POTENTIAL IN BUSINESS - WHAT DOES THAT MEAN?

Is it possible that we can be inspired and start a business based on supporting all our practical needs but at the same time consider a bigger picture of our potential clients and the community of who and where we will be offering these services and products?

Consider – what if we began our commitment to being in business from a more whole approach –meaning – considering all of the aspects that will establish a strong foundation of and for that business. That the intention is that it will support what is needed for us whilst at the same time providing services and products with our deepest integrity and love of what we do to our clients and communities. Would this create a true foundation that would support us? That then - when we have to commit to the longer working hours, the open communication and connection with our clients that is needed - we will not become overwhelmed, drained and exhausted?



Our intentions are key to the foundations of a business, but what does this actually mean practically?

Our intent is based on our integrity, our care and the quality of how we are with ourselves, then, by virtue of this it is brought to every relationship and to the services that are offered, the products and the business.

It is equally important to understand and be aware of our limitations and knowing that needing support does not make us less or not successful. In other words, we do not need to be everything and do it all. Support is readily available to us with family, friends and colleagues but also with the many other businesses, associations, and government bodies working either purely when needed or in collaboration.

Business is about people and relationships - this is inescapable. This is not often considered – we talk about it being a building or an organisation but they are made up of people – so business is actually about people. It is about you, us and whoever you and the business comes into contact or connection with.



1.2 THE PURPOSE OF THE BUSINESS PLAN

The Business Plan is the creation of a tool that consolidates your ideas and/or potential ideas into a more concrete and structured format before you commence a business. It is constantly evolving with the business through all of its cycles.

If we were to break it down to start and rather than just referring to it as a business plan it could also be referred to as YOUR PLAN - A Foundational Resource - a document – a point of reference that can be used or returned to at any time getting what is in your head – an idea - onto paper, and putting an outline or structure in place.

It is about assessing and researching what you may not be aware of and ensuring that all aspects that may be required have been considered.

A Business Plan is effectively a living document because it reflects you – your business – your business relationships etc - it is constantly changing, growing, developing, expanding as you and your business does, like a silent yet power-full partner in business with you. The key is - keep it practical and real and not just something that is simply an idea, goal or a dream that you have a vision for or desire about.

BUSINESS PLANNING

‘The Business Plan’ - often this concept can feel overwhelming – a ‘where do I start?’ moment – ‘the deer in headlights’ effect - but now - no more….

So let’s break it down:

A Business Plan is a document that describes:

your business,

its purpose

its objectives,

strategies,

target market and

financial forecasts.

Quite often it is prepared for a direct outcome whether that be to satisfy funding, to justify going into business, or to promote and market.



Gosh what does that actually all mean?!!......

The current format of business plans can seem complex particularly with the terminology that is often used, and all of this can have you thinking that it needs to be more detailed and complicated than it really needs to be. However there is an opportunity for you to prepare a Business Plan in your own way utilising formats that inspire and support you, in starting and developing your business – this then becomes a plan that you will use.

Firstly, begin your understanding and relationship with a Business Plan based on the strength of the purpose of what and why you have chosen to go into business. The plan can encapsulate what your intention is now but also looks to establish a platform for whatever potentials may present in the future. It can be reviewed, altered, adapted, expanded and utilised to monitor and measure, check in with and update as a tool that develops with you. Keep it simple, understandable and something you will use.

Importantly, it is a tool to use to be honest about whether the product or service that you are considering offering is actually needed or viable. In assessing and reviewing it is not about discounting the offering however it is about being real and sensible about how your business will support in every area of your life, for instance will you be able to pay your electricity bill? Do you need to supplement your business in the beginning whilst it is developing and growing? (i.e: with a part-time job or starting your business on the weekends and after hours)?

All of this goes towards you supporting you, as you support your business to commence and expand – without putting pressure on yourself, or the business.

The business plan can be used as a foundational template that builds on awareness, references, links and resources that can be referred back to or expanded on constantly. Thus it becomes a dynamic document that constantly evolves with you as your business grows, and this is how and why it can be a continued and very useful resource to you in carrying, operating and managing your business.

Its purpose is to serve as a supportive tool that opens you up to potentials and opportunities rather than a tool that locks you in or restricts you and your business in any way or sets you up to gauge your ‘success’ in terms of the business reaching singular targeted outcomes.



A Business Plan may include: aspects of a business which may be influenced by:

The actual demand or call for the product or service

Details of ownership/management

Skills of operator

Proposed size and scale of the business

Resources required and available

Availability of funds to cover start up costs and cash flow

Staffing

Need to raise finance and requirements of lenders

Sources of funding

Amount and types of finance available

Expected financial viability

Finance, expenditure statement,

Balance sheet and cash flow forecast,

Projections for the initial years of operation assumptions underlying the Business Plan

Expected level of inflation and taxation,

Expected trend of interest rate,

Capital expenditure and its timing,

Stock turnover,

Level of risk involved, risk assessment and management

Market focus of the business

Marketing requirements

Organisation/operational arrangements

Recognition of any seasonal or cyclical (time-based) elements which are crucial to the success of the business

Specialist services and sources of advice that may be required

Stages in the business development



Debtors collection period,

Creditor payment period,

Return on investment

Identify the purpose of a Business Plan

Strategic Business Planning is the process of road mapping the direction of your business. It supports the business to maintain a focus like the steering of a ship however with the flexibility to move and flow with the realities of what is needed to bring your product or services to the market place. A good Business Plan is actually an evolution. It never reaches a conclusion and is continually revisited and reviewed based on developing factors in your business. This is one aspect that is quite often forgotten and neglected when the busyness of the day to day of running a business gets in the way.

A Business Plan, in its simplest form, will give direction of where you want your business to be within a certain period of time (usually five years) and how you plan on getting there. In effect it is preparing yourself – reflecting on and analysing yourself, your business idea and its feasibility. This is an opportunity to be super honest and realistic – after considering all the research and gathered information before you - as to the potential or real viability of the business, product or service idea.

A Business Plan is as important for starting a business as blueprints are for building your house. In saying this though remember that the plan needs to be revisited so that your business stays current with the changing environments, customer needs and behaviours and even technological developments in the market place.

A Business Plan is a document that sets-out and justifies your business idea in a logical framework. Really it is saying you have researched all aspects of what is needed, know what and where needs to be actioned and have concluded the validity of starting this business. As a blueprint for the business it is vital if you are planning to approach potential investors and funders.

Drawing up a Business Plan will help you to identify your strengths and weaknesses, key areas where you need to develop expertise, engage with other professionals or organisations to support areas you do not have expertise in and the financial understanding and potential risk involved in setting up the business. It represents the dynamic process of planning and reviewing the business agenda over time and should be developed and



Continues to be reviewed

updated in line with how your business is developing and your clientele and market place is responding.

A Business Plan has three primary functions:

To serve as an Action Plan

To serve as a Road Map

To serve as a Sales Tool

KEY AREAS

Process

Road map

Direction

Milestones

Evolution

Continues to be reviewed

Define

Document

Period of time

Strengths

Weaknesses

Financial

Action plan

Sales tool

Document

Process/Direction



1.3 ESSENTIAL COMPONENTS OF THE BUSINESS

PLAN AND BUSINESS PERFORMANCE

THE COMPONENTS OF A BUSINESS PLAN

An executive summary

This covers the major points of your Business Plan in two pages or less – it is an overview of the whole concept for your business – its purpose.

The executive summary gives an outline of what is contained in the full plan document, providing enough information for readers to understand the key points, what is unique about the business and its purpose.

This is sometimes the first contact with a person or an organisation such as you may meet your banker but you may not have met directly the loans department personnel who read your document. It is a bio for your business. So if it is the initial introduction of your business - what is it that you would like it to represent? It is the foundation as to WHY you have chosen to establish a business. Whilst it may be a synopsis in print it holds everything in its overview of the inception and potential of your business.

When writing the executive summary begin with connecting to the WHY - the purpose of your business and its potential.

It can be supportive to write up an initial outline of your executive summary, then after completing the rest of the business plan, go back to your original draft and finalise what you are going to include in your executive summary. This ensures you allow the plan to evolve with full analysis of all areas and do not pre-empt any areas with a premature summary that locks you into something that has not been fully developed



or evaluated.

Company overview / Statement of purpose for the plan

This details your mission, vision, values, products, unique attributes, and the business opportunity you are planning.

When you are looking at starting and/or planning a small business there seems to be a great focus placed on ‘what your vision is’ – ‘what the mission statement of your business is‘ – however - what is crucial here first and foremost is to understand and know what the PURPOSE of the business is. Typically, vision is a view for the longer term and less liable to change based on changes in the environment. Mission on the other hand, is more discrete and more a shorter term view – leading towards accomplishing a step or series of steps in support of the vision. Knowing the PURPOSE of why you would commence and commit to running a small business actually is different to and would come before a vision or a mission statement.

The market /Business environment / Competition and feasibility study

This is an analysis of your industry, your marketplace, your customers, and your competition, providing an understanding and where you stand in the marketplace. It describes and analyses the products and services you offer – including your target market, market share, pricing.

This practically speaking recognises what your product/services are and what it is that they and you are actually offering - this is the unique feature and benefit. Within this it is important to consider cost and sale price and limitations of your product or services.

Strengths and weaknesses / Company description

This addresses the capabilities that give you a unique advantage over your competitors including your management, technology, operations, distribution, service, finances, and marketing.

This is looking specifically at your business – the internal



workings and all its moving parts like putting it under a microscope with an opportunity to observe what other same or similar businesses are offering and doing that inspire and support you, your business and clients also.

Observing and appreciating how other businesses operate can support your business in identifying its strengths, weaknesses and opportunities, which as always in turn then benefits not just the health and integrity of the business but also the end user - your clients and customers.

Strengths are the leading qualities that you and your business already have committed to and developed and these can naturally support the further development of seemingly or supposed weaknesses.

Quite often, the commitment to refining and bringing a greater quality to those seemingly weaker aspects inevitably ensures that your product and services are consistently in touch with the market and the clients’ needs. In other words, you are not turning a blind eye to the aspects which you have not fully developed yet, but are open to and willing to see all of it, whilst also equally being committed to growing and developing in those areas, to the point where you operate consistently or evenly across the field – with no aspect being any less than another.

The fact that you may offer and sell your products or services differently to another does not mean you are offering less or this is somehow a weakness – in most if not all cases this can be the strength such as the consistency of how you genuinely treat, are and care for your clients, staff and suppliers



Company strategy /Marketing mechanisms

This is your roadmap to the future including how you will manage the opportunities and avoid the threats. It includes your growth plans, your marketing plan, and even your exit strategy or succession planning.

This is looking at the external factors that may affect your business either favourably or not such as the weather and seasonal fluctuations with this being more taking out the telescope for a wider view of the market or world around us.

A Marketing Plan often is considered as an aspect of business about getting people to buy your product rather than always about first uncompromisingly about the quality first and foremost.

Rather a Marketing Plan is an opportunity to build and develop relationships with people - your clients, your suppliers, staff, bankers etc. It is about connecting first to what is needed based on what you see and feel – what people need - rather than I have a product that I am going to push onto you whether you truly need or want it. Developing a marketing plan that supports the promotion and advertising is in confirmation and appreciation of the quality of the product and/or service that you offer ... Letting people know how to get in contact, engage, buy the product, and support with information about the product/services and the company, you – the business etc.

Financial review /costing and cash flow / selling and pricing

The financial review looks at the state of your finances, including your income statement, balance sheet, cash flow statement, profit projection, and budget. A financial plan is also so much more than just establishing and reviewing the financial aspects of your business – it is more than just the profit and/or loss. This is the point of assessment of what can or can’t be afforded by yourself and the business both for the commencement of the business as well as a constant



reference point to monitor and develop.

It is about knowing the fact that the financial aspects are equally what will make the business remain viable or not. It is about knowing the bottom line of what it will cost for you to open the doors to your customers each and every day. The Financial aspects are a measurable source that will demonstrate to you whether the business is meeting both its current needs and developing its potential growth.

Action plan /resources / timescales

An action plan encompasses steps you will take to implement your Business Plan to meet your goals and objectives. Creating an Action Plan for the areas of your Business Plan that you need to complete can be used in co-ordinating what needs to be addressed into a time frame. It ensures that all parts have been considered and finalised and gives a point of reference that can be relied upon for future.

OTHER KEY ELEMENTS OF THE BUSINESS PLAN THAT REQUIRE

REVIEW

A review of the history and ownership structure of the business. This can also be referred to as the Business Profile. It describes your business details, including owners, their expertise and other relevant details

A review of the current and future business targets that the company intends to pursue over the period of the plan. This quite often is referred to as a strategic plan whereby you may have a BIG picture overview to start however the steps in the delivery of that needs to be mapped along the way. Effectively this becomes instrumental in dissecting what targets can be actioned towards now and if others need to be staggered in their roll out. It creates the space for the evolution of the business and also allows for the development of the business accordingly in response to customer needs and the market place.

Target analysis: meaning knowing and understanding your target audience of your business. For example, you need to know:



who your customer/market is

the demographics of the target market – location, attitudes, behaviours and trends

Then you can accurately document the facts of each and every target by ascertaining through a current method of operation

Market preferences and why

Preferred contractors, name and costs if applicable

Potential products in the target period

Relationships

Length of any current contracts

Contact details

BUSINESS GOALS AND OBJECTIVES

Customer needs/marketing projections

Family or community benefits

Financial projections

Goals, objectives, plans, systems and processes

Lifestyle issues

Market focus of the business

Proposed size and scale of the business

Short – medium- or long-term goals

Social responsibility

When considering the business goals and objectives you may consider them to be much the same thing.

An “Objective” is generally regarded to be a specific description of what is required to be achieved.

An objective is usually described using objective style language, precise and non-emotional.

For example:

“My objective is to increase my sales target to wholesalers by 15% or to a net result of $25,000 per period.”



S.M.A.R.T

An objective is also described as: (S.M.A.R.T)

Specific

Measurable

Achievable

Realistic

Time

Specific

This means:

Well defined

Clear to anyone that has a basic knowledge of the project

Looking at:

Who - Who is involved?

What - What do I want to accomplish?

Where - Identifying the location?

When - Establishing a time frame.

Which - identifying requirements and constraints.

Why - Specific reasons, purpose or benefits of accomplishing the goal.

Measurable

Whereby you establish certain criteria that can measure and support staying on track towards your targets.

Know if the goal is obtainable and how far away completion is

Know when it has been achieved

Achievable

Identifying what is achievable and if and how to strategically plan to reach those objectives.

Agreement with all of the stakeholders what the goals should be



Realistic

In being realistic the objective must be something that you are both willing and able to work towards.

Within the availability of resources, knowledge and time

Time

The objective should have a time frame.

Enough time to achieve the goal

Not too much time, which can also impact on project performance

GOALS AND OBJECTIVES

Goals and objectives clarify the purpose of the business and support you to identify necessary actions.

A “Goal” is usually regarded as a more general description or as a general statement.

It is described in terms such as “you would like to achieve” rather than the specific terms described in an objective.

The significant difference is that there is no pressure to be specific and it usually is acceptable to simply express what you feel or want to say in your language or way. For example:

Goals are high-level statements that provide overall context for what the project is trying to achieve, and should align to the business goals. They are unlike objectives, which are statements that describe the specific, tangible products and deliverables that the project will deliver.

Goals can involve areas such as profitability, growth and customer service.

Examples of Goals & Objectives

Customer Service

Goal:

To "increase the overall satisfaction levels for clients calling to the company helpdesk with support needs"

Be “easy to do business with”



To “improve customer response time to customer queries or complaints”

Objective

Increase staffing levels from 1 to 3 staff by the end of the year

Profitability

Goal:

A common business goal is to run a profitable business, which usually means either increasing sales and / or reducing expenses

Objective

The objective could be increasing annual sales by 20% or finding new business premises that decreases your rent by $500 per month or reducing certain costs by 10% such as phone, electricity or internet.

Retention

Goal

To reduce employee turnover and improve retention, provide opportunity for open communication for and with staff whether an open door policy, one-on-one and/or group regular meetings to actually listen to the people who know and have much to share being in your business everyday

Objective

Schedule regular monthly staff meetings

Efficiency

Goal

Monitor complaints and/or product defects to understand and know what support and training may be needed for staff or feedback for suppliers of materials, labour or equipment

Objective

Schedule regular monthly staff meetings

Growth

Goal



To expand the business

Objective

Add 3 new products or services to the current range by the end of next year

HOW AND WHERE TO BEST USE GOALS AND OBJECTIVES

Use ‘Goal’ language:

If you are brainstorming your BUSINESS PLAN, using imagination or developing a vision, the less formal ‘goal’ descriptions have strong advantages.

In most creative instances, people generally use conceptual thought processes.

If you have to comply with the S.M.A.R.T objective rules, creativity could be compromised. In the case of the business plan development, this could discourage innovation.

To convert goals into effective action plans, we use a process called ‘strategy formation’.

STRATEGY FORMATION

Strategy – assists the design of the Business Plan and how the organisation is to carry out the business.

Formation – involves exploration, the search for new advantages and business possibilities.

The purpose of the strategy is to handle all of the ‘how to’ issues

When you have prepared your business planning strategy correctly, this is where writing ‘objectives’ comes in.

The writing of objectives can be a good initial test for your strategy.

If you are struggling to specifically describe exactly what needs to be done, it is a signal that your strategy could be shaky or unsound.

When your strategy is well designed, the writing of specific or S.M.A.R.T objectives is reasonably straightforward.



THE BUSINESS

Organisation chart

Products/services

Risk management

The Legals

CONTENTS

Business Plan Summary

The Business

The Market

The Future

Finances

THE MARKET

Research

Environmental

S.W.O.T

Advertising & sales

2. DEVELOP A BUSINESS PLAN

2.1 RESOURCES, LEGAL AND COMPLIANCE

REQUIREMENTS IN RELATION TO WHS

Before delving into a specific area, such as WHS (Work Health and Safety), the business, the market needs, costs and finance let’s look at a ‘typical’ listing of a business plan index.

BUSINESS PLAN – TABLE OF CONTENTS / INDEX



THE FUTURE

Vision

Mission

Goals/objectives

Action plan

FINANCES

Financial review

Start‐up costs

Profit and loss

Cash flow

LEGAL AND COMPLIANCE REQUIREMENTS

Workplace health and safety (WHS), in accordance with business goals and objectives

Workplace health and safety (WHS) in Australia aims to prevent injury and disease to persons in the workplace. New national WHS laws were introduced in January 2012 to harmonise the law across Australia as all states and territories had their own specific laws in relation to WHS. Whilst it is not compulsory for each state and territory to comply with the national laws many have adapted them to suit their individual needs. For information on which new laws your state or territory has adopted, visit the government’s website at http://www.business.gov.au/business-topics/employing-people/workplace-health-and-safety/Pages/workplace-health-and-safety-in-your-state-or-territory.aspx

Workplace Health and Safety (WHS) refers to the health and safety of everyone involved in every aspect of your business, including your clients or customers, your staff or contractors, any visitors to your premises, and including you. These are the participants and patrons of your business.

As a business owner or manager, you have responsibilities regarding health and safety in your workplace – to all of those people described above. You have a responsibility in ensuring first as a duty of care that your business doesn’t create health and safety problems for your employees, customers or the public.



Knowing and understanding the new work health and safety (WHS) laws or what are also known as occupational health and safety (OH&S) laws in some areas can help you avoid unnecessary costs and damage to your business caused by workplace injury and illness. However more importantly is that these are approached with natural care, with common sense and consideration of everyone first.

The initiating point then in addressing WHS requirements is that they are understood to be of paramount importance and not seen as an additional cost or unnecessary regulation or requirement to be complied with.

They are part of the foundations that you would want to establish within your business and with the integrity that you would run it with. It is first and foremost about care and consideration about people in all aspects of your business - for example putting a sign out to let your clients know that the floor is wet and slippery. This firstly is care for your clientele and staff, plus all who visit the premises, but equally ensures that you are honouring of your care for them and of yourself.

Employers must comply with the State, Territory or Commonwealth legislation, which applies to them.

Workplace health and safety issues must include:

Identification of specific hazard issues such as occupational violence, security, manual handling, equipment and hazardous substances

Management of the organisation and operation of WHS as part of the business plan

Procedures for managing hazards in the workplace (identify, assess and control)

Provisions for ensuring safety of members of the public and contractors visiting the premises/worksite

Research resources, legal and compliance requirements, specifically in relation to workplace health and safety (WHS)

WHS legislation and codes of practice may include:

Common law duties to meet the general duty of care requirements

Health and safety representatives and health and safety committees

Prompt resolution of health and safety issues

Provision of information, induction and training



Regulations and approved codes of practice relating to hazards present in the work area

Relevant state/territory legislation

Requirements for the maintenance and confidentiality of records of occupational injury and disease

WHS Provisions (Nationally)

Despite each jurisdiction having its own legislation, they are all similar in their intentions and in many of their provisions.

Common to all are:

Support for WHS in the workplace

Provision of systems of work that are safe and without risk to health

Prevention of injury and disease

Protection of the general public’s safety and health

Inspectors

Regulations

Enforcement

WHS Legislation

(Legislation: The act or process of legislating; lawmaking.

A proposed or enacted law or group of laws.)

Workplace health and safety (WHS) legislation exists at State, Territory and Federal levels. Private sector businesses are covered by State or Territory Acts.

The content of the legislation is comprehensive, and each Act has individual differences, but their basic provisions tend to be similar in each case.

The following provisions appear in each one:

Employers have a duty to provide a safe and healthy workplace for all employees and other people who attend the workplace.

Employers must provide work systems that are safe and without risk to health.

Employers should train employees to work in a safe and competent manner.



Requirements to take steps to prevent injury, illness and disease.

Requirements to consult with employees and their representatives over WHS matters.

Provisions for workplace inspectors to visit workplaces, investigate accidents and enforce provisions of the legislation.

Codes of practice

Regulations

The Acts are backed up with comprehensive regulations and codes of practice that cover specific aspects of WHS in detail, such as first-aid requirements, protective clothing and equipment, consultation with employees, formation of WHS committees and appointment of WHS representatives, a wide range of specific hazards (such as hazardous substances, dangerous goods, manual handling, fire safety and emergency evacuation, spray painting, demolition work, handling asbestos, etc), competency requirements (e.g. for operation of certain equipment or performance of certain types of work), employee training, notification of accidents and incidents, and WHS record-keeping.

DUTIES OF EMPLOYEES AND CONTRACTORS

WHS responsibilities do not only rest with the employer. The legislation requires employees to take reasonable care of their own safety and health (and that of others), to work safely and follow safety procedures and rules, to report any WHS hazards or other problems to the employer, and to cooperate with WHS inspections, investigations and training.

Contractors have WHS responsibilities to their own employees, but some cases have held that the ‘host’ employer (i.e. the person in charge of the workplace where contractors were working) can be liable for injuries to contractors, even if the contractor had caused them.



It is therefore good practice to at least inform contractors of your WHS practices and requirements, and better still to actively include them in WHS activities such as training.

Risk management

Risk is a part of everyday life. In business, risk can be defined as the chance of something happening that will impact upon your objectives.

RESPONSIBILITIES WHEN SETTING UP A BUSINESS

Compliance

A key ingredient in business is understanding the responsibility of Compliance. It is your responsibility to know, appreciate and implement what is required ethically, legally and in response to any regulations for your profession or trade.

Developing an understanding and awareness of what these compliances are is an opportunity to be on the front foot. To know what is actually needed in establishing your business and asking for the right support from professional or business advisers, government agencies, industry regulators and other business support services rather than relying solely on the regulation without understanding what is actually required.

Compliance does not need to be ‘the bad guy’ or a nuisance but rather it is a part of building and developing strong and supportive foundations for you and your business.

There are a lot of things to consider when setting up a business.

What will I name my business?

What are the products and / or services I will offer?

How do I let people know I’m in business, put myself out there, let them know what is offered i.e. services or products. How do I market or advertise my products and/or service?

Where will I operate from?

How will I financially and legally structure my business?

What are the relevant legislations and/or regulations that are applicable to my business and industry?

What qualifications, skills and experience do I need?

Who do I ask for the right help and support? and so on.



This can be daunting and/or overwhelming and as a result some key elements may be brushed aside or missed leaving an opening that could create potential issues now and later down the track.

However, firstly and one thing that is likely to delight most people is that many of the things that we need to comply with in setting up a business may only need to be completed once. Yahoo! Phew!

Getting started

Approach compliance not as the starting point but as the end result of what you understand is needed to establish and support how you want your business to operate and in turn support you back. It does begin with our responsibilities to finding out and knowing what is needed for the activity or profession you have chosen.

Legal requirements of your business

Before starting a business plan, the legal environment and requirements should be researched.

There are many laws, both STATE and FEDERAL, rules, and regulations that must be followed to start and run your business.

Almost every aspect of your business is under some form of legal ruling. Specific forms, licenses and other documentation must be filed with state, local and federal government offices in order to begin.

Without this documentation, you may be prevented from opening and commencing operation.

How will you meet your compliance requirements?

Every business must meet compliance requirements relevant to their business. This is the law.

The number and complexity of compliance requirements depends on:

Your Business Plan structure

The type of business you will operate

The industry your business operates within

Compliance means the observance and application of all legal, tax, accounting, workplace and safety laws and regulations that affect your business.



This can be translated into various laws, regulations or codes such as taxation, different regulations for different business structures and lodging our tax returns, obtaining the necessary council approvals - licences and permits for your particular product or service and/or for setting up and operating from your business premise, AND meeting codes of ethics and conduct for your respective occupation, product and/or service.

Compliance doesn’t need to become the overwhelming factor - put in the “too hard” basket seeing it as too complicated or too involved to be taken care of. It is simply a series of steps in building what is needed for the foundations of you and your business.

Some of the considerations of compliance will be looking at the structures and requirements needed for your business such as:

Business Structure

Contracts, Licences and agreements

Intellectual property

Insurance

Leases

Employee requirements

Risk management

Legal and ethical trading

Depending on your business, the following Government Departments require compliance with and application of their requirements.

Legal considerations

Australian Taxation Office (ATO) compliance – All businesses in Australia must comply with specific Australian Taxation Office (ATO) requirements.

Australian Competition and Consumer Commission (ACCC) compliance – The Australian Competition and Consumer Commission (ACCC) promotes competition and fair trade for consumers, businesses and the community.

Australian Securities and Investments Commission (ASIC) compliance – The Australian Securities and Investments Commission (ASIC) is Australia’s corporate, markets and financial services regulator.

Insurance – Investing in appropriate insurances is a smart move and is designed to protect the business in the event of an accident or disaster.



Australian Consumer Law compliance programs

The Australian Consumer Law (“ACL”) aims to enhance the welfare of Australians by providing for consumer protection. It is the national law for fair trading and consumer protection in Australia. The ACL:

Prohibits Misleading and deceptive conduct in trade or commerce (Section 18 of the ACL)

Prohibits Unconscionable conduct in trade or commerce (which requires conduct to be against conscience as judged against the norms of society)

Makes Unfair contract terms in consumer contracts void.

Prohibits false or misleading representations, the supply of unsolicited goods or services, participating in pyramid schemes and things like referral selling, harassment or coercion.

Provides a guarantee for consumers’ rights for goods and services.

The ACL applies to a consumer who acquires goods or services priced at less than $40,000. The ACL also applies to a consumer who purchases goods or services above that amount but they are of a kind ordinarily acquired for personal, domestic or household use or consumption.

The ACL contains provisions creating offences for certain breaches of the law. Criminal sanctions apply to some. The ACL also creates national enforcement powers to be used by consumer law regulators.

The Australian Consumer Law (ACL) is set out in Schedule 2 of the Competition and Consumer Act 2010. This legislation replaced the Trade Practices Act 1974. Further information on the ACL can be obtained from the ACCC website, at http://consumerlaw.gov.au/the-australian-consumer-law/legislation/.

The Competition and Consumer Act also governs market conduct, and deals with matters such as anti-competitive contracts (section 45), cartels (section 44ZZRA, 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK), collective bargaining, exclusive dealing (section 47), misuse of market power (section 46), and predatory pricing (section 46(1)).

Further details can be obtained from the ACCC website, at https://www.accc.gov.au/business/anti-competitive-behaviour/.

A consumer law compliance program is designed to identify and reduce the risk of breaching the Competition and Consumer Act 2010 and to remedy any breach



that may occur. A solid compliance program will facilitate compliance within the organisation and ensure the ethical and social responsibilities and operations of a business.

As it has been explained compliance is a necessary part of any business. It is not an ‘extra’, or something optional. It is required. Compliances can be seen as a supportive way of building a strong foundation for your business – getting it right on a practical level and crossing all the t’s and dotting all the i’s is something that will later support you. Of course, as people are generally aware, non-compliance with the various regulatory requirements can bring heavy penalties including, in some cases, payment of large fines, imposition of conditions on the way you operate, or even in some cases having to stop operations. Underneath all of that is the fact that most compliance requirements are very obviously there for a reason – to ensure a safe, efficient and honest system for all.

A Compliance culture means:

Commitment to comply

Compliance know-how

Compliance as a business practice

Why should companies invest in a compliance program?

Business benefits

Building strong reputation

Mitigation of penalties

There is no generic compliance program as each organisation’s circumstances are different. Some organisations may require:

A simple program implementing an effective complaints handling system

Providing all relevant staff with consumer law training tailored to the business activity



2.2 MARKET NEEDS, MARKET SIZE AND POTENTIAL

MARKET NEEDS

All aspects of market analysis can support in determining the feasibility or affordability of the product to produce, manufacture or deliver and then if it is likely that you will be able to sell the product or service for a price people would be willing to pay.

What would be the consequences of developing or providing products or services that financially drain and cannot support the commitments of you or the business? This does not rule out such things that there may be initial capital and investment that is beyond initial returns however it also ensures that you have planned for each of the processes that are required to keep the business going during these phases.

Your Product or Service

Before embarking on marketing it needs to be understood that a product or service is more than the actual product or service itself. It is more than its tangible features - it includes intangibles such as quality, additional features and benefits, packaging, after sales support, customer services, warranties, delivery etc. - and what it may mean in the way of support and care of people such as your client - it may be life changing and something to appreciate.

Consider such factors as:

What is the uniqueness of your product/services?

You may be offering the same product or service however your uniqueness is the way in which you offer it to people. It is not always noted in the traditional way - it is an intangible asset - it is the quality and integrity that is offered.

What are the opportunities for your product/services?

If there are 100’s of people offering the same thing does this restrict or stop you from going into business?

Opportunities are created by your commitment and dedication to your business and your clientele. They are created and supported by referrals, your relationships that you have developed with people and businesses.



The quality of how you do business is what actually comes back to you – and this is how word of mouth works. When it comes to true quality in business, word of mouth travels fast, far and wide, as quality is worth recommending, just as it is not found everywhere these days. It grows reputation.

Are you offering a product in awareness and understanding of what is actually needed by people rather than needed solely by you?

It is not about not offering or creating a product or a service based on what you would like to do rather it is about considering and realising the whole picture which includes you. That by seeing the whole picture that is inclusive of people - your potential clients - the viability of your business is a given.

Do you need to monitor and assess the ongoing needs and qualities of your products and services?

This is an important and essential part of your business. It is like your housekeeping - it does not simply stop when you first do it.

Keeping abreast of changes, of what is going on in your industry, legislative updates, new technology - it is like the ongoing self care and support of your business, keeping it fresh and alive in its activity.

It keeps you expanding and developing yourself and your business and equally presents the same opportunities to your clientele and other businesses.

It keeps your clients coming back for more - naturally so - as they see and feel your commitment and dedication to your chosen expression and what you offer knowing they can trust and rely on the quality of the product and service that is delivered on each occasion.

By researching market needs you can expect to:

Reduce financial risk

Position your products in the Business Plan for optimal performance

Identify your target markets:

Demographic makeup

Risks and opportunities

Buying habits

Challenges



Identify optimal product and company positioning – know your unique selling position.

Measure the effectiveness of your marketing and advertising messages understanding how to connect with your customers and clientele.

Identify new qualified leads for your sales executives

Market needs research analysis enables you to determine both the current needs of your markets and to anticipate and prepare for future demands.

This research should also provide you with information about the customers and who evaluates products for purchase and what purchasing decisions they may use.

MARKET SIZE

Research generating valuable prospect lists. Know your Customers.

Identify the contribution to the business – how would the Customer engagement impact the business.

Define the customer in terms of wants, needs and desires – understanding your customer market and how to respond accordingly.

Define who the customer is in respect to what products and services are produced and how the customer prefers to receive information

The total market equals the company's sales if it were to capture 100% of its specific marketplace.

Organisations of all sizes face the challenge of determining the size of their markets.

Organisations must present the size of their "relevant market" in their business plans.

Relevant market size

The challenge that many organisations face is their inability to forecast their ‘relevant market SIZE’, particularly if they are creating a business plan for a new or rapidly evolving marketplace.

It would be totally unrealistic to create a business plan market size that had a forecast to play in 100% of a market that, say, for example was a multibillion-dollar industry.



Whilst these are important points to consider, making a decision on how to structure, run or market your business need not have this as a sole driver to whether or how to enter into a market place.

It would be ‘realistic’ to create in this case a business plan market size that forecast a ‘segment’ of such a market as the estimated market size.

Whilst it is important to be aware of and identify other people or businesses that sell similar products or provide similar services what is also key here is that the purpose of this type of analysis can be engaged with as inspiration rather than simply competition. This awareness can provide you with stronger evaluations of the opportunities and business potentials for your own business. It can serve to highlight, or bring to the fore, what your niche services or products are - for example your customer service. The relationships that you develop with your clientele may stand out and be the uniqueness of your business. Another example may be the attention to the detail of the care and quality of the products and services you offer before during and after the sale, or the fact that your product has been designed in direct response to what your clientele/customers have asked for. All of these things are about considering your Unique Selling Proposition (position) - USP.

Observing how other businesses operate can support your business in identifying its strengths, weaknesses and opportunities, which as always in turn then benefits not just the health and integrity of the business but also the end user - your clients and customers.

Being aware of other businesses can provide you with key information about establishing important aspects of your business (e.g. charging for products, where do customers originate from, advertising etc) and can also provide an industry benchmark for your own business.

COMPETITORS

Identify who has similar operations within your industry - Who could be seen as those you are competing with?

What is already in the product offerings? Know what products or services are already being offered.

How long will it take competitors to enter the market once you release your new Business Plan? If you develop a unique product or service it is simply to be aware that others will also be inspired by your innovation. So again it is



about the uniqueness of what you offer and your relationships with your customers and client base that can ensure customer retention.

Who is likely to enter the market?

Is this analysis and observation more one of appreciation and inspiration of what you and your business offer and that of another business and what and how they offer this. That although there maybe differences – neither are the right, wrong or the only way but rather a celebration of the uniqueness with the focus being on the quality of the whole product and service offering?

CUSTOMERS

What are the demographics (gender, race, age, income, disabilities, mobility, education, employment etc), and psychographics (opinions, attitudes, values, interests and lifestyles) of the customers you will be targeting in your Business Plan? Again this is about knowing and understanding your customers.

What products are they currently using to fulfil a similar need?

How are they currently purchasing these products?

What degree of loyalty is there to your customer’s current providers?

MARKET FACTORS

What other factors exist that will influence the market size?

Could they be Government regulations; market consolidation in related markets, price changes for raw materials, new technologies etc.

CASE STUDIES

What other markets have experienced a similar business plan process or outcome that you may be aware of and what were the customer adoption rates in those markets?

Some things to consider when researching other businesses and also considering the establishment of yours would be:

What is the business name?

Where is it located? Is that location prime for their customers or suitable - (e.g. exposure, traffic flow, access, parking, other businesses)



What is the size of the business - is it highly staffed?

What do they charge for their products and services?

What is their refund or warranty policies?

Which customers and markets they are servicing? (e.g. young male professionals, families with teenage children)

How do they advertise or market themselves?

How do they put themselves and their product or service out there personally and professionally?

Do they have an active online presence (e.g. website, social media)?

Below is an example of the list in your Business Plan template for you to complete your research and analysis:

Company name

Size Sales mix (products/services)

Years in business

Customer Reaction or Response

XYZ Pty Ltd

Global or Local Company

Provides Service but not the product (such as a nail technician that does not sell nail polish or other associated products)

Offers Retail Shop (in person); phone and Online Sales

30

POTENTIAL

Research potential new markets and assess opportunities to enter, shape or influence.

Research into areas needing a new solution to an existing problem.

Untapped markets that are profitable are few and far between.

Research external factors, costs, benefits, risks and opportunities to determine the financial viability of each marketing opportunity.



2.3 LIQUIDITY AND PROFITABILITY FOR THE

BUSINESS

A financial plan is so much more than just establishing and reviewing the financial aspects of your business – it is more than just the profit and/or loss. This is a point of assessment of what can or can’t be afforded by yourself and the business both for the commencement of the business as well future projections. It is always a constant reference point in development.

The fact is that you will need money to start your business and it will be a constant part of the everyday activity and operations of your business. So knowing your current financial position and how you are with money - your relationship with it - are crucial and key.

Your relationship with money needs to be considered and reflected on before starting a business or a new venture of any kind. How you are with money will naturally spill over into the business both imposing and impacting it before it starts and/or will flow into your business as it is building. When things are not in order life feels messy, complicated even overwhelming hindering you from making clear decisions as to what is needed to support you and your business. It can be said that this is always strongly evident with finances and financial commitments no less than any other aspects of your life. Left unattended it places pressure on you creating that anxious feeling of things being left incomplete or undealt with knowing that you will ultimately have to deal with it one day. In turn this can only but impact and affect how you are with everyone around you - family, staff, suppliers etc. Money issues and pressures affect you and the whole picture.

Financial platforms cover all areas of your life such as:

knowing it means being responsible for personal commitments and to others:

household bills (rent, electricity, water, food, etc)

joint loans (home loan, car loan, furniture & appliance loans)

budgeting - planning ahead

knowing what they are and being aware of what that means to business commitments:

compliances

regulations

bills and loans / debts



knowing what they are and being responsible on the how to establish the foundations needed in this aspect of the business:

developing and following systems and procedures to support what is needed

setup/establishment costs

ongoing costs

cash flow - money in/money out

budgeting and planning

bookkeeping/accounting

A Financial plan may include:

Analysis of sales by product/service, identifying where they were sold and to whom

Cash flow estimates for each forward period

Current financial state of the enterprise (or owner/operator)

Estimates of profit and loss projections for each forward period – understanding your business income and expenses.

Financial performance to date (if applicable)

Likely return on investment

Monthly, quarterly or annual returns

Non-recurrent assets calculations

Profit, turnover, capital and equity targets

Projected profit targets, pricing strategies, margins

Projections of likely financial results (budgeting)

Projections, which may vary depending on the importance of such information and the stage in the life of the business

Resources required to implement the proposed marketing and production strategies (staff, materials, plant and equipment)

Review of financial inputs required (sources and forms of finance)

Risks and measures to manage or minimise risks

Working, fixed, debt and equity capital

The basis of any financial plan would consist of three financial statements including:



The income statement (Profit & Loss)

The cash flow projection. This can also be referred to as: A profit and loss forecast and involves listing your planned expenses and calculating the sales targets needed to reach your profit goals

The balance sheet

Plus, a brief explanation/analysis of these three statements

The financial plan also shows:

Investments

Loans

Accounts receivables – money that customers owe to you.

Accounts payable – money that you owe to suppliers etc.

The financial plan section of a Business Plan helps determine if the ‘plan’ for a business or expansion etc. is viable.

A financial plan is also the key component in determining what approach and what potential there is for attracting investment into your business idea or if you need to seek finance alternatives.

BRIEF FINANCIAL PLAN SET UP

Understanding Business Income and Expenses

Businesses are required under Australian Taxation Law to report all income and expenditure and pay tax on the difference being - Profit. If a loss is made there is no tax to be paid but you still have to report it.

What is key here though that it is not just about complying? It is a very necessary and supportive way for you to know what is going on financially through this reporting.

Simply the basic purpose of a Profit and Loss statement (P&L or referred to as a Revenue Statement sometimes), is to calculate how much profit or loss you have in running your business.

This is also then used for taxation purposes to calculate how much tax you may need to pay to the Australian Taxation office (ATO) each year.

It records and classifies:

Income - turnover



Less Cost of Goods Sold

Less Expenses

Equalling a net profit or loss

Business Income

Income is money, revenue, (turnover) that you receive for:

sale of your products

services that you offer

Interest from a bank account

Dividends from Share Investments that the business owns

Rent from investment properties that the business owns

Rebates and incentives for employee traineeships

Insurance payouts

Worker’s compensation payouts if a claim has been made

Any gains made from sale of business assets such as property, equipment, vehicles etc

Some business owners may also have employment income. Whilst this is added to your individual annual taxable income as assessed by the ATO your employer would have already remitted to the ATO tax due on this income. (If you have been paid as an employee it is important to note that this income does not get added to your business income when preparing your business accounts and reports.)

Income may not always be in the form of money – in some situations goods and services may be treated as income such as if you exchange products or services of equal value where no money changes hands (e.g. barter exchange).

Income is shown on a Profit & Loss Report.

Expenses

Expenses are sometimes also referred to as overheads or indirect costs.

Expenses are all of the financial outlays that a business makes such as utility bills, wages, and operating and management expenses. Expenses are shown on a Profit & Loss Report.

Some examples of Expenses are:



Advertising & Promotion

Bank Charges

Electricity

Rent

Salaries and Wages

Expenses are shown on a Profit and Loss Report.

Cost of goods sold (COGS) or Cost of Sales (COS)

Cost of goods sold (COGS) are the costs (business expenses), that can be directly linked or associated to the production of the product or provision of the service. It includes the total cost of:

buying parts and materials

consumables

freight on these goods

freight and delivery of the finished product

paying for the labour (wages, salaries, sub-contractor fees)

Effectively all that is required to manufacture your products or provide your service.

All other management, administration and operating costs such as rent, electricity, marketing and advertising are not included in COGS but are allocated and reported under Expenses in a separate section of your Profit and Loss report. COGS are shown on a Profit & Loss Report.

The difference between COGS vs Expenses

Cost of Goods Sold and Expenses are essentially the same thing in that they are the overall expenses for the business. However, they are simply categorised separately for more detailed reporting and tax purposes. This allows the opportunity for you to be able to assess the direct percentage in the profit margin of the production of your goods or services.

Consider whether you need to have Cost of Goods Sold categorised separately to your expenses as it may bring a complexity that is not needed.

This is a brief summary of what is needed in the Financial Planning.



Gather together the financial data (as listed above) in order to prepare these statements for your Business Plan

Look at EXPENSES

Business expenses can be broken into two categories:

Start up expenses

Operating expenses

START UP EXPENSES

All the costs incurred in ‘starting up’ a business are regarded as the start up expense listing.

These expenses may include:

Business registration fees (there can be initial fees but then also ongoing expenses)

Business licensing and permits (there can be initial fees but then also ongoing expenses)

Starting inventory

Rent deposits

Down payments on property

Down payments on equipment

Utility set up fees

These are just some examples of start up expenses.

Each business may have unique start up expenses and invariably they will grow in number, so just add to the list as you identify them.

OPERATING EXPENSES

These are regarded in accounting standards as your business running expenses.

Think of these as expenses and costs that a business would need to pay on a regular basis. These cycles may be weekly, monthly, quarterly or annually depending on the expense. When starting up some suppliers require you to pay more regularly until an established relationship has been developed.



Operating expenses may include:

Accounting Fees

Advertising and Marketing Expenses

Bank Fees

Computer expenses

Electricity

Depreciation

Equipment repairs

Equipment hire

Interest Expense (interest paid)

Insurance Expenses

Licences & permits

Memberships & Fees

Motor Vehicle expenses (fuel, registration etc)

Printing & Stationery

Postage & Delivery

Professional Development or Staff Training

Professional fees (legal & consultants)

Rent & Outgoings (i.e. Strata fees)

Repairs & maintenance

Telephone & Internet

Salaries & Wages

Superannuation

Staff expenses

Tools (replacement)

Travel Expenses

Web Hosting expenses

These are just examples of operating expenses.



THE INCOME STATEMENT

One of the three financial statements needed to be included in the Financial Plan section of the Business Plan:

The income statement (Profit & Loss)

The cash flow projection

The balance sheet

The Income Statement shows your Revenues, Expenses, and Profit for a particular period.

It's a snapshot of your business that shows whether or not your business is profitable at that point in time.

Revenue LESS - Expenses = Profit/Loss (in simple terms)

NOTE: EBIT, in accounting and finance terms means Earnings Before Interest and Taxes It is a measure of an organisation's profit that excludes interest and income tax expenses.

Operating income is the difference between operating revenues and operating expenses.

For the purposes of the Business Plan, an income statement should be generated monthly for the first year.

Example – Income Statement

YOUR BUSINESS NAME (Service industry example)

Income Statement for the ‘PERIOD’ ending

Revenue Revenue: services Service 1 Service 2 Service 3 Total revenue: services Revenue: miscellaneous Bank interest Total revenue: miscellaneous

$ Expenses Direct costs: Materials Equipment rentals Salary (owner) Wages #expense #expense # expense

$



Total revenue Total direct costs General and administration: Accounting and legal fees Advertising and promotion Bad debts Bank charges Depreciation and amortisation Insurance Interest Office rent Power Telephone Credit card commissions Credit card charges Total general and administration

Net income before income taxes (Total Revenue – Total Expenses)

Total expenses

THE CASH FLOW PROJECTION

This shows the expected cash flow in and out of your business.

This part of the financial plan will assist in indicating if expenditures are too high, productivity is not producing the necessary revenue (income) or when you might wish to consider financial options such as short term investments to deal with a cash flow surplus.

As part of your business plan, a Cash Flow Projection will give you a much better idea of how much capital investment your business idea needs.

The Benefits are that it:

Ensures that you have considered all of the factors that will impact the setup and financial viability of the business

Evidences that your business is a good credit risk

Shows there will be enough cash on hand to make your business a good candidate for credit or a short term loan

Do not confuse a Cash Flow Projection with a Cash Flow Statement.



The Cash Flow Statement shows how cash has flowed in and out of your business. In other words, it describes the actual cash flow that has occurred to-date / in the past.

The Cash Flow Projection shows the cash that is anticipated to be generated or expended over a chosen period of time in the future.

Example – The Cash Flow Projection

You can utilise the actual income and expenditure from a previous Cash Flow Statement (Profit & Loss Statement) if you have one as an indicator to estimate these figures. When doing this ensure that you also consider future planning and development costs, for example, the cost to build a new website.

If you do not have a previous cash flow statement then the figures are based on estimates however you can also refer to other businesses in the industry to research some indicators of costs that you may not be aware of.

The Australian Taxation Office (ATO) has a section that provides information about benchmarking where you can review industry benchmarks that may be of assistance to give percentage ratios: https://www.ato.gov.au/Business/Small-business-benchmarks/In-detail/Benchmarks-by-industry/

Cash Revenues

Revenue from

Product Sales (Income)

Revenue from Service Sales (Income)

Cash Disbursements

Cash Payments to

Trade Suppliers

Management Draws

Salaries and Wages

Promotion Expense Paid

Professional Fees Paid

Rent/Mortgage Payments

Insurance Paid

Telecommunications Payments

Reconciliation of Cash Flow

1. OPENING CASH

BALANCE

2. ADD: TOTAL CASH

REVENUES (Income)

3. DEDUCT: TOTAL

CASH

4. DISBURSEMENTS

5. CLOSING CASH

BALANCE



Power/Utilities payments

Total Cash Revenues Total Cash Disbursements

It is important when putting together a Cash Flow Projection to be very realistic, not over optimistic about your projected sales.

THE BALANCE SHEET

This is the last of the financial statements that you need to include in the Financial Plan section of the Business Plan.

The Balance Sheet presents a picture of the net worth of a business, at a particular point in time.

Balance sheets include the following components:

ASSETS: these are tangible objects of financial value that are owned by the company. They are items owned by your business that have a commercial value i.e. they could be sold and money received for their value.

These items are not products that you sell in your normal course of business but are things that are used to generate the income, such as:

money/funds that you are holding from sales

stock that you are holding ready for sale

tools

motor vehicles

production machinery

office equipment (desks, computers etc.)

websites

LIABIIITY: is a debt owed to a creditor of the business. Liabilities are money that you owe and can cover things such as:

loans or other forms of lending

purchases made on credit (credit cards, store cards)

suppliers the business owes money to (creditors)

PAYG Withholding payable to the ATO collected from employees’ wages

Superannuation due for Employees



Tax owed and payable to the ATO

EQUITY is the net difference when the total liabilities are subtracted from the total assets. If you deduct the total of your liabilities from your total assets what is left is your equity in the business. For example, you have a house worth $400,000 however if you owe the bank $250,000, your equity then is $150,000.

Example:

House purchase value $ 400,000

Owed to Bank (less) $250,000

Your Equity $ 150,000

For the purposes of your Business Plan, it is advised to just create a pro forma Balance Sheet intended to summarise the information in the Income Statement and Cash Flow Projections.

Normally a business prepares a Balance Sheet once a year.

Balance Sheet – Example Only

Your Company Name Balance Sheet As At __________

(Date)

Assets Liabilities

Current Assets Cash in Bank Petty Cash Net Cash Inventory Accounts Receivable Prepaid Insurance

Current Liabilities Accounts Payable Income Tax Payable Superannuation Payable GST Payable GST Charged on Sales GST Paid on Purchases GST Owing

Total Current Assets Total Current Liabilities

Fixed Assets Land Buildings Less Depreciation Net Land & Buildings Equipment Less Depreciation Net Equipment

Long-Term Liabilities Long-Term Loans Mortgage Total Long-Term Liabilities

Total Assets Total Liabilities



Equity

Earnings Owner's Equity – Capital Owner – Draws Retained Earnings Current Earnings

Total Equity: Liabilities And Equity:

Total Earnings

Once you have your Balance Sheet completed, you will then be ready to write a brief analysis of each of the three financial statements.

When you are writing these analysis paragraphs, keep them short and cover the highlights, rather than writing an in-depth analysis.

What these reports effectively provide is the story about the business, its potential and viability with full consideration and awareness of all of the factors that will impact its sustainability. Collating and putting this information down brings the reality of the whole picture to the fore. It offers the opportunity for a true evaluation and assessment as long as the figures are both honest and realistic.

SOURCES AND COSTS OF FINANCE

Sources and costs of finance is obviously one of the most important parts of a Business Plan as without funding the business would not exist.

The plan essentially proves the company/business/organisation will be a viable business.

Often the hardest part of starting a business is raising the money to get going.

If sufficient finance can’t be raised, it is unlikely that the business will get off the ground.

Raising finance for start-up requires careful planning.

Sources and costs of finance

How much finance is required?

When and how long is the finance needed for?

What security (if any) can be provided?

Is/are the business owner/company director(s) prepared to give up some control (ownership) of the start-up in return for investment?



The finance needs of the Business Plan and the potential identification of sources and costs should take account of these key areas:

Set-up costs (the costs that are incurred before the business starts to trade)

Starting assets/investment (the fixed assets that the business needs before it can begin to trade)

Working capital (the investment needed by the business, e.g. to purchase raw materials and estimates of amounts that will be owed by customers once sales begin

Growth and development (e.g. extra investment in capacity)

To provide the required liquidity and profitability for the business

For a new business/company seeking sources and costs of finance it would assist to divide the possible options into sources which are from within the business (internal) and from outside providers (external).

Financial Sources

Internal sources of financial options

External sources of financial options

Personal sources. These are the most important sources of finance for a new business.

Loan capital. This can take several forms, but the most common are a bank or financial institution loan or bank overdraft.

Share capital – invested funds provided by the founders/directors/owners who may decide to invest in the share capital of the new company. This is a common method of financing a start-up.

A bank loan provides a longer-term kind of finance for a start-up, with the bank stating the fixed period over which the loan is provided (e.g. 5 years), the rate of interest and the timing and amount of repayments.

A new company can also raise finance by selling shares to external investors.

A bank overdraft is a more short-term kind of finance which is also widely used by new and small businesses. An overdraft is really a loan facility –



the bank lets the business “owe it money”.

Savings and other “nest-eggs”. Investment from personal cash balances into a new business is a cheap form of finance and it is readily available. Often the decision to start a business is prompted by a change in the personal circumstances of the owner/directors – e.g. redundancy or an inheritance.

Share capital – outside investors. For a new business, the main source of outside (external) investor in the share capital of a company is friends and family of the entrepreneur.

Re-mortgaging is a popular way of raising a loan. The new owner takes out a second or larger mortgage on a private property and then invests some or all of this money into the business.

Credit cards are a surprisingly popular way of financing a new business. It is a method of pay-as-you-go and each month, the owner/director pays for various business-related expenses on a credit card.

Professional investors

Professional investors are another potential source of finance, and they typically prefer to invest in businesses with high growth prospects. Professional investors tend to have made their money by setting up and selling their own business and have proven entrepreneurial expertise.

Venture capital is a specific kind of share investment that is made by funds managed by professional investors. Venture capitalists rarely invest in genuine start-ups or small businesses as they usually look to over $2 million dollar investments.

Another term you may see is “private equity” – this is just another term for venture capital.



2.4 MARKET EXPOSURE OF THE BUSINESS

Most people think that marketing is just advertising and promoting however it is actually more than that, and needs to include:

understanding and knowing the purpose of your business – what your business is, what it offers, what its intended direction is

what and who is your market or who are your potential customers

who are the other people or businesses conducting the same or similar type of business

marketing research and analysis

market planning

online marketing such as online strategies, search engine optimisation, social media and networking

the marketing mix of the 4 ‘P’s – a dynamic blend of:

o Product and/or Service (What are you offering)

o Pricing (how much)

o Place (distribution - how are you going to get it out to the public)

o Promotion & Communications (Advertising, selling, packaging and promotion)

Simply put, Marketing is an area, or part of your business where you have opportunities to let people know who you are and what you have to offer whether that be locally, nationally or internationally. Marketing is about keeping your eye on your ball (on your business) - not about constantly looking for a competitive edge with other businesses.

Marketing offers you an opportunity to consider more deeply and in detail what you and your business are about - your purpose, what it is you are actually offering - being more than the product sitting on the shelf or service on a brochure or price menu. It considers who are your customers, how you intend communicating, connecting and building relationships with people, customers, suppliers and so much more.

Traditionally, the marketing ethos is about ‘selling’, ‘hooking’, ‘competing’ and getting and retaining your clientele at any cost. There is a push that you have to prove yourself, persuade and convince people that they should be coming to you. However, if marketing is not made about people, the customer, and



identifying and responding to needs etc, no amount of marketing will get the customer to buy your product or service or realise the true value of what your business is offering.

If all of the above is not part of the initial purpose - have you considered what you may actually be putting out there – for instance, are you trying to force a product or services onto to people – which – not only does not ensure the retention of current customers but can also impact potential growth by dissuading referrals. It wouldn’t matter how schmick or enticing your advertising campaign is - people know and feel if it is genuinely for them or just for profit or for the company’s own purposes. Reputation and referrals of a business are the greatest selling strengths it can hold.



MARKETING STRATEGIES

Marketing strategies may include:

Achieving lower costs of production and distribution than competitors, however this cannot be done as a compromise to the quality of the product/service that is offered or at the expense of staff, their health, wellbeing and safety.

Creating a very different product line or service so that the business becomes a class leader in the industry. Using this to inspire innovation – knowing your clientele and your market place.

Distribution – the most efficient and complementary way to reach your clientele.

Pricing, presentation and display of products/services. Clearly communicating the product/services to the customer.

Product design and packaging. Creating a branding of your product or services.

Product range and mix – knowing if you need to diversify according to customer needs.

Promotion and advertising

Pursuing cost leadership (the strategy used to create a low cost of operation within the niche market of a business) and/or product differentiation within a specialist market segment

METHODS TO PROMOTE THE MARKET EXPOSURE

After you identify the target market, you will need to determine the ideas and tools to promote the product or service into that market.

Promotions are events that encourage involvement and action by your customers to buy your products or services.

These may include:

Client days

Receptions

Promotional discounts

Product launches

Attendance at trade shows, conferences and other events



Development and distribution of general promotional and informational materials

Development and distribution of samples, case studies, testimonials and other evidence of enterprise activity

Development of displays and signs

Development of media releases, articles and media background information

Information sessions for clients, suppliers and stakeholders

Online information, web based mail outs, web subscriptions etc

Telephone promotions



Marketing strategies may include Promotion ideas may include

Achieving lower costs of production and distribution than competitors


Creating a very different product line or service so that the business becomes a class leader in the industry


Product launches

Distribution Information sessions for clients, suppliers and stakeholders

Pricing, presentation and display of products/services

Product launches

Attendance at trade shows, conferences and other events

Client days

Product design and packaging Development of displays and signs

Development and distribution of general promotional and informational materials


Product range and mix

Telephone promotions

Online information

Client days

Promotional discounts




Pursuing cost leadership and/or product differentiation within a specialist market segment


Information sessions for clients, suppliers and stakeholders




Some added comments on methods used:


Using media releases and media generally to promote and advertise your product or service is one of the best marketing tools.

The wide reach of media in all forms can provide a mass market visibility to your marketing strategies.

Traditionally you can promote the various aspects of your marketing strategies in the form of press releases, promotional campaigns or advertorials and send them to a number of newspapers, magazines, brochures and so on. Other promotional ideas are:

Direct mail

Yellow pages advertisements

Business Cards

Brochures and Flyers

Newspapers / Magazines

Editorials

Newsletters

Television/ Radio adverts

Incentive schemes

Social Bookmarking

Article Marketing

Online Directories –

Google Ads

Blogging

Squidoo

Facebook/Twitter/Instagram/Linkedin

Forums

Email Marketing

Email Signatures

eBay

Classified Online Ads

YouTube



Although usually associated with PAID advertising, some marketing strategies can select high penetration media channels such as radio and television, but rarely are they willing to post ‘free’ marketing or promotions!

Promotions also include:

Promotional activities communicate to your potential clients who you are and the products or services you offer. It includes:

customer service

public relations

direct marketing

advertising - branding

personal selling

sales promotions etc.

ATTENDANCE AT TRADE SHOWS, CONFERENCES AND OTHER

EVENTS

Trade shows and product exhibitions can be a sound marketing platform to promote your goods and services.

Trade associations, private companies and other ‘promoters’ make available exhibition stands/stalls or open space for a business to interact with prospective customers.

While interacting, it is advisable that you provide them promotional items such as brochures, website details, special offers etc.

USING THE INTERNET

Along with using media releases and media generally, the internet is equally one of the best ways of promoting your business.

The internet can be associated with most of the other examples of promotion either as a primary or secondary (complementary) vehicle.

However, we are now a global community with more and more people heading to the web or internet each day, including your web Clients, to access information quickly and easily about you and your business, product or service. An array of people – customers, suppliers, competitors etc use the Internet to research and



become more familiar and informed about your business, what they may be purchasing and whether that is what they want or need or may support them.

Today a web presence and social media is everywhere, it is considered essential for businesses in getting you, your brand, product or service out to the marketplace.

Social media and web based programs, websites on the internet are like any other form of advertising with it being a way to connect and communicate with people who may be your potential clients about who you are, your business and your product or service.

Web presence and Social Media can be low cost, value for money and powerful advertising tools to share you, your business and your products or services with the world almost instantly.

With creating a web presence or utilising social media, for business and/or for personal use it comes with the equal responsibility of how you would be or choose to interact with people in a face-to-face context. Social media and the web is an amazing platform to represent yourself and your business, and should be treated with respect. It is about being aware that whatever is created or posted on the Internet will always remain on the Internet. So it is crucial that what is posted on the Internet is what you would want everyone and anyone to see, even your mother/ father/ children/ grandparents/ friends/ clients etc. That when posting on social media, content is published that could be viewed by anybody at any time, and hence our responsibilities are actually wider than to our customer base. What is on your Internet presence and how you utilise this is a reflection of you, how you live in your personal life and your business life?

Often the Internet is viewed as a place where it does not matter what is said and/or done based on the enormous anonymity that can come with having a web presence. It is important to note that even if customers are not being met face-to-face, the way that we or a business presents themselves or their goods/services should not be any less than the expectation of a face to face interaction. In fact, your own business website is a key promotional platform for your products and services to create interest from and sales to your target audience.

Some of the advantages of Internet advertising are:

Rich multi-media advertisements can be developed consisting of drop down menus, built- in games or search engines to engage viewers



Online advertising can be interactive, i.e. two way communication allowing the user to provide feedback and login registering their details

Online advertising can be tailored or personalised for individual audiences, hence targeting people everywhere

It offers an opportunity to reach consumers who have developed a preference for online communication

Results from online advertising are measurable providing the opportunity to accurately gauge the effectiveness of advertising campaigns

These modes can include:

Banner ads

Search Engine Marketing (Search Engine Optimisation)

Pay for placement (pay per click)

Things to be aware of in using social media include the following:

Beware of ‘selling yourself’ on social media. This is not like a traditional advertising medium that ‘interrupts’ to sell - social media is about building relationships.

Keep your posts short, use short paragraphs.

Use photographs to enhance the blog or simply a photo with a caption

It is not about producing a number of posts - pumping out content. Rather it is about ensuring quality determined by you.

It is preferable to post your own content rather than re-use others’ material.

If you wish to post someone’s article that you feel would be interesting for your readers, first check the source of the story and the integrity of the author. What you post reflects back onto you.

If you find someone’s article interesting, relates or is even compelling, consider posting a brief summary with a link to the original.

If you intend on carrying out both online and offline marketing for your business, an important point to remember is that isolating your marketing strategy as online or offline can cost you a lot in the long run. Online marketing can benefit immensely from traditional offline marketing such as direct mail and advertising just as much as how offline marketing can benefit from promoting the business through the Internet. Therefore, as a small business with a limited budget, using both online and offline marketing together may help you get a better return on investment.



It is also important to note that promoting your business through direct mailing may have implications under the

Privacy Act 1998 (Clth) - https://www.legislation.gov.au/Details/C2011C00074

Spam Act 2003 (Clth)- https://www.legislation.gov.au/Details/C2014C00214.

For more information visit - https://www.legislation.gov.au/Home



2.5 PRODUCTION/OPERATION PLAN

The production/operations plan component of your Business Plan is designed to describe how the business functions on a continuing basis.

When writing a Business Plan, the operations plan section of a small business is not much different to that of a larger scale operation.

The operations plan describes the physical necessities of your business, such as your physical location, facilities and equipment. It relates to the day-to-day practical aspects of how and what is required to support and run your business. It is the physical and tangible aspects of taking care of your business on a daily basis.

A Production/Operations Plan may include:

Customer requirements, market expectations, budgetary constraints

Industrial relations climate and quality assurance considerations

Means of supply and distribution

Operational targets and action plan, which may include short- medium- or long-term goals

Options for production, delivery, technical and customer service and support

Personnel

Infrastructure

Product selection processes

Delivery processes

Accounting methods and practices

Auditing

Customer management

Start within your limits!

Again, assuming you may have already created an operational plan, this will provide a summary.

Rather than writing too much detail about the operational planning strategy of a particular product or service, this summary can list specific responsibilities, including



those of people or companies outside the business, as a check that the major essentials are covered.

A Business Plan will include an assessment of your production and operations strategy

The plan will usually identify the methods and the means by which a business would function...using those production/operation plans

The operations plan highlights areas such as:

Logistics of the organisation

Responsibilities of the management team

The tasks assigned to each division/department or sector within the company

Capital and expense requirements related to the operations of the business

OPERATIONS IN YOUR SMALL BUSINESS

The operations plan describes the physical necessities of your business, such as your physical location, facilities and equipment.

Depending on what kind of small business you will be operating, it may also include information about inventory requirements and suppliers, and a description of the manufacturing or service process.

Keeping focused on the bottom line will help you organise this part of the Business Plan

Think of the operating plan as an outline of the capital and expense requirements your business will need to operate from day to day.

METHODS OF PRODUCTION/OPERATION

Generally, there are two main areas to consider in the summary of an operations plan to discover the methods/means of production/operation to get your business off the ground.

You must demonstrate that you understand the manufacturing or service delivery process of producing your products or services in line with business goals and objectives.

Start with:

1. STAGE OF DEVELOPMENT



In this section, describe how your product or service will be made and identify any issues that may be associated in the production process.

Demonstrate your awareness of industry standards and regulations by listing, e.g., industry bodies you may be a member of or which organisations you may plan to associate with in line with your products and services.

Demonstrate the steps you may have already taken to comply with the laws and regulations that apply to your industry.

Explain who your suppliers are and their prices, terms, and conditions. Describe what alternative arrangements you have made or will make if these suppliers let you down.

Explain the quality control measures that you've set up or are going to establish.

This section of the operations plan for the business plan, explains what you have done "to date" to get the business operational

What will logically follow...is what stills needs to be done!

A further sub-section can be created entitled "Risks" which can outline any potential problems that may interfere with the identification, methods and means of production/operation production process and what you're going to do to negate those risks.

Some additional areas that can be listed for reference in the ‘stage of development’ include:

Industry association membership

Suppliers

Quality control

The second section of the production/operations plan of the Business Plan is:

2. THE PRODUCTION PROCESS SECTION

As you can see, the ‘Stage of Development’ above is an overview, but the Production Process section lays out the details of your business and its proposed day-to-day operations.

Remember, your goal for writing this section of the Business Plan is to demonstrate your understanding of identifying methods/means of production/operation or delivery processes for your product or service.



This part of the operations plan in the context of the overall Business Plan should demonstrate that you have checked all the boxes!

In the table below are examples from industry so make sure you include all the details of your particular business operation...or leave out any that do not relate to your industry or business.

Production Process of [Your Business]

What is the header here? (This should relate to your particular industry)

General

Outline of your day to day operations

Hours of operation

Is the business seasonal, if so, make sure you state this

The physical premises

What is the size and location

Drawings of the building

Lease agreements

Recent real estate valuations/assessments

Show how much the land or buildings required for your business operations are valued at

Equipment

Same discipline as above

Describe the equipment

Value and cost

Financing arrangements

Assets

List of your assets

Land, buildings, inventory, furniture, equipment and vehicles

Legal descriptions and the value of each asset

Special requirements

Any special requirements, such as water or power needs, ventilation, drainage, etc.,

What you may have done to secure any necessary council or state government permissions

Materials Where you obtain the materials

What are you going to need to produce your



product or service

What terms you've negotiated with suppliers

Production

How long does it take to produce a unit or service

When will you start producing your product or service

What may affect the time frame of production

How will you deal with potential problems

Inventory How will you keep track of inventory

Feasibility Describe any product testing, price testing, or

prototype testing that you have done on your product or service

Cost Give details of product cost estimates on your

product or service

When writing this section of the Business Plan, you can use the headings above as subheadings and then provide the details in paragraph format.

If a topic does not apply to your particular small business, leave it out. Not only have you established a detailed operating plan to show methods/means of production/operation for your Business Plan but you now have a convenient list of what needs to be done next to make your business a reality.



2.6 STAFFING REQUIREMENTS

Employing staff can support you and your business with the establishment, running and expansion.

Staffing can impact and involve sales, production, administration or management.

Staff are integral to your business It is important to appreciate and understand that they are a valuable resource and a true asset of your business.

Your staff are quite often the first point of contact that your clients and the public will connect with. The relationships that are developed both with yourself, your staff and within the workplace are essential not just to the rhythm and foundation of your business but also to how you develop and sustain relationships with your clientele and customers. It is the commitment and dedication of everyone equally that allows for the seamless operations of your business enabling the focus to be on what the purpose of the business is.

Staffing requirements may include:

Full-time, part-time staff, permanent, temporary or casual staff

Owner/operator (you the owner/operator are not actually an employee of the business in relative terms though)

Sub-contractors or external advisers/consultants

When addressing staffing or more correctly ‘human resources’ for the Business Plan, the structure and responsibilities of staff and how your business ownership is structured is another vital piece in the overall plan.

You need to clearly identify:

Who will be on your management team

What are the skills of your management and staff

How will they contribute to the bottom line

A convenient way to identify staffing or human resource requirements for the organisation is to break it into sections detailing your:

Ownership structure

Internal management team



External management resources

Human resources needs

Ownership Structure

The ownership structure section describes the legal structure of your business.

Is your small business a sole trader or a propriety limited company?

Is your small business a partnership or a corporation?

The Internal Management Team

This section details the main business management categories relevant to your business

Describe each responsibility for each category and provide profiles of skills etc.

Management categories include:

Sales and marketing

Administration and production

Research and development

Human resources

NOTE: Some key management staff may be responsible for more than one role. Identify the key management in your business and explain what functions each member has.

COMPENSATION

Detail how management will be compensated.

What salary and benefits will management receive?

Are there any profit-sharing plans that may apply?

Are there any contracts that relate directly to your management team members, such as employment contracts or non-competition agreements?

Requirements to effectively produce/deliver products/services

The task of detailing the roles and responsibilities within your human resources needs in the management plan section of your Business Plan is to describe your human resources needs specifically.

How many employees will your business need?



What are your legal obligations as an employer?

What will it cost you?

Will it be best for your business to have employees or should you operate with contract workers or freelancers?

Do you need full-time or part-time staff?

PRODUCE/DELIVER PRODUCTS/SERVICES

Outline your staffing requirements in this section of your Business Plan, including a description of the specific skills that the staff and management working for you will need to bring to the table.

Calculate your labour costs.

Determine how much salary each employee will receive, and total the cost of salary for all your employees

Add to this the cost of Workers' Compensation Insurance (mandatory for most businesses) and the cost of any other employee benefits.

You also need to describe how you're going to find the staff your business needs, and how you're going to train them.

When you are identifying staffing requirements to effectively produce/deliver products/services and training in your organisation, include as many specifics as possible.

What specific training will your staff undergo?

What ongoing training opportunities will you provide your employees?

Even if your human resource plan for your small business is to start as a solo act, you still need to include this section on Human Resources Needs in your Business Plan to demonstrate that you have thought about the staffing.

Taking care of the people that are taking care of you, your business, your products and services, your clientele/customers is key as they are integral to the representation of your business and are your greatest asset. Ensuring that everything is in order supports the building of solid relationships with your staff, developing the reciprocal consideration, respect and appreciation of every person. It is important that it is communicated with your staff what their tasks and responsibilities are and equally that they clearly understand what the business is about and its ethos. It is about developing and supporting people first and the plan of how to do this.



Human resource planning, at this early stage, will assist you as the business grows and have well thought out plans about the future and how your business is going to succeed.

Example Only – Small Business Organisation Chart

CEO/GMOwner

Operations Sales Employee Employee

Marketing Manager

Office Manager



2.7 SPECIALIST SERVICES AND SOURCES OF

ADVICE

As you are a specialist in your profession so too are others in theirs where they offer their services equally in support. It is important to ask for support as and when needed as we are not actually meant to do and know everything.

Advisors can assist and support with the establishment, growth and development of your business; education on and understanding your industry including regulations or what is on offer; developing contacts, getting yourself out there etc.

While someone starting up their business can sometimes be reluctant to utilise advisors (whether due to cost or not knowing where to start and /or who to engage) or some more experienced people feel like they already know it all (having been in business before), there is value in asking people who are experienced and have the up-to-date know-how in their respective professions or areas.

Such advisors are specialised in their particular area of business, which may be an area you are not familiar with. They make it their business to know this area inside out, and have an in-depth understanding and know-how of the relevant and up-to-date requirements and legislation. So in effect you potentially save time and money in not having to spend hours researching and finding out what is needed as well as the legal, monetary and other consequences of you possibly missing an important piece of information and not complying.

It is important to ensure that when choosing the people and organisations that provide such advice that you are confident and trust them and their capabilities to support your business in what is needed. In other words as we have discussed previously finding the right people for a particular task is important, so too is finding the right advisor for you, and your business. It is worth taking the time to get this right.

Specialist services may include:

Accountants

Business advisors and consultants

Business brokers

Contractors



Government agencies

Industry/trade associations

Lawyers and providers of legal advice

Mentors

IT professionals

Auditors

EXTERNAL MANAGEMENT RESOURCES

External management resources, including consultants, can be overlooked when preparing the overall staffing requirements as part of the Business Plan. They are often described in expenses or specialist services.

Professional / Specialist Services

External professional advisors that your business will use, such as accountants, bankers, lawyers, IT consultants, business consultants, and/or business coaches

An Advisory Board can also be established to provide you with additional advice to run your business profitably and well.

If you choose your board members carefully, they can also provide expertise that can complement your internal management team

Many companies, new and old, have never used specialist services and sources of management advice or broadly speaking “consultants” before or may have had bad experiences in the past.

In terms of initial assessments or base line business planning, a specialist services provider can help your company look at the strengths and weaknesses of your planning.

CONSULTANTS AND CONTRACTORS

Consultants and Contractors are two very different resources.... or at least they should be!

CONTRACTORS

Contractors can be thought of as temporary staff even though they are not employees of your business.



Contractors are often brought in to assist in peaks of work or to tackle specific, often one-off projects.

Contractors will likely have specific technical skills and are generally hired as individuals.

Contractors as a ‘temporary employee’ need to be given direction and managed, equally as an employee would.

CONSULTANTS

Management Consultants

Consultants are usually hired because they bring a degree of innovation as well as prior experience in tackling issues similar to those you wish to resolve.

Consultants are generally hired to deliver specific outcomes and will normally undertake the work in the manner they deem most appropriate.

A Consulting firm also has the backing of a team of specialists, thereby being able to apply the appropriate resources and tools as required.

Lastly, a consultant should not be a 'yes man or woman'. Whilst their job is to deliver the best outcomes that they can for their customer, they should also be prepared to challenge their customer if required.

Business Consultants:

Business Consultants increase professionalism and competitiveness in the marketplace

Business finance is often one of the hardest things for a company to control, so engaging a finance business consultant is a smart move since they typically come with experience and are trained in this field.

Consultants generally learn more new skills.

Consultants are often called upon to complete work that is either too complicated or specialised for companies to complete themselves

Consultants are engaged when a project is critical and needs to be finished quickly.

Cost in accordance with resources available

Consultants generally earn higher wages in comparison to your employees.

Consultants have their own overheads and profit margins to make.



Consultants, both those working independently and those working for an agency or service provider generally cost far more than a corresponding employee.

Consultants are in high demand during times of economic expansion and costs are charged accordingly.

Consultants are often needed to work in areas where growth is occurring and where existing talent is short, which pushes the cost up.

This works in favour of the consultant, as they frequently seem to be "in the right place at the right time."



3. DEVELOP STRATEGIES FOR MINIMISING

RISKS

3.1 SPECIFIC INTERESTS AND OBJECTIVES OF

RELEVANT PEOPLE

As part of undertaking your small business planning it is important to identify the specific interests and objectives of relevant people and seek and confirm their support of the planned business direction.

Relevant people can include the following:

Clients

Family members

Franchise agency

Owner/operator, partners, financial backers

Regulatory bodies

Suppliers

Trade or industry associations

However, keep in mind that involving ‘relevant’ interest groups in planning your overall Business Plan can be both a help and a hindrance!

INTERESTS AND OBJECTIVES OF RELEVANT PEOPLE

Clients

Who they are?

Where are they located?

Why do they buy?

When and under what circumstances do they buy?

What types of concerns do they have?

What are their expectations concerning price, quality and service (are they primarily cost- or quality-sensitive)?

You can ‘edit’ a client list to technically produce a relevant narrowed down list and then confirm their support of the planned business direction.



Confirming their support of the planned business direction

What do my clients really want?

How do I improve or change my products and services to meet their needs?

How can I bring more clients to my business?

Family

Securing funding almost always requires a formal plan.

Companies funded by friends and family may not need a plan

If your friends and family express an interest in assisting you with your business financing, pitch them professionally.

Ensure that it is a sound, cohesive loan request presentation just as you would to a bank or other lending source.

Don't be embarrassed to show financial statements, tax returns, or whatever else they want to see.


You will want to prepare a written agreement about any loans. Circumstances change over time and you cannot always foresee what this might be. It is supportive for yourself and the business to have any business relationships very clearly defined even within family arrangements.

Be very clear with your commitment requirements and expectations. Even some minor detail, such as the timing of interest payments, can create issues if arrangements aren't backed up in writing.

Ensure that the parameters of what investing means for family are clearly understood and outlined in relation to the planning and operations of the business. Are they only silent investors with no voting for directing rights?

Review if what is offered is a commercially viable option as their terms may be more stringent than those you might get through a commercial bank!

Franchise agency

A strong argument for buying a franchise is the experience of the franchisor

They have (usually!) been in business for many years and



you can take advantage of their consumer recognition and proven business formulas.

Any franchisor who has been successful for many years will, in all likelihood, provide excellent training with ample resources at their head office or other outlets to get you started in your own franchise.

As a franchisee, you can take advantage of the public awareness of the franchisor’s name and its national advertising budget

When you buy a franchise, you are, in effect, buying into a family of other franchisees


Ensure that you research the credibility of the Franchise agency.

All franchisees are required to pay an up-front fee to the franchisor in order to use the franchisor’s name and open shop.

These fees can run into six figures. The franchisor will usually require ongoing fees as well. Ensure that you are aware of all of the outgoing costs associated with continuing to be linked to a Franchise – licence fees etc

It is easy to fall into the trap of feeling false expectations.

Franchising is just like any other business. You must work hard and make sacrifices to achieve a measure of success.

Owner/operator, partners, financial backers

You should know your own credit history and that of any investor or partner, because lenders and investors are going to take a close look at it.

Get credit reports from major credit-reporting agencies

Can you do this? They'll want to know that you and your co-founders or management team can execute the ambitious business plan you’ve presented and pay back your loan or generate a return for investors.

Make sure you and your key people can talk about what may be ahead for the business, what the later phases of growth might be, what can go wrong, and how you might handle those things.




The most important elements for partners and financial backers are the financial forecasts the balance sheets and the statements of cash flow and income.

They must be consistent with the discussion of the company’s past performance trends and the data presented in other sections of the plan.

For plans used to solicit financial backing, this section should also include a funding request that states how much money is needed, why it is needed, and how it will be used.

Finally, you need to consider the likely payback for the investors and their need for an exit strategy.

Regulatory bodies

Legal requirements and implications

Before choosing a name, you'll need to decide which business structure you will use. Naming your business (unless you're a sole proprietor or a partnership using your own name) is a formal process, which varies depending on the business structure you choose.

You will need to determine whether your trade name will be the same as the full legal name of your business.

Do a trade names (Business Names) search and register your Business Name with ASIC (Australian Securities and Investments Commission)

For many businesses that operate on the Web, trade names are synonymous with domain names.

Domain names are not registered through state or local government but through online DOMAIN NAME businesses


Check with the ASIC - Australian Securities and Investment Commissions National Names Index to see whether your chosen name has already been registered: this way you’ll know whether the name can "officially" be used.

In order to choose the right business structure, it's best to seek legal and professional advice before making a final decision. More often this is done



with your Accountant and/or Legal Advisor.

All companies need to register a company name and Australian Company Number through the Australian Securities and Investments Commission (ASIC). (Not Sole Traders or Partnerships – this is only for Companies.)

Suppliers

Address your need for primary suppliers.

You need to make investors comfortable with your selection and planning in this critical business area.

How do I find out about suppliers/manufacturers/ distributors?

Most suppliers want new accounts.

A prime source for finding suppliers is a directory listed by state.

If you know the product-line manufacturers, a letter or phone call to the companies will get you the local distributor-wholesaler.

In some lines, trade shows are good sources of getting suppliers and looking over competing products.


Depending on how critical primary suppliers are to your business success, you may want to establish and develop a relationship with them even as you are developing your Business Plan.

Most wholesale and materials suppliers are inundated with requests for information on how to buy directly and cut out the middleman.

Once your business is established you don't want your suppliers to sell directly to your customers.

You want to develop a strong business relationship with your primary suppliers.

Suppliers make relationships difficult to begin but easy to continue. They often do this by requiring an application from you before they will tell you much about discounts and opportunities.

Trade or industry associations

Trade associations often provide sound information on a business plan that will benefit members

Associations provide a valuable network of resources to



their members through publications and services such as newsletters, conferences and seminars.


Trade associations will look closely at employee, staffing and remuneration areas of the plan.

Trade associations can look at statistics and other methods of determining business plan viability in terms of potential support.



3.2 RISK MANAGEMENT STRATEGIES

Risk Management Strategies play an important role in developing and consolidating your small business planning. Identifying and developing risk management strategies must be done according to business goals and objectives, and relevant legal requirements.

Risk management strategies may relate to:

Breach of contract, product liability

Knowledge management

Measures to manage risk including professional indemnity, securing appropriate insurance to cover loss of earnings through sickness/accidents, drought, flood, fire, theft

Security systems to provide physical security of premises, plant, equipment, goods and services

Security of intellectual property

IDENTIFYING AND DEVELOPING RISK MANAGEMENT

STRATEGIES

The Business Plan should be used to identify these risks.

If you don’t identify the critical risks the Company or organisation may face, then someone else will.

Critical Risks

The best course of action is to ensure as much as possible that you have documented as many POTENTIAL critical risks the Company MAY face.

This assessment is insurance and smart management and should not be seen as a deterrent to creating the overall plan or to alter the business ideas. It is another aspect of a reality check whereby understanding that even the best laid plans can go awry. The important thing is to be prepared as a contingency plan not in fear of what potentially could go wrong.

By having the risks identified, it will allow you to develop a strategy to then mitigate them.

You should consider:



What potential issues could arise?

How likely are they?

How do you plan to manage these potential risks?

Every company faces different critical risks

The process of risk identification for a Business Plan could include such areas as:

Rent expectations

Revenue expectations

Vandalism

Crime e.g. Fraud

Management

Maintenance

Competition and so on

You should also, as part of your business plan risk assessment, have in place how to mitigate these risks or what to do in the event they do happen.

The wise business planner will also involve an insurance broker, a legal advisor and an accountant to assist in the risk assessment, again, depending on the type of business and the risk exposure level.

Common Risks Factors

Some common risk factors that you need to include in your Business Plan:

Economic uncertainty both in terms of the economy and the business climate

Effects of third party transactions

Dilution of existing funds and risk of additional funding

Lack of liquidity (lack of cash flow)

Declining public market

Key employee retention (loss of key staff)

Adverse market changes

Cost of raw material changes

Decline in management effectiveness

Adverse effects of contracts and transactions

Decline in sales agreements



Purchasing risks

Including these things in your Business Plan is not saying they will happen; it is sensibly identifying the things that could possibly go wrong and what you would do if that happens.

RISK MANAGEMENT STRATEGIES ACCORDING TO BUSINESS

GOALS AND OBJECTIVES

A STRATEGY is needed to look behind these (and other) risks as part of your Business Plan so that you are in a better position to provide details related to both the side effects of these items and their potential impact on your business.

Risk Likelihood

Likelihood represents the chance that something will happen. This can be represented qualitatively as a word, quantitatively as a probability or frequency, or as both.

For example:

A risk of adverse market changes is highly likely (qualitative)

There is roughly a 50% chance of this risk occurring, or 50/50 chance, or 0.50, or 1/2 (probability)

The risk may occur once per year or once per season (frequency)

By combining a frequency with a qualitative word, it is easier to understand or establish an appropriate likelihood. For example: Highly Likely = Will occur at least once per year

This process proves quite beneficial for a new business owner because in laying out the risk likelihood you can provide for and explain an implementation plan for the mitigation of these risks.

This can also support with Strategic planning and ensuring diversity and innovation. It supports to ensure that you are always on the pulse and responsive to changes in the environment that could potentially impact your customers or business.

CONSEQUENCE

Consequence represents the impact that a risk may have and is measured in degrees of severity, should the risk occur.



As the consequence may be financial loss or legal problems or damage to a company’s reputation, it may range in severity from a negligible consequence through to one which is catastrophic.

It is important to understand what these consequences actually mean in the context of your business as tolerance for risk will differ considerably from one business to another.

For example, a negligible financial loss in a small business may be $500 but a negligible financial loss at a high profile organisation might be $50,000. Again, establishing the context and customising definitions for the Business Plan based upon the business needs is important.

EXTERNAL/STRATEGIC CONTEXT OF RISK

This assessment involves understanding the legal, financial, political, environmental, safety and any other related context of RISK.

For example, if when undertaking your risk assessment for SAY, economic uncertainty in terms of the business climate, you may set questions in the Business Plan like this:

Could there be any current or future political issues that may impact on this risk or the way in which it is assessed?

Could there be any recent or future changes in the laws that relate to your business?

Is there a commercial risk regarding the viability of certain products and services with recent interest rate rises?

It is also useful to discuss community expectations regarding the risks you are considering and ensure you are very clear on who the stakeholders are.

SWOT Analysis

Sometimes a SWOT analysis can also help with establishing the external risks.

So What is a SWOT analysis?

S.W.O.T. is a marketing tool that analyses the Strengths, Weaknesses, Opportunities and Threats of and to your business. This is looking at the internal factors of your business’ Strengths and Weaknesses while Opportunities and Threats are the external factors that affect your business.



It is an initial analysis that you do when you start your business and one that continues as an ongoing observation, awareness and monitoring of what is going on in the world whether within your business or outside of it. This is an opportunity to be aware of what you may need to tweak or refine in your business such as your product range or quality may need up-dating or altering whether due to meeting government or industry standards or self-initiated; increase or decrease staffing levels; introduce technology advancements, systems and efficiencies; use newer up-dated materials; up-date (renovate) or change locations; and may need to increase or decrease pricing.

Example of a S.W.O.T Analysis

Below is an example S.W.O.T analysis that can be altered or expanded on as needed:

INTERNAL ENVIRONMENT ANALYSIS

Strengths (S) Weaknesses (W)

You have extensive skills, knowledge and experience of the product or service, industry, customers and suppliers

Excellent Sales Staff with Strong Knowledge of existing products

Built and developed strong relationships with customers, bankers / financiers etc.

Developed strong internal communications with staff & management

High Traffic location

Successful marketing strategies

Reputation for innovation

Currently struggling to meet deadlines – too much work?

High rental costs

Market research maybe out of date

Cash flow problems

Holding too much stock

Poor record keeping

Need for experienced staff to support development and growth.



EXTERNAL ENVIRONMENT ANALYSIS

Opportunities (O) Threats (T)

Similar products on the market but not as reliable or are more expensive

Loyal customers

Growing demand for quality

Customers may have asked staff for similar product

Enter new markets

Collaborate or Merge with other businesses with needed technology, skill etc.

Other people and businesses have the same or similar products

New advertising campaign launched by other similar businesses to increase sales

Similar or same business opening nearby

Downturn in economy (recession) may mean people spend less

https://www.business.qld.gov.au/business/starting/market-customer-research/swot-analysis



3.3 CONTINGENCY PLAN

Every Business Plan is based upon specific assumptions that you believe are true such as certain facts, projections and market trends.

Your contingency plan simply outlines in advance what you will do in the case that a significant event, market shift or other major assumption changes.

This is not too dissimilar to the establishment of Likelihood and Consequence discussed earlier.

A contingency plan may include:

Disturbances to cash flow, supply and/or distribution

Sickness or personal considerations

When writing your business plan examine all your major assumptions and seek a third party opinion for verification.

Writing a contingency plan would involve:

Reviewing the assumptions you have made in your Business Plan

Selecting those which are “general” or have not been verified or confirmed for accuracy

Then write a document as to what you will do to compensate for the changes and shifts to minimise the impact on the business’s viability

For example:

What would you do if you do not reach your sales and revenue targets?

If you are borrowing heavily and interest rates suddenly increase what would you do to compensate for the increased costs?

What is your contingency plan in the case of a major storm or other disaster that interrupts your cash flow?

What will you do if a key staff member suddenly becomes ill, quits or dies suddenly?

What is your plan if a government or council body closes your premises because of a breach?

What is your plan if your computers fail?

What is your plan if raw materials suddenly increase in cost?



There are numerous assumptions in every Business Plan so it would be better to just list the key assumptions in your business plan.

Prioritise each one in order.

Examine the negative impact

What trends or problems could arise?

Describe what characteristic, trend or issue would cause a significant change

If left untreated WHAT would cause your business to fail?

What would you plan to compensate or adjust to keep your business viable and profitable?

PERSONNEL

Identify the key personnel required to keep the bare minimum of business operations running in the event a disaster should strike.

Examples might include:

Department managers

The accounting department

Branch managers in field offices if your business is a large one

If your company has an Information Technology department, the person responsible for this area should always be involved in business contingency planning.

Create your own business contingency template that sets out information such as key personnel and their typical responsibilities, potential disasters that could threaten business operations, and steps each key personnel member could take to minimise loss to the company.

This would likely be formed using software or an existing program that the IT person would administer.

Once satisfied with the initial draft business contingency plan, email copies to all key personnel members to get their feedback and suggestions on ways to strengthen the plan. There may be factors you're unaware of that they deal with on a daily basis and that need to be addressed in the contingency plan.



Revise the business contingency plan document based upon any input received from key personnel.

A contingency plan is a living, changing document rather than something set in stone.

Conduct review and assessment meetings with key personnel when you feel you have reached a final draft of the business contingency plan.

Encourage all staff to be honest and critical in discussion and if there are any further improvements that could be made to the plan.

Test the business contingency plan periodically like you would any other emergency planning system.

Plan an actual exercise to identify any additional missing areas or impractical solutions before a real disaster strikes.



ASSESSMENT

You are now ready to complete the Assessment for this subject, which consists of:

‐ Multiple Choice Questions

‐ Major Project

This is an opportunity to revise the entire subject and allows your Trainer and Assessor to check your knowledge and understanding of what you have covered.

Refer to the Evolve Hub for further details.



REFERENCES

These suggested references are for further reading and do not necessarily represent the contents of this student manual.

Successful Business Plan: Secrets & Strategies (Successful Business Plan Secrets and Strategies) [Paperback], Rhonda Abrams (Author), John Doerr (Foreword)

The Right-Brain Business Plan [Kindle Edition], Jennifer Lee (Author), Chris Guillebeau (Foreword), Kate Prentiss (Illustrator)

How To Write A Business Plan [Paperback], Mike McKeever (Author)

The Complete Book of Business Plans: Simple Steps to Writing Powerful Business Plans [Bargain Price] [Paperback], Brian Hazelgren (Author), Joseph Covello (Author)

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