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How to Write a Business Plan That Works

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Key components in and organisation’s success will depend on a great degree on how well you;

This is where forward planning can help you.

A colleague once told me that ‘even a bad plan is better than no plan at all’. A bad plan at least shows that you have given some thought to the direction you want to go in.

A good plan takes time and effort, especially the first time you do one and many business owners or operators think they don’t have the time, or don’t see the value in it. But believe me… it is worth the time and effort!

It is an opportunity for you to build solid foundations for your business, based on known facts and these allow you to:

Good business planning involves:

Analysis of Past Performance

In this section of a business plan you look at the past year (or two) to take a good look at what worked and what didn’t. Where you came from is every bit as important as where you are going. You need to look at:

Keeping statistics on where enquiries come from can help you to use your advertising budget in the most effective way. There’s no point in spending a lot of money on advertising on television, for example, if most of your enquiries come from newspaper ads or word of mouth. Asking customers where they heard about you and keeping a record is the best way of determining advertising effectiveness.

The answers to these and any other questions relevant to your particular industry and business will give you a solid base upon which to build your plans for the future. Knowing how you got to where you are now can show you where you went right… and where you went wrong and gives a clear

Conclusions

Looking at the above information – what conclusions can you draw? For example:

Overview of Current Situation

It is very important to have a firm grasp of your current business environment. This is where you look at what is happening around you right now. Things that are happening that could potentially have an impact on your business. This will:

It’s like having a high powered torch in a tunnel as opposed to a match!

A good overview of your current situation will involve looking at:

Business Environment Analysis

What exactly does “business environment” mean?

At its widest view point it can mean the sum total of a number of external and internal factors that affect you and the organisation you work for.

External factors could include such things as:

Also known as a PLESCT Analysis this is a thorough look at the world around you and the influences various issues may have upon your customers, suppliers and therefore your business. Doing this type of research means that you should not be caught unawares by new legislation, trends, changes or advancements. PLESCT stands for: Political, Legislative, Economic, Social, Competitor and Technology and looks at each of these sectors and how they may affect you positively – or negatively .

Doing a PLESCT Analysis

Some of the issues to consider when doing this analysis can include such things as:

Political issues. Here you should look at the general political stability of the country or state.

and so on….

For example changes in government often have an impact on businesses dealing with health, education and employment as existing programs are often changed or discontinued after an election, or new programs are introduced. International economic crises often have a big impact on our own market as does the increasing threat of terrorism or conflict situations.

Legislative issues

For example all staff working in the childcare industry, or dealing with under 18’s, must have a Blue Card, while industries dealing with tobacco or alcohol have very strict licensing laws.

Economic issues and trends

For example, the cost of living is currently rising faster than wages – things such as petrol prices and interest rates are increasing rapidly and people are thinking twice about spending their hard earned money.

Social issues and trends

Competitor information – This is a very important part of your business environment analysis – you need to know as much as you can about your competitors. Questions you need to ask are:

The answers to these questions will give you an overview of how you compare to them and what you can do to improve, and therefore win extra business.

If practical, a product/price comparison grid is an excellent way of keeping an eye on how you are faring against them.

It’s also a good idea to also do a SWOT Analysis on your main competitors (next section) – you need to be able to:

Technology –

Internal influences also need to be taken into considerations and could include:

Looking at the PLESCT Analysis and your internal influences in detail will give you a firm understanding of what is going on around you, and will help you:

SWOT Analysis

A SWOT analysis allows you to have a deep down, honest look at your organisation in terms of its strengths, weaknesses, opportunities and threats and to look at ways to make you stronger.

Strengths

What are your organisations strong points? For example:

and so on.

Weaknesses

What are your organisations weaknesses? For example:

and so on. A point to remember is that not all weaknesses are negative and could be viewed as opportunities for improvement.

Opportunities

What opportunities are there that you could take advantage of? For example:

and so on.

Threats

What things could stop you from achieving your goals? For example:

and so on.

Conclusion:

When looking at your SWOT Analysis what areas need to be addressed?

The answers to these questions will form part of your business plan.

Objective for Next Year

Having looked at your past analysis and current business situation you should now have a solid grasp of your business and where it needs to go to remain successful. Your endeavours to date will now give you a clear direction – or objectives – to aim for in the next one to three years.

One overall objective will have a number of Key Strategies – each of which will, in turn, have a set of tactics designed to help achieve each strategy and therefore the ultimate goal.

Key Strategies

The objective, as stated, is where you want to be. The key strategies are the issues you need to address in order to achieve the objective; WHAT needs to happen. For example if your objective is to increase your revenue by 10% over the previous year, then typical key strategies could be:

  1. Introduce a new product range to fill an identified market need
  2. Decrease expenditure by 15%
  3. Increase your customer base by 10%

All of which would work towards achieving the overall objective.

Obviously strategies will be determined by your own business and industry needs, so think about the things you need to do to achieve your goal.

Tactics

Each strategy will have a series of tactics (or steps) that need to be taken to make that strategy work. As mentioned, these will outline HOW you will go about each strategy. For example.

Key Stratey 2: Decrease expenditure by 15%

2.1 – Review all current suppliers to ensure we are getting the best product for the best price

2.2 – Introduce new procedures regarding unnecessary printing of emails and other documents to decrease amount of paper being used

2.3 – Re-use single sided documents as scrap paper / memo pads to save paper

2.4 – All electrical equipment and lights to be turned off when not in use

2.5 – Review discounting policy and determine if this could be replaced in a more cost effective manner

2.6 – Review consumable usages

and so on.

Once again, the tactics will depend entirely on what strategies you need to fulfil and should be as detailed as possible. These tactics will form part of your action plan. If there is a cost involved, or extra resources, then detail them here.

Sales Forecast for Next Year

Forecasting is neither as scary nor as complicated as it sounds – if you keep accurate sales records!

Sales forecasting means making an “educated” guess on how much revenue you will earn in the coming year and for this reason accurate records are essential and indispensable. You need to know where your sales came from – by product or service and even by month or week of sale. This may seem overkill but eventually this data will give you a complete and detailed picture of exactly how your business is performing. For example spikes (up or down) in sales figures don’t happen for no reason – detailed statistics can show up these spikes which might be due to such things as:

For example – the Tourism Industry is very much affected by high and low seasons. They usually know well in advance when demand will increase or decrease. Travelling to Europe in their winter is low season and demand is not as high as going in their spring or summer time. Knowing this tourism operators can plan for these periods by developing specific products designed to increase sales and take advantage of increased demand in high season. They can also accurately forecast revenue because they have a solid knowledge of who their customers are and when they travel on a month by month basis.

The same may well apply to your own industry.

A review of past years sales statistics can give you an excellent idea of how your sales happen on a month by month basis. You can read the trends like a story – allowing you to estimate with a large degree of accuracy what sales you can expect to make and know how much you will need to spend in the next year.

But what good does all this do you in forecasting? When you have collected this data for a number of years you can start to build up a picture of:

Sales figures rarely drop (or increase) for no good reason.. the trick is to be aware of what is going on around you so that you know why increases or decreases happen. This is where your PLESCT and SWOT prove valuable.

Armed with all this accurate and well researched information you should be able to make a reasonably accurate prediction on how many of each product you will sell in the coming year.

Action Plan

Points for your action plan will come from the tactics. By putting them into an actual action plan, detailing what needs to be done, by whom and by when, you can ensure that each task (or tactic) is done on time and will therefore take you that step closer to reaching your objective.

That, ladies and gentlemen, is basically it!

By following these logical steps you can:

Templates for building a better business plan can be found on www.lptraining.com.au

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