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In this presentation learn about the importance if developing a strategic plan for your business and what to include to ensure your business is best place for success.
Key learning outcomes:
Hello, I'm Dianne Brown. I'm a chartered accountant and business advisor with SRJ Walker Wayland. Today I'm going to take you through the basics on how to write a business plan.
Today I'm going to be taking you through the basics of strategic business planning.
We'll talk about:
The first thing that we need to think about is, what actually is business planning and why do we do it? Your strategic business plan is the process that provides your business direction. It breaks those goals down into strategies and action items, which you then allocate responsibility and timeframes to ensure that, as a business owner, you keep yourself accountable to achieving the relevant action items you need to undertake to achieve your business goals.
It's important because it provides you clarity and helps you prioritize your relative actions that you need to undertake. It becomes the blueprint to achieving your business success.
It is an evolving document. One of the things that I see a lot working with small businesses is that business owners will prepare a business plan, put a big tick in the box that says they’ve done that, and never look at it again. It's a complete waste of time and money.
Your business plan, particularly if you're doing a short, strategic one-page plan, which I will talk to you about in a minute, should be an evolving document. You should be reviewing it on a regular (at least monthly) basis. And you need to be ensuring that you have financial and operational performance measures in place to check the success or the outcomes of your different strategies. So benchmark your way through to ensure that you are going to achieve your goal success.
I mentioned about a one page plan. A one page plan is where you look at where your business is now, where you want it to be, and then you work out a pathway to help you get there. It means being specific. It means looking at what the business looks like now in terms of:
So put a stake in the ground and look at where your business is now.
Then you want to look at where you want your business to be in 12-18 months. You can make your plan up to about a five-year period. I like to keep it up to about 1-2 years, only because anything over that with the changing market is more akin to your business ‘vision’, rather than your detail plan of what you need to do to achieve your goals.
So you look at where you want it to be and be specific.
All of those things need to be detailed in your ‘where do I want to be’? And the critical step then becomes your “how”, which is the link to your strategies - broken down into detailed action items - and allocated to relevant people to undertake those action items, and with timeline lines and reporting milestones set in place to assist with implementation.
Once you've got that strategic plan performed, that then becomes your blueprint of what you're working towards within that next 12-18 month period.
One of the things that I see occur commonly in the SME market is that you will design a fantastic strategic (one page) plan - that might actually end up being four or five pages. You've got your document. You're ready to go. You get back into the business things. Get busy. The implementation of the actions goes out the window, because you get focused again on the day to day activities.
For that reason, I suggest it's really good idea to have an independent party available to assist you, even if it's simply to monitor your progress throughout the implementation of your plan. That can be in the form of business mentoring, implementation, advice, and assistance, or a number of different other forms that suit you and your business best.
One of the things, regardless of the type of plan that you are developing, is to ensure that you have identified your sustainable competitive advantage. So what is a sustainable, competitive advantage? It's the thing that makes you your business unique. It's why your customers buy your product or service, and it's critical that you know what that is in developing your strategy.
For example, if your competitive advantage is to be low cost, high volume products, then your marketing strategy and your operation strategy is a very different type of strategy, than if you are selling high-end luxury goods or services,. These will be very different strategies, so it's important that you know what your sustainable competitive advantage is.
I've talked about one particular type of strategic business plan that I do a lot with my clients, but what you also need to consider is the purpose of the business plan. So why are you actually pulling it together? Is it to be the blueprint for your success? Is it for financing requirements? Is it because you're going for external investment? Is it because your bank has asked you to do so?
The reason you are preparing your business plan will determine the format of that plan. I'm really pleased to say that in the current market, a lot of banks are now willing to accept a strategic one-page plan. Again, caveat, that might end up being four or five pages in lieu of the traditional 10-20 page business plans that we use to prepare. So you need to consider why you're preparing the business plan in the first place to determine the format.
If you are considering preparing a plan for some of the larger grant funding programs, or for investor readiness, you might need a more detailed plan than simply that one page plan. That one page plan that I've discussed will be part of that more formal business plan.
Consider whether it's for internal and external use. Whichever type of plan you go with, you need to make sure that you are updating it and reviewing it on a regular basis, and tracking the success of your strategies and action items, and benchmarking how they're actually going towards having those business goals.
This is an example of a one-page plan template that I do with my clients. So you'll look at where the business is now, and where you want it to be. We break it down into strategies, actions, allocated responsibilities, and timelines. If you are considering going for a more formal business plan, there is a lot of other things that you might want to consider. And this is just a template that's available from business.gov.au that they suggest that you consider to include.
At the very least there needs to be five components of any successful business plan. For a more detailed plan you will have every single one of these five. For an internal use plan, you will have your one-page plan and your financial plan that will be linked to your one-page plan.
So let's look at each of these five key elements.
For a formal plan, you will have an executive summary. We leave that section to last, because it's usually the hardest to write. You need to make a short, concise summary of the content of the rest of your plan in your executive summary/. It needs to be no more than half or one page. It needs to link to the purpose of the plan.
You want to have:
As a snapshot presented in that one first page executive summary
Then you need to have your management or what we call an operations plan. In this, you need to discuss your business purpose. Why have you been set up? What do you sell? Why do sell? What particular client need or problem are you solving? You need to have your administration requirements, so your ABN needs to be listed, your location, the contact details, link to your website, your organisational chart and experience of your key personnel. This is particularly relevant if you're going for large grant or bank financing. You want to have your business group structure- If you are part of group. You also need to have a risk analysis, particularly relevant for traditional financing, investor financing and grant funding requirements.
You also need to consider any innovation strategies that you might have, particularly for investors. Include any R&D activities that you've undertaken? What stage in the R&D process are you at? Have you got your IP or your intellectual property sorted? So have you got your trademarks registered? Are there any patients or designs that should be registered for your particular business?
A lot of people like to see sustainability plans included in there. Things like consideration of community impacts or environmental impacts. Include any particular sustainability or environmental milestone measures that you might be working towards.
I'll give you an example of one of my particular clients. So they're moving towards the circular economy. They've signed up to the aspire platform, which I understand, um, the Morton Bay regional council is also a member too. They're going to sell off cut store waste from their business to facilitate a closed loop circular economy. And their target is to have at least 10,000 of their waste sold through that by 30th of June, 2022. So that's just an example of what I mean by sustainability environmental milestones.
Your marketing plan needs to list out your business’ sustainable, competitive advantage.
What it is you do that is unique to you, and the reason that clients use your services or buy your products in the first place? What's your brand? What's your market position within the industry in which you operate? Who are your market? Who are your key customers? What's the market demographics? So your market size? What’s the percentage of estimated reach you're going to achieve? What are issues are occurring in your industry at the moment?
I've put some resources there for some information that you might want to refer to. If you're looking at doing some market research IBISWorld is a great one. But business.gov.au also has some fact sheets and templates available for various industry groups. That's worth a look at as well.
Develop your client avatar. So your client avatar is the type of client you want to win? What are their key characteristics? Where are they located? What industry are they within? How do you reach them? What's their turnover? So you need to have defined what your key client actually looks like, and work it into a client avatar. Think about your key customer demographics. Their age, gender, social status, activities, and where they are located?
Then you need to think about how are you going to reach them. For example, if you are going towards the younger market, you want to be looking at Instagram, but for older demographics Facebook might be a preferred digital channel to reach them.
You need to include a competitor analysis, but not just think about who your current competitors are, but also who might the future competitors be for your particular business? To do that, you need to identify the key reasons clients buy from you (which you should already have from your sustainable competitive advantage).
Then you need to rate yourself against those key competitors. There are a lot of tools that I've made available to you through some other learning modules available on Business Moreton Bay Region. I would suggest you take a look at other learning modules including:
You need to think about your marketing and sales strategy. In this day and age it is important to have some sort of digital marketing component, obviously it's limited to your marketing budget. But consider how you're using social media channels, such as Facebook, LinkedIn, and Instagram. Will you be using Google ads? And are those social media channels referring back to your website where you're displaying your capability of your own business?
Understand your sales and distribution channels. Do you know the percentage split of your products and services across your different channels? If not, you need to be finding that out.
Finally, you need to look at a Strategic SWOT. I know we've probably all seen the traditional SWOT analysis where you look at your business strengths, weaknesses, opportunities, and threats. But we want to combine those into your strategies and use a strategic SWOT to identify what your strategies are.
This means asking yourself four quick questions. Once you've identified your SWOT, you then look at.
It's about using your strengths to overcome your weaknesses, and capitalize on your opportunities.
You should also have a summary of your future vision for your business. So what does that look like in five years time?
What are the values that you need to operate your business to achieve that vision? What are your goals? What's your detailed action plan? And this is where you would put in your one-page plan (if you had already prepared that). The projects that are contained within that one page plan, those action items are what we use when we look to map projects to various grant funding programs.
You need to have looked at your key performance indicators. What are they from both a financial and operational perspective, and how are you monitoring them? What systems do you have in place to ensure that you can get the data to actually monitor the successful implementation of your strategy?
Your financial plan is critical. You need a financial plan regardless of the purpose of your business plan. If you've been trading for a while, your financial plan will include a summary of your past trading history. But at the very least it will include projections. It’s good financial literacy, and strong business management skills to ensure that you're doing this on a regular basis.
You should be:
In the small business world cash is king. It’s important that you have your budgets and projections documented, and you should list your financial goals and the requirements that you need in place to help you achieve those goals.
In the presentation download you will find a list of various resources that that might assist you in pulling together your detailed business plan. Whichever plan you're using - a one-page plan or a strategic business plan - the most important thing to do is simply have one, make sure you're looking at where your business is now, where you want it to be and what actions you need to undertake to get there, and to achieve your growth and profitability goals. Thank you for tuning into this learning module and I wish you all the best with your business.