|
| |
    
Your Business Plan is your company's agreed view of the future. What
products and services you are going to provide, who will be expected to buy
them, what you can reasonably charge for them and what it costs you to deliver
those services are all in the plan. The plan is the holistic overview of what
the company does, how it makes money and how it needs to be financed.
A comprehensive business plan is needed whenever approaching any source of
funding, be it banks for a loan, venture capitalists or the share market.
Established companies need an annual plan to ensure their employees, customers
and shareholders are each aware of the direction of the business.
Traditionally, the business plan has consisted of the Marketing Plan and the
Financial Plan. Successful companies don't just stop there; they go beyond to
include planning for how they will supply goods and services, how they will
develop their product and process technology and for the risks involved in
business. Some of these plan items are becoming mandatory, for example a Risk
Management Plan. Ultimately the business wants to grow, profitably and also to
be sustainable into the future. Wide-ranging business planning assists this
objective.
Marketing Plan
Foremost of the Business Plans is the Marketing Plan.
Marketing isn't just about advertising and promotions. Marketing is a wide
ranging process whereby individual and business needs and wants are quantified
and expressed in terms of products and services; in turn these products and
services are created and offered to the identified customers. Marketing covers
the means by which products and services will be priced, promoted and
distributed, and needs to provide a basis for determining costs for these
activities.
A Marketing Plan is a very comprehensive document. See our
Marketing Plan Template for a list of the subjects covered in a typical
marketing plan. Starting with analysis of the need and size of the market, the
plan develops quantitative information that is suitable for input into the
financial plan.
Financial Plan
The Financial Plan consists of 3 sets of pro-forma
documents, based upon the projections of the marketing plan:
 | the pro-forma profit-and-loss statement shows
expected income and the cost
to make that income over a
given period |
| the pro-forma balance sheet indicates the value of the company
and its capital structure at particular times |
| cash flow projections: show the expected cash in-flows and
out-flows, how much cash
is retained or leaves the company in a given period, and how much cash is
needed
to finance the business. |
Of these probably the most critical is the cash flow
projection.
A leading reason for the failure of businesses is failure
to provide enough cash. It is a common misconception to think that profit alone
will solve a business' problems; that is not the case in the "real" world where
the majority of sales are made on credit. There is a legal requirement for
companies to trade with sufficient cash to meet their debts as they become due.
The profit-and-loss statement of a profitable enterprise
shows far less is spent on raw material and resource inputs than is brought in
as revenue. If both purchases and sales are made upon credit, on similar terms,
the company is ever more exposed to cash shortages as its sales grow.
Companies can actually be victims of their own success!
Other aspects of financial planning include evaluating intended investments
using net present value methods. We have significant experience in this
technique.
We can work with you to make sure your financial plan
makes sense, and that you plan for your business to be realistically funded.
Operations and Product Delivery Plan
Exactly how your internal operations are going to be arranged to deliver the
products and services which your customers will buy is very much up to you. It
doesn't affect the customer - as long as he can get what he wants, when he wants
it.
It does however affect your profitability, and the ease with which you
service your customers. A Product Delivery plan will lead to far better
understanding of how your supply chain processes link inside the company and
provides a basis for costing the service provides and for improving performance.
Research, Technology and Product Development Plan
A leading reason for failure of new technology businesses
has been identified as excessive dependence upon the status of their technology
at startup. The more successful businesses have followed a thorough plan
to develop that technology, to develop a diversity of product lines and to
develop reliable processes, and process technology, for product and service
delivery. Many businesses simply take the "bright idea" and trust financial
glory will come from that alone; in fact those businesses which thrive use the
idea as a foundation and build a comprehensive product and technology
development program upon it .
Sustainability Planning: Risk Assessment,
Environment and Safety
Risk Management
It is now being legislated in Australia that companies have a comprehensive
risk management plan. At the very least this includes planning for
| Business Risk: what happens in the event of strong competition, a price
war, new technology or other changes to the "rules of the game". |
| Financial Risk: what happens if, for example, interest rates jump
or taxation rates double ? |
| Operations Risk: what happens if, for example, a factory burns down or
an office is closed because of a safety issue ? |
| Product Risk: what happens if, for example, a customer is harmed through
use of a product or service ? |
A comprehensive risk management plan, drawn up in consultation with the board
and executive team, will address a variety of risks and state avoidance or
mitigating strategies.
Environmental Considerations
Companies have a legal and an ethical obligation to
protect the environment in which they. their employees, their customers and
their shareholders work. In Australia specific legislation exists to protect the
environment. An example of NSW laws is available on
www.epa.nsw.gov.au/legal/envacts.htm.
Environmental protection includes protecting surrounding
air and waterways from polluting substances. Environmental protection also
includes protecting the site land and surrounding soil from contamination. The
most effective way to achieve this aim is to manage the processes so the
materials are contained.
A well managed process includes costs of containment.
Aside from protecting against the risk of costly cleanup later, good containment
systems reduce variable costs by ensuring materials are used for products and
not just let out by mistake.
Safety
Companies have both a legal and an ethical requirement to
ensure the safety of employees, customers and indeed anyone whom the
company deals with. In all Australian states, specific legislation exists to
protect stakeholders. An example is the NSW OHS Regulations 2001 (available from
www.workcover.nsw.gov.au).
Safety therefore must form an integral part of the
business plan. A company needs to have systems in place both to protects its own
staff and also such that no harm is done as a result of any particular action
(or inaction) of the company.
The time taken to plan safe working is almost always
recompensed by not having to take up time later reporting and investigation
accidents, and saves by not having to pay out compensation.
Safety includes
occupational safety which is designed to protect
individuals against harming themselves and others at work. Apart from "obvious"
on the job injuries, an occupational health and safety plan needs to consider
activities such as office work and salesperson travel.
process safety which is designed to protect the facility
and the people working in and adjacent to it. Typically a process safety plan
addresses specific measures to prevent fires, explosions, major spills and
similar events. Process safety also includes the transport and storage of
hazardous materials.
Contact John Croker (02 9416 8865 or 0418 263 795) for advice across the range of business
plans, and to facilitate preparation of your plan.
|
