Author: Cameron Moses
Developing a Business Plan for your Small Business
Fail to Plan and you Plan to Fail
Developing a Business Plan for your Small Business should not be an onerous task, nor should you see it
as a waste of time. Even the smallest businesses in the market, such as owner-operators, should write a
Business Plan to help guide their business decisions now and in the future.
So why would I want to write a Business Plan
Firstly, it will help you determine exactly what you want to achieve in your business. For example, a
good Business Plan will outline the direction in which you intend to take the business, the products and
services you will sell and how you will capture the market for these products.
Secondly, a Business Plan will help you objectively look at your business’ strengths and weaknesses
and can be the first step in improving how you do things in the future. It will also make you look at
your competition and determine exactly what sets your business apart.
Developing Your Business Plan
Each Business Plan should be developed according to the requirements of the small business. If you
are preparing a document to tempt investors, you will include sections on financial management and exit
strategies. If you are preparing the document simply to guide the next phase of your small business
development, then you will want to focus on analysing your strengths and investigating the current
marketplace. As a general rule of thumb, a Business Plan should contain the following sections.
Executive Summary
A brief overview of the contents of your Business Plan. Try and limit the length to one or two pages.
If you are looking for investors, many will only at the Executive Summary, so make sure it packs a
punch.
Description of the Business
Immediately after the Executive Summary, briefly outline your business, including how it started, who
started it and what it does. Remember to include information about the company structure, such as
whether it operates as sole trader, partnership, company or trust.
Vision and/or Mission Statement
This is optional, but it’s not a bad idea to think about anyway. Vision and mission statements a
slightly different, so consider which one is more suited to your Business Plan. A vision statement
details your business hopes and dreams, whereas a mission statement explains why your business exists.
Either way, vision and mission statements should be concise and truthfully reflect your business goals
and objectives.
Products and/or Services
Describe the products or services your business supplies. You should include information about the
anticipated sales for these items and also discuss how they meet a need within the marketplace. Be sure
to include any aspects that make your products and services stand out from the crowd, such as unique
features or patented designs.
Marketplace Analysis
Target Customers: Who will buy your products and services? Knowing your customer is one of the
keys to business success. Understand and discuss why your customers are, including socio-economic
information such as where they live, how much they earn and how old they are. All of these questions
help you better pinpoint your planning and marketing in the future.
Competitors: Very few businesses are lucky enough to have a monopoly on the market and those
that do soon find that new competition is knocking at the door. Make sure your Marketplace Analysis
includes information about competing products and services, including information about your
competitor’s market share and perceived weaknesses. Remember to discuss how your competitors may react
to your business, especially if you are planning a start-up company. If you have a great idea, chances
are someone will want to copy it.
Operational Plan
The operational plan should explain how you will conduct business, covering aspects such as where
your premises will be located, what additional warehousing space will be required and how your location
will give your business a competitive edge. The operational plan can also include significant plant and
equipment that may need to be purchased, including any vehicles and lease arrangements.
Financial Plan
How will your business idea make money and how much will it make? These are critical questions that
need to be answered in your Business Plan. If you are launching a start-up company, also calculate when
you will break-even.
Pro Form Balance Sheet: Outline the businesses assets and liabilities for the period under
consideration, for example five years or when your business breaks-even.
Projected Income Statement: Estimate the income your business idea will generate and the
expenses associated with running your business. Try and set realistic sales figures, based on the target
market you identified in your Marketplace Analysis.
Cash Flow Statement: Consider all the costs that will be incurred when launching your business
and identify where the cash to keep it going will come from.
Management Plan
Who are the key people involved in the decision making and daily running of your business? What
skills and experience do they have and how will they be used in your business? Remember that you do not
need to know everything yourself. Part of the reason behind identifying strengths and weaknesses in your
business is to find ways to improve the current situation. This may mean getting consultants to provide
experts assistance in areas dealing with the law, finance and technology. If you are outsourcing to an
established firm, be sure to include this in your Business Plan.
Risk Analysis
Now it’s time to do some critical analysis into what could derail your business. Think about what
impact changes in legislation may have, or how a significant downturn in the economy will curb consumer
spending. While you can’t cover every possibility, be sure to identify the major threats to your
business and document how you will avoid or minimise their impact.
Exit Strategies
Will you go public with an IPO, sell your business for millions or keep it as a cash cow? All of
these possibilities need to be considered when writing your business plan, especially if you are trying
to tempt investors to part with their money.
About the Author:
Cameron Moses is an experienced software developer and business analyst who specialises in creating
custom-built software for small to medium sized businesses. For more information on
small business software checkout some of the products he
recommends.