Business planning jh oct 11 ProfitNet

Adopt HR Human Resource Consultancy

Business Planning

Joan Heaney

Tel: 087 9570045Email: [email protected]



What we will cover• Reason why we should write a BP

• What is the purpose of BP?

• What should it contain?

• Some general rules

• Do’s & Don’ts

• Along the way a little bit of Action Learning…


Reasons why we don’t…‘Don’t have enough time to plan.’

‘I’m too busy getting things done.’

‘I don’t need one, I know what I’m doing.’

‘Where do I start?’

‘No plan, no failure!’


Why you should write a Business Plan before you do anything else

in your business?


Reasons why we should…


• Firm up ideas – define what you intend to do & why

• Know where you are and where you are going

• Forecast financial requirements, particularly cash-flow

• Helps you understand the things that support you and the things that stand in your way

• Examine markets, competition, customers, suppliers, operations and staff requirements etc.

• Route map for next 3-5 years

• Can be a reality check - avoid costly pitfalls

• Test viability & assess risk

• Communicate with potential investors/grant agencies

• Creates an Action Plan – translate the BP into a plan for implementation

• Evaluation – what gets measured gets done!


‘Would you tell me please, which way I ought to go from here?’

‘That depends a good deal on where you want to get too?’ said the cat

Lewis Carroll – ‘Alice in Wonderland’


Which way I ought to go from here

Year 1 - 2 Year 3 - 4 Year 5…

Getting established, finding and keeping customers; developing products and services.

Consolidation – finding and keeping competent staff, delegating, controlling the business

Attracting investors, diversifying, competing with much bigger firms in the market. It’s a different market…


So what should it do?


Steps to a business planWhat are you planning?

Define external market conditions, competition and market positioning

Define the current status of the business

Project costs, revenues, cash flow

Define your core objectives

Refine the strategies into working plans

Identify risks and opportunities

Develop a strategy for limiting risks and exploiting opportunities

Define your business activities.

Develop a strategy for achieving the core objectives

Final plans


• Describe the business

• Examine the market and marketplace for the goods or services you will produce and why there will be a demand for what you do

• Explain how you will exploit the market identified and achieve sales

• Show how your business will be organised, how it will be managed and by whom

• Demonstrate how you will produce your goods or services

• Set down the assumptions on which your financial projections will be based

• Make your financial projections for income and expenditure, profit or loss and the worth of the enterprise.


What should it contain?


1. Executive Summary2. Description of your Company3. Analysis of the Market4. Marketing & Sales Strategy5. Research & Development 6. Staffing and Operations 7. Financial Projections 8. Sales Pipeline9. Funding Requirements• Appendices


Executive Summary• Most important Section

• Create instant excitement and impact

• Clearly spell out

– Company’s mission– Outline goals and objectives – Market opportunities you see in the company and the

industry– How you will make money – how those opportunities

will result in increased earnings and profits– You have a viable business

• 2 to 3 pages

• Should be written last!


Description of Your Company

• What is your Vision for your business?

– What are you creating?

– What will your business look like in 1/3/5 years?

• What is your Mission?

– Why are you starting this business?

– What does the business do / intend to do?


Description of Your Company

• What are your overall Business Objectives– What are your most important business goals?

– To achieve a profitability of 5 % return on sales by year 1. – To achieve a 8 % share of the identified market by the end of

year 2.– To secure ISO 9000 accreditation in the short term.– Medium Term - to buy its own premises.

– Are your business goals considered SMART goals? – How will you measure success in achieving your

goals?


Description of Your Company• What are your business strategies?

– How are you going to build your business?– How fast do you think it will grow? – What will you sell? (Products & Services)– Who will be your primary customers?– What is your unique selling proposition?– Long Term Aims of the Business


Create your Vision & Mission


Market Analysis• This section covers market research and competitor

analysis.

• Never assume the reader knows this information

• Size, growth and significance of your industry, as well as your specific niche in the marketplace

• Authenticate with research and recognised publications


SWOT Analysis


Marketing & Sales Strategy• A summary of your market position & goals

• Your market objectives

• Your target markets

• The percentage of the market you intend to target (be realistic)

• A strategy for each segment of the market

• Marketing expenses & resources

• Marketing channels


Research & Development• Future development of your product or service, i.e.,

changes to meet future market demands, adaptations to international markets, or upgrades.

• Plans for new products or services to add to the range.

• IP, Patents, Copyrights, Brands


Staffing & Operations• Structure of your company

• Org chart

• Staffing – hiring plans next 3 – 5 years

• Physical Requirements

– Office/facility requirements– Equipment/manufacturing needs & capabilities– Infrastructure– Communications facilities– Costs involved– Suppliers


Financial Projections• Key Assumptions• What is the total startup capital you will need to

launch your business? • What do you estimate your business's ongoing

monthly expenses will be? • What do you anticipate your business's

ongoing monthly income will be? • Profit and Loss Accounts• Balance Sheets• Cashflow


Sales Pipeline• Projected sales

– Who from?– What size?– When?– Likelihood of getting sale


Funding Requirements• Total funding requirements

• How those are to be provided

• Investment already received

• Investment sought

• Approximate breakdown of how they will be spent.


Planning is a Process

Plan

Results

Follow Up

Actions

Simple

Specific

Realistic

Complete


Create an Action Plan

• Create an action plan by answering:

o What are the specific action items and tasks you need to complete now?

o What are your future milestones?

o What will need to be accomplished by those milestones in order to meet your objectives?


General Rules• Make it an interesting read!

– Bullet points– Balance creativity while still getting your point across– Use short (1-3 sentence) paragraphs– Be careful with using industry jargon

• Audience: Who is it meant for?

• Write with objectivity– Consider using the third-person

• Focus more on initial future (1-2 years), less on later years


Do’s• Use a business plan to set concrete goals,

responsibilities, and deadlines to guide your business.

• A good business plan assigns tasks to people or departments and sets milestones and deadlines for tracking implementation.

• A practical business plan includes 10 parts implementation for every one part strategy.

• As part of the implementation of a business plan, it should provide a forum for regular review and course corrections.

• Good business plans are practical.


Don’ts

• Don’t use a business plan to show how much you know about your business.

• Don’t let it gather dust…


‘Plans are useless but planning is invaluable’Dwight Eisenhower, 34th President USA

‘Even a great plan is wasted if nobody follows it.’ Anon

‘You can't overestimate the need to plan and prepare. In most of the mistakes I've made, there has been this common theme of inadequate planning beforehand. You really can't over-prepare in business!’

Chris Corrigan, Australian Business Man

‘A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.’

Brian Tracy, Motivational Coach


So do you really need a business plan?


• Survival of first five years is closely related to the amount of planning carried out.

• Research shows an increase in survival chances of 3% for every 1 day of planning with a plateau after 14 days.

• Good business plans help: a fully detailed plan is 15 times more likely to receive funding.

• You may still be able to build a successful business without a plan, but it is most certainly easier to do with a well-constructed business plan in your hands


Thank You for Listening

Any Questions?