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Planning your
business success
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planning your business success A GUIDE FOR BUSINESS OPERATORS IN SOUTH AUSTRALIA
Contents
P 2 DEPARTMENT FOR MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY
01 Overview
In the guide titled The Keys to Business Success, business planning, including its ongoing use as a management tool, was listed as one of the keys. This guide focuses on what a business plan is, the benefits of planning and how to prepare a plan for your business.
There is a well-known saying in business that business owners do not plan to fail, they merely fail to plan. This saying draws on the results of small business studies which show that owners who plan their businesses are much more likely to survive and prosper.
Does this sound as though business planning is the ‘magic formula’ for success? Not so; business life is not that easy. While business planning is not a guarantee of future success, it certainly helps to understand, plan and evaluate key steps in the decision-making process.
• The purpose of this guide is to provide general introductory information.
• The guide does not purport to contain all the information that would be relevant to any particular • The guide is provided to interested persons on the basis that they will be responsible for making their own assessment of that opportunity with the assistance of the information provided.
• All figures contained in the guide should be regarded as estimates only based on general samples • The information in the guide should not be relied upon in substitution for professional advice and • Persons interested in pursuing any particular business opportunity are strongly advised to fully inform themselves by taking professional advice as to the extent of their rights and obligations —particularly in relation to any proposed investment.
• The guide is provided subject to the terms of the formal disclaimer, which appears on the last page.
planning your business success A GUIDE FOR BUSINESS OPERATORS IN SOUTH AUSTRALIA
02 What is a business plan?
A business plan is a document which provides a description of the business, the market in which it operates, its objectives and the strategy to achieve those objectives.
Objectives give direction and motivation. Good objectives should satisfy the S-M-A-R-T principle. They should be specific, measurable, attainable, realistic and time-linked. When you set objectives, describe what you are seeking to achieve in clear, definite terms. Make sure your objectives are capable of being measured in numbers, percentages, dollars or time. When something is measurable, it is much easier to manage and evaluate.
To help maintain your motivation, the objectives you set should be achievable and the setting of a date for their accomplishment injects further momentum and strengthens your commitment.
To be successful, you need two sets of objectives—one for your personal life, the other for your business. Personal objectives are most important because they provide the stimulus and drive required in business. Successful people know this and make sure that their success in business will help them to achieve their personal goals. When conflict arises between the two sets of objectives, a cost will be involved, usually in terms of something which must be given up or paid.

PUT YOUR BUSINESS PLAN IN WRITING
To be effective, your business plan should be in writing. The advantages of a written plan are that it:
• Forces you to think more realistically, objectively and unemotionally about your business • Leads to questioning of past and future assumptions • Makes it easier to communicate planning objectives and strategies to bankers, partners, • Helps to ensure that all aspects of the plan are clear and integrated • Serves as a reference point when determining the effects of alternative courses of action on • Offers a framework for analysis, especially where objectives have not been achieved.
P 4 DEPARTMENT FOR MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY
03 What are the benefits of planning?
While it has been acknowledged that business planning does not guarantee success, studies show that businesses that consistently undertake planning perform better than those where planning is lacking.
The planning process produces a number of benefits for your business: • Forces an early consideration of essential goals and basic policies • Helps to challenge old ideas and create a climate for new initiatives • Enables problems to be recognised that call for external sources of information and assistance • By converting everything to numbers, planning prevents you viewing the future in ways that the • Increases your personal motivation and that of any employees you may have • Enables growth to be planned and associated capital requirements to be determined in advance • Provides feedback of information and periodic reappraisal against established objectives and planning your business success A GUIDE FOR BUSINESS OPERATORS IN SOUTH AUSTRALIA
04 Barriers to business planning
and how to break them
Even though research points to a higher prospect of survival for small businesses which plan and many small business owners are aware of the advantages of planning, a significant proportion still fail to develop and use a business plan as a management tool. Certain barriers tend to discourage them from planning.
CHECKPOINT
The following checklist describes the barriers which you may encounter and offers practical tips for breaking them down.
Practical tips
Actions to take
Be honest with yourself. We all have strengths and weaknesses. Start to recognise yours and be positive with yourself. Everyone Develop an attitude of not being afraid to discover what the current state of your business really is; the future may hold opportunities as yet unrecognised.
Inexactness
In the business world, probability is sufficient to govern action. Planning allows you to determine what is likely to happen in business according to the odds. It is better to attempt to predict and prepare rather than assuming the passive and dangerous Speed of change
Provide a measure of flexibility in the business plan to meet changing circumstances and review your plan frequently.
You also need to develop flexibility of attitude.
Lack of specialised
Courses on business planning are available through Business knowledge
Enterprise Centres and training organisations including TAFE, business advisers etc. These sources can also assist with The expense of planning must be justified by tangible results. You can keep the whole exercise cost-effective by undertaking the planning yourself under the direction of a skilled professional. Action checklists covering each aspect of the plan can help.
P 6 DEPARTMENT FOR MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY
04 Barriers to business planning
and how to break them
Practical tips
Actions to take
Time pressures
Efficient organisation and time management are required. Time for planning will not turn up by itself. A schedule needs to be set and planning may have to be undertaken outside normal business hours—perhaps in the evening or one morning during the weekend.
Lack of suitable place
Self-discipline and personal commitment again are to undertake planning
appropriate. Consideration may have to be given to undertaking planning, say, on a Saturday, away from day-to-day problems and operations.
Difficulty in starting
Development of a personal commitment to planning, self-discipline and a firm grasp of the benefits that planning can provide will help to get the show on the road.
Establishing a goal is the essential first step in the planning process.
planning your business success A GUIDE FOR BUSINESS OPERATORS IN SOUTH AUSTRALIA
05 Structure and content
of a business plan
Every business is unique. Your business plan needs to be structured to suit the specific requirements of your business. There is no ‘right’ or ‘wrong’ way to structure a business plan—each will differ in presentation and emphasis. The particular situation and requirements of your business need to be taken into account, as well as the purpose for which the plan is being prepared.
CHECKPOINT
The following checklist offers a handy reference of the various elements that need to be included in your business plan.
Key element
What to include
Contact points for future reference (telephone, facsimile and email). Clear information about the contents of your plan. Incorporate a version control method so that the latest version of the plan can be easily identified.
Brief highlights of the plan (overview of your business). Brief description of your business (product or service). Summary of funding requirements: – amount of funds required/equity offered – how funds will be used – how funds will be repaid. Description of the industry in which your business will operate. What opportunities exist to grow your business? What threats or problems may emerge to impede the attainment of your goals? P 8 DEPARTMENT FOR MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY
05 Structure and content
of a business plan
CHECKPOINT .CONTINUED
Key element
What to include
Your distinctive competence or competitive advantage. Where your business will be located and why. The performance of your business to date.
Include resumes, where appropriate, in appendices section of plan. The needs that your business will seek to satisfy.
Customer groups, their characteristics and buying habits. Assessment of competition, strengths and weaknesses.
What your target market is. What your marketing strategy will be. What marketing image you are seeking to project for your business. How your product will be distributed. How you will advertise and promote your product or service. How you will set the price for your product or service. Which markets you will aim at initially. How you intend to meet the competition. What service and support you will provide to customers.
planning your business success A GUIDE FOR BUSINESS OPERATORS IN SOUTH AUSTRALIA
05 Structure and content
of a business plan
CHECKPOINT .CONTINUED
Key element
What to include
How your business will be organised. How it is expected to develop. Staffing needs.
How the day-to-day operations of the business will be carried out. Requirements for plant and equipment. Scheduling of workflow. Quality control.
Historical financial data, where applicable, for past three years. Business viability and timeline to profitability. Break-even analysis. Funding mix. Equity and borrowings. Debt reduction and repayment plan. Past trading results (if applicable). Financial projections for next three years—balance sheet, profit and loss statement and cash flows. Key financial ratios.
Projected rate of return on investment. Assumptions underlying the projections.
Action plan of timelines for implementing the key elements of the plan.
Material to support the main body of the business plan e.g. brochures, summary of market research results, resumes of key personnel, letters of reference etc.
P 10 DEPARTMENT FOR MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY
06 How to prepare and
present your business plan
Development of a business plan takes time. It is hard work. Sound business plans are not written at one sitting—they are created systematically over a period of time, usually months, as ideas and strategies are developed and problems are identified and resolved. Given the effort that goes into development of your business plan, it is important that it is put together and presented in a professional manner. Here are some practical tips for putting your business plan together: • Determine the objectives of the plan.
• Decide what information must be presented in the plan e.g. if finance is required, sufficient information must be included to enable the financier to make an informed decision.
• Determine in advance to whom you will be presenting the plan—knowing the reader(s) of the plan will help you decide on detail required, its length and emphasis.
• Use tables, charts and graphs to present data where possible.
• Make a good first impression—incorrect spelling, grammar, punctuation, numbers that do not add up and a poorly organised plan all detract from the impact of the document.
• Keep paragraphs and sentences short.
• Avoid jargon—do not use language that only an expert can understand.
• Do not make vague, ambiguous or unsubstantiated claims or statements.
• Arrange to have your business plan bound in a business-like presentation.
• Include an executive summary up-front but write it last.
• Be succinct. Quantity does not equal quality. A well-written plan should say it all in as few pages • Use consultants where required to assist you prepare the plan, but not prepare it for you. It should always be your plan; you should understand it fully and be committed to the plan.
planning your business success A GUIDE FOR BUSINESS OPERATORS IN SOUTH AUSTRALIA
07 Summary
A business plan serves as a major
planning and control tool in business.
Business planning helps you to focus
on the key success factors in your
business and the priorities necessary
to attain personal and business goals.
Objectives should be specific,
measurable, attainable, relevant
and time-linked.
Studies show that planning offers
many benefits and enhances the
prospects of business success.
P 12 DEPARTMENT FOR MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY
07 Summary
Written plans have several advantages
over plans (often just good intentions)
which are not committed in writing.
Getting it down on paper helps to
reveal where the plan is vague or
undeveloped.
An effective business plan consists of
business objectives, strategies and
operating tactics covering all facets
of the business, directed towards the
realisation of objectives.
A business plan must be compiled
and presented professionally.
planning your business success A GUIDE FOR BUSINESS OPERATORS IN SOUTH AUSTRALIA
P 14 DEPARTMENT FOR MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY
DISCLAIMER
The Government of South Australia gives no warranty and
makes no representation, whether express or implied, as
to the accuracy of information contained within this Biz
Guide or the suitability of the information for any purpose.
Any use of the information contained in this Biz Guide
(whether authorised or not) is at the users’ sole risk and
the Government of South Australia disclaims responsibility
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for any loss or damage incurred as a result of such use. The information is provided solely on the basis that users of the information will make their own assessment of the accuracy of the information and users are advised to verify all information contained within this document.
Any information about the law in Australia or South Australia is provided as general information only and is not legal advice. This Biz Guide is a starting point only and is not a substitute for legal or professional advice. While the Department has attempted to ensure the information is accurate at the time of publishing, no responsibility will be accepted for any errors or omissions and the Government of South Australia will not be liable for any loss or damage incurred by any person as a consequence of any use, reference or reliance on this information. Any such use, reference or reliance shall be at the sole risk of that person who should seek their own legal and/or professional advice if required.
COPYRIGHT
Produced by the South Australian Department for
Manufacturing, Innovation, Trade, Resources and Energy
Department for Manufacturing,
Innovation, Trade, Resources and Energy
Level 9, The Conservatory131–139 Grenfell Street, Adelaide SA 5000GPO Box 1264, Adelaide SA 5001 T +61 8 8303 2400 F +61 8 8303 2509E [email protected] www.dmitre.sa.gov.au/sbs P 15 DEPARTMENT FOR MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY

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