How to Draft a Proper Business Plan for Your Start-up
Ideas can pop up by the dozen, but executing them is the real test of grit, determination and patience. Similarly, a novice entrepreneur’s mind is brimming with market speculations and ways of making it to the top. However, transforming these dynamic thoughts into actionable plans requires jotting them down as a strategy. This approach is useful for envisaging the present and the future of the business, while keeping the challenges into consideration. A business plan is a quintessential pre-requisite when you are intending to launch a new venture. It acts as the roadmap and the blueprint of the structure of the organisation. Though it is supposed to be concise, it should have all the essential details that elaborate the business goals and ways of their achievement. For a start-up, the value of a business plan increases manifolds because it assists the entrepreneur in seeking loans from lenders, banks and investors. According to statistics, new investments in start-ups in Australia were close to $82 million in 2017. The seasoned investors would not support an idea that is still taking shape in an entrepreneur’s imagination. They will put their money into projects that display a concrete game plan for success. That is why a business plan must effectively cover the current operations and future projections to enunciate the objectives of the enterprise in a precise manner. It sets the benchmark for operating the business which is followed by the management and the employees to work towards the common goals collectively.
A business plan is an indispensable tool that is not only a necessity for a start-up but also for businesses for sale in Australia. The buyer would always look at the business plan before the acquisition to understand the financial health of the company. In fact, a survey revealed that a business plan can significantly improve the chances of success. Thus writing a business plan should be your top priority which must begin with listing down the following:
1. Company Profile
The first part must specify the type of your business – retail, manufacturing, or wholesale, followed by the structure of the organisation – sole trading, company, partnership or trust. Then provide the geographical location along with the address and details of lease or purchase cost. Define the area in square feet and if it is being operated from home, clarify what parts of the house will be used for the business. Provide details of all the licences and registrations you have acquired to operate as a legal entity. In the last part of this section mention the information about the management, owners, and number of employees briefly. If you are acquiring a business for sale in Sydney or any other city, you can use the free online tool Business Licence Finder to identify the licences and permits required to start the business.
2. Product Description
Give a general description of the products that you will be selling and their prices. Also, provide details whether the goods would be manufactured or bought from a wholesaler for reselling. If you are selling a service, talk about its features and pricing mechanism.
3. Target Market
You must clearly describe the target market by focussing on a niche as it is impossible to cater to a wider audience at the beginning of the venture. Identify the geographical location and the demographics of the target audience such as their age, gender, educational qualification, income level and most importantly their buying behaviour through a psychographic analysis. So whether you are planning a start-up or purchasing a business for sale in Melbourne, you need to know your target market inside-out.
4. Competitive Analysis
Research thoroughly about your competitors and figure out their strengths and weaknesses. Analyse their products and services and outline how your offerings will be different from them and what unique characteristic will they have to entice the target audience. There must be a strict demarcation regarding the difference in customer service and delivery to further distinguish your brand from the competition.
5. Marketing Plan
The marketing plan will talk about the ways of making the target audience aware of the new business and promote a unique selling proposition to make it stand out from the competition. It should have the following:
- Mention all the marketing collaterals that will be created such as pamphlets, brochures, logo, letterheads, stationery and more.
- Types of advertising used to promote the products and services such as national or local print, broadcast, and outdoor media.
- Digital marketing through social networking websites, blogging, email marketing, company website, forums, etc.
- Personal and direct selling methods that will be adopted.
- Define the budget of the marketing efforts for the initial few years and the duration of each campaign.
6. Personal Financial Information
This part is essential as lenders would be interested in dealing with a trustworthy professional. So honestly state all the information related to your financial standing for the last three years consisting of your tax return statements, copy of your credit report, personal assets and debts to strengthen your credibility as a responsible businessperson.
7. Financial Strategy
This is the most vital part of the business plan as it will be carefully scrutinised by the lenders or banks. It should include all the below-mentioned information:
- The cost of setting up the business encompassing price of equipment, office space, inventory, the creation of the structure, and the fee payable for various licences and permits.
- A start-up balance sheet should describe the assets, liabilities and debts.
- For the first year, give a detailed summary of monthly expected sales and expenses.
- While making the future income projections for the initial 3 or 5 years, create statements showing sales and expenditure and final figures after deducting the taxes.
- For taxation, seek the advice of the Australian Taxation Office which administers tax laws and applies them to all start-ups and businesses for sale.
- Break-even analysis is a crucial milestone in this segment as it will give an estimate of the time when you expect to reach the no-profit no-loss stage in the lifecycle of the business.
- List down the sources of capital flow including your personal investment in the start-up and expected funding to be received from lenders and investors.
8. Management Profile
This part will entail the particulars related to the management, structure and the team members.
- Board of Directors – Define the top management and the number of directors who will control the business. Provide their qualifications and experience.
- Managers and teams – Describe the organisational hierarchy by dividing teams and appointing managers. If the designated people have already been hired, give information about their background and qualifications. The roles and responsibilities of all the teams should be clearly illustrated in this part.
- Associates – Provide the list of all the people required as advisors for the business such as a lawyer, insurance agent, financial advisor and more such people. Also, elaborate about the qualifications of these people to assist in identification of suitable candidates.
9. Operations Plan
This part will discuss the action plan for the company, stating the major milestones and ways of their accomplishments. It must indicate the goal you want to achieve by the end of the first year as well as after five years of operating the business.
In the end create a brief synopsis of all these points for an executive summary which will form the introduction of the business plan. Review the document and add attachments in the end as appendices. So whether you are launching a start-up or acquiring a business for sale in Australia, use these tips to create a perfect business plan which will guide you for years to come.