How to draw up a business plan BPP005 - How to draw up a business plan

his subject shows you how to draw up a business plan by identifying the audience

for your plan and then meeting their needs. The subject uses the Business Process Planning model of business planning and assumes you are familiar with it. The material is designed for people intending to go into business or people who have just done so.

Objectives: List the components of a business plan and relate them to the elements of Business Process Planning. List the steps involved in identifying the audience for your business plan. List the purposes of an overview to your business plan. Describe one technique you can use to help you generate an overview of your business plan.

Introduction to How to draw up a business plan Reasons to draw up a business plan There may be several reasons why you might need to draw up a business plan such as:

You want to document your own thinking so you can check it and, if necessary, refine or improve it. You want to attract partner(s) to your business or venture capitalists. You may want a lending institution to advance you funds.

This subject shows how to draw up a business plan and the overview to your business plan.

If you want to see a clickable list of the pages comprising this subject, please select Subject outline from the navigation bar to the left. Business planning and a business plan It's important to distinguish two different concepts. First, business planning is the process you undertake to develop, plan and review your business on an ongoing basis. Second, a business plan, on the other hand, is a document you may draw up for a specific purpose at a specific point in time. Reasons for drawing up a business plan might include:

You want to review your initial business plan. You want to use a business plan to explain your business concept to a potential partner. You want to convince a financial institution that lending your business money will be a good investment for them.

This subject, How to draw up a Business Plan, is about drawing up a business plan. It's not about the ongoing process of business planning. If you want to see subjects that deal with business planning, here are the two easiest ways to find them:

This website contains a series of fifteen subjects on Business Process Planning, of which the one you're looking at now is the fifteenth. You could visit the first in the series, Planning is vital. You can close this window (X at top right), click Subjects at the top left of the other window, and select any of the business planning subjects listed.

Components of a business plan The basis of your business plan This subject uses the components of the Business Process Planning model as the basis for drawing up your business plan. If you want to familiarise yourself with this model, the subject Overview of Business Process Planning is the best way to do it. (If you click the link, you'll exit the subject you're viewing now and go to the page where you can elect to view that subject.) Here's a diagram showing the components of Business Process Planning.

The components of your business plan In case you haven't downloaded it yet, this link takes you to the pro forma business plan. It tells you how to complete your business plan. (If you click the icon, a second browser window will open from which you can download the pro forma.) The pro forma contains the elements of the Business Process Planning model above. Example The body of your business plan will be made up of information you gathered as you completed the components of Business Process Planning. You might like to see an example of how you might put together such information for inclusion in your business plan. Draw up your business plan Please turn to your pro forma business plan and follow instructions there.

Please note: When drawing up your business plan, if you've already prepared the information to go into your plan, it doesn't matter what sequence you follow to collate the information. However, if you're yet to develop any of these components for your business plan, there's a sequence you need to follow. For example, you can't identify what your Critical Success Factors are until you've developed your Competitive Advantage. Neither can you develop your Competitive

Advantage until you've done your Market Research. If you're yet to develop any components for your business plan, Overview of Business Process Planning takes you to a short subject from which you can select those you want.

Your business plan Your audience Before you draw up your business plan, you need to identify your audience for the business plan: different audiences will expect to find different things in your business plan. For example:

A business plan for a financial institution requires emphasis on the security of the loan you were seeking, how you'd service interest and how you'd pay off the principal. A business plan for yourself probably places equal emphasis on all components. A business plan for a prospective partner requires emphasis on both the security of any venture capital you were seeking and on likely returns.

It's only after you've identified your audience and their needs that you can make informed decisions on what detail to include in your business plan.You may need to draw up two or more business plans if you have more than one audience and their requirements or needs are sufficiently different. Presenting your business plan After you prepare your business plan, you're likely to present it to your audience rather than simply mail it to them. Therefore, as you draw up your business plan, bear in mind how you'll eventually present it to your audience. For example, a detailed drawing on a page may be acceptable for face-to-face presentation to one person. However, as an overhead presented to a room full of venture capitalists, it would probably be disastrous. RIPP The information above leads to an acronym you might find useful: Research your audience. Identify their requirements and needs. Prepare your business plan.

Present your business plan. Developing your overview An overview Once you've developed the body of your business plan, you need to develop an overview. Even though the overview will be the first component in the completed business plan, you usually develop it after you've drafted the body of your business plan. The overview of a business plan does two things:

It highlights the main points It places those main points into context.

A tool There are a number of tools you can use to help you develop the overview of your business plan. The following adaptation of Ansoff's Gap Analysis is an example. As previously outlined in this subject, you should already have identified the audience for your business plan and their needs or requirements. Once you've done this, you can use the following pointers to develop your overview for that audience and for their needs. Your overview should answer each of these questions in turn.

Who am I? Where am I now? Where do I want to be? How I intend to get there? What do I need to achieve this?

The following table provides several appropriate headings as you answer each of these questions for your particular audience: Question Who am I? Business name Owner's experience Where am I now? Business description Business structure Location Date business established Overview heading

Where do I want to be? Products or services Markets Trends in industry and market place Competitors How do I intend to get there? Competitive Advantage and USP Key activities Projected sales Profits

What do I need to achieve this? Capital requirement Owner's contribution Funds required Security offered Consultation

Example of an overview Example You might like to see an example of a business plan overview. Audience As you can see from the information presented in the example at the link above, the overview has been written for a financial institution. Audience needs Potential lenders of funds will need to see such information as:

projected sales projected profits capital requirement owners contribution funds required security offered who has been consulted.

If you have completed the body of your business plan, you can now write your overview and combine the two to make a completed business plan. Conclusion

Summary of How to draw up a business plan This subject covered the processes of drawing up a business plan and an overview to a business plan. It didn't cover the ongoing process of business planning that's an intrinsic part of successful, growing enterprises and it provided links to other subjects on the site that do. Where to next This subject is the final in a series of ten on Business Process Planning. There are several other series of learning bytes on this site that may also interest you. Please

go to the first subject on Business Process Planning, Planning is vital (in case you began part way through), or close this window (X at top right), select Subjects in the top left of the other window and make another selection from the subjects listed

Business Overview Business Name Poco Costoso Ristorante Experience The owner Antonio Biaggi has recently moved to Queensland and is intending to open a new style of Italian restaurant in a city on the coast. Antonio has 15 years of experience in operating and managing Italian restaurants as he grew up in his familys up market Italian restaurant in Lygon Street in Melbourne, where he had the opportunity to gain experience in every facet of the Italian restaurant business thisresulted in hands on experience: 4 years as kitchen hand and cook 5 years as wait staff 4 years as Manager His plan is to both retail and wholesale a unique wholemeal fresh pasta recipe that his family has handed down for generations. He is planning that within 12 months to be in the top 20 restaurants in the city and within 24 months to build a significant wholesale business across Queensland

Business Description An air-conditioned 50 seat, low cost, Italian food restaurant. Business Structure The business will commence as a sole proprietor however Antonio intends that it will be a Pty Ltd company within 24 months. Location: Central City, Queensland coast beachside setting. Date Business Established: Opening planned for 6 months hence. Products or Services: Featuring Italian style wholemeal pasta & pizzas served with amusing entertainment. Markets The primary market has been identified as university students & backpackers. The secondary market will be families on holidays at the seaside. There is also a plan to market the wholemeal pasta across Queensland and eventually into other states. Trends in market place There are 6 restaurants within 1 kilometre of the planned site for Poco Costoso however they are all expensive up market gourmet establishments. There are no low cost eating places within 3 kilometres of the beach. There is a university at the end of the street and 5 (five) backpacker hostels within 2 kilometres. Competitors In the main city centre 3 kilometres form the restaurant site there is a brand hamburger shop and a brand chicken shop which offer low cost food. However the majority of university students and backpackers have no transport to easily gain access to these eating places. The advantage Antonio plans to have over his competitors in the retail business is through a staff training method he has developed which ensures that diners will have a fun dining experience. The waiters will all be circus clowns who will entertain the diners during and after their meal. The concept is designed to appeal to all clients but will be particularly attractive to students and backpackers due to low prices and lots of fun activities. Once the concept is finalised he hopes to franchise it. The advantage in his plans for the wholesale business is the unique taste and shapes of the wholemeal pasta. Competitive Advantage: To supply high quality, low cost, wholemeal pasta and pizza served with a high level of entertainment via specially trained wait staff. USP:

Poco Costoso Ristorante Cheap and Cheerful Pasta & Pizza La pizza e la pasta poco costose e felici hanno servito dai clowns divertenti. Key Activities:

The provision of highly trained staff both for wait and kitchen. The development, design and decoration of the restaurant. A strong advertising and promotion campaign that will attract the targeted market. $388,409.00 $56,739.00

Projected Sales: Profits:

Capital requirement: $500,000.00 Owners $250,000.00 Contribution: Funds Required: $250,000.00 Security offered: Valuation: Consultation: Domestic Home, Main St Central City, Qld 4xxx $350,000.00 Central City Accountants and Business Management Pty Ltd.

Disclaimer. Whilst this profile has been designed to assist develop an effective business plan it is recommended to have the completed plan and financial implications reviewed by a professional business advisor.

Why planning is important

Marshall decided to paint his lounge room. He didn't plan very well. He decided to paint the room and just got started. He made several trips to the hardware store, spent much more money than he budgeted for and took a lot longer than he expected to complete the job. He should have spent some time planning the job. Click the box below to see how long it took Marshall to paint his lounge room after only five minutes planning.

Now see how long it would have taken him had he spent 15 minutes planning.

Just 10 minutes more planning would have saved Marshall almost two hours and two trips to the hardware store. Planning saves time. It helps you complete tasks effectively and quickly. This also applies in business. It's called business planning. Overseas holiday: a case study Here's another example of what can happen when people fail to plan.

Bill and Jill have long dreamed of going to the Bahamas for a holiday. They've saved some money and believe they're ready for their adventure. Bill drives to the local travel agent and says, "I'd like two tickets to the Bahamas for the 19th of January." The travel agent replies, "Certainly sir. That'll be $3,250". Bill's face pales. It's most of the money they've saved. When he returns home he tells Jill and they discuss the budget. "It'll be OK," Bill says. "The fellows at work told me we can get cheap accommodation anywhere along the beach. We can lie in the sun and relax!" The day of their departure arrives and they head off to the airport. When they present their tickets, the airline officer asks for their passports. They discover Jill's is out of date. After numerous phone calls, they arrange a temporary extension and board the plane. When they arrive, they stand in the airport lobby, wondering where to go. After many more phone calls and a chat with a taxi driver, they find reasonable accommodation. But their savings are now spent and the credit card is low. Despite this they think things are about to get better and they'll have their dream holiday. They step outside and it's pouring rain. It's the wet season and it rains for the rest of their holiday. Because they've spent all their money, they don't have funds for excursions or other activities. They spend the rest of their holiday in the motel room. They return home - wet, broke and terribly disappointed.

Planning models There are a number of business planning models available. This learning byte goes on to examine two of the most common: 1. traditional business planning

2. Business Process Planning and the differences between them. Traditional business planning The Traditional method of developing a business plan focuses on what the business owner wants to achieve as distinct from what the customer may need. Customer needs are often assumed. In Traditional planning the owner

prepares a mission statement outlining what they want to achieve with their business. An example of a mission is to become one of the top three providers in their industry or area of expertise. decides how to fulfil their 'mission'. They do this by setting goals or objectives. An example of an objective is to provide better quality products than anyone else. produces detailed plans to achieve the objectives. These include financial plans, a plan for marketing the product, and a plan for managing resources.

The ultimate outcome, if done well, is that the owner has a method for setting up and running their business.

Business Process Planning The Business Process Planning method is a customer-focused approach. It gives you a plan for running a business not only today and next month, but also for the long term. The method identifies customer needs and then focuses on how to fulfil them. This gives a business a greater chance of success. This model of planning takes into account:

the bigger picture What's happening in the world around you that could affect your business. This can include technological advances such as the growth of the internet and the economic climate. the things that will definitely impact your business This includes availability of specific skills, equipment and prices. what makes you special and different from your competitors What your customers really want, such as 24-hour service or fast turnaround. This is called your Competitive Advantage. what you must do to make the most of what makes you different from your competitors If it's response time that sets you apart from your competitors, you have to organise transport, e.g. motorbikes and scooters, to get your employees through the traffic.

How Traditional and Business Process Planning methods compare Similarities Both lead to the same outcome: a way of planning and running your business. Differences Traditional

Business Process Planning

Owner focus Uses a step by step approach Based around the mission statement Linear model (considers only certain aspects)

Customer focus Uses an integrated approach Based around the competitive advantage Holistic model (broad based - all encompassing approach)

Advantages of the Business Process Planning method

It focuses your business on what customers actually want. It uses practical, real-world knowledge. It's a more thorough method of planning. It enables you to build an integrated, holistic view of your business.

Competitive advantage and Unique Selling Proposition bpp4-049 - Competitive advantage and Unique Selling Proposition

his subject focuses on a critical component of your business: your competitive

advantage. It should help you identify why your customers will buy from you rather than from your competitors. Timing: 10 to 15 minutes.

Why do customers buy? The success of a business depends on customers buying your product, service, knowledge or expertise. So why do customers buy?

The key reasons why customers buy include:

They trust you. You fulfil a need they have e.g. convenience. Your product or service has benefits that others do not. You offer a higher level of service or higher quality product.

Successful business operators know who their competitors are, what they're doing and how customers perceive their own businesses and competitors' businesses. A successful business operator analyses market research to identify factors which will draw customers to them rather than to competitors. This subject goes on to help you:

put words to the way in which your business can fulfil customer needs describe your Competitive Advantage (CA) and how it meets customers' needs develop a Unique Selling Proposition (USP).

You may already have some knowledge of this area. You might like to try some questions to test that knowledge. If you want to see a clickable list of the pages comprising this subject, please select Subject outline from the navigation bar to the left. Please click Next to continue. Features and Benefits To satisfy customer needs, the business must focus on the benefits that the customer receives from the product or service offered. The benefits for the customer are derived from the characteristics of the product or service and these are called features. Customers only buy benefits. They buy what the product or service can do for them, not the features of the product or service. Let's take the example of a car. Features (I am offered ...) Benefits (I buy ...) Leather seats Anti-lock brakes Central locking 4 cylinder engine Fastback shape Comfort Safety Security Economy Style/esteem

Please click this icon to check you've picked up the important points we've just been making. Here's a table you can use to help you identify and explore the features and benefits of your own business. Introducing Competitive Advantage

Now that you have a list of the benefits your business offers, please make a note in the box below of the features and benefits your competitors offer and print it out for your records.

Now you need to compare your benefits with those of your competitors. Please compare the printout of your own list of features and benefits from the pop-up box on the previous page with the printout of the box above. Do you offer anything different from your competitors? If not, you may need to consider other benefits you can offer to your customers. For example, home delivery, a moneyback guarantee, two-hour call-out service, child care facilities. This will set you apart from your competitors. These benefits are referred to as your Competitive Advantage. If you cannot differentiate yourself from your competitors, you may need to rethink your business idea. A Competitive Advantage comes from knowing your competitors, knowing your strengths and knowing your customers' needs and current frustrations. It is the critical component that ties the Business Process Planning model together. It is pivotal to your success.Your Competitive Advantage (CA):

reflects the competitive strength of your business. For example, this may be quality of service is preferably but not necessarily unique should be clear and simple will normally change over time as competitors try to cash in on your idea.

A simple example of the CA for a sandwich shop is "To make and serve the highest quality gourmet sandwiches in the local area." Develop your Competitive Advantage The following questions should help you develop your CA. Please type in the boxes provided, thinking about benefits as you do so. You're welcome to print out your notes for your records.

You should now have a list of the benefits your products or services offer your customers, a list of the benefits offered by your competitors and the above points about developing your own Competitive Advantage. Please use this information to generate a statement of your own Competitive Advantage, type it into the box below, then print it out.

A Planning Kit accompanies this subject. If you're using the Planning Kit, you might like to include the statement in it.

Congratulations! You've developed a statement of your own Competitive Advantage. There aren't too many things you do in business that are more important than this one!

Unique Selling Proposition Now you've identified your Competitive Advantage, you have to make sure your customers know it too! You do this by developing a Unique Selling Proposition. Your Unique Selling Proposition (USP) is the selling message or slogan you use to ensure customers understand quickly and easily the benefits you offer that your competitors don't. You use your Unique Selling Proposition as a tool to advertise, promote and position your business against your competitors. Your benefits and your Competitive Advantage will remain invisible to your customers unless you point them out via your Unique Selling Proposition. Examples 1. A pizza business might have a Competitive Advantage of delivery that's faster than their competitors. Their USP could be, for example, Thirty minutes or it's free.

2. A vegetable store might have a Competitive Advantage of food that's fresher than anyone else in the neighbourhood. Their USP might be As fresh as today's sunrise.

The next page should help you develop your own Unique Selling Proposition. Develop your Unique Selling Proposition Having developed your Unique Selling Proposition, please do not assume it will work forever. It's important you regularly review it. You need to keep it fresh and viable in your market place. (It's also highly probable that you'll need to go back and review your competitive advantage from time to time as well.)

Petrol companies provide examples of changing Competitive Advantage and Unique Selling Propositions. One company put up petrol price boards to gain an advantage. When the rest followed, and the first company no longer had that particular Competitive Advantage. The first company then opened onsite stores to provide extra convenience (notice the benefit!) for their customers. That Competitive Advantage and USP lasted for a while, but then their competitors followed suit. That's only the beginning of the petrol company story.

To keep ahead of your competitors you need to:

develop your Competitive Advantage develop your Unique Selling Proposition keep both under review so your customers are always know what's in it for them to buy from you.

Please now use this information to generate a statement of your own USP, type it into the box below and print it out.

A Planning Kit accompanies this subject. If you're using it, you might like to include your USP in it.

Congratulations! You've developed a statement of your own Unique Selling Proposition to help market your business. Conclusion Summary of Competitive Advantage and Unique Selling Proposition In this subject you may have:

identified why customers buy from your business developed your Competitive Advantage developed your Unique Selling Proposition.

Test your knowledge This activity is designed to check your knowledge of the subject. Please follow the instructions for each question and click the check my answer link once you've answered. Please use your results to decide whether you need to revise any content. Subject outline in the menu to the left takes you to a clickable list of pages comprising this subject.

Where to next This subject is the fourth of ten on Business Process Planning. The next deals with the must-have's of your business, your Critical Success Factors. Please

go to the next subject on Business Process Planning, Critical Success Factors, or close this window (X at top right), select Subjects in the top left of the other window and make another selection from the subjects listed.

SESSION TWO Business Plan

Sessio

What is a Business Plan? o Why prepare a business plan? o What to avoid in your business plan Business Plan Format o Vision statement

The people Business profile Economic assessment Six Steps to a Great Business Plan o Basic business concept o Feasibility and specifics o Focus and refine concept o Outline the specifics of your business o Put your plan into a compelling form o Review sample plans Does Your Plan Include the Following Necessary Factors o A sound business concept o Understanding your market o Healthy, growing and stable industry o Capable management o Able financial control o Consistent business focus o Mindset to anticipate change o Plans for online business Formulate (and Reformulate) Your Business Plan Top Ten Do's and Don'ts Sound Byte Transcriptions Sample Business Plans Session 1 and 2 Business Plans
o o o

Session Feedback