Australia

A Business Plan can be used for more than one purpose.

Internally, it can be used to communicate your strategic objectives to the team and help the business deliver on its strategy and vision. It can be used as a guide to ensure you don’t over-spend or overextend yourself with borrowing, to document growth ambitions for the business and set associated KPIs.

Externally, it can be used to obtain additional funding or attract a new investor – providing lenders and investors with enough information to evaluate risk and make an informed decision.

Regardless of its purpose, a good business plan will outline your goals for the future and map out a clear path to achieving them. It will detail your product or service, your competition, the start-up and operational costs and information about the market you’ll be trading in.

While our following checklist is based on a business plan used for seeking finance, the overall structure remains true regardless and the detail can be adapted to suit your business needs.

Use this checklist to ensure you meet all the requirements for a robust business plan and give yourself the best chance at raising the capital you need.

For tailored advice from a Business Advisory expert, please contact us.

 

How to use this checklist

Below are the sections to include in your business plan. Each are labelled to reflect the relevant area and provide an explanation of that section, tips to completing it and key inclusions.

1

Executive summary

The executive summary provides a brief overview of the plan.

It needs to be detailed enough so that investors and other stakeholders understand the business, but leave enough untold to engage them to read further. It must express succinctly the uniqueness and viability of your venture.

Tips

  • Limit the Executive Summary to a maximum of two pages
  • Write it once the rest of the Business Plan is complete
  • Ask several business contacts to review the summary to test its effectiveness

Key inclusions

Describe your business and why it is unique >

  • What is your product or service?
  • Why is your market attractive?
  • Who are your customers?
  • Who are your competitors?
  • Why are your products or services preferable to those of your competitors?
  • How has your company evolved to date?

Briefly state management’s qualifications >

  • What is management’s past success record?
  • What abilities do management bring to the business?
  • How is ownership to be distributed?

Present your financial projections summary >

  • How much growth is expected?
  • What earnings are projected?
  • Over what period of time will these be achieved?

Indicate the amount, forms and use of finance >

  • How much finance is required?
  • What form will the funding take (debt or equity)?
  • What will the money be used for?
  • How will finance be repaid?
  • What are the risks/rewards for the investors?

2

Industry

The evaluation of future potential is often based on past performance and a brief summary of the development of your business is therefore required.

Explaining how your business relates to other participants in the industry and what trends affect your industry will give the reader a basis upon which to evaluate your plans.

Key inclusions

Provide a history of the development of your business >

  • When was your business founded?
  • Who were the main founders?
  • How is the business financed?
  • What are the major accomplishments of your business?

Describe the industry in which you operate >

  • What is the current size of the industry?
  • Who are the major participants in the industry (competitors/market leaders/suppliers)?
  • What factors are important to success in your industry?
  • What legislation or environmental trends affect your industry?

3

Product or service

This section enables you to provide a full description of your product or service, consider planned developments and assess any competitive products or services.

Tips

  • Use charts where appropriate to compare your product or service with those of your competitors
  • Include photographs or drawings if you think they are helpful
  • Do not make this section too technical, if necessary attach an appendix

Key inclusions

Fully describe your product or service >

  • What need does it fulfil?
  • What features make your product or service unique (cost/technology/versatility)?
  • How is your product or service perceived in the industry?

Discuss the development of your product or service >

  • How do they compare in quality and features with your product or service?
  • Why do customers buy the competitors’ products or service?
  • What pricing strategies are pursued for these products or services?

Discuss competitive products or services on the market >

  • How do they compare in quality and features with your product or service?
  • Why do customers buy the competitors’ products or service?
  • What pricing strategies are pursued for these products or services?
  • Is it normal to pay commissions or offer discounts?

Research and development >

  • What are the future developments and objectives?
  • What are the influences of new technology
  • What are the technical risks?
  • What is the current state of your competitors (technological developments and how these will affect you)?
  • What are the considerations for next generation products?

4

Market

This section is used to describe the opportunities available in your market and show how your proposals will exploit them successfully.

It may be helpful to prepare this section of the plan first, since some of the other sections, such as operations and finance, will be dependent on the ability of your business to penetrate and expand in the market.

Tips

  • Show that the market exists for the products or services you will provide
  • Show that you understand the market forces and have the abilities and resources to supply and publicise your products effectively
  • Make a realistic estimate of your potential market share based on sound assumptions
  • Give a concise appraisal of the competition and do not overestimate your strengths or underestimate your weaknesses
  • Use charts where appropriate to compare your company’s strengths and weaknesses with competitors
  • Do not unjustifiably slight your competitor’s abilities. Investors expect to obtain and in-depth understanding of why your sales goals can be achieved despite competition

Key inclusions

Describe your customers >

  • Who are they (individual/manufacturers/end users)?
  • Where are they located geographically?
  • How sensitive are they to price, quality and service?

Describe your market >

  • How large is the market?
  • How developed is the market and what is its history?
  • What is the projected growth rate for the future?
  • Are there any unusual market characteristics such as barriers to entry?
  • What do published forecasts predict about the market’s future?
  • What is your market share?
  • Are you aiming for particular market segments?
  • What are your plans regarding expansion, including the export market?

Discuss your company’s competition >

  • What companies do you compete with?
  • What are their strengths and weaknesses (financial backing/technology/market share)?
  • What are their similarities?
  • What are their marketing strategies? What will their likely response be to your product or service?
  • What is the potential for new competitors to enter the market?
  • Is there any competition from overseas?

Discuss your online presence and strategy >

  • What online presence does the business currently have?
  • What is your strategy regarding the online presence?
  • What impact has the online strategy had on growth?
  • What are the concepts for future online presence?

Explain how you will achieve your sales goals >

  • What marketing strategy will you employ?
  • How will potential customers be identified?
  • What customers will be the target in your initial marketing effort?
  • How will you attract customers away from the competition?
  • Are advertising efforts important to your strategy?
  • What are the considerations for the size of your sales force and business development team?

5

Operations

This section should describe how your business will successfully and efficiently provide its product or service.

For example, if your business is a manufacturing operation you should include a full description of the production process, the raw materials required and whether any particular trade skills are needed. For a service venture, the availability of skilled employees will be a prominent feature.

Tip

  • Highlight any competitive advantages

Key inclusions

Describe the production process (if applicable) >

  • How will critical elements be controlled (bottlenecks/quality/delivery)?
  • To what extent are you dependent on key factors – suppliers, materials skilled labour?
  • What raw materials are required?
  • What is your relationship with suppliers?
  • What is the production capacity? Is it sufficient for the future?

Discuss personnel requirements >

  • What are your employee needs? Are there any particular skills needed?
  • What are your employment costs, including benefits?
  • How will you attract sufficient, suitably qualified employees?

Evaluation of your equipment needs >

  • What facilities and equipment will be required?
  • What future additions will be required for expansion and how much will they cost?

What are your existing premises and where are they located? >

  • Are your existing premises suitable for your needs?
  • Do you need any additional premises?

6

Management

This section should outline the strength and quality of your management team which will be of particular interest to investors.

Tips

  • Openly discuss the strengths and weaknesses of current management
  • Show what steps will be taken to rectify any weaknesses highlighted
  • Indicate what additional skills will be required as the venture grows
  • Include full profiles of key individuals and on organisation chart in appendices

Key inclusions

Discuss the structure of the organisation >

  • How are responsibilities distributed?
  • What additions to management are anticipated?

Identify the key management team and their backgrounds >

  • Who are the key managers and what have they accomplished in the past?
  • What are their goals for the organisation?
  • Is there a balance of skills among the members of the management team (marketing, research, finance, administration)?
  • Have any personal financial commitments been made to the business by the management team?

Describe the role of any outsiders in the venture >

  • Are there to be any non-executives on the board of directors? What skills will they bring to the organisation?
  • What professionals (lawyers, accountants, bankers) does the company rely upon?

Include general personnel details >

  • What are the employment terms of key personnel?
  • What are the planned staff numbers?
  • What are the business’ future recruitment plans?
  • Are there other incentives issued to staff?
  • What qualifications and skills are required?

7

Implementation schedule

The implementation schedule should outline all activities required to implement the proposals set out in other sections of the business plan.

It should be consistent and co-ordinate with the financial projections (see section 8). It should also indicate expected completion dates and milestones. Decision points in the company’s growth should be identified where the choice may be made to commit further funds.

Typical factors should include timings for:

  • Obtaining finance
  • Capital expenditure program
  • Staff recruitment
  • Product testing
  • Contacting distributors
  • Obtaining orders

8

Finance

The investor or lender will want to assess your current financial position and you will need to provide your latest accounts (audited if applicable), together with a commentary on the trends they reflect. The investor will also be interested in forecasts of profits and cash flow, incorporating the proposals detailed elsewhere in the plan.

In addition, the amount and form of finance sought as well as a schedule for its repayment should be set out.  Bear in mind that investors in start-up companies will want to see evidence of financial commitment on the part of the existing owners.

Tips

  • Demonstrate the careful thought the financial projections have been given
  • Document your assumptions explicitly
  • Include a commentary on the financial projections
  • Do not include too many spread sheets – computer produced analyses will be helpful in preparing and evaluating financial forecasts, but the statements included in your plan should be clear and to the point

Key inclusions

Include historical statements >

Where possible, include full financial statements (balance sheets, income statements, and statements of cash flows) for the past two to five years.

Present financial projections >

Prepare projected income statements, balance sheets and cash flow statements for the next three to five years. These should be on a monthly basis for the first year and then quarterly. Include:

  • Assumptions you have used in preparing the projections
  • The impact of capital expenditure, fixed costs and research and development costs on the cash flow
  • A break-even / sensitivity analysis, identifying the split between fixed and variable costs
  • A contingency element, identified as such.

9

Appendices

The appendices should include documentation which supports or further explains the strategies and observations noted elsewhere in the plan, for example:

  • Profiles of key management personnel (track record, age, marital status, educational record, professional qualifications)
  • Market research studies
  • Photographs or drawings of the product
  • Detailed technical specifications
  • Organisation chart
  • Letters of commitment from potential customers and suppliers
  • Plant layout
  • Contractors (e.g. management, agreements, technology rights, leases)
  • Magazine, newspaper and trade articles about your business and its operating environment

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