Business Name

Business Plan
BUSINESS PROFILE

What business are you in?

Provide a general outline of your business, sufficient for outsiders to fully understand what your business is all about.
Which industry is it in? What is the major benefit, rather than product or service, that you provide to your customers?

What are the unique features of your business's products or services?

Discuss product or service advantages that give you an edge in the market. Is your product or service substantially
better than your competitors? Does it offer the best, the fastest, the most powerful, the cleanest or the most efficient
solution?

. Page 2
What were your sales last year and over the last few years? How well have you performed? If you
have not performed to budget, indicate why not.
This provides a background to your sales situation and a lead-in to the future of the business. For instance, you may
include something like "Although our sales have increased by ten percent a year over the last three years we have never
really taken advantage of the opportunities available. This plan is being prepared to enable us to do so in the future."

What are your projected sales and profits for the next three years?
This is the bottom line. How much profit are you going to make?

Year Last Year Year 1 Year 2 Year 3

before last

Sales

Gross Profit

Net Profit

. Page 3
What proof can you provide that you will achieve this level of sales and profit?
Back up your forecasts with some form of evidence that there will be continuing demand for your goods or services. Do
you have any advance orders, existing customers that have promised to use your goods or services, market research
surveys or sales experience in this industry that implies a natural growth in the market. Do you have evidence of any
external factors such as changes in legislation, competitor status or cultural influencers that will lead to a demand for
your products or services?

Add anything that re-inforces the proposition that you will be successful. For instance, mention any large orders you
have received in the past or perhaps profile some of your existing customers. List anything which may add credibility to
your business.

. Page 4
MARKET & COMPETITIVE PROFILE

How big is the total market? Is the market growing or declining?

Explain who will buy your products or services. Is this a good, strong, growing market or is it declining? If it is
declining you should consider diversifying into other markets.

Sometimes the figures on total market size are irrelevant, especially when a business is only a small fish in a very big
pond. For instance, a Plumber who has just set up shop will probably get no help from knowing the size of the total
Plumbing market. However, if he is a one-man plumbing business in a particular suburb and specialising in a particular
area, it would be worthwhile him knowing how big the market is in this area, how many competitors there are and how
many specialise in the same services as he does.

If you are trying to find out how big the market is, try contacting the association that covers your product or service. Or
contact the government information service to enquire about their published statistical information. If you are launching
a new product which will be retailed, you could contact a number of the larger retailers and ask them how many of these
type of products they would sell.

You need to establish the most reliable source of information for your product or service.

. Page 5
Can the total market be broken down into smaller sub-markets or market segments?
Try to break down the total market into smaller segments. This will help you develop your plans and competitively
position your products and services. Examples of segmentation, which show you exactly how to do this are included
elsewhere in this manual in the section "Examples of Segmentation".

A quick example: If you are selling computers you might segment your market into large businesses, small businesses,
the home buyer, government bodies and students. When you break down your market into smaller segments such as this
it is easier for you to decide how to sell your goods or services to each segment. For example, you may need to sell your
computers at a low price to students and to sell them through the university magazine. However, to government bodies
price would be less of a consideration than reliability. You may also need to employ a sales rep to sell effectively to
government bodies.

. Page 6
Are there any market trends that will affect your business?
It is very important to know and recognise the trends and the external factors that could affect the market, so you can
assess whether or not your business will be viable in the long term. Are there any cultural, legislative, social,
environmental, technological or other influencers that may affect your business? For example, technological influencers
have made typewriters, telexes and buggies almost obsolete. Environmental and social issues have seriously affected the
plastics industry by forcing companies who were using plastic-based packaging to find alternatives. There are trends in
the market for following a more healthy low-fat lifestyle. The hat market will increase in coming years because of
awareness of the deteriorating ozone level. Look at your products, services and markets and assess whether there are
any potential threats or opportunities that could affect your planning.

. Page 7
How do you compare to your competitors?
The labels on the left hand side of the box below are examples only. Change them to suit your company.

You Competitor Competitor

Price Strategy
Retail price
Payment terms

Product Strategy
Quality
Ease of use
Reliability
Product life
Country of origin

Promotion
No of reps
Advertising appeal

Distribution
Exclusive
Direct marketing

. Page 8
STRATEGIC DIRECTION

Target market (Who will buy your products/services?).

Based on the market trends, profiles of your business and your competitors, who exactly will you sell your products and
services to? What market represents the best chance of success? Where are the opportunities?

How will you position your business's products or services against your competitors? Is there a gap in
the market?
Why will people buy your goods or services? Are you offering the same as everyone else is or something that is
substantially different and that fills a need in the market? There could be a gap in the market. I.e. No competitors that
sell similar goods or services at a price that you are prepared to sell at or no-one else that has a particular feature or
distributes their product in the same manner as you do. In a previous question you looked at the features of your
products and services - in this section you should look at the benefits to the customers of these features and whether your
competitors can provide the same benefits.

This is an explanation of why you will win! Discuss any major product or service advantages that give you an edge in
the market place. For instance, all watches tell the time but each manufacturer positions its products differently. People
buy Swatch watches because they are fashionable and Rolex watches because of their image. Isolate the unique feature
of your products or services - this is called your competitive advantage .

A service business would do the same. For instance, a gardener's competitive advantage might be to offer fixed price
services. This gives the customer security of price - they know exactly what the service will cost from the start. The
gardener could also offer garbage removal, lawn mowing and pool cleaning. The benefit to the customer is ease of
purchase. They can order all these services with one phone call, pay with one cheque and have a familiar face doing all
the work.

. Page 9
What are the major things that you will need to achieve in order to meet these financial returns?
This is a brief outline of all the things to come. E.g. "We will increase our advertising expenditure, invest in a new
machine, improve our distribution by appointing a freight agency and better target our product to the consumer based
on the results of our market research campaign". If you are applying for funding for capital expenditure highlight what
the funds will be used for.

Marketing Strategy highlights:

Product/Service Positioning

General Marketing Strategy

Production Strategy or Retail Strategy highlights:

(Depending on the type of business you are in)

Organisation and Management Strategy highlights:

Number of new employees

Training

Systems and Reporting

. Page 10
Financial Strategy highlights:

Investor Information
If presenting to outside investors or a bank, how much do you wish to borrow and what will be the return on investment?
What, specifically, do you need financing for?

. Page 11
OBJECTIVES AND STRATEGIES

The forms on the following pages cover the major areas of your business which you need to plan for. Use them to list all the
things that you are going to do over the next year, or years, to improve the performance of your business and to achieve
your projected sales and profit figures. Below is an example of how the forms should look when filled in. The "Who"
heading refers to who is responsible for making sure that the tasks or strategies are achieved. The "When" column refers to
when the task or strategy is to be completed.

Strategy (Action Objectives) Who When

To employ a new secretary for Sales. PH Mar
To produce an internal newsletter for staff. JB April

Example of Marketing Strategies

Promotional: Develop promotions by product, by region, by segment or type of customer; Develop a print
advertising campaign; Develop a lead generation program; Contact "centres of influence"; Issue a PR release;
Develop a new sales approach; Contact lost customers and past enquirers; Sell new products to existing customers;
Develop an up-sell promotion; Develop a sales promotion.

Product: Improve the quality; Launch a new model or product; Develop a returns policy; Lengthen the warranty
period; Conduct R&D in the area of xxxxxx; Develop a brand name; Provide add-on accessories to xxxxx; Change
the type of package; Group like products into package purchases.

Pricing: Alter the pricing structure; Offer discounts and bulk rates; Develop distributor, agent and retailer pricing
levels.

Distribution: Appoint new distributors, sub-distributors or agents; Develop material for distributors; Sell direct.

Example of Financial Strategies

Eliminate cash-flow shortages; Improve the collection of money from debtors; Stretch out payments to creditors;
Reduce expenses; Rationalise leases; Apply for a $50,000 overdraft; Reduce wage payments; Purchase new
equipment; Reduce inventory levels; Look at lower cost rent alternatives.

Example of Organisational & Management Strategies

Improve morale; Conduct a sales training course; Chart the organisation; Develop policies and procedures.

Example of Production Strategies

Purchase new machinery; Schedule two months for installation and trials of new machinery; Commence production
in October on new machinery; Spend $50,000 on R&D; Lower WIP inventory levels to five percent of production;
Develop production policies and procedures; Reduce reject rate; Develop better production scheduling techniques
in association with the marketing department's sales forecasts; Find alternate suppliers for XXX raw material;
Maintain production at an average ninety percent of capacity.

Example of Retailer Strategies

Rotate stock on a daily basis; Reduce stock damage/pilferage; Purchase a better cash register; Improve customer
service through training; Improve presentation of stock.

. Page 12
 MARKETING PLAN
19 to 19
Total Sales Objective
Sales objectives by product, market segment or
any other variable that you care to use to
measure your performance

#1
#2
#3
#4

MARKETING STRATEGIES
Milestones, tasks or action objectives Who When
E.g. To contact thirty lost customers every month. SK Last day

. Page 13
 FINANCIAL PLAN
20 to 20
Budget Sales
Budget Net Profit
Budget Gross Profit
Budget Expenses

FINANCIAL STRATEGIES
Who When
Milestones, tasks or action objectives

E.g. Apply for a $50,000 overdraft. PH 1/6

. Page 14
 ORGANISATIONAL AND MANAGEMENT PLAN
20 to 20
Number of staff to be hired
Payroll Budget
Training & Human Resource Budget

ORGANISATIONAL & MANAGEMENT STRATEGIES

Milestones, tasks or action objectives Who When
E.g. Institute weekly Sales training. CL 23/6

. Page 15
 PRODUCTION PLAN
20 to 20
Production Forecast
Plant Capacity
Production Costs

PRODUCTION STRATEGIES
Milestones, tasks or action objectives Who When

E.g. Reduce reject rate by two per cent a month for three months. CL 28/9

. Page 16
CASH FLOW STATEMENT
Detailed descriptions of these statements are included in this manual. The Cash Flow statement is an extremely important
document which needs to be prepared on a monthly basis. A Cash Flow statement shows how much cash the business will
have on hand. It only takes into account when bills are actually paid and when monies are actually received. For instance,
suppose that $100,000 worth of goods are sold this month. Although this is registered as a sale this month, the money will
not be physically received until next month or even later. Therefore it won't appear in the Cash Flow statement until the
month it is physically received.

The same applies to expenses. An advertisement in the Yellow pages, costing $4,000 for the whole year, will only appear in
the Cash Flow statement when it is physically paid for.

It doesn't matter how healthy the order book looks, if bills can't be paid the business will fail.

Budget Actual Variance

OPENING BALANCE
Cash Inflow

Cash Sales
Cash from Debtors
Interest Revenue
Other

Total Available

Cash Outflow

Wages
Rent
Credit
Accounting Fees
Selling and Admin Expenses
Office Expenses
Purchases of Assets
Loan Repayments
Directors' Drawings

Total Outflow

CLOSING BALANCE

. Page 17
INCOME STATEMENT

Income statements (also referred to as profit & loss statements) are important as they tell you whether or not you are
making a profit. Businesses should prepare these statements on a monthly basis. Often, to simplify these reports, rather
than trying to record the complex inventory movements, many businesses prepare their operational budgets by averaging
out a cost of sales figure.

Budget Actual Variance

Sales
Less Cost of Goods Sold
Opening Inventory
Purchases
Duty on Purchases

Less Closing Inventory

Gross Margin

Add Miscellaneous Operating Revenue

Commission Revenue
Discount Revenue

Less Selling and Distribution Expenses

Advertising
Commission Expense
Delivery Expenses
Salaries - Sales
Vehicles
Depreciation on Showroom
Equipment

Administration and Management Expenses

Audit Fee
Directors' Fees
Office Expenses
Salaries - Office
Telephone
Depreciation on Buildings - Office

Financial Expenses
Bad Debts
Doubtful Debts
Discount Expense
Interest on Debentures

Net Operating Profit

Add Non-operating Revenue
Profit on Sale of Surplus Equipment
Net Profit before Tax
Less Provision for Income Tax
Net Profit after Tax

. Page 18
OTHER INFORMATION

Any other information that supports your plan should be included. The Appendices can be used to include such things as
brochures, customer satisfaction letters, PR releases, etc.

MONTHLY EVALUATION
Two key elements of successful Business Planning are the allocation of tasks to individuals and the accountability of those
individuals. A Business Plan does not produce results because it has been written down - results are produced when
employees are given targets and performance goals for which they are accountable.

. Page 19