A business plan is an essential tool for every business to have and if you have a business plan already it should be updated on a regular basis. With reports of increasing difficulty for businesses seeking to raise finance in the aftermath of the banking industry Royal Commission, a good business plan could be the difference between a yes or no from the banks.
There are four key elements required in a business plan. The first element is the information regarding the people involved in the business. This will include the owners and managers of the business however other key parties need to be identified. These will include your accountant and business advisors, solicitors and suppliers. This will help prove that you have the necessary skills and network to be able to make the business a success.
The next element will be the business profile. What you will sell, to whom and for how much is the first part of the profile to be included. An analysis of the competition should also be included – if your plan suggests that you will blow away the competition then you could be seen to be naive. The strengths and vulnerabilities of the business should be also discussed in detail.
The third element should be an analysis of the big picture including the external environment. This will include any regulatory requirements, how a change in interest rates would affect the business and how you would respond to other changes in the external environment. Risk and rewards should be detailed – such as how would the business cope if a founder or key team member left, or what if the business has a greater demand than expected – what is your plan and how would you respond to these events.
The final part is the numbers. Every business plan should include well thought out budgets and cash flow projections. This should detail when the business will become profitable, how long any finance will be repaid over and when the owners will be able to get a distribution of the profits from the business. The calculations and key assumptions should also be detailed to show how you have come to arrive at the figures.
If you would like more information on business plans and strategy please call UHY Haines Norton on 4972 1300 or email info@uhyhncq.com.au