Presentation on theme: "Business Plans A business plan is a formal statement of a set of business goals, and details the intended strategies that will be used to meet those goals."— Presentation transcript:
1Business PlansA business plan is a formal statement of a set of business goals, and details the intended strategies that will be used to meet those goals.
2Mission StatementWhere will the business be in two to five years, and how will this be achieved?
3Example Mission Statements Westnet strives to be the best telecommunications provider in Australia through its commitment to outstanding customer service and the provision of premium quality, competitive products.RSPCATo prevent cruelty to animals by actively promoting their care and protection.
4Example Mission Statements The core activity of Canterbury Renovations will be the renovation of kitchens, bathrooms and laundries. The business will provide a complete service, including free designs and quotes, supply and installation of equipment and fittings, all associated building services, after sales maintenance and a seven-year guarantee covering workmanship.
5Industry and Business Environment NameWhat your business doesLocation and layoutThe industry that you are inPoint of difference of your competitors
6Example Industry and Business Environment Westnet is a Western Australian-based internet service provider (ISP), founded in the city of Geraldton back in Now owned 100% by iiNet, Westnet has around 220,000 members and a proven track record for delivering customer satisfaction.As a growing national telecommunications service provider, Westnet offers a competitive range of services, including dialup, ADSL, ADSL2+, mobile broadband, satellite broadband, telephony, web hosting, domain registration, business telecommunication solutions and web-based content across Australia.Westnet is Australia's leading ISP for customer service, with 70% of its 450 staff occupying customer-facing roles and a wealth of awards under its belt.
7Example Industry and Business Environment Canterbury Renovations is a new business with no existing clients, projects or history.We will offer complete kitchen, bathroom and laundry renovation services, including the supply of appliances.Although these products are available through other businesses, we offer them as part of a service rather than a stand-alone product.
8Product or Service Description Goods being produced and soldHow they will be produced and soldHow they compare to major competitorsThe price, and how you have determined itOngoing product or service development
9Example Product or Service Description Canterbury RenovationsRenovation of kitchens, bathrooms and laundries.Including the supply of timber, tiles, paint and plaster with our renovations services.Our products will also include built-in appliances such as ovens, microwaves, cook tops and dishwashers, which will suit each individual project.
10S.W.O.T Analyses Strengths Weaknesses Opportunities Threats Characteristics of the business that give it an advantage over othersWeaknessesCharacteristics that place the business at a disadvantage relative to othersOpportunitiesExternal chances to improve the businessThreatsExternal factors that could cause trouble for the business
11Example S.W.O.T Analyses Strengths Weaknesses Technical competence of the proprietorsTotal agreement between proprietors on their objectivesFinancial resourcesGood network of contacts for potential clients, suppliers and tradespersonsBusiness is located within the target marketLack of management skillsNo track record in businessNo current plan for management succession in the short termInefficient equipmentProprietors have limited security with which to raise finance for future growthBusiness is principally dependent on one person during the formative stages
12Example S.W.O.T Analyses Opportunities Threats Rapidly growing market Poor reputation of existing renovation businessesLarge number of old yet valuable homesAvailability of casual staff and tradespersonsAvailability of display and manufacturing premises within the areaHigh disposable income within the target marketPotential for future expansion of the businessPoor reputation of the industryPotential for economic downturnsExistence of competitorsIncreasing cost of materialsRetaining suitable staff and reliable subcontractorsPossible government regulationGeographically diverse marketAn increased number of Do It Yourself (DIY) renovations, inspired by magazines and television programs
13Marketing Strategy Target market audience Sales targets Promotion and advertising policyWhere, how and when you will promote your product/serviceDistribution method
14Example Marketing Strategy Our target market includes:people wanting larger or more modern living environments who want to stay in the area and/or avoid moving costspeople wanting to live in area buying a property based on location not house style or condition (about one third of renovators in the area)home owners (about half of renovators in the area) in the middle to high income bracket, with at least two sources of income per household and a higher than average disposable income, which was predominantly spent improving quality of lifepeople wanting to upgrade parts of their house in order to sell it for a better price
15Example Marketing Strategy Over the next 12 months, Canterbury Renovations will undertake:25 renovation jobs valued at $12,000 eachinclude built-in equipment in 12 jobsOver the next 12 months, Canterbury Renovations will:generate $300,00 in saleshave a working capital of $41,000 by the end of April
16Example Marketing Strategy Market research carried out by the proprietors reveals an increase in home renovation activity among home owners in their target market. Such owner/renovators, especially in the inner suburbs, subcontract the more complex work to builders. Market research also indicates that many existing kitchen, bathroom and laundry renovators do not have a good reputation, therefore, the proprietors believe they can gain a competitive advantage through the provision of top quality products and services, access to specialty items and innovative designs.The proprietors believe the best marketing strategy combines a good network of contacts, the development of a reputation for quality and reliability and the attainment of personal referrals. This strategy will be pursued through the distribution of brochures, direct contact with home buyers in selected areas and a small display in the rented business premises.
17Management Strategy Ownership and management structure Duties of business management/ownersResources required (human and capital equipment)
18Example Management Strategy We have industry experience, but need training and experience in managing staff. Canterbury Renovations has a team of dedicated and qualified staff and we will provide training in the areas of our preferred service technique and business style.A set of guidelines has been written for all staff outlining expected behaviours such as cleaning, punctuality and customer courtesy. We also intend to employ a professional writer to create an Operations manual.As the proprietors, we will attend the 'Planning and Starting a Business' course at the Box Hill College of TAFE. We also intend to join the Master Builders Association and attend a number of relevant industry courses, trade shows and subscribe to relevant business magazines.
19Financial Strategy Expected costs/expenses Cash flow Estimated level of sales and profitability
20Example Financial Strategy First year overhead expenses = $50,650Pre-business and initial costs = $12,000Total overheads for the first business year = $62,650
21Example Financial Strategy Initial funding of the businessAs the proprietors, we have $20,000 of our own money to invest in the business, supplemented by a $20,000 long term interest free loan from our parents. The closing balance in the projected cash flow shows that, in addition to this, some $41,000 will be required over the first year.We also had preliminary discussions with our bank manager and, subject to the provision of a documented business plan and the provision of a mortgage over our home, we will be provided with an overdraft of $45,000.An overdraft was agreed to be the most suitable arrangement for our first year as financial requirements will vary substantially from month to month and there will be no profits with which to repay capital. After the first year, trading levels will be more predictable and finance arrangements will be reviewed.
22Example Financial Strategy Break even analysisThe average mark up on direct/renovation costs is 25%. For example, a $10,000 job will have a direct cost of $8000. Therefore the gross profit will be $2000 (20% of the value of the job).The projected overheads for the first year will be $62,650. To break even, the business will have to achieve sales of which 80% pays for the direct/renovation costs and 20% pays for the overheads of $62,650.If sales x 20% = $62,650 then the sales required to reach break-even would be $62,650, multiplied by five ($313, 250).Therefore, the break even point of sales in the first year will be $313,250. This will not be achieved in the first year. However, in the second year the profit margin of 18% of the projected sales of $450,000 ($81,000 gross profit) will cover the overheads of about $73,150 and produce a net profit of $8350.