Small business planning

Failing to plan is planning to fail P P P P P P Proper Preparation Prevents Piss Poor Performance

What could stop us from failing? A business plan A business plan is exactly what it says — a plan for a business. It is a written statement of the goals and objectives for the business, and the steps to be taken to achieve them. In other words, it is a summary and an evaluation of a business concept.

Benefits of developing a business plan

The business plan Turns dreams into reality!!

Most business plans All businesses are different, which means that all business plans will look slightly different. A typical business plan should, however, include the following elements:

Executive Summary An executive summary — a one-page document describing the business and its objectives. This is usually prepared at the end of the plan-writing process.

Operations Plan An operations plan — outlining how the business will be set up and the human resource needs.

Financial Plan A financial plan — which details how the business will be financed, and projected cash flow, revenue, expenses and profit.

Marketing Plan A marketing plan — outlining key information from the industry the business will be entering and how it fits in, and the marketing strategy of the business

iPAB Sheet - Look

Riddle me this Businesses do not plan to_____________; they fail to______ ?

What are the main benefits of a business plan?

The main benefits are The main benefits of a business plan include: It allows the owner to know where the business is heading It helps test the viability of the business It assists the business to be proactive rather than reactive It assists in maintaining the business operation, especially focusing attention on the goals and objectives It indicates the owner’s ability and level of commitment It forces the small business owner to justify his or her plans and actions It identifies the business’s strengths and weaknesses It assists when arranging finance for the business It is a useful reference point for the running of the business.

Human and physical resource needs What is a resource? What is a human resource? What is a physical resource? What is an asset?

Quick Quiz Imagine you are planning to set up a costume hire business. Circle resources that are human and resources that are physical

What is Human / Physical? Bear costume Online technical support for website Business car with business logo and contact details Mobile phone Computer Cash register Superman costume Dressmaker (when fancy dress costume cannot be purchased but needs to be made) Batman car Receptionist Fairy wand Wig Online costume hire catalogue Fancy dress researcher — will track down any costume requirements

Human Resource needs and the business plan The operations section of the business plan should provide details concerning the people side of the business

Physical Resource needs The types of assets The associated costs of each asset Location and layout of the businesses assets

Assets You are planning your business. List the assets your business will require Estimate how much you think they will cost purchase new

Financial Planning ‘Should Jen start her business?’ Jen wants to start up her own catering company. She is going to start by working out of her own kitchen, but she will need to purchase better equipment, such as mixing bowls, fry pans and knives. She estimates this will cost $2000. Her operating costs on food, wages, advertising, insurance, interest on a short- term loan, telephone and electricity costs, stationery, rent, accountant’s fees and motor vehicle running costs total $3000 per week. Jen estimates that in the early stages of the business she might only receive $1500 in revenue from her catering jobs, as she doesn’t have many customers.

Financial Planning

PPPPPP – Financial Planning Many people in business press ahead without even doing these basic sums, only to find that instead of making a profit, they plunge further and further into debt

Assessing Finance Required When commencing a small business, the owner must answer two crucial financial questions: How much money will I need to commence operation? Where will I get the money? Let’s look at how the small business owner assesses the finance required to establish and operate a business. The cost associated with actually establishing the business is a good place to start our discussion.

Establishing Costs legal fees, furniture, computer hardware and software, motor vehicles, fixtures and fittings, phone and electricity connection, stock and possibly advance rent.

The Lord Nelson

The Lord Nelson Legal fees – Licensing, Building Permits furniture Tables, 200 chairs computer hardware and software – imPos fixtures and fittings, - Handmade bar, beer garden, lights, sounds phone and electricity connection – 3 telephone lines, internet, foxtel stock – Roughly $20,000 worth of stock to start and possibly advance rent - $10,000 per month Total Cost (Approx) - $1,250,000 Before we even served a customer!!!

Operating Costs These costs include wages, advertising, insurance, interest on any loans, telephone and electricity costs, stationery, rent, accountant’s fees and motor vehicle running costs. These must be paid in order for the business to continue to trade.

The Lord Nelson $30,000 every 3 months for electricity and gas $1,000 a month for phones Stock - roughly $3,000 a week Advertising – roughly $1,000 per month Rent $10,000 a month Wages - $5,000 a week $30,000 a month without even serving a customer You need to make $30,000 per month to break even!!

Outline some of the establishment costs you would expect the following new businesses to have.

Plickers – Pre Test

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