Thinking about striking out on your own and starting your own company? Here's how to create an effective business plan.
What is a business plan?
At a practical level, a business plan is a document that contains everything you think is important to include. It can be long and detailed, or it can touch briefly on different aspects of your business.
A business plan can include anything and everything that relates to how you run your business. The specifics will depend on the kind of business, what stage you’re at, your goals and how you’ll measure success.
Usually, it covers topics like your overarching vision for the business, contact and registration details, who’s involved, market analysis, financials, goals for the future and succession planning. But there are no right or wrong answers—include the details most critical to you.
Why should I have a business plan?
Simply put: sometimes, the unexpected happens. With a plan in place, you’ll find it easier to shift focus and adapt to change in real-time.
When you’re clear about your goals and how you expect to meet them, you can tweak it as you go. A plan gives you a direction in which to head and helps to identify potential roadblocks. In this ever-changing economy, it can help you to spot risks and create strategies to manage them.
Then, as you look back, you can measure success against your plan and see where you could improve.
Creating a business plan
Developing your business plan requires asking plenty of questions. Start thinking about things like:
- What business structure will work best—sole tradership, partnership, incorporated company?
- Who are your competitors and what are they doing?
- Where does your business fit in the market?
- What products or services will you sell?
- How will you attract clients or customers?
- What budget is required at each stage of your business development?
- Do you need a website, logo and social media accounts?
- What policies or guidelines should you have in place?
- Where might you need help from third parties?
You might know some of the answers already, but don’t be afraid to ask for independent advice from the experts.
Then, you can start bringing it together into one file. Don’t worry too much about getting it exactly right from the beginning—this is a flexible, living document that will change over time.
The structure of a business plan
So, how do you structure a business plan? Again, there are no right or wrong ways to do this. What’s most important is that it’s easy for you to understand and refer to later.
Here’s a proposed structure to get you started:
1. Business purpose
An overview of your business, sometimes called an “executive summary”. The bigger purpose behind your business, including your ambitions, objectives, goals, milestones and mission statement. Basically, what are we doing here?
- Vision / Mission
- Short-term goals
- Long-term goals
- Key people
- Registration details and business structure
2. Your place in the market
An analysis of where your business fits among others in the market and how you plan to differentiate it.
- The problem you’re solving
- Your target market/audience
- Competitor analysis
- SWOT analysis
- Marketing strategy
- Risk analysis
3. Goals and activities
Your ambition for the business over the short- and long-term, expanding on your answers in part 1.
- Goals for the next year, 3 years, 5 years
- How you propose to meet those goals
- Details of your products and/or services
- How to measure your success
An outline of the cost of running your business, funding sources and forecasting.
- How much you need to get started
- Where the money will come from
- How much revenue you expect to generate
- Profit and loss forecast
The Australian Government’s business website also has tips for structuring and creating your business plan document, including a business plan template.
What to do next
Be prepared to revise your plan over time. Things are always in flux, from the external factors like technology, economies and the environment, to internal shifts with people, products, customers and even overarching goals. The best business plans are those that evolve to meet the current market.
Still feeling unsure? Studying business can help fill in the gaps. Whether you’re just starting out or have been up and running for a while, there are online business courses to suit you.