17,99 €
Mehr erfahren.
- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
- Veröffentlichungsjahr: 2014
Everything you need to know to design a profitable business plan Whether you're starting a new business or you've been trading for a while, Creating a Business Plan For Dummies covers everything you need to know. Figure out whether your business idea is likely to work, how to identify your strategic advantage, and what you can do to gain an edge on the competition. Discover why a business plan doesn't have to be a thrity-page document that takes days to write, but can be a simple process that you do in stages as you work through your business concept. Learn how to prepare an elevator pitch, create a start-up budget, and create realistic sales projections. Discover how to predict and manage expenses, and assemble a financial forecast that enables you to calculate your break-even. Look at the risk involved in this business and experiment with different scenarios to see if you're on the right track. * Explains how to create a one-page business plan in just a few hours * Takes a simple step-by-step approach, focusing on budgets, financials, and everyday practicalities * Offers focused guidance on managing cashflow, designing marketing plans, and establishing a long-term vision for your business * Includes access to downloadable templates and worksheets, as well as helpful online audio and video components * Written by Veechi Curtis, bestselling author and business consultant A good business plan is the first step to success for any new business, and getting it right can mean the difference between big profits and big trouble. Creating a Business Plan For Dummies gives you the detailed advice you need to design a great business plan that will guide your business from concept to reality.
Sie lesen das E-Book in den Legimi-Apps auf:
Seitenzahl: 556
Ähnliche
Creating a Business Plan For Dummies®
Published byWiley Publishing Australia Pty Ltd,42 McDougall Street,Milton, Qld 4064www.dummies.com
Copyright © 2014 Wiley Publishing Australia Pty Ltd
The moral rights of the author have been asserted.
National Library of AustraliaCataloguing-in-Publication data:
Autho:
Curtis, Veechi
Title:
Creating a Business Plan For Dummies / Veechi Curtis
ISBN:
9781118641255 (ebook)
Notes:
Includes index
Subjects:
Business planning
Dewey Number:
658.4012
All rights reserved. No part of this book, including interior design, cover design and icons, may be reproduced or transmitted in any form, by any means (electronic, photocopying, recording or otherwise) without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Legal Services section of John Wiley & Sons Australia, Ltd, Level 2, 155 Cremorne Street, Richmond, Vic 3151, or email [email protected].
Cover image: © iStockphoto.com/alphaspirit
Limit of Liability/Disclaimer of Warranty: THE PUBLISHER AND THE AUTHOR MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITATION, WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES. IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM. THE FACT THAT AN ORGANISATION OR WEBSITE IS REFERRED TO IN THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN THAT THE AUTHOR OR THE PUBLISHER ENDORSES THE INFORMATION THE ORGANISATION OR WEBSITE MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE. FURTHER, READERS SHOULD BE AWARE THAT INTERNET WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ.
Trademarks: Wiley, the Wiley logo, For Dummies, the Dummies Man logo, A Reference for the Rest of Us!, The Dummies Way, Making Everything Easier, dummies.com and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the United States and other countries, and may not be used without written permission. All other trademarks are the property of their respective owners. Wiley Publishing Australia Pty Ltd is not associated with any product or vendor mentioned in this book.
Contents at a Glance
Introduction
Part I: Getting Started
Chapter 1: Letting Your Plan Take Flight
Chapter 2: Figuring Out What’s So Special about You (and Your Business)
Chapter 3: Sizing up the Competition
Part II: Doing the Groundwork
Chapter 4: Budgeting for Start-Up Expenses
Chapter 5: Figuring out Prices and Predicting Sales
Chapter 6: Calculating Costs and Gross Profit
Chapter 7: Planning for Expenses
Part III: Checking Your Idea Makes Financial Sense
Chapter 8: Assembling Your Profit & Loss Projection
Chapter 9: Calculating Your Break-Even Point
Chapter 10: Creating Cashflows and Building Budgets
Part IV: Transforming Your Idea into Reality
Chapter 11: Separating Yourself from Your Business
Chapter 12: Developing a Strong Marketing Plan
Chapter 13: Staying One Step Ahead
Chapter 14: Managing Risk
Chapter 15: Pulling Together Your Written Plan
Part V: The Part of Tens
Chapter 16: Ten Tips for Using Excel in Your Business Plan
Chapter 17: Ten Ideas for a Well-Presented Plan
Chapter 18: Ten Questions to Ask before You’re Done
Appendix: Sample Business Plan
Index
Table of Contents
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Part I: Getting Started
Chapter 1: Letting Your Plan Take Flight
Getting Your Feet Wet and Having Fun
Deciding who this plan is for
Choosing your dance partners
Looking at different online planning tools
Scoping the Nature of Your Plan
Structuring your plan
Setting aside enough time
Deciding how far into the future you want to go
Understanding Why Your Plan Needs Constant Love and Attention
Going for rhythm with financial planning
Keeping everything on track with your marketing cycle
Conjuring Up a One-Page Business Plan
Scoring Your Business out of 10
Chapter 2: Figuring Out What’s So Special about You (and Your Business)
Understanding Strategic Advantage
Looking at examples of strategic advantage
Focusing on real-life examples
Understanding How Risk Relates to Gain
Justifying Why You Can Succeed
Uncovering your inner mojo
Asking three key questions for each of your advantages
Rating how you score
Developing Your Strategic Advantage Statement
Drafting your statement
Growing your advantages over time
Making sure a demand really exists
Looking Around for More Ideas
Chapter 3: Sizing up the Competition
Why Analysing Competitors Is a Big Deal
Figuring Out Who Your Competitors Really Are
Organising competitors into groups
Homing in on head-to-head competitors
Thinking about future competitors
Engaging in Cloak-and-Dagger Tactics
Doing a competitor profile
Mirror, mirror on the wall . . .
Choosing your competitive strategy
Matching your competitive strategy to your strategic advantage
Summarising Your Competitive Strategy
Joining the dots
Measuring up the risks
Preparing an Elevator Speech
Saying what you do in 30 seconds or less
What to avoid with your elevator speech
Practice makes perfect
Part II: Doing the Groundwork
Chapter 4: Budgeting for Start-Up Expenses
Creating a Start-Up Budget
Purchasing materials and inventory
Listing your start-up expenses
Including expenses paid for out of personal funds
Adding enough to live on
Separating Start-Up Expenses from Operating Expenses
Dealing with initial start-up expenses
Putting theory into practice
Assessing How Much You Really Need
Calculating Likely Loan Repayments
Estimating loan repayment schedules
Calculating interest
Thinking about whether you can really service this loan
Understanding Different Finance Options
Getting into bed with the bank
Offering up collateral
Seeking equity partners
Borrowing from family
Chapter 5: Figuring out Prices and Predicting Sales
Choosing a Pricing Strategy
Setting prices based on costs
Setting prices based on competitors
Setting prices based on perceived value
Building a Hybrid-Pricing Plan
Offering a premium product or service
Cutting back the frills
Getting creative with packages
Charging different prices for the same thing
Forming Your Final Plan of Attack
Monitoring and Changing Your Price
Building Your Sales Forecast
Calculating hours in a working week
Increasing sales with extra labour
Predicting sales for a new business
Predicting sales for an established business
Creating Your Month-by-Month Forecast
Chapter 6: Calculating Costs and Gross Profit
Calculating the Cost of Each Sale
Identifying your variable costs
Costing your service
Costing items that you buy and sell
Adding import costs
Creating product costings for manufacturers
Understanding Gross Profit
Calculating gross profit
Figuring gross profit margins
Looking at margins over time
Analysing Margins for Your Own Business
Calculating margins when you charge by the hour
Calculating margins when you sell products
Calculating margins if you do big projects
Building Your Gross Profit Projection
If you have a service business with no employees and no variable costs
If you have a service business and you use employee or subcontract labour
If you buy and sell a small number of products
If you sell many different products or your variable costs are a percentage of sales
Chapter 7: Planning for Expenses
Concentrating on Expenses
Separating start-up expenses and variable costs from ongoing expenses
Thinking of what expenses to include
Building a 12-month projection
Finetuning Your Worksheet
Recognising relationships
Allowing for irregular payments
Playing with the 10 per cent rule
Staying Real with Benchmarks
Locating benchmarks for your business
Using benchmarks as part of your plan
Thinking about Taxes and Loan Repayments
Allowing for personal and company tax
Understanding where other taxes fit in
Dealing with loan repayments and interest
Factoring Personal Expenses into the Equation
Identifying income
Figuring how much you need to live
Setting goals and budgets
Recognising why personal and business budgets connect
Seeing where you can scrimp and save
Part III: Checking Your Idea Makes Financial Sense
Chapter 8: Assembling Your Profit & Loss Projection
Understanding More About Spreadsheets
Naming worksheets within a single workbook
Linking one worksheet to another
Using names to identify important cells
Building Your Profit & Loss Projection
Step one: Insert your projected sales forecasts
Step two: Bring across variable costs
Step three: Add your expenses budget
Step four: Look at the bottom line
Step five: Think about tax
Checking you’ve got it right
Analysing Net Profit
Calculating net profit margins
Assessing whether your net profit is reasonable, or not
Thinking ahead further than 12 months
Looking at your rate of return
Measuring Risk and Your Comfort Factor
Chapter 9: Calculating Your Break-Even Point
Identifying Your Tipping Point
Calculating business break-even
Factoring personal expenses into the equation
Calculating break-even for your business
Changing Your Break-Even Point
Looking at Things from a Cash Perspective
Chapter 10: Creating Cashflows and Building Budgets
Understanding Why Cash Is Different from Profit
Five reasons your projections may look rosy, but cash could be tight
Five reasons your projections may look grim, but cash could be flowing
Summarising what’s Different about a Cashflow Report
Looking at Cash Coming In
Calculating cash collected versus sales made
Thinking about loans and other sources of funds
Thinking about Cash Flowing Out
Allowing for the purchase of new equipment (or other start-up items)
Looking at payment for stock versus cost of sales
Deciding where to show tax payments
Factoring in loan repayments
Predicting the Bottom Line
Setting up a worksheet in Excel
Making a pre-emptive strike
Calculating sustainable growth
Building Your First Budget
Allocating budgets in detail
Comparing budgets against actuals
Creating Balance Sheet Projections
Part IV: Transforming Your Idea into Reality
Chapter 11: Separating Yourself from Your Business
Deciding What Path You Want to Take
Doing the thing you love to do
Getting help and delegating what you can
Building a business that’s separate from you
Creating a way of doing business
Wearing Different Hats
Building a Business with a Life of its Own
Defining your difference
Documenting and building systems
Setting goals for you and your business
Planning for a graceful exit
Appreciating the Limitations of Your Business
Planning for People
Planning for help
Deciding whether to make someone an employee, or not
Calculating the costs of labour
Chapter 12: Developing a Strong Marketing Plan
Laying Down the Elements of Your Plan
Writing an eloquent introduction
Building a brand that people want
Defining Your Target Market
Analysing your customers
Thinking creatively about channels
Researching the market
Summarising Your Competitor Analysis
Setting Sales Targets
Slicing goals into bite-sized chunks
Expressing goals in other ways
Getting SMART: Five essential ingredients for any goal
Creating Strategies to Support Your Targets
Making a list of your top ten
Creating websites and marketing materials
Planning an advertising strategy
Reaching out to the public
Working your networks
Planning For Customer Service
Keeping Yourself Honest
Comparing dollar targets against actuals
Tracking referral sources
Analysing online success
Measuring overall conversion rates
Chapter 13: Staying One Step Ahead
Taking an Eagle-Eye View
Looking at what’s happening in your industry
Responding to industry trends
Rating Your Capabilities
Putting yourself through the griller
Prioritising where you need to do better
Identifying Opportunities and Threats
Doing a SWOT Analysis
Putting theory into practice
Translating your SWOT analysis into action
Creating a Plan for Change
Chapter 14: Managing Risk
Mitigating Financial Risk
Maintaining profitability
Guarding against bad debts
Managing cashflow
Staying on top of stock levels
Protecting Your Intellectual Property
Safeguarding your name, brand and designs
Making sure you’re not on someone else’s patch
Restricting employees with a view to when they move on
Limiting Your Liability
Choosing a business structure
Signing up for insurance
Staying on the Right Side of the Law
Keeping your products safe
Complying with employment legislation
Ensuring a safe workplace
Understanding planning regulations
Deciding What Goes in the Plan
Chapter 15: Pulling Together Your Written Plan
Reviewing the Overall Structure
Introducing Yourself and Your Business
Developing a mission statement
Crafting a company description
Talking about your values
Plunging into the Financials
Presenting your key reports
Pleading for finance
Adding extra information
Completing the Rest of Your Plan
Selling yourself and your team
Providing a quick summary of operations
Introducing the killer marketing plan
Explaining how you plan to manage change and risk
Setting Milestones for Every Step of the Way
Translating your plan into clear goals
Creating a calendar
Part V: The Part of Tens
Chapter 16: Ten Tips for Using Excel in Your Business Plan
Get Things to Add Up Automatically
Learn to Drag and Copy
Format Cells so They Make Sense
Freeze Rows and Columns
Apply Conditional Highlights
Hide Stuff You Don’t Need
Link One Worksheet to Another
Don’t Type Values into Formulas
Spell Out Your Logic
Create Graphs and Charts
Chapter 17: Ten Ideas for a Well-Presented Plan
Do a Cover Sheet
Create a Table of Contents
Get Your Financials to Fit
Copy Charts into Word
Use a Single Font, Keep Text in Black
Include a Picture or Two
Save Your Plan as a PDF
Consider Interactive Elements
Run a Spell Check
Check Language for Simplicity
Chapter 18: Ten Questions to Ask before You’re Done
Can You Summarise Your Business in 30 Seconds or Less?
Does Your Plan Truly Evaluate Competitors?
Have You Double-Checked Your Numbers?
Do Your Numbers Match Your Goals?
Does Your Plan Play to Your Strengths?
Have You Cast Your Net as Wide as Possible?
Have You Made Any Assumptions You Can’t Justify?
What Do Others Think?
Do You Have a Plan for Getting Out?
Is Your Plan Inspirational?
Appendix: Sample Business Plan
Index
About the Author
More Dummies Products
Guide
Table of Contents
Begin Reading
Pages
1
2
3
4
5
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279
280
281
282
283
284
285
286
287
288
289
290
291
292
293
295
296
297
298
299
300
301
302
303
304
305
306
307
309
310
311
312
313
314
315
316
317
319
320
321
322
323
324
325
327
328
329
330
331
332
333
334
335
336
337
338
339
340
341
342
343
344
345
346
347
349
350
351
352
353
354
355
356
357
358
359
360
361
362
363
364
365
366
367
Introduction
I grew up in Scotland, where the winters can be wild, wet and cold. My father was a self-employed landscape gardener and each year, as the days grew shorter, he would start hatching entrepreneurial plots to see the family through the scant earnings of the winter months. Handmade garden furniture, barrels from the local brewery scrubbed back and filled with violets, gold-leaf mirror restoration and beach-scavenged scallop shells were but a few of the ill-fated ventures that would transform our Victorian flat into a hive of industry for a few fleeting months of each year.
I started my first business at the age of 26 and have been in business ever since, oscillating in a manner not unlike my father’s between the more stable income of business consulting and the somewhat precarious existence of writing and publishing.
Yet when working on this book, I realised something quite fundamental. While I’ve been steadily successful for more than 20 years, all too often the sensible-cardigan-wearing-accountant side of me wins out against the risk-taking-creative-why-don’t-we-try-this side of me. Possibly due to the rather feast-and-famine finances of my childhood, I typically spend more time analysing profit margins than I do thinking of creative new products; I focus more on managing risk than being a trendsetter. If you’ve been in business before, I’m sure you too have experienced this natural tension between your entrepreneurial side and the inner voice of ‘reason’.
One challenge for me in writing this book has been to find ways to encourage dreams to flourish while simultaneously exploring the somewhat sobering process of writing a business plan. I’m writing this introduction having just finished the last chapter of this book and, happily, I think that the process has worked on me. I’m itching with impatience to begin my next business venture, and feel utterly optimistic about its prospects. (I remain my father’s daughter, after all.)
I hope you have a similar experience with this book, and that I share enough inspiration for your inner entrepreneur to thrive while at the same time providing unshakeable feet-on-the-ground practicality.
About This Book
I like to think that this book is a bit different from other business planning books, not least because this book is part of the For Dummies series. Dummies books aren’t about thinking that you’re a ‘dummy’ — far from it. What the For Dummies series is all about is balancing heavyweight topics with a lightweight mindset, and sharing a ‘can-do’ attitude that encourages anyone — no matter how young or old, how inexperienced or how veteran — to give the subject at hand a go.
I like to think that the Dummies way of thinking has helped me to bring a fresh approach to the subject of business planning. I’ve tried not to get bogged down in the same old stodgy discussions of mission statements, values and organisational charts; instead, I’ve focused more on working with others, being creative and thinking of your business as something that’s unique and separate from yourself.
You may be surprised by the fact that I devote six whole chapters to the topic of finance (you’ll only find one finance chapter in most business planning books). I’m a real advocate of the importance of financial planning and, in this book, I try to break the topic down into bite-sized chunks that anyone can understand, even if they haven’t done any bookkeeping or accounting before.
I also understand that most people who’ve worked in business end up with knowledge that’s patchy. You may know heaps about marketing but nothing about finance, or vice versa. The beauty of Dummies books is that you can just leap in, find the chunk of information that addresses your query, and start reading from there.
One more thing. Throughout this book you’ll see sidebars — text that sits in a separate box with grey shading. Think of sidebars as the nut topping on your ice-cream: Nice to have, but not essential. Feel free to skip these bits.
Foolish Assumptions
When writing this book, I make no assumptions about your prior experience. Maybe you’ve been in business all your life or maybe you’ve never been in business before. It could be that you’re a tech geek or it’s possible that you hate computers. Maybe you love numbers or — much more likely — you may have a somewhat queasy feeling when it comes to maths.
I also make no assumptions about the age of your business, and realise that for many people reading this book, your business is still a seedling waiting to be watered. (For this reason, I include practical advice such as how to budget for personal expenses while you’re building your business, and why things such as your relationships and family situation are all part of the picture.)
Last, I don’t try to guess where you live in the world. After all, the principles of business planning are universal, whether you’re in the snowdrifts of Alaska, the stone country of Australia or the kilt-swaying highlands of Scotland.
Icons Used in This Book
Want to get the killer edge? Then look for this handy icon.
This icon highlights free resources, worksheets, templates and checklists you can find online at www.dummies.com/go/creatingbusinessplan.
This icon alerts you to international differences. I’m not talking about language, colour or creed here, but more mundane matters such as tax rules or government contacts.
Tie a knot in that elephant’s trunk, pin an eggtimer to your shirt but, whatever you do, don’t forget the pointers next to this icon.
This icon points to ways to give your business plan that extra spark.
Real-life stories from others who’ve been there and done that.
A pitfall for the unwary. Read these warnings carefully.
Beyond the Book
I’ve created a whole heap of Excel and Word templates to make it easier for you to create your first plan. The Excel templates provide a great starting point for most of the financial projections, while the Word templates help you structure the narrative parts of your plan. You can find all of these templates at www.dummies.com/go/creatingbusinessplan.
On this webpage you can also find links to a few extra articles. In one article, I write about the psychology of sales projections, and in another I talk about managing expenses when cash gets tight. A third article talks about the psychology of goals and the art of setting goals that motivate you (and others) to carry out your plan.
At www.dummies.com/extras/creatingbusinessplan you can also find a bonus Part of Tens list, with ten tips for checking that your business plan idea is strong enough to fly. I also provide a neat video at www.dummies.com/go/creatingbusinessplan that corresponds to the Excel tips in Chapter 16, where you can not only watch a demonstration of each one of these tips but also have the joy of listening to my reassuring voice as the soundtrack. Almost as good — probably even better — than having me in the room beside you.
Speaking of which, I really like to think of my books as a conversation with readers, rather than a one-way monologue. If you have any comments, questions or feedback, I’d love to hear from you. Please feel free to email me at [email protected] or go to Facebook and search for Veechi Curtis.
Where to Go from Here
Creating a Business Plan For Dummies is no page-turning thriller (probably a good thing given the subject matter) and doesn’t require you to start at the beginning and follow through to the end. Instead, feel free to jump in and start reading from whatever section is most relevant to you:
New to business and you’ve never created a business plan before? I suggest you read Chapters 1, 2 and 3 before doing much else. Chapter 1 provides a road map for creating your plan, and Chapters 2 and 3 help you to consolidate your business concept. From here, you’re probably best to read the chapters in the order that I present them, because these chapters follow the same sequence as the topics within a business plan.If business strategy is more your concern, Chapters 2, 3, 11, 13 and 14 are the place to be.Are financial projections a source of woe? Chapters 4 to 10 are here to help.For advice on creating a plan that can’t fail to impress prospective lenders or investors, Chapters 14 and 15 explain how to pull your plan together, Chapter 17 provides tips on getting your plan to look good, and Chapter 18 offers a handy checklist to make sure you don’t forget a thing.Part I
Getting Started
Visit www.dummies.com for great (and free!) Dummies content online.
In this part . . .
Explore the whole idea of business planning, discover how you can prepare your plan in small chunks of time over a period of weeks or even months, and assess the potential of your business idea using a simple scorecard.
Figure out what your business does best and identify where the strategic advantage of your business really lies.
Explore the delicate relationship between risk and gain, and understand why the craziest ideas often have the most potential.
Go underground to research your competitors, creating a full dossier on each one, and position your business against competitors to develop a winning competitive strategy.
Never gaze awkwardly at your feet again — prepare the killer elevator speech instead.
Chapter 1
Letting Your Plan Take Flight
In This Chapter
Getting started without another moment’s hesitation
Thinking about the structure of your plan and how long it’s going to take
Eating, drinking, sleeping and planning — all part of everyday life
Summarising everything on a single page
Rating yourself and your business idea with a quick and easy quiz
Y ou probably already know that if you spend time working on your business — rather than just working in your business — you have a heaps better chance of higher sales, more profit and a generally easier existence.
One of the main reasons people don’t get around to creating a business plan is that they think they don’t have enough time. Pish tosh. You don’t need to spend weeks creating an impressive 30-page document. Instead, what you need to do is change your way of thinking. Rather than making a daily To Do List of all the people you have to call, brew yourself a cup of tea and have a think about your pricing strategies. Rather than fretting about all the jobs that need doing, spend a couple of hours researching your competitors.
Some of the most important elements of a business plan can be done while you’re in the shower, on the beach or driving in the car. Attitude is everything. To create a great business plan, all you need is a willingness to be objective about your strategy, the discipline to analyse your financials (even if you’re not naturally good with numbers) and the ability to think of your business as something that’s separate from you.
So no more excuses, no skipping to another chapter, no closing this book with a sigh. It’s time to start planning, and there’s no time like the present.
Getting Your Feet Wet and Having Fun
In Creating a Business Plan For Dummies, I place less emphasis on the importance of creating a written plan and more on why planning is best viewed as an all-year-round activity. The neat thing about this way of thinking is that you can start with your plan at any time, even if you know you have only one hour free this week and you’re flying to Europe for a skiing holiday the next.
Planning can be a heap of fun once you get started. Some of my best business ideas have come to me while lying in the hammock at our holiday house, digging up weeds in the garden or having a quiet coffee down at the village.
Deciding who this plan is for
You, of course. Your plan is an ongoing process, not a massive document that you create every year or so. Feel free to pick a structure, time and format that works well for you.
Occasionally, other people may want to have a stickybeak at your plan, usually prospective investors or lenders. On these occasions, you probably want to create a formal plan using a fairly traditional format, and focus more on the presentation and readability of your plan.
One thing to bear in mind, however: Regardless of who is likely to read your plan, I strongly suggest that when it comes to the financials — sales targets, income projections, profit projections and so on — you be consistent. Don’t have one version of financials for your own purposes, and another spruced-up version for the bank.
One of my first jobs after I graduated was as a warehouse manager for a small but growing company. Money was always tight and we were forever presenting new plans and Cashflow Projections to prospective lenders. Part of my job was to ‘massage’ the figures to show that while cash was desperate in the coming six months or so (and hence loan funds were required), things would soon turn the corner and, within a couple of years, we would be awash with funds. I discovered how easy it was to manipulate figures (a topic I explore further in Chapter 8 when I look at scenario analysis). By adding 10 per cent to sales, trimming expenses by the same amount, and maybe increasing the gross profit a little, I could transform dire predictions into something that looked amazing. Trouble is, these figures were pure fiction. The manipulated scenarios inevitably created a false sense of security, and led to some pretty poor long-term decision-making.
The moral of the tale? Don’t get hoodwinked into ‘selling’ your plan and exaggerating your likely success. Stay as realistic as possible. This tactic will help you gain respect from any likely investors and keep you grounded as to what lies ahead.
Choosing your dance partners
As a business owner, you need to have a good understanding of your financials, a solid commitment to marketing, a razor-sharp insight into your competition and a keen sense of strategy. Even if you don’t have all of these skills yet, I can’t think of a better way of acquiring these skills than getting involved in your own business plan. Experience is a generous teacher.
Having said this, unless you’ve run a business before, you’ll almost certainly need a little help from outside. Good news is that all you have to do is ask. Consider the following sources:
Business planning courses: In my opinion, a structured course spread over several weeks or even months is the very best possible way to accumulate basic planning skills. Not only do you have the discipline of working on your plan at least once a week, but you also usually receive expert mentoring from the teacher or teachers, as well as peer support from other people in a similar position to you.Business advisory centres: Depending on where you are in the world, business advisory centres have different names and structures. However, most state and federal governments fund some form of free advisory centres.Business consultants: While I warn against delegating the whole planning process to outsiders, expert consultants can be a great resource, especially if you retain control and ownership of your plan.Your accountant: I strongly recommend that you do your own financial projections, rather than delegating this task to a bookkeeper or accountant. (I explain just how in Chapters 4 through to 10.) However, after you have made your best attempt, consider asking your accountant to review your figures, and help you to identify anything that doesn’t make sense or seems unrealistic.Your lawyer: In Chapter 14, I talk about managing risk, including protecting your name and your brand, and limiting liability through company structures. Your lawyer is an excellent source of advice for this part of the planning process.Friends and family: Not only is the advice of friends and family usually free, but these people also understand you like nobody else. Support and encouragement from friends and family is invaluable on those doubtful days when you think you (and your new business idea) may be crazy.Your spouse/life partner: Last but not least. Need I say more?Looking at different online planning tools
In Creating a Business Plan For Dummies, I try to provide you with everything you need to build your plan, including a whole bunch of free templates and resources that you can download from www.dummies.com/go/creatingbusinessplan. You may be wondering how these templates compare to the many business planning templates or software applications you can find online (many of which are also free).
At a surface level, most of these templates provide you with pretty much everything you need to create a plan. However, when writing this book, I’ve reflected on my experience from running business plan courses. What I find is that some concepts of business planning that may take only a few sentences to summarise are really hard for those new to business to grasp.
For example, almost anyone can explain the concept of strategic advantage in a few sentences, and most business planning templates simply provide a Word template with a few blank lines in which you can write your strategic advantage. In real life, I find that these concepts usually take several sessions to gel with my students. It’s for this reason that I devote two whole chapters to the concepts of strategic and competitive advantage (Chapters 2 and 3) and I recommend you read these chapters early in your business planning process, so you can be sure a solid foundation is in place when you create your plan.
However, what you may find works well is to use a business planning template in conjunction with this book. You can find a whole heap of industry-specific templates online, and you may even find topics within these templates that I don’t cover in detail within this book. (Bplans, at www.bplans.com is probably the world’s leader in business planning templates and software, and provides an excellent starting point.)
As well as business planning templates, you can also consider business-planning software. You can either buy software that you install on your computer (such as Business Plans Pro available from www.bplans.com or MAUS MasterPlan available from www.maus.com.au), or you can subscribe to online planning software in the cloud (such as www.liveplan.com or www.planhq.com). I prefer cloud-based software because you can pay as you go, and because the cloud makes working collaboratively with others so much easier.
The main difference between business planning templates and business planning software is the sophistication of the financials. For example, the financials in most business planning software packages (including those in the cloud) include Profit & Loss Projections, Cashflow Projections, budgets, break-even analysis, Balance Sheets and more. You usually find that all the financials interconnect so that if you change a figure in your Profit & Loss Projection, the change automatically flows through to the other financial reports.
While business planning software can be a real benefit if figures and maths don’t come naturally to you, the downside can be inflexibility (for example, you may find you can’t adapt the list of expenses, or that the format for sales projections is limited). Assuming you have a decent internet connection, why not weigh up the pros and cons for yourself by subscribing to a service such as www.liveplan.com for 30 days or so. Subscriptions cost approximately US$19.95 per month, and a small payment of this nature is hardly likely to break the bank.
Are you ready?
I find that if someone really wants to start their own business, wild horses can’t hold them back. The idea keeps coming around and around until that person finally takes the leap and says ‘I’m going to give it a go’.
So if you’re champing at the bit to start your new business, I have just three questions to ask you first:
Do you have experience in the kind of business you’re planning to start? For example, if you’re looking at buying a coffee van, have you actually spent a few days selling coffee in this way? Do you have barista or retail experience?Do you definitely have enough capital to get started? If you’re not sure, do you think you may be better saving for a while before you launch your business? (See Chapter 4 for more on budgeting for start-up expenses.)Is your partner/spouse supportive? (I remember my (now ex-) husband wanting to start up in business when our first child was just six months old. He was ready to start a new business, but I certainly wasn’t.)If your answer to any of these questions is ‘no’, I suggest that you try to temper your enthusiasm just a little. And if you still can’t wait, then hey, I completely understand.
Scoping the Nature of Your Plan
While planning is certainly best done on an ongoing basis, the ideal approach the very first time you create a business plan is to cover all the elements of your plan — concept, strategy, financials, marketing, people and so on — within a reasonable time frame, and then collate all your workings into a single document. This approach requires a certain level of discipline, but by the time you get to the end you’re going to be left with a major sense of achievement.
Structuring your plan
The best format for a business with a turnover of $100 million and 200 employees is going to be utterly different from the best format for a start-up business with no employees. For this reason, you can find as many possible formats for a business plan as recipes for bolognese sauce.
What most formats have in common, however, is certain key elements, although the sequence of these elements varies. (See the following section for how much planning time each of the elements is likely to require. I tell you where to find more detailed information on each one in the following section as well.)
Here are the key elements of a business plan:
An overview of the business and its strategy. This introduction to your plan includes your mission, a brief description of your business and a strategic advantage statement.A complete summary of financials. At its simplest, the financial part of your plan may only include a Profit & Loss Projection for the next 12 months. More detailed plans include Profit & Loss Projections for 24 or 36 months ahead, plus historical Profit & Loss reports and Balance Sheets for the previous year or years. Financials often also include break-even analysis, Cashflow Projections and budgets.A people plan. Who are you, and why are you so awesome? What are your skills and the skills of those involved in your business?A marketing plan. A marketing plan is usually several pages long and includes competitor analysis, unique selling points, target market analysis, sales targets, marketing strategies and a bit more besides.An analysis of industry and economic trends, as well as a summary of what you perceive to be opportunities or threats. No business is an island, particularly in a very fast-changing world. This part of your plan looks at factors outside of your control (such as industry or economic trends), possible opportunities that your business could exploit, and threats that you need to guard against. Your risk-management plan also belongs in this section. (Note: You may find that the industry analysis section sits better in the first part of your plan, immediately following your business and strategic overview, so that you provide a complete summary of your strategic platform.)A summary of goals. Here’s where you get to share your dreams, neatly sliced and diced into monthly, six-monthly and yearly goals.In this book, I work through the preceding six key elements in sequence. (The only exception is the mission statement, which normally goes at the beginning of a business plan but which I don’t address until Chapter 15. From experience, I find it works best to delay writing a mission statement until further into the planning process.)
Setting aside enough time
Here’s a bit more detail about how much time the different elements of a business plan (refer to the preceding section) typically require, and how often you need to attend to them.
Business model and strategy
How long does it take to come up with a decent business model? If you’re lucky, you may be able to come up with a winning strategy over the course of a few drinks in the back of a pub. Alternatively, you may find it takes years to come up with a strong strategy that really works.
As well as coming up with a strong business strategy, the other element of developing your business model is doing a detailed analysis of your competitors. This process usually takes only a few hours, but is something that you should do every six months or so, so that you avoid being caught by surprise.
I talk about business strategy in Chapters 2, 11 and 13, and focus on competitive analysis in Chapter 3.
Financials
Creating a Profit & Loss Projection (Chapters 5 through to 8) can be pretty time-consuming the first time around, and may take several days if you’re not used to working with figures or Excel. Stick with the process, though, and the next time around will only take a fraction of the time. Similarly, a Cashflow Projection (Chapter 10) can be quite technically demanding and may take many hours to pull together, especially the first time.
So how often do you need to repeat the process? I recommend you compare budgets against actual results every month when you look at your Profit & Loss report. As patterns emerge (maybe you can see that you consistently over- or under-estimate something), return to your overall Profit & Loss Projections, revise your figures, and extend these projections once more so they span a full 12 months ahead.
If your business is always tight for cash and you carry high levels of stock or customer debt, you or your finance manager may need to do Cashflow Projections all year round, updating figures on a constant basis.
I explain how to create a Profit & Loss Projection in Chapters 5 to 8, and talk about Cashflow Projections in Chapter 10. Later in this chapter (see ‘Going for rhythm with financial planning’) I also talk about the financial planning cycle, and about how one activity naturally flows into another.
People plan
A business isn’t anything without the people who run it, and your skills, entrepreneurialism and natural abilities are as much a part of the mix as anything else, as are the skills of the people you choose to involve in your business. This part of your plan needs to outline the people element of your business: Who does what, and why they’re the best choice for the job.
Even if you don’t have any employees yet, you can still include details about any consultants, advisers, mentors or professionals who you plan to involve in your business. These details help to establish credibility for anybody else reading your plan, and prompt you to think further outside the business than just yourself.
Chapter 2 touches on this topic, while Chapter 11 explores the people side of your plan in more depth. (People planning doesn’t necessarily take a huge amount of time at first, but is something that can be a huge time-waster if you don’t get it right.)
Marketing plan
I love doing marketing plans. Thinking about sales strategies is such a creative process that it’s hard not to feel a charge of energy and inspiration as you flesh out your ideas.
The first time you create a marketing plan can take anything from several hours to several days. After the first time, however, maintaining a coherent marketing plan generally only requires a half-day or so every six months.
I talk about the marketing cycle later in this chapter (see ‘Keeping everything on track with your marketing cycle’), and explore marketing plans in detail in Chapter 12.
Looking into the future
In this book, I emphasise reporting for financial projections rather than reporting on actual financial results. I do this for two reasons.
First, many people reading this book are going to be working on their first business plan and won’t have any results for previous months or years as yet.
Second, even if you’ve been trading for some time, you will always reap benefits from making financial projections and experimenting with different scenarios, such as what could happen if you increased sales by 10 per cent or decreased expenses by a similar amount.
However, if you’ve been trading for a while, you do need to include historical figures (Profit & Loss and Balance Sheet) for the last year or two years in your business plan. These actual results provide a great reality check for you (or anybody else) when comparing future projections against past performance.
Situational analysis
The first time you do this part of your plan, which includes both an industry analysis, as well as a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, can take a fair chunk of time, depending on the depth in which you choose to explore this topic.
I don’t usually see the need for you to update the written element of this part of your plan any more often than once a year. However, being alert to the impact of things changing around you is something you want to maintain all year round. Find ways to stay tuned to changes in your industry, possibly by attending conferences, subscribing to forum boards, researching information on industry websites or attending industry association meetings.
Planning for risk doesn’t generally require significant time on an ongoing basis, but tends to demand your attention in fits and starts (for example, trademarking a logo or drawing up employee contracts may take several days to organise). However, I suggest you allow at least half a day or so each year to review your risk-management strategies.
I talk about situational and risk analysis in Chapters 13 and 14.
An action plan
The action plan is where you weave all the other elements of your plan together into a neat summary of goals and objectives, each one with a time frame. In other words, the action plan is the section that endeavours to keep you on track, hopefully providing a calendar of activities for the months to come.
An action plan usually only takes an hour or two to pull together at the end of the planning process but once done is something that you should try to keep constantly updated. I talk about creating your action plan in Chapter 15.
Deciding how far into the future you want to go
In this book, I focus on projections that cover the next 12 months (or the first 12 months from when a business starts trading). I do this largely for simplicity’s sake. (The principle of creating a financial projection for 24 months is exactly the same principle as for 12 months — all you’re doing is adding a few more columns.)
In practice, how far you should extend your plan into the future really depends on the nature of your business and how long it has been established. Here’s what I suggest:
For most new businesses, a 12-month financial projection works just fine. (Although most traditional business planning books talk about building financial projections for the next two, three or even five years ahead, I find that for new businesses, this long-term approach quickly spills into fiction territory. If you have no idea what sales you’re going to make this month or next, how can you realistically predict what sales you’ll make in three years’ time?) For new or growing businesses where the projections show low profitability in the first 12 months because the business requires a certain sales volume before it really starts to work, I suggest you extend your projections for at least a couple of years. This is the only way you can assess the long-term viability of your concept.For an established business with three or more years of trading history, I recommend you extend your financial projections 24 months ahead.Understanding Why Your Plan Needs Constant Love and Attention
In the preceding section, can you see that some elements of a business plan require much more regular attention than others? This is just one reason why creating a business plan once every year or two and then leaving it on a shelf to gather dust is a strategy for failure. Once you finish your first business plan, I strongly suggest that you continue to update different elements as time allows and circumstances demand.
The two elements within a business plan that require the most ongoing attention are your financial plan and your marketing plan. Each of these activities has its own planning cycle.
Going for rhythm with financial planning
Figure 1-1 shows a typical financial planning cycle, with the review of your business model at the beginning and end of each process.
Here’s how you can work through the financial planning cycle:
Review business model and strategy.I talk about business models and strategy in Chapters 2, 3 and 11. In the context of your financial planning cycle, the idea is that if you can’t get your financials to look healthy, you probably need to review the way you’re doing (or planning to do) business.
Review your prices, rates and sales projections.Setting prices and sales targets (a topic I cover in Chapter 5) is both a financial and a marketing activity, and sales projections usually form part of your marketing plan. Some business planning books suggest you do your marketing plan before your financial projections, but I prefer to work on pricing and sales projections first.
My argument for working on your pricing and sales projections before your marketing plan is this: If you haven’t set your prices, you can’t do any meaningful financial forecasts. Without financial forecasts, you don’t know if your business model has any chance at all. And without having your essential idea confirmed, what is the point of doing a marketing plan? All very chicken-and-egg in its nature, but essentially you have to start somewhere.
Confirm the direct costs of providing your service or making your products.I talk about costing products and services in Chapter 6, and explain how to create a Gross Profit Projection for the next 12 months.
Create a forecast for expenses.If you’re just getting started, I suggest you create a budget both for business and personal expenses (see Chapter 7). For simple cash-based businesses, this expense forecast becomes your budget for the months ahead.
Create a Profit & Loss Projection for the next 12 months.In Chapter 8, I explain how to create a Profit & Loss Projection, and how to forecast your net profit over the next 12 months.
Work out your break-even point.You can calculate your break-even point in several different ways (Chapter 9 explains just how). Understanding this information is a powerful weapon in your business artillery.
Generate a Cashflow Projection.Even if you’re making a profit, you may find yourself short of cash. In Chapter 10, I explain how to generate a Cashflow Projection so that you can anticipate any cash shortfalls.
Set sales targets and expense budgets for the 12 months ahead.Committing to budgets is one of the most important elements of the financial planning cycle. In Chapter 10, I explain the subtle difference between projections and budgets.
Continually review actual results against budgets, and tweak your pricing, strategy and budgets accordingly.With finances, you can’t ‘set and forget’. Instead, the trick is to monitor your actual performance and compare this against your budgets every single month. For example, if sales fall short of targets, you need to sell more, change pricing or pull back on expenses. If sales go over targets, you probably want to look at your Cashflow Projection and check that you can finance this growth.
Can you see how it really doesn’t work to create a 12-month Profit & Loss Projection as part of your business plan and then think to yourself, Cool, that’s finished for the year? I’ve yet to see a business where actual results are exactly the same as budgets. You will always get a difference, and you need to manage these differences on an ongoing basis.
Keeping everything on track with your marketing cycle
When you’re in business, the process of marketing never stops. By marketing, I don’t just mean advertising or sales strategies; rather, I mean everything from understanding competitors to analysing customers, and from reviewing pricing to ensuring excellent customer service.
The pace of change in most business environments is so fast that you can’t afford to let a whole year go by without reviewing your marketing plan. In just the same way as you need to compare actuals against budgets every month for your income and expenses (refer to preceding section), you also need to review your sales targets every month against actual results. Look at the detail — even if total sales came close to budget, did the sales come from a different source than you had anticipated? What are the trends? Do you need to revise your marketing plan, or change your sales budgets (and, therefore, your expense budgets too)?
Figure 1-2 shows a typical marketing cycle (I explain each step of this cycle in detail in Chapter 12). Can you see how the fifth step of the marketing cycle (review pricing, rates and sales projections) is exactly the same as the second step of the financial cycle (shown in Figure 1-1 in the preceding section of this chapter)? That’s because setting sales targets is always the point at which the sales team and the bean counters connect.
A few years ago, I worked as a consultant to a very sales-orientated business, helping to look at the finances and general profitability. One of the dynamics at play was that the company would have six-monthly sales meetings at which they’d set sales budgets for the year ahead. The vibe at these meetings was always pretty buoyant and the sales budgets reflected this. After these meetings, I’d be given these sales budgets and work with the general manager to set expense budgets accordingly. The general manager never wanted to lower sales budgets for fear her sales team would become complacent, but when working with this over-optimistic set of figures, she inevitably set her expense budgets too high. Eventually I persuaded the general manager to have two sets of sales budgets on the go at any one time. The first set was what the sales team came up with, and these budgets became their targets. The second set — which we didn’t share with anyone in sales — was what we thought sales were likely to be, based on the previous year’s results plus a modest 2 per cent for growth. We then set the expense budgets accordingly. This method worked really well for the company, balancing the psychology of different individuals perfectly.
Conjuring Up a One-Page Business Plan
When I was talking to my publishing manager at Wiley about writing this book, we played around with a whole heap of different possible titles. One of the ideas Clare came up with was Creating a One-Page Business Plan For Dummies. My response was one of immediate enthusiasm. A one-page business plan sounds so quick and easy, I thought everyone would buy a book with that title.
But then, like Pinocchio, my conscience kicked in. I knew that a one-page business plan is never enough. You simply can’t fit everything you need to know on one page, and to suggest anything otherwise would just be a whopping fib. So we came up with a different — and much more realistic — title.
The one-page business plan idea sticks around, however, and at times does have a role to play. I like to think of the one-page plan as being a summary of the overall plan, a way to provide a bit of daily inspiration and keep everyone on track with overall goals. Figure 1-3 shows an example of a one-page plan (generated by MAUS MasterPlan software) and how this summary concept can work.
One-page plans are best if you create them with a specific audience in mind. I’ve seen one-page plans that are essentially pitches to lenders of a new idea, or one-page plans that provide performance summaries for senior management. The only time I created a one-page plan, I made a hybrid between planning elements (listing my mission and strategic advantage at the top of the document), and goal-setting (listing milestones and dates for the months ahead).
If you want to create a one-page plan for your business, I suggest you start by doing a complete plan, culminating in some kind of longer document as explained in Chapter 15. With this complete, have a think about what kind of summary you would like to see, and whether a monthly one-page plan is going to work for you.
