Anyone considering starting a business, or who already owns a business, is advised to write a business plan. There is no specific time to write one. A business plan can be written at the beginning, during, or at the exiting stage of your business’ life cycle. A business plan is perhaps one of the most important documents that your business can have. It is used to achieve many things, such as seeking start-up finance and engaging suppliers, customers & partners in business, employees, investors and lending banks. However, the most important reason to write a business plan is for your own direction and planning out all future aspects of the business.
There are two key points to consider when creating a business plan. 1. To clarify the thoughts and intentions of the person contemplating starting the small business, including putting on paper the business’ goals and objectives, and 2. To prove to those who might fund the business that it is worth financing.
A business plan serves multiple purposes
A few of these are:
• To create a roadmap to a successful venture and to recognise its long-term direction.
• To describe who you are and what you do (your focus).
• To scope out your customers and competitors.
• To make sure your finances are in order.
• To consider a strategy to pay off any debt incurred along the way.
• To anticipate issues and problems before they occur.
There are many sections within a business plan. Generally it is important to include your vision/mission statements, a marketing plan which will generally include a SWOT analysis and the marketing mix, and any legal requirements and obligations to be considered, such as taxes, government regulations and contracts for example. Also to be incorporated are operational plans – both manufacturing and risk management where applicable, as well as human resources and contingency plans. By including these points within your plan you will be able to provide readers with a feel and understanding of what your business is all about, not to mention give you a clear definition of who you are, what you do and where you are going.
Of course, a very important element in the business plan is the financial planning side of it. The financial plan allows you to develop pro forma financial statements that match and support the text of your business plan with numbers. Sound financial management is one of the best ways for your business to remain profitable and solvent.
The financial plan will include:
• Start-up costs
This will include the costs to actually open your business and the amounts needed to keep it open (operating costs)
• Sources of initial funding
Debt finance is usually the most attractive form of financing for small businesses. A few of the many financing options available include bank overdrafts, loans and mortgages.
• Cash Flow Statements
These highlight the incoming assets and outgoing expenses incurred by the business
• Balance Sheet
This shows the business’ liquidity at a certain point in time by listing all the assets and liabilities.
• Income Statement
Here the profits, losses and effects of taxes are displayed.
• Summary of Financials
The Financial Projections Summary provides a broad overview of the upcoming expectations and summarises the cash, equity, (and sweat!) that the principals have invested in the business during the past months/years.
Financial statements and business plans can be confusing and time consuming, but this need not be the case. Here at The Quinn Group our experienced accountants and business advisors can help you with any general queries or assistance with regards to business planning and financial needs. To submit an online enquiry click here, or contact us on 1300 QUINNS (1300 784667) or on +61 2 9223 9166 to make an appointment.