7 Tips For Formulating An Effective Business Plan
Thinking of starting a business and not sure where to begin? Make sure you follow these tips on how to formulate an effective business plan.
A business plan can at first glance, seem unnecessary. After all, if an idea is in your mind, why would you need to write it down? An effective business plan is not just for you. Instead, the plan can be used to gain investors or new partners. A business plan can put everything into perspective and will be instrumental in determining the success of your business.
1. Be Thorough
When starting a business very rarely will your budget be accurate. In this case, you are better to overestimate what you’re costs are going to be. A classic example might be a bar which you want to open. There is the cost of a liquor license which they should factor for. However, a liquor license has restrictions and extra fees based on where your bar is. It’s these nuanced details that are overlooked. Therefore, the tip is to be thorough. There is no reward for generalising about details especially financial ones. Go through with the extra effort and research thoroughly. If you are unsure of whether you have covered everything you can check with a business lawyer.
2. Outside opinion
An echo chamber is not a good place to be. Individuals can be either too optimistic or pessimistic. Therefore, when formulating an effective business plan, you will need another opinion. A second opinion can point to things you have missed or have underestimated. One solution to this step is to become a partnership.
The practical but overlooked aspect to formulating an effective business plan is organisation. Poor formatting and mistakes look unprofessional. You should think of your business plan as a portfolio. Your portfolio should be polished. This doesn’t mean fancy graphics or highlights. Instead, focus on a clean and accurate presentation of data. In the long run it will help you understand what’s going on. The last tip would be to use a table of contents page. Then you can break up sections like marketing/legal/finance/operations.
4. SWOT Analysis
A SWOT analysis is a breakdown of strengths, weaknesses, opportunities and threats. A weakness could be expensive inputs. This is because you can’t purchase in bulk yet. In contrast, an opportunity might be a new law that was passed. It could even be a new demographic which has emerged in Australia. A current SWOT allows you to better target the market while being aware of your shortcomings.
5. Council & Government interaction
Your business may be operating out of home or through a commercial address. Regardless you will probably have to interact with the council at some stage. It’s at this point that you need a business plan. The government body may ask for plans, activities, expansion and more details. Now if you have an effective business plan, you can refer the council to those sections. The key then to an effective business plan is preparing it not just for yourself but also for others like the council.
Businesses can overlook marketing when planning. It is that aspect that you care about once the product is out in the wild. Marketing covers a wide field such as target demographic, pricing structures, data analytics and advertising. Having a marketing plan ready beforehand will prevent any ad hoc decisions that deviate from your business plan.
7. Summarise your plan
A business plan can get very long. Add in the marketing, legal and operation details, and it can be a long read. Therefore, including an executive summary adds to the professional look. It also gives outsiders a quick insight into what your business is. This means offering an overview of products, goals, costs and target audience. Ideally, you should keep your executive summary from 1 to half a page.
Justin is a legal intern at Lawpath as part of the content team. He is currently studying a Bachelor of Laws and a Bachelor of Economics at UTS.