Business planning is fundamental to any business. A well-considered, structured business plan should provide an understanding of your operational plan (including organisational structure), marketing plan and financial projections.
There are a lot of overlap areas between business and strategic plans; however, they can be summarised by the following: the business plan sets out your business objectives, what you want and plan to do; and the strategic plan details how you will go about making those changes (refer Strategic planning note).
Operational plans
This component should include comprehensive detail around your organisational structure, hierarchy, and responsibilities of staff. Business names, trading names and business typology (partnerships, limited company etc). It should set out your management systems, specific IT platforms utilised, human resource requirements, along with physical aspects such as the office space, equipment, company vehicles and licensing.
Marketing
This should set out current and future markets as well as business strategies for customer-relationship management (CRM). In other words, how will the business attract and reach out to new customers, understand the needs and requirements of existing customers, and deliver service levels that maintain new and current customers' expectations? Underpinning all of this is market research, involving positioning the business to the strategic market or customer catchment, not vice-versa.
The marketing plan should fundamentally analyse and appraise who your competitors are, and how those businesses relate in terms of performance and quality. Questions that could form part of the analysis are: who are your nearest direct competitors? In comparison, is your business growing, steady or declining? What can you learn from your competitors? How does your business differentiate itself in the marketplace? Does your business offer a number of services, or offer select services? Answering these and other questions can provide a useful audit of the relevance of the practice’s marketing plan and direction.
Financial projections
This includes key financial information that is often requested by your financial lender or institution. It should include at minimum a current balance sheet, an income or profit-and-loss statement and a cash-flow analysis.
In addition, the plan should provide specific information about your practice’s debt levels and debt-servicing requirements, and how the practice will repay borrowed money. A good business plan is crucial for any business loan or credit (overdraft) application or extension. Sound internal account keeping and tracking systems are crucial to the success of any business. Managing and reviewing cost-control systems and operating expenses are important during any stage of the business cycle. In prosperous periods, when business activity is relatively plentiful and cashflow is steady, many practices ignore or give less emphasis to expense management which places strains on the financials of the business when cash flows decline, which may have flow-on effects such as delivering poor-quality products and services.
Investing in the business includes capital investments such as office premises, IT equipment, and investing in staff training and development. Clearly, in good times practices find it financially easier to invest in capital assets such as technology and related infrastructure that will provide scope to expand the services and products offered, because of increased cashflow and possibilities for larger profit levels that can be reinvested. In leaner times, practices need to carefully consider such capital investments, and the immediate return on investment. However, practices must also consider that investing in the business in leaner times may also provide a platform for the practice to grow and seize opportunities when the economy experiences a pick-up.
Business consultants or specialists can assist in developing your plan should you wish to engage outside council. However, effective business plans need to be reviewed regularly and adjusted in response to changing conditions to be truly effective. In summary, a detailed, thoroughly considered business plan should assist business leaders and managers to appropriately deal with any economic contingency.
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