5 minute read
Do you need a business plan?
Do you need abusiness plan?
BY CHRIS PUCKRIDGE RURAL AND SMALL BUSINESS FINANCIAL COUNSELLOR, RURAL WEST
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For many people running small to medium sized businesses the thought of writing a business plan can be horrifying!
Why would I need it? We know what we are doing! Sounds like a waste of time! We are too busy to be mucking around with that! Our business is only small, we don’t really need it! I have a business plan, it’s in my head! These are common responses when the idea of a business plan is raised.
A business plan can be as simple or as complex as you want it to be.
So why would you need a business plan?
In many businesses things can change fairly quickly, the owners of the business might be long standing but there are others, who work for or work with the business, that often come and go. An example of this could be the key staff in the business such as employees, or key suppliers who are critical to the business success. Other key players, such as agents that have the role of marketing produce, or perhaps bank managers and other financiers who provide long term and seasonal funding, may need this information. And then there are supporting businesses like agronomic services, labour contractors and many others who can be critical to a business’s success. The business owners themselves also need to be clear, especially when it’s a family run business and there are two or three partners working as a team. How do you keep this wide range of critical people and organisations on board with what you are doing and what you want to do? How do you keep on the same wavelength and how do you change when you need to, and how do you stay firm in what you are doing when you need to be consistent and all “sing of the same sheet”?
The answer to all of the above
3 THE plan can be broken up into different sections as there may be parts of it that you don’t want to share with third parties.
What does a business plan look like?
A business plan can be as simple or as complex as you want it to be, there are many examples available online and for many farming businesses it can be kept as a simple list of headings with some detail under each one. Here’s an example that some WA farming businesses have used recently:
Business purpose People Management Operational staff Industry and business environment Business assets
Business performance and outlook Productivity Why does the business exist? What do the owners expect from it? Who sets the long-term direction? Who are the owners? Who has to deliver on objectives? Who are the key people, what are their skills and experience? What are the external factors that are likely to impact on the business? What are the hard assets of the business and what is their quality, their current efficiency and future potential? What are the results compared to benchmarks? What has the business produced in the past five years — year on year?
Costs Return On Assets Outlook Financial structure and gearing What are the options to increase the business performance? Strategic position Plan Budgets, liquidity, and profit
Monitoring and performance management What are the costs of running the business and are there any that are being focused on? What is the last year’s ROA compared to the previous years? Where is the business going? Appropriateness of financial structure relative to assets and income. This could be just one or two or a longer list that can be ranked.
Provide a SWOT (Strengths, Weaknesses, Opportunities, Threats) on your business. What is your key plan for the next 12 months? What, how, who, when? Include a brief section on each of these that summarises how you do these, by when and who is responsible? Who will monitor the key measures of the business to make sure that they are being done and who will pick up on things that are not being done or not being done well?
How does it sound so far?
This may look like a gigantic document, but it can be done in a very brief format or it can be done in great detail depending on what you want. A business plan can be as brief as 1–2 pages but is most commonly 10–15 pages and can be as large as you like if you want more detail. The plan can also be broken up into different sections as there may be parts of it that you don’t want to share with third parties. Remembering that it is your plan, and you can use it how you want to use it.
So, what are the benefits of having a business plan?
More and more business plans are being requested by financial institutions if you are applying for finance or other financial needs. Banks and other lenders will often feel more confident in providing funds to a business where they can see a plan that can monitored throughout the year, as well as transparency. Business plans are also often This is the absolute number requested by government and other bodies if you are applying for any grants or funding. one benefit in giving you a much deeper knowledge and stronger insight into the why, what, where, In general, a business plan can be developed in year one and then when and how of your business. amended as you go along to suit Need a hand? changing needs. It can then be easily updated each year and reissued to your key stakeholders within the business and even to some outside of your business. The biggest benefit though is this! The single biggest power of a business plan is what If you need a hand to write the plan there are many professional organisations that are skilled in assisting you and can provide you with the right framework and coaching to develop your plan. You could also contact us at Rural West on 1800 612 004 and we can have a talk with Business plans are often requested if you are applying for grants orfunding. you will get out of it by writing you about it. it yourself or amongst your partners or family members. MORE INFORMATION The developing of a business plan by Supported by the State and Federal the business owner and operators is a wonderful opportunity to discuss what you are actually doing and for you to reflect on the business and get governments, Rural West works with a wide range of primary producers and regional small business owners to improve their position and profitability. a deeper understanding of what it is Call 1800 612 004 or visit ruralwest.com.au that is really important for you and your for more information. fellow stakeholders.
