Your dream is taking shape – and planning helps!
Have you dreamt of opening your own coffee shop, Chemical kit manufacturer, ice-cream shop, a bakery, cell phone shop, fresh fruit and vegetable vendor store or leather work business?
Your next step is to start putting your dream on paper. When you describe your dream in words, you start to bring the possibility into a reality. This process is called planning, and most would call it “the writing” of a business plan.
The Springboard Academy’s Terence Knott-Craig prefers to call this the road map to success; the planning of your business journey - from the dream to the ultimate goal.
How does one go about drawing up a “road map”?
Knott-Craig suggests that you need to be sure, in broad terms, about the following before you start the process:
What is the purpose of this business, i.e., what is the community or market need that you want to satisfy? (Why will the business exist?)
What does this business do, i.e., what will you do to satisfy this need?
How will the business fulfill its purpose?
These factors will help you determine your vision and mission statements, as well as having measurable goals.
Now that you know where you are, where you want to go, and how you are going to get there, you have the basics of your road map.
What does this “road map” entail?
Knott-Craig suggests that there are three sub-plans that make up the overall road map:
The marketing plan;
The operations plan; and
The financial plan.
Though these are separate documents, they are also intertwined. They feed off one another, and together will guide you to achieve your business goals.
The marketing plan
Identify who your clients will be - not individuals, but the common characteristics and needs of the people who you wish to influence, and who “need” your product.
Research how they make their purchasing decisions, and create a strategy to enter the market through advertising, promotions, education or whatever it is that will be most effective in penetrating said market.
It is always advisable to build in a measuring technique to test the effectiveness of your strategy. You might want to intensify or even change the strategy, depending on the initial results.
The purpose of this plan is to make the greatest impact for the least amount of money, and to forecast from this plan the sales you expect to make, and the cost of making those sales.
The number of sales will help determine the capacity required to satisfy the demand.
The plan for creating this capacity is called the operating plan.
The operating plan
Make some important decisions about the following key issues:
where the premises should be located,
which equipment is necessary for the business to get off the ground,
which skills are required and who should be employed,
the specific skills you can bring to the business,
where to buy the raw materials,
how the business process will work,
the legal form the business should take,
which agreements, contracts and licences are required, and
what you think the operating Key Performance Indicators (KPI’s) will be.
A Rand value can be placed on each of the marketing and operating plan’s items and actions, and these values will be used in the financial plan.
The financial plan
The financial plan incorporates the following:
The book-keeping programme;
The administrative systems;
The costing model and mark-up policy;
The drafting of a budget (forecast) for:
Monthly profit and loss statement
Cash flow statement;
Registering the business as a legal entity and all other legal requirements, such as
Skills Development Levies;
The appointment of an auditor (where necessary) to draft financial statements;
A system to receive (and use) monthly management accounts;
Setting specific financial KPI's (Key Performance Indicators)
Net profit goals
Wow! It sounds like too much for one person to handle, doesn’t it?
Some would recommend that you employ someone else to do all this for you.
But, who does this business plan belong to?
If it is your business, it is imperative for you to know your business plan inside and out.
Knott-Craig recommends that you develop the plan. If you are not good at writing, perhaps employ someone to capture your plan in writing, but let it be your plan.
Is that all?
These three plans together with:
an executive summary, which is a short introduction of the issue and solution, and includes a better defined Vision, mission and goals of the business, and
a conclusion explaining how you can make the business a success, completes your business plan, your blueprint, your road map to success.
Who do I have to my plan to?
You only have to show it to someone else should you require finance from a banker or investor, or someone who wants to be a shareholder or partner.
However, you do need to share your vision, mission and goals with your staff, so that you all work toward the same destination. This is one of the keys to successful execution.
Look out for The Springboard Academy’s next edition, all about execution.