Evaluating your business plan: an overview
A business plan is your secret weapon. It’s the backbone of all great enterprises. There are many opportunities in today’s business environment. So now’s a great time to create a brand new plan to drive your business forward.
As the saying goes, if you don’t have a plan, you’re planning to fail. Which means without a plan you may be able to make some progress. But you won’t know what your future looks like and how to achieve it.
A business plan defines success for your enterprise and sets out milestones to achieve it. It’s a way of assessing your firm’s strengths and weaknesses, make the most of your pluses and address any limitations. It’s also a tool for reviewing the competitive landscape and working out your unique selling point. It will help you work out what to do and how to gain control, even when the commercial landscape and the economic outlook is shifting.
During your business planning journey you will:
Set goals and milestones
Look for opportunities
Model future revenue
Review the plan and measure its success
Get Outside Melbourne, a premium hiking business based in Victoria, has been up and running for a little over a year. Founder and sole trader Kane Ford explains a sound business plan underpins his fledgling enterprise. It’s allowed him to understand the competitive landscape and devise a value proposition that sets him apart from his competitors.
“There was a real gap in the market for a premium, all-inclusive hiking experience. So my business provides quality transport and catering and we even finish each hike with bubbles to celebrate.”
Kane has developed a three-year plan. The first year was about refining his product, year two is about scaling the business and enhancing the product the third year is about diversification into added value offerings. “It's a three-year plan that I'll periodically review and evolve.”
Franchising and new locations are on the cards in the future and Kane is also looking at keynote speaking. He says having a business plan has given him structure. “It allows me to stay true to what I set out to do.”
How long should it be?
The Goldilocks principle applies to business plans. Too short and it won’t contain enough detail to define success. Too long and it will be unachievable. You need a document that’s just right. This will make it easy to regularly review it. Be aware a business plan you prepare for a bank is going to be a lot longer and more detailed than the one you use within the business.
“Many businesses believe a plan has to be extensive and broad. But a simple yet achievable, well-thought-out business plan is far more powerful,” says Brian Sher, co-founder of Sydney-based business coaching firm The Fortune Institute.
Most plans should be between one and five pages with no more than five KPIs, which should be SMART – specific, measurable, achievable, realistic and time-bound.
"Many businesses believe a plan has to be extensive and broad. But a simple yet achievable, well-thought-out business plan is far more powerful"
Brian Sher The Fortune Institute
Identifying opportunities to pivot
The new commercial environment means there’s more demand for some products and services and less demand for others, which is an opportunity to ‘pivot’ your offering. This involves re-thinking what you sell to help get new customers and lift your revenue and profits.
Equipment supplier to the carpet cleaning industry Carpet Magician is a great example. This is a competitive area and the products firms offer across the sector are almost identical. In this example, the firm previously relied on advertising to generate sales and only won business after undercutting the rest of the market. But this only led to lower profits.
So Carpet Magician needed a new approach. The business’s carpet cleaner customers actually had a more pressing need than simply paying the lowest price for equipment. Finding new customers and raising profits was far more important.
The Fortune Institute helped the firm set up an online Carpet Cleaning University to educate its clients about making their own business more profitable, with free access to the university with any purchase. This new approach produced an 800 per cent rise in sales within six months.
Working out if you have a market
Coming up with great new business ideas should be a priority. But you need to analyse data to make sure your ideas are going to work. This involves finding prospective customers and asking them unbiased, open-ended questions about:
- Their need for the product or service
- The features they value
- What they think of competitor products
- The price they are willing to pay
You can put together a simple customer survey using Google forms or Survey Monkey and run a competition with small prizes to get the information you need.
Chartered Accountants Australia and New Zealand and the Ministry of Business, Innovation and Employment (MBIE) are great places to start for professional services firms looking for information on the latest industry trends.
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