The Business Planning Process

Sources of planning ideas

Situational analysis is important in order to plan ideas. A SWOT analysis needs to be undertaken.

Vision, goals and/or objectives

• Vision: broadly states what the business aspires to become; its purpose and its function
• Mission: a statement of how the business will achieve its vision
• Business goals: (social, financial, personal) (strategic, tactical, operational)

Organising resources

• Operations: production of good/service
  • a business plan effectively details the inputs, processes, and outputs involved.
• Marketing: activities undergone to develop a product that suits the target market
  • Involves advertising to entice customers
  • Market analysis – social trends, market research, demand, competitors
• Finance: source of finance
  • Plan outlines where these funds go
  • Sales forecast, cash flow statement, break-even point
  • Needed to cover initial and ongoing expenses
• Human resources: employer employee relationship
  • Number of employees, the skills they need and their wages
  • HR laws – WHS, awards, anti-discrimination
  • Training – induction, mentoring and specific
  • Monetary and non-monetary rewards
  • Acquisition – staffing needs, recruitment, selection

Forecasting

• Total revenue: sum of all money received by the business (sales, fees and interest earned)
• Total cost: all the costs incurred in the operation of the business (fixed and variable)
• Break-even analysis: financial planning tool that can be used to forecast how many items to be produced and sold in order to cover cost.
• Cash flow projections/statement: Cash flow projection is a breakdown of the money that is expected to come in and out of your business.

Monitoring and evaluations

• Sales: income from products sold
• Budgets: an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis
• Profit: The revenue remaining after all costs have been met is the business’s profit.