To receive this te mplate in word forma t email [email protected] sw.gov. au Business na me Business Plan Pe rio d Pla n a p p lie s fro m a n d to Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 1 Table of Contents Executive Summary 3 1. Business profile 3 2. Product, market and competitive profile 4 3. Strategic direction 10 4. Marketing Plan 12 5. Operational Plan 15 6. Financial Plan 17 Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 2 E xe cu t iv e Summ ar y This one pager should summarise the material that the most critical stakeholders with limited time need to know. The focus is typically the revelations from the situation analysis that lead to the framework components (such as target markets and strategic competitive advantage) and major strategies (such as how the business will grow and become more relevant to the needs of the target market). 1. B us ine ss pr o f ile Hi s t or y A paragraph history of how the organisation started, leading to a basic outline of the business, sufficient for outside stakeholders to understand. Position the profile in terms of the products that are offered and their benefits. If the business is only a part of a broader organisation, try to illustrate how the business is different with an organisational chart that includes the purpose of each unit. V is i o n This is a short and exciting statement of what the business would really like to create if it had the chance. The vision should be a wow statement that impresses to the extent that people are excited. It should have more character than being the leader, biggest, fastest or cheapest. Example: Inspire people to strengthen their conservation ethic and actively care for the environment Mi s si o n This is a statement that shows how the vision could be achieved, capturing the essence of the product and the way it is managed. Provide cutting edge ecotourism experiences that actively involve participants in conservation projects aimed at protecting and enhancing the environment. B us i ne s s ob j e c ti v e s The business objectives are the principal and ongoing directions that need to be followed to achieve the mission. Their emphasis can be suggested to reflect relative importance or even resourcing (covered later). Business objectives Emphasis Generate regular and dependable profit for reinvestment into the non-commercial aspects of the organisation 70% Attract and involve new markets in practical conservation activity 20% Generate additional volunteers for core conservation volunteer programs Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 3 2. P ro d uc t , mar k et an d co mp et it iv e pr of ile C ur r e n t m ar ke t Identify who will / is buying the product. Try describing the customers by selecting certain market segments from systems (http://www.roymorgan.com/products/values-segments/values-segments.cfm). These systems describe the customers in terms of demographic and psychographic characteristics1. Try to allocate the various segments according to the proportion of the total customer base that they represent, in a table format. If the business involves customers visiting a place, quote the total visitation and try to extrapolate from the proportions the actual visitation per segment. If a segmentation system doesn’t represent all the markets that are the customer base (eg certain school levels) then add them. Table 2.1 Current market profile Market segments Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6 Total Proportion of customer base X% X% X% X% X% X% 100% Number of customers X X X X X X 50,000 Demographic characteristic Demographic characteristic Psychographic characteristic Psychographic characteristic In one or several tables, list the markets against why they are customers (motivations / needs), what products they mainly take up, repeat custom, whether their customer base is growing or declining, and their satisfaction levels or any other information that is known about them. Table 2.2 Current market analysis Market segments Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6 Motivations X% X% X% X% X% X% Needs X X X X X X Products typically taken up Satisfaction Repeat custom potential Growth potential Provide some commentary on what relevant social and economic trends might be influencing the current market to consider being customers. How might they be changing (experience with similar experiences, available time, alternative pursuits, price sensitivity etc). Conclude on how big the potential market might be for these markets versus other to engage with the same product or alternative products. 1 Demographics include age, education, career category family status and residence location while psychographics includes values, attitudes, behaviours and price sensitivity Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 4 Pro duct Describe what is actually offered to the customers. Try to go beyond the immediate place, facility or activity and create an experience, then try to draw from this the benefits of the experience. Go through the same process for each product being offered. Use pictures if they help capture the essence of the offering. Try to differentiate products in as many ways as possible, including price. Table 2.3 Product characteristics Product 1 Product 2 Product 3 Name of Product Description of the product Frequency offered Times offered Seasonal variations of product Its key benefits to the customer Any competitive advantage it may enjoy over a competitors Pricing policy (Premium, middle, budget) ie positioning Price Expected sales pa 1. $ 2. No of units Gross profit It is also useful to compare products in terms of where they are on a lifecycle. Each product can be assessed in terms of its use or sales and placed on a lifecycle graph. A healthy business does not have its products clustered in the one category. Plot each product on a drawn graph like the one in Figure 2.1, in terms of whether each product is in its Introductory, Growing, Mature, Decline or Extension stage. The scale on the left could be visitation or sales. Think about the distribution of the products and what kind of product strategies you should later create in response. Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 5 Figure 2.1 Location of business products on the Product Lifecycle The second powerful way to assess the strength of product is the use of the BCG Matrix. For each product that the business offers, think about how much market share it has and how much market growth it is undergoing. Place each product into one of four quadrants within the matrix. Think about the distribution of the products and what kind of product strategies you should later create in response – the matrix provides some suggestions. Table 3.2 BCG Matrix Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 6 C o m p e t i t o r a na l y s is First start with similar businesses likely to attract similar markets. To understand the essence of their competition, use a table to recognise what kind of strengths they have that makes them so competitive, such as closer access to similar target markets, more innovative product or a larger resource base for marketing. When thinking of the implications, consider whether the business could become more competitive by emulating strengths or capitalising on weaknesses. Table 2.4 Competitor analysis Product they compete with Competitors Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5 Table 2.5 Strengths making them competitive Their limitations Implications for the business Alternative Competitor analysis approach Identify what other type of competition for the customer base is occurring. Think of alternative ways to achieve the overall benefits through alternative ways to spend time or money. For example, home entertainment systems, computers with virtual reality and Christmas sales are a competitive force for the leisure tourism market. Then reflect on what are the most important implications (without pre-empting strategies). SW O T An a l y si s A SWOT Analysis is a list of your businesses strengths & weakness and a list of external opportunities and threats that may impact the business. It will identify the broad issues that affect the business positively and negatively. A strategy may emerge from the issues listed. It is important to be honest and open in your thinking. Strengths & Weaknesses are issues that relate internally to your business. Things over which you have some control. For every strength and weakness identify the implication to your business by linking the Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 7 ‘Which means that . . .’ column. Opportunities & Threats are issues that are outside the control of the business. These issues occur in the outside world that may have an impact on your business. The purpose of this analysis is to be able to take steps to ‘harvest’ an opportunity or ‘minimise’ a threat if recognised in time. For every Opportunity and Threat identify the implication to your business by linking the ‘Which means that . . .’ column. Table 2.6 SWOT Analysis – strengths and weaknesses Strengths Which means that . . . eg location of B&B on main road Good public awareness of property past experience in . . . Able to adapt to change quickly particularly skilled at . . . Big advantage over competition Weaknesses Which means that . . . eg location of B&B on main road Resistance to staying in noisy location little financial experience Need to pay others to assist – expense No spa Clients prefer a spa – may lose bookings Owner works full time as well Difficult to take immediate bookings Opportunities Which means that . . . eg low cost of the Australian dollar makes us competitive in international markets aging population will increase the size of certain markets My international marketing dollar goes further My target market will grow Darwin-Alice Railway will deliver more customers to my region Market growth = higher yield Threats Which means that . . . eg environmental legislation makes it costly to provide my service Increased expense = decreased profit Deregulation means more competition cost of Public Liability Insurance makes my product unviable Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 8 Table 2.7 Alternative approach to a SWOT analysis Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 9 3. S tr a te g ic d ir e ct io n T ar ge t m a rk et Using the same market segmentation system, identify which segments should be targeted. Target markets are those representing the greatest potential for growth and worthy of additional resource allocation to stimulate their interest and ensure their needs are met. They can be some of the existing markets and they can also be new markets. It is illogical to target all the markets currently represented by current customers because then resource allocation is spread too thin to be effective. It might be that different products have different target markets. Use a table in a matrix form to show the relative emphasis. Table 3.1 Competitors Product 1 Product 2 Product 3 Product 4 Product 5 Target markets Target market A ☺☺☺ ☺☺ Target market B ☺☺ ☺☺ ☺☺☺ Target market C Target market D Target market D ☺☺☺ ☺☺ ☺☺ ☺☺☺ P os i t i o ni n g a n d b r a n d Positioning is the act of designing the businesses offering and image to occupy a distinctive place in the mind of the target market. The end result of an effective position is a cogent reason why the target market should buy the product. Review the product descriptions and the needs of the target market, and develop a positioning statement for the business. The statement should follow the following form: To (target market and their need) our (brand) is (concept) that (point of difference). For example: To young, active soft-drink consumers who have little time for sleep, Mountain Dew is the soft drink that gives you more energy than any other brand because it has the highest level of caffeine. With Mountain Dew, you can stay alert and keep going even when you haven’t been able to get a good night’s sleep. From the positioning statement comes the major distillation known as a brand – a name, term, sign, symbol, or design or a combination of them, intended to identify and differentiate from competitors. Identify the name that will signify the brand for the business, symbol or design that will create the strongest brand for the business. A brand can be better positioned by associating the name with a desirable benefit (such as Volvo uses safety). From this comes the final component of positioning – the tag line. Avoid lines that claim to be the best (eg. fastest, largest or cleanest) because these may be overtaken by a competitor (Channel 9 – Still the One; not any more, goodbye tagline). Identify a tagline for the brand. Finally, select or create images that reflect the brand, and do not deviate from these in key promotions. Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 10 S t r a t e g i c c o m p e t i t i v e a d v a nt a g e One of the most important aspects of any business is its strategic competitive advantage. A business has competitive advantage when it has an edge over its rivals in attracting customers and defending against competitors. Review Section 2 of the Business Plan and consider what competitive advantages exist. When all the detail is stripped away to the essence of competitive advantage, it usually revolves around: 1. Whether a business target market is broad or narrow; and 2. Whether the business is pursuing a competitive advantage linked to low costs or product differentiation. This creates five potential generic competitive strategies to consider, as shown in Figure 3.1. Choose which one the business plan should pursue – the choice must influence the strategies to be created in the Marketing, Operational and Financial Plans that follow this section. Figure 3.1 Five generic competitive strategies to consider Type of competitive advantage being pursued Target market A broad cross section of customers Lower cost Differentiation 1. Overall Low cost Leadership Strategy 2. Broad 5. Best Cost Provider A narrow cross section of customers (niche market) 3. Focussed Low-Cost Strategy Strategy Differentiation Strategy 4. Focussed Differentiation Strategy Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 11 4. Mar k et ing Pla n A Marketing Plan identifies the marketing objectives of the business, generates a series of strategies to achieve objectives and then lists a series of actions to be undertaken to achieve the objectives. However, it is prudent to gain a good understanding of the market in which you will operate, before you set your objectives and strategies. Ma r k e t in g O b j e ct i ve s After analysing the nature of the market, write down the high level marketing objectives of your business and the strategies to achieve your objectives. Marketing objectives could be: 1. Increase sales of Product No.1 to X with and average gross profit (yield) of Y 2. Introduce Product No.2 to a new market 3. Sustain investment in new business Business Plan Template (Produced by Simon McArthur, Newcastle City Council.) Page 12 Mar ket ing Str at eg ies Each line of the chart must be able to stand alone. Target markets may need to be repeated on a new line and so may products. Table 4.1 Marketing strategies for each target market and product Target Market (Name) Target Market 1 Product Two night min stay, B&B, pamper pack Communication and Distribution Strategies Own brochure: Update and distribute Cost Sales target (Time and/or money) (pa) $1900 + 8 hrs 104 nights $600 + 40 hrs 50 nights $2500 + 50 hrs 40 nights Advertise: Shorts, B&B Association, Yellow Pages, regional guide Direct mail: Bi-annual mail-out to database (brochure), Internet: Update web offers weekly. etc Target Market 1 One night min stay, B&B, mid week only, dinner at local restaurant, gift Own brochure: Update and distribute to worksites Advertise: Staff newsletters, Personal sales calls: to RAH, GMH, MFS and SAPOL Internet: Place product online etc Target Market 2 One night min, B&B Advertise: NSW Holidays Yellow Pages, regional guide, internet, monthly ad in Herald Sun Personal calls: Tourism Newcastle, major accommodation providers, Internet: Place product online etc etc etc © 2006 South Australian Tourism Commission Page 13 Ma r k e t in g A ct i o n Pla n Table 4.2 No. Marketing actions needed to achieve the marketing strategies Action Why Priority By when th By Expected who cost 1 Create new marketing brochure To meet the needs of target market ‘Adelaide Main’ 1 30 May Jim $5000 2 Create poster For target ‘Adelaide Shift Workers’ 2 15th Sept Jim $200 3 Personal calls to RAH nurses admin office To create relationship with nurses admin and staff club officers 1 On going Sally $min 4 etc 5 6 © 2006 South Australian Tourism Commission Page 14 5. Op e ra t ion al P la n This section outlines the key operational issues that must be addressed if the business is to achieve its objectives. What needs to be planned to achieve the objectives of the business? Consider the following headings: Human Resources Bookings Cleaning Maintenance Customer service Risk management (insurance, legal compliance, risks) Book keeping Administration Asset management OHS & W Etc © 2006 South Australian Tourism Commission Page 15 Table 5.1 No. Operational Action Plan to achieve operational plans Action Why Priority By when th By Expected who cost 1 Undertake a risk management assessment To reduce risk of staff and customer injury and to ensure that the business can continue to operate 1 15 June Jim $500 2 Review booking procedures. Design new procedure using computer software. To increase customer service, accuracy and market intelligence 2 30th Sept Jim $2000 3 Formalise a written contract and procedure for cleaning staff To ensure each contractor understands cleaning requirements and responsibilities 1 30th May Sally $50 4 etc 5 6 © 2006 South Australian Tourism Commission Page 16 6. F in a n c ia l P la n It is very important to consider the financial risks and implications of operating your business. It is recommended that you consult your accountant to ensure accuracy as you prepare this plan. Ob j ect i ve s Provide a set of word based statements that state the financial objectives. If your revenue comes from grants, then write objectives around what you are going to do to improve your position with procuring the grants and ensuring they are sustainable (widening sources, increasing value for the grant provider etc). Consider statements that relate to Are you going to drive revenue growth and / or reduce certain costs as fundamental objectives Which products will drive revenue and which will be there for future growth or no growth at all the (do you want revenue widely distributed or narrowly focussed across products) What is your overall profitability objective (such as accepting a loss and ongoing subsidisation, cost neutrality, profitability for product improvement , or profitability to support other parts of the organisation) Pr o d uct Pr i ci ng Determine the cost base of your product. Understand the effects of sales volume and commission on your ‘price’. An Interactive Pricing Calculator is available to assist with this process. The Excel spreadsheet is on a separate file available from the NCC Tourism and Economic Development Unit Manager. I nc o m e a n d E x p e n d i t u r e Prepare a budget to demonstrate your expected income and expenditure for a 12 month period. It is best produced on a spreadsheet and in its basic form could look like this: © 2006 South Australian Tourism Commission Page 17 Table 6.1 Income and Expenditure Budget Income Year 1 Year 2 Year3 Year 1 Year 2 Year 3 Product 1 (X sales @ $X) Product 2 (Y sales @ $Y) Other income (retail sales, commissions, souvenirs) TOTAL INCOME Expenditure Operational Expenses Training Travel Stock/supplies Cleaning Fuel Maintenance Drivers wages etc Administrative Expenses Lease/loan Insurance Licences Registration Rent Telephone Wages Superannuation Workcover Postage Petty cash Memberships fees Bank fees and State taxes Wages etc Marketing Expenses Advertising Brochure production Brochure distribution Promotions Sales staff wages etc Contingency 10% TOTAL EXPENDITURE SURPLUS/(DEFICIT) © 2006 South Australian Tourism Commission Page 18 Ca s h Fl ow It is important that you understand the nature of your cash flow. Without available cash to pay wages and suppliers your business will not survive. You will need to evaluate the timing of when you will receive your income and when you will need to pay your expenses. These are usually broken down to a monthly basis and will reflect the seasonal nature of your business and the lag time that various agents and suppliers will take for payment. A Cash Flow Budget is best produced on a spreadsheet and could look like this: Table 6.2 Cash Flow Budget Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun OPENING BALANCE Income Cash sales Accounts receivable TOTAL INCOME Expenditure Cash Payments Accounts payable TOTAL EXPENDITURE CLOSING BALANCE Fi na nc i a l Acti o n Pla n Table 6.3 No. Specific actions to achieve financial objectives. Action Why Priority By when th By Expected who cost 1 Prepare Income & Expenditure Budget 1 15 June Jim 2 Prepare P&L Budget 2 30th Sept Jim 3 Meet accountant to discuss performance 1 Quarterly ongoing Sally $500 x 4 4 Set up a new accounting system 1 1st June Sally $1000 5 6 © 2006 South Australian Tourism Commission Page 19