How to write a business plan
A good business plan is essential when thinking about starting a new venture. It will help you apply for business finance and keep your vision on track once things are up and running. Here are four steps to help you create and implement an effective business plan.
1. Set out your strategic vision
Ask yourself what your company stands for. Think of everything you'd want a potential investor, partner, employee or customer to know about it. This includes:
- Vision statement: Should be brief and aspirational, yet achievable. Take the time to get it right. Try to sum up in one sentence what your business is all about, where you want it to go and how you'll get there
- Unique selling proposition (USP): Sets out why you believe customers will come to you rather than a competitor. What makes your business unique?
- Target market identification: While you don't want to limit your customer base, the clearer picture you have of your target market, the easier it will be to communicate with them. You may initially have to assume who you think your customers are, but once your business is live you should be able to update this using real sales data
- Explanation of products and services: Should be designed in line with your USP and meet the needs of your target market
- Key goals: Must be measurable, achievable and consistent with the financial plan
- Capital requirements: How much will you need to start and run the business and where will you get the funding? Amounts should be supported by calculations in the financial plan
2. Set out the details
Now it's time to see how your vision will work. Who will help you bring it to life? What business structure are you considering? Here are some other things to include:
-
History and structure
Outline your business' background and introduce key people like employees, managers, partners and investors.
-
Goals and milestones
Set out major business goals for the period covered by the plan, plus various milestones you want to reach along the way. Make these goals specific and measurable, so you can see your progress further down the track.
-
Competitors
Do a detailed analysis of the competitive landscape, including:
- Information on the industry
- Size and characteristics of the target market
- Your competitors' strengths and weaknesses
-
SWOT analysis
Put your business model to the test by identifying the strengths and weaknesses of your idea and potential opportunities and threats in the market you will be operating in.
Strengths
What does, or will, your business do well? What makes you better than the competition?Weaknesses
What doesn't your business do well at the moment and how will you improve this?Opportunities
Where are the areas for growth, both within and outside of the business?Threats
What are the external factors that could change or threaten your business? -
Business assets
Identify what you have already and what you need, including:
- Premises
- Plant and equipment
- Information systems
- Intellectual property
- Licences
- Insurance
-
Business strategy considerations
Sales & Marketing
- What's the best way to reach your customers?
- What is your budget for sales and marketing? How will you get repeat business?
- How can you collect useful data on your customers? For example, loyalty programmes, customer relationship management systems, online sales channels.
- How will you use this data to create targeted and relevant messages?
Operations
- Where will you be located?
- Can you work from home initially? This may help to keep your costs down early on.
- Do you need resource consent for your premises or operations?
- What IT infrastructure will you need?
- How will you get your product to market?
- What about insurance?
- Have you thought about your supply network?
- What is your business continuity plan? If disaster strikes, it's important to have contingency plans in place to ensure your business can trade afterwards.
- List your start-up costs and capital requirements as well as your projected cash flow, profit and loss and balance sheet forecasts and a break-even analysis.
- Budgets showing costs, income and cash flow are particularly important for seasonal businesses.
- As a rule of thumb, when it comes to finances and forecasting, be conservative; double your expenditure and halve your sales forecasts.
- Also consider the following:
- Do you have enough money to get up and running as well as cover costs in the short term?
- When will your business turn over enough money to be profitable?
3. Make necessary changes
Writing your business plan may bring up questions about your business, and once you reach the end you may not be happy with certain parts of your plan or your prospective day-to-day operations. Before finishing, ask yourself:
- How can I counter the strengths of my competitors?
- How can I overcome the weak points in my business plan?
- Do the assumptions I’ve made based on various financial projections make sense?
Also, you might consider sharing your plan with others to sense check it.
4. Put the plan to work
Once it's ready, treat your business plan as a guide to running your business. Remember that it's a working document, so if your goals and circumstances change, update the plan. The business.govt.nz website has some great tools and templates to help get your business started.
Keep reading
What's next?
Small business banking
Every business is different and has unique banking needs, discover your options.
This page is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and should not be relied on. This information has been prepared without considering your objectives, financial situation or needs. We recommend you seek independent professional advice and contact Inland Revenue before acting on this information.
