Turning innovative ideas into actionable strategy
As we approach the end of the year, I hope that our users and readers are taking some well earned rest after another 12 months of uncertainty, global issues and an ever-changing Australian business landscape. Time off gives us a chance for introspection, and if you’re anything like me, you’ll set yourself some ambitious targets to eat well and exercise that will probably be out the window by the middle of January. But when it comes to our businesses, things should be a bit more serious. We need to look ahead in order to hold ourselves accountable and give ourselves every possible effort to succeed and thrive in our ventures, by effectively defining the purpose behind what we do, and planning our strategy to execute on our mission.
Whether you are a brand new start-up, or an established business with an effective track record, it’s critical to periodically reflect on your business strategy as the world around you continues to change. A plan is not written in stone. Business plans change, and they must evolve with the operating landscape which they serve, but if you set a strong structure for defining your business, your planning doesn’t need to be complicated.
In this post, we’ll share what we think are the three most important elements of a business plan, and we’ll share some great publicly available resources that you can leverage to set yourself up for success.
What to consider in your business plan:
1. Define your purpose:
Why does your business exist? What problem is your business trying to solve for its customers?
These are the fundamental questions that will underpin how you operate, and will serve as the ultimate foundation as to why you should continue to push your business to succeed.
If you are able to define the purpose of what you do, you will be able to expand with a clear vision. Your purpose should be easily communicated to your stakeholders. When your business grows, it’s likely you’ll have to delegate responsibility to partners and suppliers, and with a clearly defined purpose, this will be simpler, and expectations will be clear and consistent.
2. Complete a SWOT Analysis:
Understanding the positive and negative forces that shape your business is absolutely critical to help you priorities your time where it is most effective. A SWOT analysis is a deep dive on your business’ Strengths, Weaknesses, Opportunities and Threats within the context of the business environment within which it operates.
The Harvard Business Review has prepared an excellent SWOT toolkit that will help you to understand your business under this framework, however, in summary:
Strengths: internal characteristics that place your business at an advantage over your competitors. What are the internal strengths that set you apart from the rest?
- Weaknesses: internal characteristics that place your business at a disadvantage against your competitors. What do you need to improve on when you look at the established players in your industry?
Opportunities: external factors that your business can take advantage of in growing and developing your group. What can you capitalise on in your business environment?
Threats: external factors in your environment that can cause trouble or barriers for your business. What reasons outside of your control could negatively impact your business?
3. Set your pricing strategy and know your competitors
Pricing strategy for businesses can be complex and requires analysis and correction over time, but in your business plan, what’s important to consider is how you set a price point that is competitive for your product based on your industry.
Start with what it costs to bring your product to market. What are the costs of materials? How much time does it take to prepare your service? Having a clear view of the costs of creating and delivering your product or service to market will form the foundation of your pricing.
Next, consider your pricing objectives. Most businesses will focus on making a profit, but for start ups and new businesses you may also consider:
Your position in the market (premium or competitive products)
How you compare to your competitors; and
Your ability to increase or decrease the supply of your product and it’s affect on the health of your business.
Finally, also consider pricing legislation and regulations that might apply to your industry, as Australia has rules of competition that protect consumers from false or misleading representation. Are you offering false discounts? Are you displaying consistent prices across the same product on all websites? These are questions to consider when setting your pricing.
Check out these great business plan templates that will cover all the key elements that define your business:
- Business.gov.au: Develop your business plan | business.gov.au
Commonwealth Bank Australia: How to write a business plan
Remember it is important to supplement your business plan with a good set of business goals. Check out this blog for details!