Sample Marketing Plan

The sample plan in this document is provided as a guide only. The statistical and financial information in this booklet are assumptions for the case study and should not be used for an actual business plan. Intending and existing business people must undertake their own research and use reliable data for the preparation of their business plans. When setting up your business, be sure to find out which legislation, licences and codes of practise will affect your enterprise. Sample Marketing Plan This is a sample marketing plan for a small business, Canterbury Renovations. Its a guide to how you can prepare a marketing plan for your business. Your plan may require more or less information than this sample marketing plan. As you work through the plan, conduct the appropriate research and planning for your business to ensure your plan results in effective marketing.

1.1 Mission Statement

The core activity of Canterbury Renovations will be the renovation of kitchens, bathrooms and laundries. The business will provide a complete service, including free designs and quotes, supply and installation of equipment and fittings, all associated building services, after sales maintenance and a seven-year guarantee covering workmanship.

2.0 Current Market Position

Its important to understand the current position for your business before deciding on how to market it further. Marketing analysis and research (done in later sections of your plan) form the basis for identifying your current position. External and internal business factors need to be considered and planned for.

Example
Canterbury Renovations is a new business and has no existing clients, projects or history to account for. However, the proprietors are experienced in the industry and have the financial capacity to conduct business successfully.

2.1 Product
Although it seems obvious, its important to identify your products and services in the plan. You need to consider each product or service in terms of existing competition and for how the market perceives it. You will need to market new products differently to those well established in the market.

Example
Canterbury Renovations provides materials such as timber, tiles, paint and plaster as part of their renovations services. All of the materials selected will be of the best available quality suitable for the purpose.

Competitors: These products are available in many places but at varied qualities. Canterbury Renovations expertise will ensure only quality materials are selected for use. Products will also include a wide range of built-in appliances such as ovens, microwaves, cook tops and dishwashers. These will be reliable products and selected to suit each individual project. Competitors: All of these products are available at many places, but Canterbury Renovations offers them as part of a service rather than as stand alone products. One renovation company in the western suburbs also offers these appliances as part of their renovations packages but they dont service the eastern suburbs at all. Balwyn Kitchens doesnt supply equipment to install in new kitchens.

2.2 Place
To sell products and run a business, you need to have premises of some sort. It may be a home office, a mobile service, a business centre office or a shop, but it needs to be considered from the customers point of view. Consider whether those premises and its location appeal to customers. Compare your premises with your competitors premises. Think about how you premises can work to your marketing advantage.

Example
Canterbury Renovations will have a showroom for people to visit. This will allow some demonstration of work and products available and provide a space where projects can be discussed, planned and contracts signed. Alternatively, Canterbury Renovations staff will visit clients homes to discuss projects and sign contracts. This provides a level of customer service that clients like when considering such large projects and expenses. Competitors: Various kitchen renovation companies in the neighbouring areas work purely from a showroom for the sales and planning stages, so Canterbury has an advantage in service. Balwyn Kitchens also provides an in home service, but they only offer kitchen make overs compared to Canterburys kitchen, bathroom and laundry focus. This gives Canterbury a larger target market as well as being able to offer clients more services for their home upgrades.

2.3 Price
Every business needs to set prices for products and services. A pricing strategy outlines how prices will be set and how much flexibility there will be for individual prices. It includes details such as discounts, specials, package deals and moving old stock. Check competitors prices and policies to ensure you are being realistic with your policies.

Example
Canterbury Renovations pricing policy includes: high margin

priced for traditional customers competitively priced against competition for the quality discounts offered when pricing three concurrent jobs at once (e.g. a kitchen, bathroom and laundry renovation) no set prices as each job is quoted according to its requirements progress payments offered discount offered for prompt payments

2.4 Promotion
Consider how you currently promote and market your business and what is and isnt working. Look at what your competitors do for promotion, noting what does and doesnt work for them as well.

Example
Canterbury Renovations is a new business so there are no existing marketing activities in place. There is no brand awareness in the renovation market. A graphic designer has developed a logo, business cards and letterheads ready to promote the business, and a website is underway. West Homes advertises in lifestyle magazines with some success but this is an expensive option. Canterbury Renovations cant afford this avenue yet and isnt sure of the returns anyway. Balwyn Kitchens sponsors a feature section in the local paper each month and uses signage and letter box drops t o promote their services.

2.5 People
A business cant operate effectively without good staff. Each business has different requirements so you will need to consider the size of your business, what service level is required and hours or operation to determine how many staff you need. Its also important to determine what skills and experience staff require, what training they may need, how you will recruit new or replacement staff and what roles staff will be required for.

Example
Canterbury Renovations has collected a team of dedicated and qualified staff. The proprietors have experience in the industry but need training or experience in managing staff. They are providing training for all staff into the preferred service technique and style for the business. The priority areas for staff training will be: building and production techniques using new products: fittings, materials, equipment using new machinery: outputs, operation, efficiency marketing skills selling

communication skills customer service estimating and pricing

The proprietors plan to develop their basic business skills by attending an eight week course, 'Planning and Starting a Business', at the Box Hill College of TAFE. They will also join the Master Builders Association and attend a number of relevant industry courses. Trade shows will be attended and subscriptions will be made to relevant business and trade magazines. As staff notice deficiencies in certain areas, these will be identified and addressed through a formal training strategy.

2.6 Processes
By writing down procedures for business activities, your business can be run more efficiently and consistently. Procedures can be for activities such as dealing with complaints, preparing quotes, serving customers, answering phone calls and emails and equipment use.

Example
Canterbury Renovations currently doesnt have many written procedures. However, they have written a set of guidelines for all staff outlining expected behaviours such as cleaning a work site at the end of each day, being helpful and courteous to customers and being punctual to work sites. As part of the business planning process, the proprietors made notes of procedures and will employ the services of a professional writer to create an operations manual.

2.7 Physical Evidence

The appearance of your staff, premises and vehicles can have a large impact on how passers by and customers perceive your business.

Example
Canterbury renovations staff will all wear a work shirt with the business logo on the left pocket. This will identify them as part of Canterbury Renovations and present a neat, uniform team approach. Initially, staff will not be provided with vehicles but its in the business plan to later provide utes and vans with the business name painted on the side. Once premises are finalised, they will be set up specifically to suit the showroom requirements. Showroom staff will be required to keep the showroom neat and tidy at all times and to be welcoming to customers entering the showroom.

3.0 Market overview

Your business is affected by factors beyond your control, and these need to be taken into account before making any plans. This part of the marketing plan is an overview of your key markets and predicted major changes on those markets that will impact on your business success. Essentially, you need to consider what opportunities and threats may arise out of the changes you expect in the next 6 to 12 months or longer.

Conduct a PEST analysis ( assess the physical, economical, sociocultural and technological factors) to determine outside factors that will affect your marketing plans. Allow for factors such as new regulations under consideration, interest rate fluctuations, changes in market characteristics and technological advances.

Example
Canterbury Renovations understand that the internet is a powerful marketing tool so they are creating a website as an electronic brochure. They also make use of email by providing an email address on all documents and for all staff. Senior staff, such as project managers, will also be using a palm computer and a mobile phone to make sure they are contactable and have all required information when visiting clients. The building and renovation industry is doing well at the moment with interest rates staying at manageable levels and no new building regulations are under consideration. There are many older homes in the area so Canterbury Renovations have a lot of potential for work in the foreseeable future. There are other renovation companies and builders in the area as competition but some are booking projects up to 6 months in advance so the area has work available for a new business. Many of the people in the area are double income families where time is a bigger concern than money. Simplicity and multiple services are seen as advantages to these busy people, and they will pay extra to save themselves time and worry.

4. SWOT Analysis
A SWOT (strengths, weaknesses, opportunities and threats) analysis can provide a lot of useful information for a business. It can give direction to the business and its marketing strategies. The results need to be concise, relevant and interesting. The report should be easy to read and give a clear understanding of the business aims, and key issues and objectives should flow from it easily. Some factors to consider in a SWOT include: unique characteristics of the business/product/service amount of money available existing client base suppliers and distributors price structure profit margins It isnt always easy to conduct a SWOT analysis on your own business, but there are outside businesses and consultants who can help. In a larger business or one offering multiple products and services, it may be easier to analyse each product or department independently.

4.1 Strengths Example

Canterbury Renovations have a number of marketing strengths, including: technical competence of the proprietors dedication of the staff total agreement between proprietors on their objectives financial resources good network of contacts for potential clients, suppliers and tradespersons ability to respond to the needs of the market business is located within the target market

4.2 Weaknesses Example

Canterbury Renovations has identified areas where improvements are required, including: lack of management skills small size of showroom premises no track record in business no current plan for management succession in the short term inefficient equipment lack of research and development facilities proprietors have limited security with which to raise finance for future growth and development business is principally dependent on one person during the formative stages

4.3 Opportunities Example

There are ample opportunities for quality home renovations in the eastern suburbs which is why Canterbury Renovations is locating itself in that area. The key opportunities available are: rapidly growing market due to a preference by home owners towards renovation rather than relocation poor reputation of many existing renovation businesses and building tradespersons large number of old yet valuable homes within the target market location availability of casual staff and tradespersons availability of display and manufacturing premises within the area high disposable income within the target market potential for future expansion of the business into other areas and/or franchising

4.4 Threats Example

Canterbury Renovations will need to be aware of and try to overcome the following threats:

poor reputation of the industry in the areas of quality and reliability potential for economic downturns existence of competitors within the industry increasing cost of materials, equipment and subcontractors difficulties of getting and retaining suitable staff and reliable subcontractors possible government regulation geographically diverse market increased number of DIYs and supported through home TV shows and magazines increased interest in travelling and owning new cars rather than spending money on home improvements

4.5 Key issues Example

From the SWOT, the important issues to consider are: inexperience and lack of brand awareness sufficient funds for projections but limited resources for growth keeping projects affordable if materials costs increase unexpectedly need to gain knowledge in recruiting and managing staff

4.6 Key opportunities Example

From the SWOT, the key opportunities include: providing good customer service that will put Canterbury Renovations ahead of market perceptions and earn word of mouth advertising popularity of renovations in the area utilising technology to promote business and keep in contact with staff good networks allow good service and joint promotion activities

4.7 Competitor Analysis Example

Canterbury Renovations main competitors are West Homes and Balwyn Kitchens. West Homes is too far away to threaten Canterbury Renovations projected customer base, but needs to be monitored in case they expand eastwards. Balwyn Kitchens only renovates kitchens at this stage and have the following strengths and weakness: Balwyn Kitchens Strengths: established & well known business featured in Home Beautiful magazine two apprentices Weaknesses

only does kitchen projects not answering emails and minimal contact with staff during working hours no website lack of fully qualified staff high overheads with large showroom on a main road

Opportunities potential to do bathrooms and laundries vacant premises next door for expansion new housing development in their area - may get contract with builder to do kitchens Threats new car sales yard in area increased number of DIYs and supported through home TV shows and magazines disgruntled ex-employee suing for unfair dismissal

5.0 Assumptions
It isnt possible to accurately predict every possible threat and opportunity. However, with careful research and consideration, you can predict likely changes and prepare for their impact. By listing certain assumptions in your plan, it will be easy to see when the plan needs updating. For instance, if you assume Balwyn Kitchens wont move into bathroom renovations and later they do, you can change the plan to allow for that competition.

Example
This plan is based on the following assumptions: Balwyn Kitchens only offer kitchen renovations interest rates remain fairly low and steady the website wont require much maintenance once it is created West Homes wont expand into the East materials and equipment costs dont change much

6.0 Objectives
Your marketing objectives should be based on understanding your strengths and weaknesses and the business environment you operate in. They should also be linked to your overall business strategy. Marketing objectives don't just involve trying to make more sales. Your objectives can be about creating awareness, developing interest, motivating people to trial your business or getting clients to return to you. You may have more than one objective, but if so, make sure that they are consistent with each other. If the objectives aren't well suited, you may want to change one or perhaps delay one until you have achieved the first. Remember to make your objectives SMART (Specific, Measurable, Attainable, Realistic, Tangible). Make your objectives with high targets as they can be broken into action tasks in the Action Plan sections of the plan.

6.1 Sales Example

Over the next 12 months, Canterbury Renovations will undertake: 25 renovation jobs valued at $12,000 each include built-in equipment in 12 jobs

6.2 Revenue Example

Over the next 12 months, Canterbury Renovations will: generate $300,00 in sales have a working capital of $41,000 by the end of April

6.3 Customer Base Example

Over the next 12 months, Canterbury Renovations will: have served 30 new clients have quoted a further 200 clients completed projects of $10,000 plus for 50% of clients

6.4 Ansoffs Matrix

Ansoffs matrix is a useful tool for identifying your marketing objectives. Ansoff identified four possible courses of action for your business:

sell existing products to existing markets (safest option) extend existing products to new markets develop new products for existing markets develop new products for new markets (most risky option)

Marketing objectives should be about products and markets only.

Example
The Ansoffs Matrix doesnt apply to Canterbury Renovations as they are a service based business.

7.0 Strategy
A strategy statement outlines how you will achieve the marketing objectives.

7.1 Strategy Introduction

The introduction of the strategy statement is a summary of the main strategies outlined in this section, so its easiest to write once youve completed the strategy. Ideally you will use your SWOT analysis and statements of Key Issues and Opportunities to help you choose the market segments in which you will compete, and determine how to

position your business relative to your competition. You need to develop strategies to meet those objectives.

Example
Market research carried out by the proprietors reveals an increase in home renovation activity among home owners in their target market. Such owner/renovators, especially in the inner suburbs, subcontract the more complex work to builders. Market research also indicates that many existing kitchen, bathroom and laundry renovators do not have a good reputation, therefore, the proprietors believe they can gain a competitive advantage through the provision of top quality products and services, access to specialty items and innovative designs. The proprietors believe the best marketing strategy combines a good network of contacts, the development of a reputation for quality and reliability and the attainment of personal referrals. This strategy will be pursued through the distribution of brochures, direct contact with home buyers in selected areas and a small display in the rented business premises.

7.2 Target market

As small businesses usually only have enough resources to target market segments, its important to select the most relevant segment before launching a marketing plan. Before you choose, consider the following:

who are your customers and potential customers? is there a market niche which has not been catered for? are customers in this market satisfied or are they looking for a change? can you offer them something which really meets their needs? will you generate enough business in this segment to survive? alternatively, is there too much business? Will you overreach yourself? how will competitors react? can you communicate to this market effectively? How?

Example
Our target market includes: people wanting larger or more modern living environments who want to stay in the area and/or avoid moving costs people wanting to live in area buying a property based on location not house style or condition (about one third of renovators in the area) home owners (about half of renovators in the area) in the middle to high income bracket, with at least two sources of income per household and a higher than average disposable income, which was predominantly spent improving quality of life people wanting to upgrade parts of their house in order to sell it for a better price

7.3 Positioning statement

A strong statement outlining your approach to the market and how you will create brand awareness. Consider these questions in developing your plan:

which elements of your marketing are essential?

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which are preferable but optional? do you have a clear understanding of your customer's needs? do you understand your strengths? how will you differentiate your product from competition?

Example
Canterbury Renovations - quality renovations without fuss Canterbury Renovations are professionals caring for clients homes by improving their kitchens, bathrooms and laundries with quality materials and workmanship. Canterbury Renovations supplies and installs equipment such as ovens and dishwashers, creates an environment to suit each client and advises on colours and styles.

7.4 Branding strategy

Branding will make you stand out in the marketplace so a branding strategy can be a useful marketing tool. It takes time to create a strong brand, but it involves all aspects of your business and especially all marketing activities. The brand can be for your product, product range or your business. Once you have a well established and recognised brand, you may be able to charge more for your product, have instant credibility to new customers and require less sales effort to make sales.

Example
Canterbury Renovations will slowly build up brand awareness for their name and logo. This will be done as part of the overall marketing strategy for the next three to five years. The branding strategy includes ensuring that any marketing or advertising materials, such as business cards and staff uniforms, are created in accordance with Canterbury Renovations corporate identity style guide. Canterbury Renovations will present its image as trustworthy and reliable.

7.5 Product strategy

This section describes your long-term product strategy in detail. If you are providing a service then you should consider your service(s) as your product(s). You will need to consider: what features and benefits do you offer? unique selling point (USP) potential products

Example
Canterbury Renovations offers personalised service whereby the design is part of the project and can be done in the clients home with discussions. This personalised service is our USP.

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Currently, they are offering bathroom renovations but they plan on extending into kitchen renovations and extensions as well.

7.6 Pricing strategy

Determining the price of your goods and services is an important step when developing your business and marketing plans. The prices you set will affect the number of sales you will make, who will purchase from you, what service is required and how much profit your business makes. Well handled pricing strategies and changes can greatly improve the profitability of your business. There are four factors (cost, demand, competition and image) to consider in choosing a selling price, but there is no clear method of actually determining the correct price for the item and market. Experience and market research also help in this process.

Example
Canterbury Renovations pricing policy is: supply of built in equipment (such as microwaves, ovens) will be done with a 2 percent commission to remain competitive with whitegoods retailers each project will be costed as part of the quote process each project will include a $200 establishment fee the profit margin on labour of constructions and installation, materials and direct costs will be 25 percent

7.7 Distribution strategy (place)

Your customers will expect to find your products:

when and where they need them in suitable quantities in appropriate places where they can choose between products with access to other services to help them use the product (such as after sales service)

Distributing your products is part of successful marketing, so making changes to distribution is something to be considered as part of the marketing plan.

Example
Canterbury Renovations transports the prepared units and equipment to clients directly, rather than through a distributor.

7.8 Promotional strategy

Regardless of how good your business is, if you dont promote it and tell people you exist, its unlikely that you will make many sales. Promotion is more than selling and advertising your business. Its about attracting the right people to use and reuse your business. There are a number of techniques to use and they can be combined in various ways to create the most cost effective strategy for your needs.

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Each time you prepare a marketing plan, its worth doing further market research to determine customers needs, wants and priorities as well as assessing how the market currently perceives you and your products and services. Promotion techniques are broken into four main categories: public relations advertising promotion packaging or personal selling.

Direct marketing is often added to the marketing mix despite being part of advertising rather than marketing.

7.8.1 Public relations strategy

Good public relations (PR) generates interest in your business in terms of enquiries and reminding existing clients of why they have used your business in the past. PR is a long-term process, to do with developing an image and a reputation with your customers and the market as a whole. PR strategies can be focused to appeal to particular market segments and to send a particular message. All of your PR activities should then work towards promoting that message to the right people. Your one year marketing plan should include a publicity plan which will capitalise on newsworthy events and opportunities. This includes using the press and radio to promote your message to your marketplace.

Example
Canterbury Renovations wants the reputation of being residential builders who produce quality results with professional attitudes by: always being punctual and leaving worksites clean and tidy providing information resources for local media interesting in renovation and design tips A PR agency will be considered in two years time once the business has developed and gained a client base and a good reputation.

7.8.2 Advertising strategy

Advertising is used to attract customers attention and interest, create desire for your products and services, inform customers and prompt customers to purchase form you. Your business can be advertised in many ways. Be sure you understand the message you want to send and the audience you want the message to reach. For instance, to reach a young audience with a our product is fun message you will be better to use cinema advertising rather than advertisements in a business magazine. Consider how often you will repeat the advertising in the same and different media.

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Example
Canterbury Renovations will start advertising on a small scale until resources increase. Initial advertising will be carried out through letter box drops, local paper listings and a direct mail campaign to new home buyers in the area. After six months, the advertising strategy will be reviewed and magazine advertising will be considered along with direct mailing to real estate agents.

7.8.3 Direct marketing strategy

A response is required for your activities to be classed as direct marketing. Many forms of advertising can be called direct marketing, but the responses received need to be monitored to assess the value of the strategy. One of the most common forms of direct marketing, especially for small businesses, is direct mail. A letter or flyer is mailed to potential customers in order to build awareness, increase sales, offer a trial or incite them to contact you.

Example
Canterbury Renovations will use a lot of direct marketing to launch the business and will: conduct a letter box drop of flyers in the area to offer opening specials create a newsletter to go out monthly to customers and interested people as a reminder of the business and develop a relationship by offering tips and information offer business card magnets to real estate agents to offer as promotional gifts for new home owners add a survey to the website asking people to select which topics most interest them

7.8.4 Sales promotion strategy

Sales promotion is a tactical move where you persuade people to act in a particular way that they otherwise wouldnt have acted. The following activities can be supported by a sales promotion strategy: introducing new products through a trial staying competitive through discounts or added on benefits encouraging year round use of products to reduce seasonal slumps attracting new customers increasing the perceived need for your product increasing the number of items purchased in each transaction

Example
Canterbury Renovations will offer some sales promotion tools, including: discounts during the first month of operation to attract customers discounts for multiple projects (e.g. bathroom and kitchen) free design service as part of the project

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7.8.5 Sales strategy

Selling by one person to another is highly expensive but also the most effective form of promotion. Obviously, this occurs in every business, with or without sales staff. You need to develop a strategy outlining how much personal selling is included in the plan and how important personal sales is to your target market.

Example
Initially, there will be no sales staff, but within three months, at least one sales person will be working in the showroom to assist customers. This will allow the owners and tradespeople to concentrate on quotes and projects. The website includes a contact form to collect information so return contact will be efficient and informative for the potential customer. All staff giving quotes and doing designs will be trained is sales techniques to encourage additional work or appliances without being pushy.

7.8.6 Packaging strategy

Packaging does more than protect and hold your products as its an essential aspect of presentation and branding. Your packaging choices help make your product stand out from competitors products and can create perceptions as well.

Example
The only packaging for Canterbury Renovations is leaving a beautiful renovation in pristine condition with a bunch of flowers on display.

7.8.7 Partnership
Any partnerships created with another business should have a separate marketing plan specific to the joint aspects of your business. This marketing plan may allow certain activities and budget for these additional marketing plans.

Example
A partnership with a local cleaning company will be investigated to ensure clients homes are left clean and tidy after renovation work is complete.

7.9 Services marketing

There are obvious difference between marketing a product and a service. If your business is a service business, or has a strong service element as part of product sales, there are additional elements of the marketing mix to consider. These are people process physical evidence Selling a service can be harder to control and keep consistency, and as it cant be stored, may lead to rejecting potential sales in peak times. Customers dont leave with a tangible item and as a result may value your service differently.
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7.9.1 People
Good customer service is always important, but it is crucial in a service business. Any negative experience will result in customers looking elsewhere or being dissatisfied.

Example
Canterbury Renovations staff will always wear a blue shirt with the logo on the left pocket and will be instructed to keep equipment and uniform neat and in good condition. Staff meetings will include discussions on sales techniques and customer service. After six months of operations, a service staff of the month awards program will be introduced. A list of award winners will be prominently placed in the showroom. Feedback forms for customers will always include a question on staff performance and manner to capture all kinds of feedback.

7.9.2 Process
Strategies for dealing with necessary and customer service tasks are an important way of ensuring consistency. Procedures make it easy to cope with busy times and when there are interruptions during a process.

Example
Canterbury Renovations hasnt yet produced all of the procedure manuals. However, procedures are being discussed and prepared to include quote processes, sales behaviour, care of customers premises, security and confidentiality, customer service and invoicing procedures.

7.9.3 Physical evidence

As there isnt a tangible product, you need to find other ways to brand and present your business. For instance, staff in uniform or having the premises decorated in certain ways can not only make your business professional and welcoming but can also create a brand. Other forms of physical evidence are things your customers can actually take away with them. Some examples are gift certificates, loyalty cards, business magnets or pens, certificates of achievement, information sheets or manuals, written warranties or guarantees, photographs and small gifts.

Example
Canterbury Renovations will take before and after photos of every project and present them in a folder as a memento for the customers. All projects will be cleaned up at the end of each day and thoroughly cleaned at the completion, using a contract cleaner if necessary. A bunch of flowers will be left on the bench at each project to welcome the customers into their new kitchen/bathroom. Staff will all wear a blue shirt with the company logo and eventually, company vehicles will carry the logo as well.

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8.0 Resource requirements and budgets

In the long term, the business plan projections are usually sufficient to cover the marketing plan as well. However, the marketing plan should include a mini-plan of one years operations. This includes details about how to achieve the overall objectives and costs for various activities. The mini plan uses the same format as the main marketing plan without the research and background information. It basically needs to include the objectives for the year, the strategies for reaching the objectives, action plans for the strategies and some contingency actions if the plan doesnt go as expected. Setting out the action plan in a spread sheet makes it easy to visualise and work with. It also will show up any points where actions will interfere with each other and take too much time at once.

Example
Action Plan from commencement on 1st March: Action Letter box drop Direct mailing to local real estate agents Present photos to customers Send out a newsletter Ad in local paper 15th, 22nd, 29th 1st March 1-7th April 10-17th May June July August 20-25th

Send out 12th

At end of each and every project

1st

1st

1st

st

5th, 12th, 17th, 24th

th th 5 , 12 , th 17 , 24th

th nd 15 , 22 , 29th

8.1 Evaluation and control

The plan should be regularly reviewed and evaluated so it can be adjusted as required. Information collected during evaluations can also be used in planning future marketing strategies and objectives. Include annual budgets in the one year or mini operational plan.

Example
Canterbury Renovations will review the marketing plan every month to assess progress and alterations as the business progresses. After six months, this may reduce to every second month if marketing is under control and working effectively.

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9.0 Business growth and development

Definition
Outline the future direction of the business. To grow and develop your business, you will need to optimise the use of business infrastructure, increase your buying power, improve efficiencies through internal specialisation and continually improve your products and services. Its important that potential investors be aware of your strategies for future growth and development. Describe here how you intend to develop the business.

Example
Canterbury Renovations will keep abreast of new products, technology and production methods. They will be in regular contact with local and overseas suppliers. Marketing techniques will be monitored. Any techniques deemed successful will be expanded and those which are unsuccessful will be abandoned. The proprietors are especially conscious of the need to continually monitor the financial position of the business. Monthly comparisons will be carried out between actual sales, profitability and cash flow, and their projections. The cost of each job will be compared with estimates to ensure that future estimates remain accurate and profitability is achieved. The business will not be profitable in the first year. However, projections indicate it will be profitable in subsequent years. Profits will be put back into the business in order to aid growth and development, with a focus on the following areas: expansion of production facilities expenditure on promotional activities reserving cash to pay for the greater volume of materials, labour and subcontract work associated with a higher level of business activity

All unsuccessful quotations will be analysed. Prospective customers will be asked to provide comment on why they rejected the quotations, and information gained this way will be used to monitor the effectiveness of pricing and sales strategies.

10.0 Financial forecasts

Definition
Financial forecasting means making a set of financial projections that will provide the figures to support the written information in your business plan. This section will include your break even analysis. You need to provide fairly detailed forecasts for at least the first 12 months of your operations. Give careful thought to the initial capital requirements of your business. Undercapitalisation can have serious repercussions.

Example
*GST has been included where relevant.

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10.1 Exploratory costs

Accommodation Accounting fees Business planning Consultants Entertainment Legal fees Market research Publications Samples Telephone, fax, letters, photocopying Translations Travel Valuation fees Total:

$2600

10.2 Initial costs

Lease (legal costs, stamp duty, rent in advance, bond) Electricity, gas and phone (connections and security deposits) Opening stock Insurance premiums (property damage, public liability, vehicle, theft, personal disability, professional indemnity) Printing and artwork Wages Credit card establishment fee Initial promotion Promotional cost Loan establishment cost Stationery and office supplies Computer software Installation Training Statutory charges (licences, permits and registrations) Subscriptions for publications Association membership fees Total: Capital costs Business structure (registration, professional fees) Office equipment (desks, chairs, safe, computers, fax, telephone system) $1200 $2800 $2500 $500 $4000 $800

Subtotal: $1600 $9400

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Plant and machinery (purchase price, delivery, repairs, installation/commissioning) Building costs (shop front, partitions, electrical wirings and fittings, floor coverings, toilets, plumbing and drainage, painting, signs) Display materials Purchase price of business Franchise fee Training Shop fittings (counters, racks, shelving, storage, decorations) Security system Trade marks, designs and patents (registrations and patent attorney fees) Reference materials Land Total:

$2000

$600

$1500

Subtotal: $600 $12,700

10.3 Possible direct/renovation costs for the first year

Subcontractors Materials Wages WorkCover Group tax/payroll tax Maintenance and repairs Waste disposal Commissions Royalties Freight Total: $103,300 $84,300 $50,400

Subtotal: $12,000 $250,000

10.4 Possible overhead expenses for the first year

Rent Outgoings Interests Motor vehicle expenses Advertising and promotion Bank charges Hire purchase payments Lease payments $14,400 $1600 $2250 $9600 $12,000

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Insurance payments Accounting fees PAYG TAX Legal fees Staff amenities Electricity and gas Postage Entertainment Travel and accommodation Subscriptions Subtotal: $10,800 Total: Total first year overheads ($50,650) + exploratory and initial costs ($12,000) =$62,650 overheads for the first year of business $50,650

10.5 Initial funding of the business

The owners have $20,000 of their own money to invest in the business, supplemented by a $20,000 long term interest free loan from Frank's parents. The closing balance in the projected cash flow (Attachment 2) shows that, in addition to this, some $41,000 will be required over the first year of the business. The owners had preliminary discussions with their bank manager and, subject to the provision of a properly documented business plan and the provision of a mortgage over their home, they will be provided with an overdraft of $45,000. An overdraft was agreed to be the most suitable arrangement for the first year as financial requirements will vary substantially from month to month and there will be no profits with which to repay capital. After the first year, trading levels will be more predictable and finance arrangements will be reviewed.

10.6 Break even analysis

The average mark up on direct/renovation costs is 25%. For example, a $10,000 job will have a direct cost of $8000. Therefore the gross profit will be $2000, (i.e. 20% of the value of the job). The projected overheads for the business in the first year will be $62,650. To break even the business would have to achieve sales of which 80% pays for the direct/renovation costs and 20% pays for the overheads of $62,650. If sales x 20% = $62,650 then the sales required to reach break even would be $62,650, multiplied by five, (i.e. $313, 250). Therefore, the break even point of sales in the first year will be $313,250. This will not be achieved in the first year. However, in the second year the profit margin of 18% of the projected sales of $450,000 (i.e. $81,000 gross profit) will cover the overheads of about $73,150 and produce a net profit of $8350.

11.0 Costing
Definition
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Show how you have established the price of your products and services.

Example
Canterbury Renovations will be involved in the following activities: purchase and supply of equipment purchase and conversion of raw or partially finished materials provision of manufacturing and onsite labour provision of subcontract work $368,500 $73,150 $8350 $81,500 +81,500 $450,000

The following assumptions are made when preparing quotations: Direct costs Overhead expenses Business profit Total Annual turnover in the second year

Therefore, to cover profit overheads, the average mark up on all direct costs, equipment, materials, labour and subcontractors' costs will be 25%. Accordingly, quotations will be prepared on the following basis for a typical job of, for example, $10,000: Item Equipment Material Labour Subcontractors Total Direct Cost $ 2,500 1500 2300 1700 $8000 Mark up % 15 35 30 25 (avg.) 25% Mark up $ 375 525 690 425 (approx.) $2000

Hourly labour rates will be calculated as follows: Costs Hourly rate (according to award or workplace agreement) Add on costs (e.g. WorkCover 5%) Medical costs Superannuation 6% Payroll tax Sick pay allowance Annual leave allowance ($18x52/48)-$18 Tools allowance Total Allowance for non-productive time, e.g industrial action, maintenance, travelling, tool maintenance, training, injuries etc, $ $18.00 $0.90 $1.00 $1.08 (N/A) $2.00 $1.50 $1.00 $25.48 $2.55

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e.g. 10% Total

$28.03

Therefore, the hourly rate for estimating work will be charged at $28.00 + 25% mark up = $36.50 per hour.

12.0 Records
Definition
Provide details of the management information systems that will keep your business running. Outline the types of records you will keep whilst operating the business.

Example
Canterbury Renovations will maintain sufficient business records to demonstrate the financial position of the business on a monthly basis. Financial records will compare profitability with projected profit/loss and cash flow statements. Records will also be kept for each job to show its progress and cost in labour, materials and subcontractors. These will be regularly compared with estimates for that job. The following specific records will be kept: cash book receipt book invoices, received and sent bank deposits and statements petty cash expenditure wage, WorkCover, superannuation and long service leave records employee details capital assets register materials purchased and allocated to each job or temporarily as floating stock contact details of all enquirers, existing clients, suppliers and subcontractors individual job records showing progress job estimates

13.0 Supporting documents

Definition
Including certain documents will support the statements you have made throughout your plan. You should include figures for projected cash flows and profit and loss, as well as a statement of financial position. If applicable, you should also attach copies of your references, qualifications, licences, permits, partnership agreement, research data, current promotional literature and locality map.

Example
Attached to the business plan are the following documents:

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Attachment 1: Projected profit/loss for the first year Attachment 2: Projected cash flow for the first year Attachment 3: Projected profit/loss for the second year Attachment 4: Projected cash flow for the second year Attachment 5: Statement of financial position

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