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Business Plan

On
Coffee Shop
For
Shrirampur
By
Prerna Jani

Under the guidance of


Prof. Girish Kudle
Submitted to
University of Nagpur
In partial fulfillment of the requirement for the
award of the degree of Master Of Business
Administration(MBA)
Year 2014-2015
Through
N.M.D College Gondia
1

ACKKNOWLEDGEMENT
I acknowledge my sincere thanks to the co-operation extended
by the college and all those who helped me in preparing and
presenting the report.
I take this opportunity of expressing my profound gratitude to
my guide Dr. Girish Kudale of N.M.D. college, Gondia whose
continuous support has been a constant source of motivation for
me.
I would like to express my deep sence of gratitude to our
executive director Prof. Girish Kudale for allowing me to carry
out this project work in this prestigious institution.

Prerna Jani

Table of Contents
Executive Summary
Business Opportunity
Product/Service Offering
Marketing Plan
Financial Plas Opportunity
Business Opportunity
Vision and Mission
Goals and Objectives
Nature of the Business

Market Analysis
Situational & SWOT Analysis
Table 1: SWOT analysis and strategy development

Industry Analysis
Competitor Analysis
Analysis of competitors
Analysis of competitors products and services

Elements of Success
Target Market
Competitive Advantage and Unique Selling Proposition

Marketing Plan
Marketing Objectives
Marketing Mix
Table 4: Value Propositions

5.3

Action Plan

5.4

Sales Analysis and Forecast


Figure 1 Sales forecast

Legal Matters and Risk Management


Business Structure and Business Name
Registrations, Licences and Permits
Listing of registrations, licences and permits
Insurances

Human Resource Management


Organisational Chart
Owner/Operator Skills and Experience
Industry Knowledge and Experience of Key Personnel
Employment Conditions

Operations
Business Premises and Location
Plant and Equipment Requirements
3

Financial Plan

Start-Up Budget
Break-Even Analysis
Financial Analysis

Appendices for Business Plan


Appendix 1: Situational analysis external environment
Appendix 2: Situational analysis internal environment

Executive Summary

Business Opportunity
Hotel Harayali have entered into negotiations to purchase a caf business, called Malgudi
Swaad, because of its great location in the Shrirampur Shopping Centre with the highest
number of passing shoppers which is supported by a large and growing local population.
There are a limited number of cafs within the centre and with both Gauris and Lalithas
experience with having successfully operated and owned a number of cafes in Shrirampur
and overseas they will be able to increase their market share from 35% to 40% in 12 months.
The competitive advantages of the business are:
location
quality of food and service
knowledge and experience of the industry
available financial resources

Product/Service Offering
The main activity of the company is the operation of the Swaad Malgudi. Business activities
include purchasing, storing, preparing, selling and serving our products to our valued
customer. We expect to serve over 6,000 customers (dine in and take away) per month.
The Cafe is open from 8:00am to 5:00pm Monday to Saturday and from 8:00am until midday
on Sunday. The cafe comfortably seats 36 persons.
The mission of the business is to satisfy customers needs and wants for high quality coffee,
delicious nutritious meals and excellent service. Our main point of differentiation from other
cafes and coffee shops in the Centre is that one of the business owners is an National level
trained chef who will be able to produce fresh, light and healthy meals each day as well as
develop new menu items to meet the changing needs and tastes of people who care about
what they eat. The high quality coffee will target staff and shoppers in the Shopping Centre
who enjoy good coffee that simply offers good value for money at highly competitive prices

Marketing Plan
The objectives of the company are to:
maintain market share through the change of ownership then grow market share to
40%, and
generate a before tax net margin of 20%.
The business will achieve these objectives by:
retaining two key staff members of Malgudi Swaad to maintain continuity of customer
relationships during the changeover
upgrading signage to be more visually appealing
maintaining the existing price levels and controlling costs
undertaking more aggressive marketing and promotion.

Page 1

Financial Plan
Our projected performance is summarised below:
Turnover: Year 1 Rs.536,650
Year 2 Rs.580,000
Gross margin Rs.378,690 (71%)
Net profit (before tax) of Rs.109,869 in the first year, growing to Rs.131,175 in the second
year of operation.
The business is cash flow positive from the first month of operation
Break-Even is estimated at a monthly sales level of Rs.30,869
Return on Total Assets: 37.3%
Return on Equity: 51.2%
The purchase price of the business is Rs.170,000. Total start-up cost has been calculated at
Rs.2,09,810 and is to be funded by way of a Rs.104,905 bank loan and equity injection of
Rs.104,905. It is proposed that the loan be paid back over a two year period from cash flow.

Page 2

Business Opportunity
Business Opportunity
Purchase of an established Malgudi Swaad within the Hotel Harayalithat is part of a large,
well developed master planned community which is still growing, incorporating a regional
shopping centre, residential, retail and commercial development.
The business is ideally located for a cafe, being situated on the main marketl with a high
passing trade due to its close proximity and a number of well known retail fashion clothing
chains. There are a limited number of cafes within the centre and Malgudi Swaad has the
best location, with the highest number of passing shop.
Primary customers are shoppers and staff within the Shopping Centre who take a break from
their shopping or work and enjoy fine coffee or other beverages as well as for people wanting
a light, quick and healthy meal that provide a good alternative to the fast food options. The
success of the business is based on its excellent location, quality of management and staff,
great value for money coffee and meals and superior service.

Vision and Mission


Vision - The companys vision is to be the Caf of preference for Babaji Ka Thullu Shopping
Centre customers.
Mission - The mission of the business is to satisfy customers needs and wants for high
quality coffee, delicious nutritious meals and excellent service.

Goals and Objectives


Goal one: maintain continuity of customer relationships during the changeover by:
Retaining two key staff members of Malgudi Swaad
Maintaining the existing price levels
Goal two: maintain market share and sales through the change of ownership then grow
market share to 40% in 18 months. The strategies to achieve this goal are:
Increase the number of customers
Increase the average sales size
Increase repeat trade from customers
Undertaking more aggressive marketing and promotion
Goal three: generate a before tax net margin of 20% for the next two financial years by:
Eliminating high cost purchases
Improving cost control
Improving stock control

Page 3

Nature of the Business


Malgudi Swaad will serve take away beverages (especially fine coffee) and moderately priced
good quality light meals to the casual dining market within the shopping centre precinct.The
caf is profitable, has a strong positive cash flow and may be seen as a strong viable and
growing business.
Seaview Pty Ltd was recently established for the purpose of acquiring the existing caf
business known as Malgudi Swaad , located at the Shrirampur Shopping Centre. Babaji ka
thullu is one of the first hotel to open at the centre and enjoys an excellent location from which
to operate.

Page 4

Market Analysis
Industry Analysis
The market is a competitive market with franchised operators starting to emerge in the coffee
shop segment (also offering light meals), which will over time increase concentration in this
segment. While the level of competition is increasing, the shopping centre in which Malgudi
Swaad will be located has capped the number of cafs and coffee shops within the complex.
To this extent, there will be limited competition and it is anticipated that all cafs and coffee
shops within the complex will be quite profitable.
Key points about the caf and restaurant industry:
Greater concentration in higher than average household income areas
Sensitive to changes in real household disposable incomes
Trend towards singles, families and business people meeting and eating out
Growth with households increasing purchasing frequency and the amount spent in
each transaction in this area
The current general trend is for cafes and restaurants to concentrate on offering value for
money with an emphasis on family restaurants, as well as franchised opportunities. The
industry will continue to benefit from higher incomes and time constraints on some
households as well as lifestyle changes. This will include more dining out or take away food
consumption.
There are three key success factors in the caf industry that are essential for the business to
do well in order to be competitive. These factors are based on the positioning of the business
as well as its place and physical appearance:

Location of caf in terms of:


o Proximity to surrounding attractions
o Short distance to consumers
o Convenience and accessibility

Physical appearance in terms of:


o Cleanliness of premises
o Quality of food
o Quality of service

Clear market position

Competitor Analysis
Our main competitors is Club Caf which they have strong brand recognition, with high
product quality and well-documented processes for how the business should be run which
comes from being a national franchise business. However, they have the operating
boundaries of the franchisor that doesnt give them the flexibility to change menu items so
easily. This flexibility is something Malgudi Swaad can take advantage of with having a chef
who can develop new menu items to meet the changing preferences of customer.
Our competitors have no history of discounting and whilst the number of cafs within the
centre is capped, pricing should remain very stable. The following tables outline an analysis of
the cafs competitors, their products and targeted customers.
Page 5

Table: Analysis of competitors


Company
Name
Club Caf

Size
National
franchise 20% market
share

Sales Mix
(Product/ Service)
Coffee, wine and
beers and other
beverages, light
meals, cakes and
desserts; liquor
licence

Years in
Business
2 years - since
the centre was
opened

Reputation Rating
(1-10)
8 - Franchise chain
has a sound
reputation

Malgudi Swaad will need to maintain current marketing activities and a high level of service
and product quality to ensure its competitiveness. It needs to have a clear market position to
target and promote the quality and value for money of products and services.

Page 6

Elements of Success

Target Market
There is substantial population growth in the area as residential development continues and
commercial development commences. The master planned community attracts a high socioeconomic demographic with high employment and higher than average per capita income.
Malgudi Swaad customers are the passing shoppers and shopping centre staff of all ages
who enjoy a fine coffee (dine-in, or take away) and a healthy, value-for-money meal. The
majority of the general public consulted in the shopping centre were families and young
singles. The cafe will make it particularly easy for a young family to enjoy a meal by providing
a range of childrens meals and activities. Our take away beverages will also appeal to this
group and the segments made up largely of singles between the ages of 18 40 who shop or
work within the shopping centre precinct. They tend to have moderate incomes with high
discretionary spending.
The majority of customers who purchase coffee from Malgudi Swaad are social drinkers,
followed by customers who want their daily fix or a pick me up. They are wanting a
convenient, friendly and relaxing environment to recharge their batteries or socialise over a
fine coffee, choice of beverages and quality fresh, light and healthy meals that provide an
alternative to fast food options. The market need being satisfied is based on convenience,
quality and value for the coffee drinkers as well the health conscious consumer who is
concerned about what they eat.

Competitive Advantage and Unique Selling Proposition


Our first and main competitive advantage that we possess is our location. Malgudi Swaad is
in the best possible location for a caf and has 3 years of the initial 5 year lease to run, plus
the option of another 5 year.
Our second competitive advantage is the quality and value of the wide variety of light and
healthy meals offered by the business that cannot be matched by other businesses in the
centre. In addition, one of the owners is an International Chef who can create new menu
items overnight which gives the business the flexibility to sell products to meet the changing
preferences of customer.
Our third competitive advantage is the industry experience and expertise of both owners
running successful caf and restaurant businesses in the past.
These competitive advantages form the basis of our unique selling proposition with the slogan
of Swaads convenient, light and healthy and will also include widely promoting the
culinary skills.

Page 7

Marketing Plan
Marketing Objectives
There are three key marketing objectives:

To achieve sales of Rs.536,650 for the first year and Rs.580,000 for the second year.
To achieve estimated 40% market share next 12 months.
To position the business as a convenient place to eat light and healthy meals

To be reviewed in 6 months.

Marketing Mix
PRODUCT
Healthy and light meals are the key point of differentiation for the business because the Caf
has the capabilities and flexibility to develop new menu lines to meet the changing needs and
tastes of customers, whereas the two franchise businesses in the centre must conform to the
requirements of the franchisor. While the other products, in particularly fine coffee, are not
unique they do offer excellent value for money that fill the price points between the high and
low ends of the other coffee and caf businesses in the centre.
The caf will provide the relaxed and friendly environment that our customers seek when
searching for a dine in meals, beverages and cakes and dessertsthat offers excellent value
for money, but do recognise that this is not unique as shown in table 4 below:

Table :Value Propositions


Features

Benefits
Relax and take a break
Enjoyment & social connector
Refresh and relax
Health & well being

Importance
(1 to 10)
8
7
4
8

Unique?
Y/N
No
No
No
Yes

Cafe environment
Fine coffee
Beverages
Fresh & light meals
Cakes & desserts

Complements coffee & meals

No

Rating: 1 = Low, 10 = High

PRICE
We propose to offer high quality food and service at a price comparative to our major
competitors we will meet the market on price to retain market share if we need to. Our
clientele have a medium to high disposable income and seek high quality products and good
service, pricing will reflect the value of our products and services.
The shopping centre has a captive market and given the limited number of cafs in the
centre, prices have not been discounted in the market. There is no intention to discount to buy
Page 8

market share as Malgudi Swaad currently holds the largest market share of approximately
35% and we intend to take it to 40%, whilst maintaining existing margins.

PLACE (i.e. DISTRIBUTION)


Customers access and purchase our products and services through our shop front. The
location of the caf is at the Shrirampur Babaji ka thullu Shopping Centre. Itis a very large
regional shopping centre drawing customers from up to 15 kilometres away and is surrounded
by a market of approximately 250,000 persons.
It is situated on the main mall, near the major (national) supermarkets and retail fashion
clothing chains. It has a high passing trade due to its close proximity to two national
supermarket chains and a number of well known retail fashion clothing chains. The caf is 60
m and there is three years to run on the current 5 year lease. An option to take another 5
years is available under the lease.
When the proposed commercial development goes ahead, the businesses located there are
potential customers for a catering business. The business plan will be revisited at this time.
PROMOTION
In conjunction with Babaji ka thullu Management we will be undertaking a range of promotions
when we take over the cafe promoting the new ownership of the caf. These promotions will
include offers of discounted meals and coffee, but they will only run for two weeks. We
estimate that this will be sufficient time to allow a smooth transition to ourselves as new
owner.
Word of mouth advertising is very important and the best advertising we will be providing is
the quality of our products and service.
PEOPLE
Key staff member who worked with the owner will be retained to help with the continuity of
existing relationships with customers.
PROCESS
Major processes are flow-charted in the cafs procedure manual that are geared to providing
quality and responsive services to clients as well as efficient and effective operations of the
cafe. This includes sufficient numbers of staff are working during the peak periods to make
sure customers are served in a timely manner. Further information about the processes in
place are detailed in section 8 of this business plan.
PHYSICAL EVIDENCE
The caf is fully fitted out with table, chairs and dcor that projects the desire image of quality
and value as well as aligns with the USP of Light and Healthy Malgudi Swaad . This also
applies to uniforms for the staff. The cleanliness of the premise, tables and chairs will be
maintained to a consistently high standard at all times.

Page 9

Action Plan
In conjunction with Hotel Harayali Management we will be undertaking a range of promotions
when we take over the cafe promoting the new ownership of the caf. These promotions will
include offers of discounted meals and coffee, but they will only run for two weeks. We
estimate that this will be sufficient time to allow a smooth transition to ourselves as new
owners.
Word of mouth advertising is very important and the best advertising we will be providing is
the quality of our products and service. In this area will be training the staff in customer
service skills
When the proposed commercial development goes ahead, the businesses located there are
potential customers for a catering business. The marketing plan will be revisited at this time.

Sales Analysis and Forecast


Our sales analysis has revealed that we can expect on average 6,000 customers
(transactions) per month with a general mix of customers buying only coffee, usually take
away and those dining in buying a light meal and coffee. Our sales forecast is based on an
average industry selling price of Rs.3.50 per cup for coffee and average light meal selling
price of Rs.13.00. We expect that the mix of coffee to meals will be approximately 1.5:1 and
have based this on the cafs current figures. On this basis we have projected sales of
Rs.536,650 for the first year and Rs.580,000 for the second year. Sales will spike in the buildup to Diwali and at times of seasonal celebration e.g. Mothers and Friendship day etc. Our
Sales Forecast by quarter is shown in the figure below.
Sales performance will be analysed on the basis of sales (Rs.) per employee.

Figure 1 Sales forecast


Sales Budget Forecast
by QTR
160,000
140,000
120,000

100,000
80,000
60,000
40,000
20,000
0
Sales Budget

QTR 1

QTR 2

QTR 3

QTR 4

132,950

147,100

117,400

139,200

Page 10

Legal Matters and Risk Management


Business Structure and Business Name
Seaview Pty Ltd has been established to carry on the business Malgudi Swaad , with
Brendan Elliott and Margaret Elliott being the shareholders and management of the
company.
ACN.
111111111
ABN. 38 111111111
The Business Name Malgudi Swaad is an existing registered business name
BN.
xxxxxxx

Page 11

Contracts and Agreements

Table : Listing of contracts and agreements


Contract/Agreement

Contract
or Agt
Yes/No

Current Status

Business Purchase Contract

Yes

Awaiting copy from vendors


solicitor.

Franchise

No

Shop Lease

Yes

Plant & Equipment Purchase/


Maintenance

Yes

Advertising Contracts

No

Intellectual Property

No

Distribution Rights

No

Purchase/Supply Contracts

No

Service Contracts

No

Loan Documentation

Yes

Agreements with Customers and


Contractors

No

Cooperative Agreements with


other Businesses

No

Subject to due diligence and finance


approval. Refer Business Purchase
Contract.
To be acquired as part of the
business.

Informal agreements

Have held an initial discussion with


the bank awaiting a copy of the
contract, loan application
documentation and finalisation of the
business plan.

Page 12

Risk Management
Table Risk assessment

Likelihood

Impact

Priority

(L=low, VL=very low, M=medium. H=high, VH=very high)

Preventative Action

Fire loss
of
property/life

Change in
suppliers
terms

Installation of smoke alarms and


sprinkler system, fire extinguishers
installed and regularly checked,
regular staff training in emergency
fire procedures including
evacuation plans (shop & centre),
Ensure insurances including fire,
public liability and business
interruption are adequate and in
place
Maintain good relationships with
suppliers and maintain access to
personal cash reserves

Food
poisoning

VL

VH

Use quality products, correct


storage of food stuffs, train staff in
hygiene principles as part of a
Quality Control Process

Supplier
unable to
supply

Arrange alternative suppliers,


evaluate substitute products

Major
dispute with
centre
owner
Loss of key
person

VL

Ensure formal lease agreement is


in order. Develop and maintain a
sound working relationship with the
Centre Manager.
Take out key person insurance,
effect knowledge and skill transfer
to other staff

Risk
Description

Contingency
Plans
Immediate
access to
personal
resources to
rebuild shop
and business
quickly whilst
waiting for
insurance
payments
Utilise
alternative
suppliers or
increase
working
capital (from
personal cash
reserves)
Develop a
complaint
handling
process.
Investigate
source of food
poisoning and
remediate
Purchase from
alternative
suppliers or
use suitable
substitute
products
Engage
lawyer for
advice
Short term
contract for
suitable
replacement
(until
permanent
staff can do
the job). Call
up insurance
policy

Page 13

Insurances
Table Listing of insurance policies
Type of
Insurance
Business
Package

Insurer and
Policy #
QBE

Annual
Premium
Rs. 1,400

Indemnity
Insurance

QBE

Rs. 500

Key Person
Insurance

AMP

Rs. 500

Workers
Compensation

WorkCover

Rs. 200

Commencement
Date
Insurances will be
arranged upon
execution of the
contract.
Insurances will be
arranged upon
execution of the
contract.
Insurances will be
arranged upon
execution of the
contract.
Insurances will be
arranged upon
execution of the
contract.

Expiry Date

The business package will include public liability, fire, theft, burglary and business interruption
insurance. The above is based on quotes obtained from our Insurance Broker. Insurances will
be finalised once the contract has been signed.
Brendan and Margaret have life insurance and income protection policies already in place.

Page 14

Human Resource Management


The maximum staff requirement (including the owners) is estimated at 6 employees. Two of
the employees will be employed on a part-time basis. The main skill sets required are food
preparation, sales, customer service, front counter, stock control and management. It is
planned to retain two staff members from the previous ownership and recruit two more
appropriately qualified staff. We will be taking them through our in-house induction program
prior to opening.

Organisational Chart
Owners/Managers

Team Leader 1

Team Leader 2

Team 1

Team 1

Staff at Malgudi Swaad will be organised into two teams. Team 1 will be headed by Gauri
will be responsible for customer service and administration. Lalithas will head Team 2 which
will be responsible for the food preparation and the kitchen.

Page 15

Industry Knowledge and Experience of Key Personnel


Table : Details of personnel with specific industry knowledge and
experience
Name

Position

Knowledge/Experience

Staff Member 1

Customer Service

Worked with previous owners

Staff Member 2
Staff M

Customer Service
Customer

Worked with previous owners

Page 16

Human Resource Requirements


Table : Analysis of human resource requirements
Full Time Staff
Team 1
Team 2
Catering
Total

Permanent
Part Time

Casual Staff

2
2

1
1

Contractors

Job Descriptions
Under review.

Employment Conditions
As per Hospitality Award.

Page 17

Workplace Health and Safety


The workplace health and safety plan is based on the advice and guidance provided by
Workplace Health and Safety Queensland www.worksafe.qld.gov.au and their fact sheets for
the restaurant and caf industry.

Page 18

Operations
Business Premises and Location
At present the only facility we will be using is the caf. It is ideally located within the shopping
centre to attract passing customers and is also relatively close to our main suppliers i.e.
bakery. The caf is fully fitted out and is fit for purpose.
There is no need for a separate operating location at this point in time. There is an opportunity
to roast coffee beans and manufacture the cafs own blends at a later date. If this occurs, it
may be necessary to acquire operating premises to implement the idea.

Plant and Equipment Requirements


Set out below is a listing of the minimum plant and equipment items that are required to
successfully operate the Caf. A schedule of the plant and equipment (and their values)
contained in the purchase price will be included in the contract documentation and will be
subject to due diligence. The purchase price of the plant and equipment items listed below is
stated in the contract at Rs.50,000.

Table : Listing of plant and equipment


Description of Plant /
Equipment Item
Quality coffee maker

Number required

Cost and how financed

Small commercial
kitchen

Included in the purchase


price.
Included in the purchase
price.

Benches & cupboards,


sinks/drains

Ongoing costs and


Maintenance
Under warranty
Annual maintenance
check

Included in the purchase


price.

Replace as necessary

Furniture Chairs &


tables

36 chairs
10 tables

Included in the purchase


price.

Replace as necessary

Signs

Included in the purchase


price.

Crockery, cutlery and


linen
POS Equipment
(including software),
computer

72 settings of
crockery and cutlery
1 of each

Included in the purchase


price.
Included in the purchase
price.

Replace within 6
months as part of
promotional strategy
Replace as necessary
Under warranty

Page 19

Stock or Inventory
All stock at this stage will be stored on site at the caf. Fresh produce such as vegetables
are purchased in vacuum sealed bags or cartons and meat in vacuum sealed packs. These
will be stored in a small commercial refrigerator. Other items such as coffee beans, canned
and packaged products will be kept in the storage cupboards.
Other perishables including cakes and cheese cakes will be kept in refrigerated display
cabinets and will be stored for a maximum of three days.
On average, we expect to turn stock over once per week.
Stock will be controlled using our stock control system, which is a module of the accounting
software package.

Page 20

Financial Plan
Tables attached:
Sales Forecast
Start-up Budget
Annual Profit Budget
Profit and Loss Statement (2 years projected)
Annual Cash Flow Budget
Balance Sheet (2 years projected)
Break-Even Analysis
Financial Analysis

Start-Up Budget
The start-up budget is estimated at Rs. 209,810 broken up into one off costs of Rs.187,300
and monthly expenses in advance of Rs. 22,510. Included in the one off costs is goodwill
valued at Rs.120,000 and plant and equipment of Rs. 50,000.

Page 21

Break-Even Analysis
The Break-Even point has been calculated at 4138 transactions at an average selling price of
Rs.7.46. This equates to a contribution margin of Rs.6.38 per transaction and a Break-even
sales point of Rs.30,869 per month. The projected level of sales for each month is well above
the Break-even level (approximately 30% above).

Figure Break-even analysis


Monthly unit sales

Break-Even Chart

Break -Even
$ Monthly Sales

60,000
50,000
40,000

30,000
20,000
10,000
0
1,655

2,483

3,310

4,138

4,966

5,793

6,621

Monthly Unit Sales

Financial Analysis
The Return on Owners Equity calculated on the projected end of year financial performance
and position indicates a return on investment of 51.2%. Return on Total Assets is calculated
at 37.3%. Gross Profit Margin over the period is estimated at 71% with the Net profit Margin
estimated at 20.5%.

Page 22

The Current Ratio and the Quick Ratio (Acid Test) are both very high reflecting the fact that
the business has a very strong and positive cash flow. This is due to sales being
predominantly cash, whilst purchases are bought on largely on 30 day terms. Liquidity is
sound.
The business also enjoys a sound financial position with the Debt to Equity ratio calculated at
37.2% and Debt to Total Assets at 27.1%.

Assumptions
Average sale price Rs.7.46 per transaction
Average cost Rs.2.20 per transaction
Sales transactions range from 5900 per month to 7500 in peak period
Historical gross profit margin of 70% will hold.
Seasonal fluctuations Christmas and New Year are peak periods of sales activity (build up
from November, the after New Year slow to February)
The business operates on a cash basis for reporting and paying tax.
PAYG (withholding) is remitted monthly on the Instalment Activity Sheet (IAS), with GST
remitted quarterly in arrears on the Business Activity Statement (BAS).

Page 23

Refining the plan


This section would not be retained when presenting the business plan to other parties e.g. potential
lenders and investors.

Page 24

Appendices for Business Plan


Appendix 1: Situational analysis external environment
External Environment

Opportunity

Threat

Influence
(1-10)

ECONOMIC:
Yes

Yes

Yes

Population growth and make-up

Yes

Household structure (e.g. singles.


families)

Yes

Geographic distribution

Yes

Level of education

Yes

Stage of the economic cycle


Current interest rate
Average disposable income
DEMOGRAPHIC

TECHNOLOGY:
Innovations in the manufacturing
process
Technological developments (substitute
products)
SOCIAL/CULTURAL
Corporate social responsibility
Environmentally friendly green
products
Standard of living
Percentage of work to leisure time

Yes

Yes

Yes

Yes

POLITICAL/LEGAL:
Regulatory environment and legislation
Compliance with standards and codes
ENVIRONMENTAL
Climate Change & Carbon Trading
Eco-efficient manufacturing
PHYSICAL FACTORS:
Climatic conditions
Water restrictions

Yes

Infrastructure - transport,
communications and services

Yes

8
Page 25

Appendix 2: Situational analysis internal environment

Internal Environment

Strength

Weakness

Factor
(1-10)

Yes

STRATEGY
Competitive advantage - able to
differentiate
Key drivers of the business are known

Yes

Strategy and resources for growth

Yes

Detailed action plan

Yes

Clear evidence of market need for your


product/service
Know your specific market & competitors
in detail
Know exactly who your target audience is
and be able to describe them in detail
Spend more resources on your current
and most profitable customers
Competitive and profitable pricing
strategy

Yes

Yes

Yes

Yes

Your marketing plan and budget

Yes

SALES & MARKETING

Yes

Measure, learn from and adapt your


marketing activities

Yes

STRUCTURE
Business structure maximise wealth
and minimise risk (e.g. sole trader,
company, partnership, trust)

Yes

Distribution and sales to target markets

Yes

Are your buildings and facilities


adequate?
Is your equipment effective and up to
date?
Able to protect your IP from being
copied?

Yes for
current level
of demand
Yes

Yes limited
capacity for
expansion

SYSTEMS
Information and management systems
(e.g. CRM)

Yes

Performance measurement and rewards

Yes

Documented processes and systems

Yes

Strong debt collection systems

Yes

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Purchasing systems and inventory


management

Yes

Yes

STAFFING & SKILLS


Recruit the right people
Training and development of staff

Yes

Staff motivation, satisfaction and


remuneration
Diversification of management and staff
skill base
Management skills, experience & track
record
Establish complementary areas of skills
(e.g. trusted advisors with skills you dont
have)
Distinctive competencies reside in the
business

Yes

Yes

Yes

Yes

Yes

People understand why the business


exists

Yes

Shared understanding of the vision

Yes

People can describe ways in which the


business is distinctive

Yes

Do you have access to further funds?

Yes

10

Manage budgets, cash flow and debtors

Yes

Is your cash flow adequate for growth

Yes

10

Manage and analyse performance


against financial indicators in your
industry
Management understand and use their
financial accounts on a regular basis

Yes

Yes

SHARE VALUES

FINANCES

OTHER FACTORS:
Nil
Rating: 1 = Low, 10 = High

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