Sample Business Plan

This sample plan is a guide only. The statistical and financial information provided
are assumptions for the case study and should not be used for an actual business plan.
Intending or existing business people must undertake their own research and use reliable
data to prepare their business plans.
When setting up your business, be sure to find out which legislation, licences and codes of
practise will affect your enterprise.

Executive Summary
Definition
The Executive Summary is a basic overview of your business plan that outlines the business
strategy and themajor issues that could impact on your marketing plan.
This synopsis is written last and used as a check-list for the main document. This can also
include a mission statement.

Case Example
Canterbury Renovations will specialise in the renovation of domestic kitchens, bathrooms
and laundries. The business is expected to expand in two or three years to include residential
construction.
The business emphasis will be the delivery of high quality products and services, the
reinvestment of profits into business growth and the development of a strong business
identity.
As the proprietors, we have a combined building background with a flair for interior
design. Our research found a number of suitable premises available, with one shop currently
available for rent and outgoings of $14,000 per annum.
The initial funding will be $85,000. This comprises of $40,000 provided by the proprietors
and a $45,000 overdraft, secured through the provision of a mortgage
on our home. We expect to achieve a turnover of $300,000 in the first year, which yields a
gross profit of $50,000 after an owner salary is paid. This will pay overhead expenses such as
rent, interest and advertising.
In the second year, we expect the annual turnover to be $450,000, and to employ two
additional staff.
This growth is predicted to occur as a result of a strong marketing strategy and the
development of a reputation for supplying excellent products and services. The
manufacturing works may be required to relocate to an industrial site in the future and this
would require additional finance.

Mission Statement (Optional)

The core activity of Canterbury Renovations will be the renovation of kitchens, bathrooms
and laundries. The busi ness 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.

Your Business Products and Services

Definition
It is important to identify your products and services in the plan. You need to consider these
in terms of existing competition and market perception. You will need to market new
products differently to those already well established.

Case Example
Canterbury Renovations is a new business with no existing clients, projects or history. We
provide timber, tiles, paint and plaster with our renovations services. Our products will also
include built-in appliances such as ovens, microwaves, cook tops and dishwashers, which
will suit each individual project.
Although these products are available through other businesses, we offer them as part of a
service rather than a stand-alone product. One company in the western suburbs also offers
these appliances as part of their renovations package, but they do not service the eastern
suburbs.
Our main competitor Balwyn Kitchens does not supply equipment when installing new
kitchens.

Premises
Definition
To run a business, you need to have premises. It m ay be a home office, a mobile service, a
business centre office or a shop, and the location should appeal to
customers. Compare the premises to your competitorspremises and consider the marketing
advantages.
Premises can be optional and both external and internal business factors need to be
considered. Marketing analysis and research (conducted using the separate Marketing Plan
attachment) can help identify your position.

Case Example

Canterbury Renovations will establish a showroom in the eastern suburbs to allow

demonstration work ofproducts and provide a space for discussion, planning and the signing
of contracts. However, such discussions can similarly take place at the home of prospective
clients.
The premises will also allow for storage space and some manufacturing work will take place
at our residence, which has council approval as a home-based business premises.

SWOT Analysis
Definition
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 give an
understanding of the business aims, and key issues and objectives should flow from it easi ly.
Some factors to consider for this analysis include:
unique characteristics of the business
amount of money available
existing client base
suppliers and distributors
price structure
profit margins

Case Example
StrengthsWeaknesses
technical competen ce of the proprietors
total agreement between proprietors on their objectives
financial resources
good network of contacts for potential clients, suppliers and tradespersons
business is located within the target market
lack of management skills

no track record in business

no current plan for management succession in the short term
inefficient equipment
proprietors have limited security with which to raise finance for future growth
business is principally dependent on one person during the formative stages
OpportunitiesThreats
rapidly growing market
poor reputation of existing renovation businesses
large number of old yet valuable homes
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
poor reputation of the industry
potential for economic downturns
existence of competitors
increasing cost of materials
retaining suitable staff and reliable subcontractors
possible government regulation
geographically diverse market
an increased number of Do It Yourself (DIY) renovations, inspired by magazines and
television programs

Key issues
Drawn from the SWOT analysis, the significant issues for Canterbury Kitchens 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

Key opportunities
Key opportunities include:
providing good customer service that will increase market perceptions and earn word of
mouth advertising
popularity of renovations in the area
utilising technology to promote business and keep staff contact
good networking allows good service and joint promotional activity

Personnel Planning
Definition
You will need to consider business size, service level and hours or operation to
determine the staff you will employ. It is also important to establish what skills and
experience they should have, the possibility
of training,recruiting, replacing and the roles your staff will take.

Case Example
We have industry experience, but need training and experience in managing staff. Canterbury
Renovations has a team of dedicated and qualified staff and we will provide training in the
areas of our preferred service technique and business style.
A set of guidelines has been written for all staff outlining expected behaviours such as
cleaning, punctuality and customer courtesy. We also intend to employ a professional writer
to create an Operations manual.
Deficiencies will be identified and addressed through a training strategy.
The priority areas for staff training will be:
building and production techniques
using new products
using new machinery

marketing skills
selling
communication skills
customer service
estimating and pricing
Staff will wear a work shirt with the business logo to identify them and present a uniformed
team approach. Eventually, we will provide vehicles will the business name printed on the
side.
As the proprietors, we will attend the 'Planning and Starting a Business' course at the Box
Hill College of TAFE. We also intend to join the Master Builders Association and attend a
number of relevant industry courses, trade shows and subscribe to relevant business
magazines.

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 also 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. Undercapitalisation can
have serious repercus sions- if you underestimate the establishment and initial operating
costs, there is a far greater chance of failure.

Case Example
*GST has been included where relevant.

Pre-business costs
TravelAccommodationEntertainmentPhone, fax, letters, copyingLegal feesAccounting
FeesConsultantsBusiness planningMarket
ResearchPublicationsTranslationsSamplesValuation feesTotal:Initial costs
Wages Opening stockCredit card establishment fee Initial promotionLeasing costs:Legal
costsStamp dutyRent in advanceBondPromotional premiumLoans establishment
costsElectricity, gas and phone costs:ConnectionsSecurity depositsStationary and office
suppliesComputer software:InstallationTrainingStatutory
charges:LicencesPermitsRegistrationsSubscriptions to publicationsAssociation membership

feesInsurance premiums:Property damagePublic riskVehicle damageTheftPersonal

disabilityProfessional indemnityPainting and artworkTotal initial costs:

Capital costs
Purchase price of businessFranchise feeTraining Office
equipmentDesksChairsSafeComputers, printersFax, phone systemVehiclesPlant and
machinery:Purchase price/depositDeliveryRepairsInstallation/commissioningShop
fittings:CountersRacks, shelvingStorageDecorationsSecurity SystemBusiness
Structure:RegistrationProfessional feesTrademark/design/patents:RegistrationsPatent solicitor
feesReference materials:LandBuilding costs:Shop frontPartitionsElectrical wiring and
fittingsFloor coveringsToilets, plumbing and drainagePaintingSignageTotalcapital
costs:Operating Costs
RentOutgoings Wages Staff amenitiesAdvertisingReplenish stockMaintenance and
repairsWrappingsElectricity and gasPostageWaste disposalWorkCover Group tax Sales
tax Payroll taxHire purchase paymentsBank chargesCapital repaymentsInterestsBank
chargesLease paymentsCommissionsSubcontractorsRoyaltiesFreightMotor vehicle
expensesEntertainmentTravel and accommodationPostage SubscriptionsInsurance
premiumsAccounting feesLegal feesTotal operating costs for the first three months:

Possible direct/renovation costs for the first year

Subcontractors $103,300Materials $84,300Wages $50,400WorkCoverGroup tax/payroll
taxMaintenance and repairsWaste disposalCommissionsRoyaltiesFreightSubtotal:
$12,000Total:$250,000Possible overhead expenses for the first year
Rent $14,400Outgoings $1600Interests $2250Motor vehicle expenses $9600Advertising and
promotion$12,000Bank chargesHire purchase paymentsLease paymentsInsurance
paymentsAccounting feesPAYG TAXLegal feesStaff amenitiesElectricity and
gasPostageEntertainmentTravel and
accommodationSubscriptionsSubtotal: $10,800Total: $50,650
Add up the first year overhead expenses = $50,650
Add pre-business and initial costs = $12,000
Total overheads for the first business year = $62,650

Initial funding of the business

As the proprietors, we have $20,000 of our own money to invest in the business,
supplemented by a $20,000 long term interest free loan from our 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.

We also had preliminary discussions with our bank manager and, subject to the provision of a
documented business plan and the provision of a mortgage over our home, we will be
provided with an overdraft of $45,000.
An overdraft was agreed to be the most suitable arrangement for our 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.

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 (20% of the value of the job).
The projected overheads for the first year will be $62,650. To break even, the
business will 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 ($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 ($81,00 0 gross profit) will cover the overheads of about $73,150
and produce a net profit of $8350.

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

Case 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
The following assumptions are made when preparing quotations:

Direct costs$368,500Overhead expenses$73,150 Business

profit$8350Total$81,500+81,500Annual turnover in the second year$450,000
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:
ItemDirect Cost $Mark up %Mark up
$Equipment2,50015375Material150035525Labour230030690Subcontractors170025425Total
$8000(avg.) 25%(approx.) $2000
Hourly labour rates will be calculated as follows:
Costs$Hourly rate (according to award or workplace agreement) $18.00
Add on costs (e.g. WorkCover 5%)$0.90Medical costs$1.00Superannuation 6%$1.08Payroll
tax(N/A)Sick pay allowance$2.00Annual leave allowance ($18x52/48)-$18$1.50Tools
allowance$1.00Total$25.48Allowance for non-productive time, eg. industrial action,
maintenance, travelling, tool maintenance, training, injuries etc, eg. 10%$2.55Total$28.03
Therefore, the hourly rate for estimating work will be charged at $28.00 + 25% mark up =
$36.50 per hour.

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.

Case Example
Canterbury Renovations will maintain sufficient business records to demonstrate the financial
position of the business on a monthly basis. Financial records will compare prof itability 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

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.

Case Example
The following documents have been prepared as a support to the business plan for Canterbury
Renovations.
Projected profit/loss for the first year
Projected cash flow for the first year
Projected profit/loss for the second year
Projected cash flow for the second year
Statement of financial position

Your Marketing Plan

Definition
An essential component of any business plan is a marketing plan. Your marketing
plan should cover such areas a market overview, marketing objectives, marketing strategy,
resource requirements, and budgets.
Sales, pricing strategy and generated revenue are all an important component of the
marketing plan. Once your business is up and running, the marketing
plan should be updated regularly.
To download a sample marketing plan, visit the Sample Marketing Plan page in this section.