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Why is business planning important?

Setting out to build your business without a business plan is like switching on the ignition and driving out of your driveway without knowing where you're going or how you plan to get there. Business planning helps define and guide:

  • An agreed route for your business
  • Your key objectives for the next three to five years and how they will be achieved
  • What intellectual property you already have registered, or might want to protect
  • Directions and timelines in which to achieve your goals
  • Your day-to-day operations and decisions. A business plan can also be used as a benchmark to measure your progress towards achieving your goals.

Set your goals - Your business plan is likely to outline goals for some, or all, of the following.

  • Financial objectives – for example, to increase turnover or reduce operating costs by 5% this year
  • Strategic objectives – for example, to increase the number of corporate clients by 20% within two years
  • Operational objectives – for example, to increase output by 10% within six months
  • Marketing objectives – for example, to increase total sales to existing customers by 10% next year
  • Social/Environmental objectives – for example, decreasing your carbon footprint by 5% each year for three years
Identify your strategy - Use your business plan to outline the steps needed to achieve the goals and objectives you have identified. This in turn will direct the day-to-day operations of your business

Forecast the financial implications - The financial implications of your goals and strategies will be reflected in the financial forecasts in your business plan. Your goals will identify the areas of improvement, like an increase in sales or a reduction in costs, and your strategy will identify any additional expenditure required to achieve these goals.

Review your business plan - The effectiveness of your business plan as a management tool depends on you referring back to it as a reminder of your plans and objectives, and updating your plans to keep them relevant. For further information, check out: http://www.business.govt.nz/starting-and-stopping/entering-a-business/before-you-start-a-business/writing-a-business-plan