Business Planning Yr 11 Preliminary Course The focus of this topic is:

Business Planning
Yr 11 Preliminary Course
Part 2
The focus of this topic is:
The processes of establishing and planning a small to medium enterprise
What we will cover …the Syllabus
 Students learn to
 Examine
business issues
 Investigate aspects of
businesses using
situations and actual
business case studies
 Prepare a small
business plane
 Students learn about
 Small to Medium
Enterprises (SME’s)
 Influences in
establishing SME’s
 The business
planning process
 Critical issues in
business success and
The 4 main topics in business planning are:
Small to
Influences in
issues in
Part 2 in this topic
Small to
Influences in
 personal
✔ Completed
 taxation
issues in
Influences cover…
Personal qualities
 qualifications, motivation,
entrepreneurship, skills, gender,
Sources of information
 professional advisors, Government
agencies, other sources
The business idea
 identifying opportunities,
 Sources, cost, requirements
Legal considerations
 Registrations, zoning, health
regulations, trade practices
Human resources
 Skills, costs
considering the competition
Establishment options
 Starting , buying an existing, a
Market considerations
 good/service, price, location,
 Federal, state, local
“Learn the Lingo” first!
Using your text book find the meaning to these words, write
it in your workbook
Business Opportunity
Market analysis
Debt finance
Bank overdraft
Equity finance
Trade Practices Act 1974
Goods & Services Tax (GST)
Its function is to protect both consumers and businesses
in Australia.
Starting a Business
 All types of people own and operate thousands of
businesses in Australia today.
 Starting a business requires courage, determination and
energy, and it demands a wide range of skills.
 It’s important for people to recognise their strengths and
weaknesses, decide if they have the right personal
characteristics to be a business owner and learn the skills
they don’t presently have.
Personal qualities
It is important for people to recognise their strengths and weaknesses and decide if they have
the right personal characteristics to be a business owner
Exceptional grades and a dazzling history in business are NOT essential!
For some types of SMEs there are few or no formal academic requirements needed
to operate a business. If you do want to gain qualifications in small business, there
are tertiary courses available.
Knowledge and understanding of what is required to successfully own and operate
a SME can come from experience through working for other businesses eg. your
part time job.
What is important is the eagerness to work long hours
Research suggests
approx. 75% of people who started their own SME spent at least 50 hours per week in the
25% spent 65 hours per week or more
There are NO age limits
People between 20 – 25 years are operating a SME
Qualifications cont.
 There are 2 factors that are often mentioned that
encourage individuals to go into business. These are:
 Motivation
 Entrepreneurial spirit
 Refers to your personal drive, determination and desire to
achieve a goal or objective.
 The desire to be your own boss is a major reason for
wanting to start your own business.
 There is also the desire to transform an idea into a
successful product by capturing the attention of potential
 An entrepreneur is someone who starts, operates and
assumes the risk of a business venture in the aim of making
a profit.
 The term can apply to any person
 Entrepreneurial attitude is needed everywhere
 in life; studies, hobbies and in working life - as well as an
entrepreneur or an employee.
 school plays an important role in growing to
Entrepreneurship cont.
Personal qualities needed
Entrepreneurship cont.
• sense of freedom and independence
• owner has more control over their
own destiny
• they would expect the extra effort to
be rewarded through profits
• satisfaction also of guiding the
business’s growth, overcoming
obstacles, setting and meeting
targets, gaining a larger customer
• sense of pride
• requires owner’s full attention
• work hours longer
• constantly live and breathe the
business problems
• freedom and flexibility is often
• may need to reinvest the profits to
generate long term growth
• owner may not be able to draw a
salary until the business becomes
more established
• commitment is enormous!
 Skills are essential and can be gained through experience,
education and/or training
 Experience
 A person with “hands on” experience will have greater chance of
achieving business success
Skills cont.
 Education and Training
 Universities, TAFE and business colleges offer courses in many
business and industry fields.
 They can broad in nature – eg degree in business management OR
specific such as a degree or diploma in marketing, human resource
 TAFE and business colleges also offer vocational courses for
establishing a SME
 Some government agencies provide opportunities to learn about
starting a business. The Business Enterprise Centres in NSW offer a
range of services such as a business start up kit and how to write a
business plan
Skills cont.
 All of these avenues for education, allow the business
owner to develop the essential skills for establishing a
 Accounting
 Computer skills
 Staff management
 Business administration (incl. inventory control and rosters)
 marketing
Activity: Yuan Wong entrepreneur at 15!
 Textbook, pg 346
 Answer questions 1-5
Cultural background
 This influence can arise from a community’s traditions and
beliefs such as ‘ work ethic’ : the willingness to work long and
hard in a effort to be successful
 Many European and Asian cultures
 It can also arise from centuries of experience in certain trades or
services , enabling a person to use this knowledge to achieve
business success.
 E.g a person from Thai cultural background may be able to succeed
in a restaurant business that aims to provide quality, specialist Thai
 Due to growth in employment from
establishment /expansion in the small
business sector and its contribution to the
economy, policies are being created by the
government to assist small businesses.
 As a response, and also due to the change in
social attitudes, many women are setting
their own businesses at 3x the rate of men. It
is claimed that businesses owned by women
fail at a far slower rate than those owned by
men . Why? Women are more cautious in
business and are better bale to compare the
risks and rewards in business, and as a result
are less likely to experience business failure
ACTIVITY: Skills Set
• Fill in the table below using your knowledge gained from the personal qualities,
qualification and skills area in this topic that you possess and could bring to a small
business. You can use your Business as Usual business idea.
• Refer to diagrams pg 342, and 345 for help.
Skills I have now
Skills I would need to
How would I obtain these
new skills
ACTIVITY: Do you have the right stuff?
 Do you have the
right stuff for the makings of an
 Using the list of character traits common to successful
entrepreneurs, complete the table
 Although it’s not necessary that you possess all of them,
you should possess most!
File: entrepreneur activity list
Activity: Quick Quiz
 Revision on SME/Entrepreneur – from Part 1
 Marks out of 15
 Refer resources folder –Teacher calls out questions.
Student write answers in their workbook.
Sources of Information
 SME cannot be experts in all areas of their business AND
they do not usually have the funds to employ a
specialist/consultant to assist with management.
The SME owner can receive assistance from a large
number of government and private agencies.
Government and Private support
agencies are a source of advice
Professional Advisors
 Accountants
 advice on financial management and taxation
 Solicitors
 provide information on business formation and
structures, registration, contracts, leases, partnership
agreements, patents and legislation
 Bank Managers
 provide information and advice on financial services,
sources of finance and basic business management
 Management Consultants
 If a business problem arises that the owner cannot deal
with, then a consultant can assist as they can be more
objective and view problems in an unbiased manner.
Government Agencies
 Federal government
 Operates a website as a service to
businesses of all sizes:
 Offering access to all government departments on everything
from fair trading to taxation
Government Agencies
 State governments
 All state gov’t s have established agencies that provide support and advice to
business owners. Examples include:
 NSW Dept of State and Regional Development – Small Business
 Provides: information and advice on starting a new business, buying a business,
managing a small business and exporting, information on current issues affecting
business ie technology, e-commerce, and workplace issues such as enterprise
agreements and industrial relations
 Business Enterprise Centres (BEC) Australia
 Is a not for profit network of business enterprise centres that provides support to
SME owners – how to establish a business, examples of business plans and
methods and identifying business opportunities.
 Local government is also more involved in encouraging business as it creates
employment –local councils offer advice on land zoning, subsidised land and
development applications
Other sources offer the following
Chambers of
• Legal and financial help,
economic and taxation
advice, explanation of
legislation and industrial
relations information
Small Business
Association of Aust &
• This lobby group has a
membership of thousands
of individual small business
owners, providing a forum
for exchanging news and
views relating to small
Trade Associations
• Offer specific industry
information such as
product development and
trends e.g Metal Trades
Industry, Aust. Medical
Aust. Bureau of
Statistics (ABS)
Libraries and
Reference material
• Most libraries have on line
access to large databases
with search facilities and
trade /industry journals
• Provides valuable data on
social, economic and
demographic trends,
specialised data on
business activities assisting
the business owner in
analysing and
understanding changes to
the external environment
The Business Idea
As well as determining whether or not they have the motivation and personal
qualities to start a business, potential SME owners will have a clear idea of
what they want to sell. Sometimes it is an original idea for a good or service
that is quite different from anything on the market, or a distinct improvement
on something already available. Or it may be that particular goods or services
are unavailable in a a particular area
Coke is it!
 All businesses in the world must have started from an
initial idea and then grown according to their success
within the market.
Coke started as a medicinal tonic sold off the
back of a travelling wagon.
Now, Coca –Cola Amatil is an internationally
successful business that dominates the soft drink
market globally. It is sold in 200 countries, there
are 400 brands providing 3,000 different
products, contributing to a global sales revenue
of $38 billion (2010)
The business idea…..
Listening to people, particularly for ideas on
goods and services
for ideas
can come
Reading magazines and books, researching the
Visiting displays, exhibitions in areas such as
technology, or new products from overseas
Identifying a ‘gap’ in the market – a demand
that is NOT currently being satisfied
Determining improvements that could be
made to an existing product
Assessing government statistics and
research information
The business opportunity
 Identifying a business opportunity is NOT just having an
idea. An opportunity is something a person can see as an
avenue to success. It is often identified when a person feels
they can provide goods and services in a better or different
way from those already on the market. There are many ways
to identifying an opportunity:
Analysing and reviewing
particular parts of the market
to find an opening for
particular goods and services
Identifying whether many
other people share a
particular interest or hobby.
This hobby may become the
catalyst in identifying a
business opportunity. There
must be a large enough
market to sustain sales of the
product or service however.
 The most important area needing investigation before a
business opportunity becomes a reality is the consideration of
the competition
 First the business owner must decide on the type of market in
which their goods and services will compete. They must decide
on whether to target :
 A broad market (mass market)
 A niche market (small, specialised)
 The business owner is then able to identify the level of
competition and who are the main competitors.
How then do I make my business
 Or in other words: How do I develop a customer base or gain
market share from my competitors?
 The type of market will influence the strategy used:
 If a niche market – there are usually none if minimal
 If a broad market – extensive planning is required to determine
how to capture market share from the competition
 You have an interest in music and would like to establish a
store selling CD’s, stereo equipment, CD players and so on.
 You would need to ask yourself….why would a customer
buy a CD from MY store rather than JB Hi-Fi, Sanity or
online from Apple Itunes?
 If you cannot answer this question, you should not
consider it a business opportunity
There are 2 ways of achieving competitiveness
 The business that can produce a good or service at the
lowest possible cost and then sell at the lowest price has the
greatest ability to attract market share (in most markets).
 If you can differentiate your product or service, is it unique
or better than the competition than you have a competitive
advantage eg. Selling computer with extra service, lessons
or added software.
ACTIVITY: Know your competition!
 Using your ‘Business As Usual’ business idea:
 Identify what type of market are you in i.e mass or niche?
 Outline if the level of competition is high, medium, or low
 Clarify who are your competitors?
 Determine if your product/service has a competitive
advantage ie do you have a low cost position or a highly
differentiated product/service?
Establishment Options – there are 2
Set up a
this may involve buying
a franchise
Buy an
Each has their advantages and disadvantages
Setting up a new business –
starting from scratch
 Sometimes conditions are more favourable for starting a
new business than for buying an existing business eg.
 When a person has created something unique and starts a
business to market their innovation or invention
 When a person recognises a gap in the market –customers’
needs are not satisfied
 When the market has grown and existing businesses cannot
supply all customers
Setting up a new business –
starting from scratch
Buying an existing business
When an existing business is purchased, the business is
already operating and everything associated with the
business is included in the purchase e.g
• stock and equipment
• premises
• existing customer base
• staff
• location
• reputation and goodwill
If you are purchasing an existing business, it is essential to know why
the business is for sale, examine the accounts for past 3 years at least
to determine the financial health of the business and that the goodwill
and reputation is also not overstated. SEEK AN ACCOUNTANT!
Buying an existing business
Buying a franchise
 People choose to start a franchise in the hope of avoiding many
of the problems associated with starting a new business.
 For a set fee, the small business owner receives the benefits of a
successful business formula, a well recognised name and
established trademarks.
 Franchising operations tend to have fewer teething problems.
 It is the fastest growing area of small business with approx 1300
franchisors in Australia. The franchise sector in Australia is
worth $128 billion (2010)
Buying a franchise
Looking for a franchise