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A business plan is a written description of the future of your business and more importantly, how you are going to get there. It is a document that explains what you are going to do to make your company profitable and how you are going to achieve this. It defines both your business model and your strategies to make this business model work and more importantly profitable.Normally when a business idea arises, you know what resources and capabilities you have at the start of your business and where you want to go in a certain period, usually in 3 or 5 years. But what is the way to reach that goal? Where to start? How to arouse investor interest? Even, how to get your business off the ground? Everything seems so easy when you have the great money winning idea and concept. It is how you are going to achieve these dreams and get enough money to keep the business going for many years to come.Writing a business plan is to build a map that will guide you to where you start making money with your initial business idea. At is very basic structure, your business plan is a mixture of strategies and plans. It involves financials, marketing, staffing and products. Think of it as the foundation to your new business.WHAT are the reasons that I might need one?
• To look for investors.
• To apply for a loan.
• To establish the viability of your business idea.
• To make improvements to your current business.
• To expand your current business.All of these types have different emphasises and a different structure.WHAT is a business plan?
It is a tool or document that describes a business opportunity or idea, the work team, the operational and marketing execution strategies, the business risks and the economic viability of your business. A well written document guides you to turn an idea into a viable business.It can also be defined in another context in that the business plan becomes a fundamental tool within the analysis of a new business opportunity, a diversification plan, an internationalisation project, the acquisition of a company or an external business unit, or even the launch of a new product or service within the current business.To summarise, both for the development or launch of a startup and for the analysis of new business investments, the business plan becomes an indispensable tool. So even though you have an established business, you will still need a business plan as you expand and improve that business.A business plan is never finished and should be reviewed from time to time at least annually but certainly when large changes to an existing company are anticipated. This implies that every plan must adapt effectively and efficiently to the changes, helping the project to continue.WHAT is the point of a business plan?
Many entrepreneurs think they only need a business plan when they are seeking investment or when the bank asks for one. However the act of business planning, when completed correctly, enables the entrepreneur to carry out an extensive market study that will provide the information required to design the best possible business model that will be both profitable and efficient.Additionally, the business plan will develop the strategic measures for all functional areas that will enable them achieve the objectives for the new business.
Once written, the business plan will serve as an internal tool to assess the management of the company and its deviations from the planned scenario. Proposing, if necessary, adaptations to the agreed business model in order to obtain updated information for the daily management of the company. This will include preparation of the required changes and processes to bring the business back on track.So lets dive into the concepts behind business planning a bit more.The WHY of The Business Plan
• Why do you want your business plan?
• Why are you writing the plan now?The WHAT of the Business Plan
• What is the purpose of developing a specific plan?
• In what period do you consider it possible to carry out your projects?
• What is your business model?
• What is your Value Proposition?
• What are your products or services to be offered?
• What positioning do you plan to develop to compete?
• What are your measurements of success?
• What markets do you plan to penetrate?
• What market percentage do you estimate to obtain?
• What margins do you consider possible?
• What income do you consider you will receive?
• What are the costs of expansion?
• What are the costs of obtaining new customers?
• What do you want to do with your business?
• What strategies do you want to undertake – financial, marketing and planningThe WHERE of the Business Activity
• Where will your products be sold from? Shop, office, website, social media, road side, party planning,
• Where are you based? Locally, centrally, virtually etc.
• Where are your products produced?
• Where are your distribution channels?
• Where are they going to be sold?
• Where is your market?
• Where will your staff need to be based?The WHEN of your business planning activities
• When will you need to start your new activities?
• When will they end?
• When will your investor need to invest?
• When will your investor get their money back?
• When will you have enough staff to carry out your new changes?
• When will your products and services be available?
• When will your products need to be updated and/or improved?
• When is the best time to attract new customers?WHO do you present your plan to?
• Bank for loan purposes and they will take a charge over a property usually.
• Investor to join your company as a shareholder.
• Angle Investor to join as a shareholder but also be involved in the running of your company.
• Management team so they know what is expected of them.
• Suppliers who will be offering credit.
• Director level hires so that they are encouraged to join your company.
• Believe it or not the entrepreneur should also refer back on a regular basis.As you can see there are a lot of Ws involved with a business plan – the biggest W is why should you write a business plan and the answer is – because it is such a great business tool.

Research on over 25,000 consultancy projects has shown that about one third deliver what was promised and the other two thirds end in embarrassing and expensive failure. Yet it is not difficult to get truly high value from consultants. But for this to happen, all of the following nine conditions must be met. Too many clients embark on costly consulting and IT systems projects without checking that these commonsense elements are in place.1. Your people cannot solve the issue
If you are thinking of buying consultancy to redesign your processes, develop a new organisation structure or whatever, you must ensure that nobody in your organisation is capable of doing the job and establish exactly how much consultancy help you need. Would it be enough just to buy one or two experts’ time to help guide your own staff? If so, then you should not let the consultancy sell you an army of “warm bodies”. Firstly, because this will be a huge waste of money. And secondly, because employees are more likely to accept changes to which they themselves have contributed and are more inclined to reject changes forced upon them by young inexperienced consultants who will not be around to bear the consequences of the changes they are proposing.2. Your management team has correctly identified that issue
The next question to ask is whether you and your management team could in any way be responsible for the situation with which you want your consultants to help you. It is unusual for an organisation to have a problem that is not in some degree related to the way management leads the place. If you are able to make a reasonably honest and objective assessment of your own role in creating a situation where you believe you need consultants’ help, you are much more likely to buy the correct consultancy.3. Your consultancy is selling a solution and not a product
Before hiring a consultancy, you need to be aware of what they can and cannot offer. In particular you need to assess whether they are genuinely trying to provide a customised solution to your situation or whether they are trying to foist some pre-made service on you. And if your consultants are in any way connected with an IT systems house, all the warning bells should be sounding. It is probable that they will be under great pressure to flog you some IT – make really sure you need it before they convince you to buy it.4. Your consultancy has the right skills
When a consultancy shows interest in working for you, there is nothing wrong with insisting on seeing the CVs of the consultants who will be running riot in your organisation. Many consultancies will resist this request – if they do, they are probably not the kind of consultancy you would want to work with anyway.5. The consultants with the right skills will work for you
When your consultancy is trying to sell to you, they will probably give you loads of face time with their experts with the skills relevant to your situation. Too often, once you have signed the contract, the experts become scarce and you’re left mostly with inexperienced “billing fodder”. You should demand that the consultancy includes in your contract a firm written commitment as to how many days per week the experts will be on site working on your project. And you should not ever accept bland assurances that their experts will always be available on the phone to help your “billing fodder” out and give them guidance when necessary.6. Your consultancy agrees to a fixed timeframe and fixed budget
Look closely at the contract your consultancy offers you. In particular, check whether the total fees they plan to charge you are fixed and whether they clearly commit to how long your project will take. Many consultancy contracts, especially those including some IT systems work, may at first look like they are offering a defined service for a fixed price within a fixed timeframe. But if you look in the small print, you will often find several “get out of jail free” clauses that allow the consultancy to charge an awful lot more and take considerably longer than they initially promise.7. Your consultancy agrees to base part of their fees on results
There are few consultancies that will risk basing any significant part of their fees on the results they achieve. They will normally give all kinds of excuses – they cannot be responsible for external events in the market, the economic situation might suddenly change, one of your major customers might move to another supplier, a competitor might implement a new more aggressive strategy affecting your profits and so on. While there is some validity to all these excuses, you should still be able to find some performance measures that will indicate whether your consultancy delivered the dreams they promised. If they do refuse to base at least thirty percent of their fees on their results, you should consider giving the business to someone else.8. Your consultancy charges ‘reasonable’ fees and expenses
Your consultancy will probably try not to tell you how much they pay their staff and they will attempt to give you an overall price for your project rather than revealing what each consultant will actually cost you. However, you can reckon that a junior consultant is getting paid somewhere between £30,000 and £50,000 a year, an experienced consultant £60,000 to £80,000 a year and a project manager £100,000 to £150,000 per year. So if your consultancy are paying a junior consultant less than £1,000 a week and yet appear to be charging you £8,000 a week for their time, then this 800% gross profit margin may be excessive. Likewise, if they are paying an experienced expert around £2,000 per week and you are forking out £15,000 a week for them. Then look out for extra administration charges, excessive travel expenses and only pay for consultants’ time spent working on your project.9. Try adapting existing IT systems before deciding to build new ones
If you think you may need to improve your IT systems, most IT consultants will recommend you build a completely new system. Their argument will be that your needs are unique, so to give you the best solution, they need to design something exactly matching your needs. It may be true that overall the system they propose is different from other systems in existence. However, if you split your required system up into its individual elements, you will probably find that most of these already exist in other organisations. You will save many millions and huge organisational effort by thinking creatively about how existing systems can be adapted to serve your needs. And always ask yourself the question: with over 700 million people living in the developed world, is it really possible that your organisation is so unique that there is no other organisation in existence that has similar IT system needs to yours?

Property and especially Australian property is an excellent investment. Not only is it much harder to lose money in property than in the stock market, but with property you also benefit both from steady capital growth and from rental income. And as rental income increases over time it protects you from inflation. At the same time you can borrow money to buy property and despite Australia’s high taxation environment, property investment can be very tax efficient.Let’s have a look at these advantages and some more beneficial aspects of residential property investment in a bit more detail.1. An investment market not dominated by investorsFirst of all, you need to realize that some seventy percent of all residential property is “owner occupied” and only thirty percent is owned by investors. That means that residential property is the only investment market not in fact dominated by investors, which means that there is a natural buffer in the market that is not available in the share market. To put it simply, if property values crash by 10%, 20% or even 40% we all still need a home to live in and so most owner occupiers will simply ride out any major crash rather then sell up and rent (compare this to the stock market where a major drop in prices can easily trigger a serious meltdown). Sure, property values can and do go down but they simply do not show the same level of volatility as the share market and property offers a much higher level of security.And if you don’t believe me when I tell you that residential property is a safe investment, then just ask the banks. Banks have always seen residential real estate as an excellent security and that’s why they’ lend up 90% of the value of your property; they know that property values have never fallen over the long term.2. Sustained growthProperty prices in Australia tend to move in cycles and historically they have done well, doubling in cycles of around 7 – 12 years (which equates to about 6% to 10% annual growth). We all know that history is no guarantee for the future but combined with common sense it’s all we have. There is no reason to think that the trends in property of the last 100 years would not continue for the next few decades, but to be successful in property investment you must be prepared and capable to ride out any intermediate storms in the market, but that applies to any investment vehicle you choose.Australia’s median house price between 1986 and 2006 as published by the Real Estate Institute of Australia (REIA) shows that back in June 1986 you would have bought an average home for $80,800. That same home would have been worth $160,500 in 1986, which is pretty much double of what you paid 10 years earlier. Another 10 years later in 2006 that average home was worth some $396,400. So between 1986 and 2006 that average home went up by nearly 400% or about 8.3% per annum.Not bad. And quite in line with the longer term history.In fact, as Michael Keating points out in his blog on 24th January 2008 (Why Melbourne’s properties will keep rising), it is actually on the low side compared to the historical average. Australia’s property prices have been tracked for something like the last 120 years and on average they have risen 10.4% per year. Just in case you might believe that had to do with Australia being a newly found colony, and don’t believe this would be sustainable in the long term, consider this. In the UK records of property sales go back till 1088 and analysis of the data shows that in those 920 years UK property on average has gone up by 10.2% per year.3. Buy It With Other Peoples Money (OPM) Now just in case the above has not been enough to convince of the value of residential property investment, let me tell you one of the great secrets of creating wealth, which also applies to investing in property. The secret is OPM. Other Peoples Money.Secret? No – that’s just marketing hype you see on the web, but the power of Other People’s Money or more common referred to as leverage or gearing is absolutely critical to building wealth. And, in the case of property the leverage you can apply is substantial. As I mentioned above, banks love residential property as security and therefore will easily lend you 80% or 90% of the value.It was Archimedes who said, ‘Give me a lever and I’ll move the earth’. Well, as an investor you don’t want to move the Earth, you just want to buy as much of it as we can! When you use leverage you substantially increase your ability to make profit on your property investments and, importantly, it allows you to purchase a significantly larger investment than you would normally be able to.Let’s have a look at how this works. Imagine there are five investors each with $50,000 to invest. Say they all buy an investment that achieves 10% growth per annum and has a rental yield (or return) of 5% per annum. Investor A borrows 90% of the value of his investment property (Loan to Value Ratio or LVR of 90%) and investors B, C and D borrow 80%, 50% and 20% respectively. Investor E doesn’t borrow at all and goes for an all cash transaction.Let’s start with cashflow, which is here simplified to rental income minus interest paid. Investor A, who geared 90%, has a negative cashflow of $15,500 for the year whilst Investor E who borrowed no money at all has a positive cashflow of $2,500. But that’s not the whole picture because each of the properties increased in capital value and once we include that the picture changes significantly, Investor A has a net worth increase of $34,500 whilst Investor E who didn’t gear increased his net worth by only $7,500. In terms of return on investment Investor A achieved a 69% return on his initial $50,000 whilst investor E achieved a return of 15%.That’s pretty impressive for one year. And if the investors let their properties grow one or two full cycles we’re talking about serious wealth creation. And once the investors have enough equity in their investment property they can use that to fund a second purchase which after a few years growth will allow the purchase of a third and we’re on our way to wealth! That is, those investors who geared as Investor E is not going anywhere fast.However, it is not all that easy. As you saw Investor A incurred a negative cashflow in his first year and would continue to do so for a few years until the rental income had grown sufficiently to pay his interest. He has to fund this annual shortfall from his salary. And this is called negative gearing – you borrow money to generate capital growth in your property but incur an annual shortfall in the near term. For most investors this means there will come a limit on how many properties they can buy with negative gearing, as they don’t have too much spare income. If you look in our strategy sections you can read more about negative gearing and techniques to avoid paying the shortfall out of your own pocket. We also address cashflow positive properties.But let’s get back on topic and have a look at some more compelling reasons to invest in Australian residential property.4. Income That Grows We’ve discussed that Australian residential property vestment is safe, with long term growth prospects and combined with the right level of leverage can create significant wealth. We also briefly touched on the fact that it generates a rental income. The good thing is, that over the years the rental income received from property investments has increased and this increase has outpaced inflation. In fact the last few years have shown tremendous increases rents – I know because the rent on my investment properties has been booming. Still is actually.Ok, but are rents likely to keep growing? Well, statistics show that the level of home ownership is slowly decreasing in Australia. There are a number of reasons for this like demographic trends but, in particular, as property prices keep rising, fewer people are able to afford their dream homes. The latest Australian Bureau of Statistics figures confirm that more and more Australians are renting and many industry commentators are suggesting that the percentage of Australian who will be tenants in the near future will go up to 40%. So demand is growing. We also know that supply of good quality rental properties is limited (very low vacancy rates across all of Australia) and the government is having difficulty providing public housing. So all in all, it is very likely that rents will continue to grow at a pace faster than inflation – good news if you intend to become a property investor!5. Tax EfficientWhen it comes to investing in property, your best friend is the bank as they provide the leverage you need to accelerate your wealth creation. Your second best friend is your tenant, as without a tenant your investment property would stand empty and your third best friend is the taxman.The taxman? Absolutely. How can that be when Australia is not know for attractive tax rates, in fact the opposite?Well, first of all the interest you pay on the loan to buy an investment property is fully tax deductible and if you own the property longer than a year you only pay capital gains tax over 50% of the gain. Add to that various depreciating allowances and you have the makings of a very tax efficient investment. If you do your homework, the bank will happily give 80% or 90% of the money you need to buy your investment property and once you own it, your tenant and the taxman will pay your interest and your rental expenses. Guess who gets to keep the capital gains, you! Talk about OPM.6. Millions of Millionaires And if the above doesn’t get you going, consider this: most of the world’s richest people got rich by investing in property. Those that didn’t get rich from property typically invested their newfound wealth in property.So, if the majority of wealthy people have used investment property to increase their wealth than why not use that knowledge to you advantage and do the same! There’s nothing wrong with seeing what successful people do and applying those principles to your own life.Even McDonalds make more money through its real estate than through selling burgers and fries as it owns most of the land and buildings in which it’s franchises are located!7. You Can Do It Too Before you say, it’s OK for the rich, but how the heck am I going to get into property investing, let me tell you this. You do not need to be very wealthy to get into property investment; it really doesn’t take large sums of money to get involved. And that’s because many of the banks will lend 80%, 90%, 95% and sometimes even 100% or more of the value of a residential property. As long as you have a steady job and a little starting capital (spare equity in your home) you can afford to buy investment properties.It has been shown over and over again that careful and intelligent use of real estate can enable ordinary people, like you and me, to become property millionaires in about 10 years. If you truly intend to become one of the wealthy people in the future, you should probably take a serious look at using property to your advantage.8. Too Much Hard Work? There are many ways to make money and some say that property investment isn’t that easy and takes a lot of time and effort. It takes time to get an understanding of the property market and how to go about investing in property. It can take weeks if not months to research areas and find the right investment property for you. And then it only gets worse, you have to organize finance, get a solicitor to deal with all the legal work. Just the finance and legal work can take 30 to 60 days. And once you own the property the work isn’t over, as you need to look after it and do your tax!Nobody said it would be easy. Nobody said you didn’t have to get your hands dirty.It will take time and you will have to work at it and educate yourself. But hey, if you are serious about creating wealth and retiring early then property is a great way to achieve that. And once you’ve started and get some experience under your belt, you’ll see that I gets easier, and actually the process of building a investment property portfolio can be very rewarding and a lot of fun too.So, to come back to the original question, my choice for property investment is based on the low level of risk and robust long-term performance property compared to the alternatives. Investing in property, if done well, is Simple, Safe and Reliable.Please note that this article does not include the charts and tables of the original article.