Business planning is essential as it provides clarity, direction, and focus. It helps in identifying opportunities and challenges, guides decision-making, and increases the likelihood of achieving sustainable growth and profitability.
To achieve your business goals you’ll need to:
- Develop and implement initiatives to meet your goals.
- Identify key performance indicators (KPIs) to measure progress towards your goals.
- Establish processes to gather and review key information about your business.
- Manage business risks effectively.
- Produce a business plan to better understand your business and to establish how you will achieve your goals.
- Understand the importance of Te Tiriti o Waitangi and how to apply its key principles to your business
We’ll explore each of these points in this topic.
Every business benefits from a business plan, whether you’re a one-person, part-time operation or a large corporation.Business.govt.nz
This is the second module in the programme. It’s called Small Business Planning.
The module has been created to:
- introduce a range of business management theories, common business activities, small business structures, and relevant legislation
- build on the learning from the previous module
- equip you with the knowledge to produce a business plan and marketing plan.
By the end of this module you’ll be able to produce a business plan and marketing plan.
Time to Complete This Module
This module is worth 20 Credits, which is roughly equivalent to 200 hours of learning. Learning time includes reading, watching videos, completing learning activities, processing ideas, discussing what you’re learning with others, and completing the assessments.
This module represents one third of the whole programme of study. Full-time students should aim to spend about six weeks to complete it. Part-time students should aim to complete it within 12 weeks.
Assessment Outline
To finish this module you need to complete three assessments:
SBE02A1: Legal compliance. You will need to:
- Produce a written summary of all relevant legislation that relates to your business.
SBE02A2: Business plan and marketing plan. You will need to:
- Develop a business plan and a marketing plan for your small business.
SBE02A3: Refined business plan. You will need to:
- Run your business for at least three weeks.
- Update your business plan and processes based on what you found worked and what didn’t during this short period.
Go to the assessment section now and read the full assessment requirements.
Taking the time to properly plan and describe your business’ goals and how you are going to meet them can be a game changer for any business, whether already established or just starting up.
The key benefit of business planning is in the process itself. Going through this planning process will force you to carefully examine all aspects of your new venture
Reading
When Business Planning Is Right for You
This short article explores when you should conduct business planning and includes a case study for a business you may remember from the previous module.
Business Plan Contents
A business plan is a comprehensive document that outlines the goals, objectives, strategies, and action plans for a business venture. It serves as a roadmap for the business, guiding decision-making, resource allocation, and operations.
A business plan is essential for guiding the growth and success of a business. It provides a structure for planning, executing, and evaluating business activities. Following the structure will improve the chances of the business achieving its goals.
Here is a brief outline of some of the information a business plan can cover:
- Key information about the business such as the business name and the products and services the business provides
- Business strategy which is made up of elements such as the business purpose and goals.
- Management of people involved with the business such as advisors and identifying future staffing needs.
- Management of risks and legal compliance
- Financial planning which can involve forecasting income and expenses.
All of these elements and more will be covered throughout this module.
You have already researched or planned out some of this information during the previous module.
The content and format of a business plan template may vary depending on the industry, size, and purpose of the business. Many templates are available online, including free and paid versions, which can be customised to suit the specific needs of your business.
You will be provided with a template for your business plan and marketing plan to submit for your assessment to ensure it covers the assessment requirements. Marketing planning will be covered later in this module.
You will most likely end up with a few ‘working documents’ where you planned out aspects of the business and these are good to hold on to. Your business plan will have the outcomes of this planning in a summarised format.
Tip
In the previous module you were asked to take notes of any legislation that was mentioned that is relevant to your business. You should add to this list as you work through this module. This information will be useful for your assessment.
Business Plan Recipients
A well-developed business plan is essential for attracting investors, lenders, and other stakeholders. It demonstrates the viability and potential of the business, instilling confidence in its prospects and increasing the likelihood of securing funding.
Common recipients of a business plan include:
- Investors: Business owners often present their business plans to potential investors, including venture capitalists, angel investors, or private equity firms, to secure funding for start-up capital or expansion projects.
- Lenders: Business owners may provide their business plans to banks, financial institutions, or other lenders when seeking loans or lines of credit to support business operations or growth initiatives.
- Partnerships and joint ventures: Businesses considering partnerships, joint ventures, or collaborations with other businesses may share their business plans to outline the proposed arrangement, including goals, strategies, and expected outcomes.
- Board of directors: Business plans may be presented to the company's board of directors to gain approval for strategic initiatives, investments, or major business decisions.
- Employees: Business plans can be shared with managers to help align everyone on the business’ goals, strategies, and operational plans. In some cases, businesses may share condensed versions of their business plans with other employees.
Business Planning Advice
Business advisors and mentors can help you with a range of things, including connecting you with business networks and accessing funding. They can also provide you with advice on business planning and review your business plan before you finalise it.
Reading
Types of Advice You’ll Need
This article points to other sources of advice for several aspects of business planning.
URL: https://www.business.govt.nz/getting-started/advice-and-governance/types-of-advice-youll-need/
Post Read Task: Make a list of the other sources of advice for your own reference.
Business Mentors New Zealand and The Regional Business Partner Network were mentioned in the previous module and in the article above. There are also plenty of advisors that focus specifically on Māori business. The Māori Enterprise team – part of Te Puni Kōkiri Ministry of Māori Development – is a good place to start and the linked page also lists local Māori business networks.
Reading
A Seed of an Idea
A case study of a new garden centre business who utilised the expertise of a business mentor.
URL: https://blog.businessmentors.org.nz/a-seed-of-an-idea
Post Read Task: What were two key things that the business mentor helped the garden centre business with? Would these things help you with your own small business?
Reading
Hāngī Cooker Set For Success in Australasia
A case study of a business manufacturing and selling modern hāngī cookers, reflecting on the different avenues of support received by the business owner.
Post Read Task: Write a short summary of the business owner’s reflections for your own reference.
Your business strategy is made up of your business goals, purpose, market analysis and, if you have them, your vision, mission and values. These were all covered in the previous module.
Business Initiatives are projects implemented by a business to achieve its goals. Your business strategy informs business initiatives.
Reading
What Is a Business Initiative? (Definition and Tips)
Read this article to learn more about business initiatives.
URL: https://www.indeed.com/career-advice/career-development/what-is-business-initative
Below are some examples of business goals, each with an example of a business initiative linked to that goal.
Example 1
Goal: Improve operational efficiency by streamlining processes and reducing costs by 10% within the next quarter.
Initiative: Conduct a thorough process review to identify inefficiencies and bottlenecks, then implement automation solutions and workflow optimizations to streamline operations and reduce expenses.
Example 2
Goal: Enhance employee satisfaction and reduce turnover by 25% within the next year.
Initiative: Introduce employee development programs, wellness initiatives, and flexible work arrangements to improve work-life balance and job satisfaction, supported by regular feedback mechanisms and recognition programs.
Example 3
Goal: Reduce product defects by 25% within the next six months.
Initiative: Conduct a thorough quality control assessment of manufacturing processes, invest in employee training to improve product assembly techniques, and implement inspection processes to detect and rectify defects early.
Example 4
Goal: Improve customer satisfaction ratings to 90% within the next year.
Initiative: Enhance customer service training for frontline staff, implement a customer feedback system to gather insights and address issues promptly, and revamp product/service offerings based on customer preferences.
Key Performance Indicators
A key performance indicator (KPI) is a measure that helps to judge how effectively a business is achieving its goals. KPIs provide insights into the performance of specific areas of the business and indicate whether progress is being made towards desired outcomes.
Below are some KPIs that could measure progress towards the example goal: Increase online sales revenue by 20% within the next 12 months.
- Conversion rate: Track the percentage of website visitors who complete a desired action, such as making a purchase or signing up for a newsletter.
- Average order value: Monitor the average amount spent by customers per order to assess the effectiveness of promotions and upselling strategies.
- Cart abandonment rate: Track the percentage of users who add items to their online shopping cart but do not complete the purchase, identifying potential barriers to conversion.
Ideally you will have between one and three KPIs for each of your goals that not only provide you with performance insights but also highlight areas for improvement.
A balanced set of KPIs includes both financial and non-financial metrics to provide a comprehensive view of business performance. While financial KPIs are essential for assessing the financial health and performance of a business, non-financial KPIs provide valuable insights into various aspects of business performance, including operations, customer relationships, employee engagement and satisfaction, and risk management.
Non-financial KPIs also provide context for financial KPIs by offering insights into the underlying factors that drive financial performance. Take a look at the example below.
Example
Non-financial KPI: Customer Satisfaction Score (CSAT)
Financial KPI: Sales Revenue
In this example, the CSAT measures the satisfaction level of customers based on their shopping experience, while the sales revenue represents the total income generated from sales.
Context provided by the CSAT for the sales revenue:
If the CSAT is high, indicating satisfied customers, it can provide context for the sales revenue. A high CSAT suggests that customers are pleased with the products, services, and overall experience provided by the retail store. As a result, they are more likely to make repeat purchases, recommend the store to others, and exhibit loyal behaviour. This increased customer satisfaction can lead to higher sales revenue as satisfied customers tend to spend more, resulting in increased transactions and higher average order values.
If the CSAT is low, indicating dissatisfied customers, it can provide a warning sign for potential issues impacting sales revenue. Low customer satisfaction may result in decreased repeat business, negative word-of-mouth, and lost sales opportunities. Understanding the reasons behind the low CSAT can help identify areas for improvement, such as product quality, customer service, or store ambiance, which, when addressed, can positively impact sales revenue in the long run.
Reading
11 Non-Financial Measures of Performance To Boost Success
This article describes non-financial KPIs and provides tips for choosing the right ones for your business.
URL: https://www.indeed.com/career-advice/career-development/non-financial-measures-of-performance
Post Read Task: Which tips stood out the most for you? Make a note for your own reference.
Examples of financial KPIs will be identified later in this module when financial considerations are covered. More examples of non-financial KPIs will be identified throughout the rest of this module.
Watch
Small Business KPIs: How to Develop Key Performance Indicators to Grow Your Business
If you are feeling unsure about KPIs, this video is worth watching.
Expected Duration: 18:30 minutes
Activity: KPIs
- Take a look at the business goals you wrote as part of the previous module and assessment.
- Are there KPIs that you know of or that were mentioned in the article or content above that you think would be good measures for any of these goals?
- Research KPIs that are common in your industry, including what your competitors use, if possible.
- Note down the non-financial KPIs that would be good measures for your business goals.
- Financial KPIs will be covered later in the module, but feel free to take note of any relevant financial KPIs you come across as well.
Reporting Processes
Reporting Processes in business refer to the systems and procedures used to collect, analyse, and communicate information about the business performance, activities, and operations.
The table below provides an outline of how reporting processes are linked to key aspects of business.
| Performance monitoring and evaluation | Reporting processes are used to monitor and evaluate the business’ performance against established goals and KPIs. They provide insights into areas of strength, areas needing improvement, and overall progress toward goals. |
| Decision-making | Reporting processes support informed decision-making by providing decision-makers with timely, accurate, and relevant information. Reports may include financial data, operational metrics, market trends, customer feedback, and other critical insights needed to make strategic and operational decisions. |
| Transparency and accountability | Reporting processes promote transparency and accountability within the business by providing stakeholders, such as staff, with visibility into its activities, performance, and results. Transparent reporting fosters trust among stakeholders, enhances credibility, and promotes ethical behaviour. |
| Communication and collaboration | Reporting processes facilitate communication and collaboration across different functions of the business. They help share information and coordinate efforts to achieve common goals. |
| Compliance requirements | Reporting processes ensure that the business complies with legal requirements related to financial reporting, environmental disclosures, workplace safety, and other areas. Reports may be submitted to regulatory authorities, government agencies, or industry bodies to demonstrate compliance with applicable standards and regulations. |
| Risk management | Reporting processes support risk management by identifying, assessing, and communicating risks and vulnerabilities within the business. Reports may highlight potential risks, mitigation strategies, and actions taken to address emerging threats, helping stakeholders make informed decisions to manage risk effectively. |
In the previous module we covered managing business information. This included:
- Legal requirements of record keeping of financial data and employee and customer information.
- How to store business information including digital tools that can help you manage different types of data from financials in accounting software to customer information in customer relationship management (CRM) platforms.
An advantage of using software for reporting is it can do the hard work of calculating and presenting your data. It reduces the burden on the business owner and makes the report more concise and accurate.
The key for reporting processes is ensuring the right people review the right information at the right frequency to help the business succeed. Developing a good reporting process involves establishing:
KPIs are linked to your business goals and strategy and indicate data metrics to be reviewed. Any additional information required will be guided by your compliance requirements and risk management plan.
The frequency of review will depend on what information is being reviewed and how crucial it is to the running of your business. Producing and reviewing reports can take time, so be reasonable with the frequency you set while ensuring you won’t miss something important. You can change how often you produce these reports over time as you find what works best for the business.
As mentioned, your financial data can easily be sourced from your accounting software. Financial reporting will be covered later in this module. Non-financial data will need to come from a range of different sources such as a CRM, employee surveys or web analytics. Regardless of where the information is sourced from, where possible, try to ensure that all the information is relevant to the audience in order to save them time. Ideally, you will automate the sourcing of the information or producing the reports, but where this isn’t possible, you will need to establish who is responsible for sourcing and maybe collating or presenting the information to the decision-maker or team.
Generally it’s the decision-maker for the aspect of the business related to the information that needs to review it. In some cases, such as with risk management or project goal-tracking, the information may be shared with the team for learning, transparency or coordination purposes.
To help with decision-making? To monitor business performance or progression to achieving goals? To improve collaboration or operations from learnings? Whatever the reason, it is important to have one so that you aren’t wasting time on reporting without purpose. It is important that the reviewers also understand the purpose for their reviews.
Risk is “the effect of uncertainty on objectives” (Wikipedia contributors, 2024), or in more simple terms, it is “uncertainty that matters” (ISO 31000 Risk management process, 2020). Risk can be positive (which we refer to as opportunities) or negative, like a staff member getting injured, or losing a key customer. Risk management is mostly concerned with these negative situations.
Managing risks that may impact the achievement of your business goals will help safeguard the long-term success and sustainability of your business.
Key steps in risk management include:
- Risk identification: Identify potential risks and uncertainties that may affect the business’ objectives, projects, operations, or stakeholders. Consider internal and external factors that could pose threats or opportunities and review reports.
- Risk analysis: Assess the likelihood and potential impact of identified risks to determine their significance to determine a risk rating. You can then prioritise risks based on their risk rating.
- Risk control: Develop and implement methods to mitigate (reduce) the likelihood and/or impact of identified risks. This may involve implementing controls, taking preventive measures, transferring risk through insurance or contracts, or accepting certain risks as part of the business’ risk tolerance.
- Monitoring: Record and report on how effective the controls are. Reporting processes should be established for this.
- Review: Review the effectiveness of risk management to ensure it remains relevant and responsive to changing circumstances. This includes regularly reassessing risks and updating the risk management plan as needed.
Consulting with stakeholders in risk management helps identify and control risks by getting input from diverse perspectives and expertise. Stakeholders can include staff, customers, suppliers, investors, insurers, the local community and government agencies.
Note
Engaging with your staff concerning management of health and safety risks is a requirement under the Health and Safety at Work Act 2015.
Types of Risks
The table below provides an outline of common types of business risks.
| Health and safety risks | Health and safety risks encompass hazards and dangers that pose threats to the well-being and physical integrity of employees and stakeholders. These may include workplace accidents, occupational illnesses, exposure to hazardous substances, ergonomic hazards, and psychological stressors. |
| Compliance risks | Compliance risks pertain to violations of laws, regulations, industry standards, or contractual obligations. Failure to comply with legal requirements can lead to legal disputes, fines, penalties, reputational damage, and loss of business licences. |
| Financial risks | Financial risks are risks related to financial management, such as credit risk, currency fluctuations, interest rate changes, and funding constraints. |
| Operational risks | Operational risks stem from internal processes, systems, and human error. They include supply chain disruptions, equipment failures, technology malfunctions, fraud, data breaches, and regulatory compliance failures. |
| Reputational risks | Reputational risks arise from negative perceptions or public relations crises that damage a business’ reputation, brand image, and stakeholder trust. These may result from product recalls, ethical misconduct, environmental controversies, or social media backlash. |
| Intellectual property risks | Intellectual property risks for businesses involve the potential loss or infringement of valuable intangible assets, such as trademarks, patents, copyrights, and trade secrets, which can undermine competitiveness and profitability. Failure to adequately protect intellectual property can lead to legal disputes, reputational damage, and loss of market advantage. Intellectual property and methods of protection were covered in the previous module. |
Risk analysis
You can use a risk matrix like in the table below to assess the risk rating of a particular risk.
| Impact | ||||||
|---|---|---|---|---|---|---|
| Insignificant | Minor | Moderate | Major | Extreme | ||
| Likelihood | Almost Certain | Moderate | High | Critical | Critical | Critical |
| Likely | Low | Moderate | High | Critical | Critical | |
| Possible | Low | Moderate | High | High | Critical | |
| Unlikely | Low | Low | Moderate | High | Critical | |
| Rare | Low | Low | Low | Moderate | Critical | |
For example
If the likelihood of the risk occurring is likely, and impact would be minor, then the risk rating is moderate. You can use these risk ratings to prioritise the risks.
Risk Control
Risk Control involves implementing actions to reduce the likelihood and/or impact of risks. The table below outlines several risk control approaches.
| Eliminate | This involves taking actions to eliminate or avoid the risk altogether. For example, a business might choose not to pursue a particular project or enter a specific market if the associated risks are deemed too high. |
| Minimise | This involves implementing measures to decrease the likelihood or impact of a risk. This might include implementing safety procedures, improving processes, or investing in technology to minimise the chances of a negative event occurring. |
| Transfer | This involves shifting the risk to another party, such as an insurance company or subcontractor. This is often done through insurance policies, contracts, or outsourcing arrangements where the responsibility for managing the risk is transferred to a third party. |
| Diversify | This involves spreading risk across multiple areas or investments to reduce overall exposure. For example, a financial institution might diversify its investment portfolio to minimise the impact of fluctuations in any one market or asset class. |
| Contingency planning | This involves developing plans and procedures to respond effectively to potential risks if they occur. This might include establishing emergency response protocols, backup systems, or crisis management teams to mitigate the impact of unexpected events. |
| Training and education | Investing in training and education can help mitigate risks associated with human error or lack of knowledge. By ensuring that employees are properly trained and informed about potential risks and how to manage them, businesses can reduce the likelihood of incidents occurring. |
| Accept | Sometimes, businesses may choose to accept certain risks if the cost of mitigation outweighs the potential impact of the risk. In these cases, businesses may decide to monitor the risk and develop contingency plans to address any negative consequences if they occur. |
These risk control strategies can be used individually or in combination, depending on the nature of the risks and the business’ risk tolerance and objectives. Effective risk management requires careful consideration of the potential impacts of each strategy and the development of a comprehensive plan to address identified risks.
Health and Safety Risks
Under the Health and Safety at Work Act 2015, risks to health and safety must be eliminated so far as is reasonably practicable. If a risk can’t be eliminated, it must be minimised so far as is reasonably practicable. You are responsible for providing a safe workplace and processes and systems to protect the safety and health of everyone who visits it.
Download this comprehensive WorkSafe guide for more information on risk management and your compliance obligations. While the content is focussed on health and safety risks, some of the learnings can be applied to general risk management.
Insurance
Insurance policies can be purchased to cover a range of business risks. The specific insurance needs of a business will depend on factors such as its industry, size, location, and operations. It's important for businesses to assess their risks carefully and work with insurance professionals to determine the most appropriate coverage for their needs.
Reading
Insurance
This article provides an overview of common policies bought by businesses. As you read this article, take note of the policies you think would be relevant to your business.
URL: https://www.business.govt.nz/risks-and-operations/planning-for-the-unexpected-bcp/insurance/
Activity: Business Insurance
Talk to someone in a similar business or industry as you, or your Regional Business Partner or mentor, to see if they know of other types of insurance that may be good for your business or if they know a good broker.
Risk Management Plan
A risk management plan is part of your business plan and should include the following:
- a summary of identified risks
- the appropriate control for each risk
- identification of the people responsible for each risk
- how each risk will be monitored.
Reading
Risk Management Plan Worksheet
Business.govt.nz provides a good risk management plan worksheet. Click on the link to download.
URL: https://www.business.govt.nz/assets/Uploads/Documents/risk-management-plan-worksheet.docx
Activity: Risk Management Plan
Download and fill out the risk management plan worksheet linked above. You may like to add to this as you work through the module.
Summary
In this topic we’ve introduced business planning and some of the key elements involved. We’ve looked at creating business initiatives from goals and how to manage risks that may get in the way of achieving these goals. We’ve also covered tracking goal progression using KPIs and establishing reporting processes for these and other aspects of your business. Finally, we explored the relationship between Te Tiriti o Waitangi and businesses in Aotearoa, and the history, challenges and opportunities of Māori business.
We will continue to build on these subjects throughout this module and go into more detail on planning for different aspects of business.
