Business Planning – What Do We Include and How Does It Look

Caring Cottage Vision Board

Caring Cottage Vision Board

In a previous blog, business owners who are members of the Albany Creek Business Contacts discussed whether businesses really need to undertake business planning (“We Know We Should, So Why Then Don’t We?” https://balanixsolutions.com.au/we-know-we-should-so-why-then-dont-we/ ). It was agreed that businesses did need plans and that business planning needed to be more than just “in our head”. However, it was also agreed that business planning and plans could take various forms with various detail to support and meet the needs of the individual business.

So, what do business owners believe are the critical information to be contained in plans and what can they look like?

In relation to content, the following was proposed:

  • Real and enduring purpose – this needs to be clearly stated so every decision you make must support this purpose.
  • Stakeholder analysis – stakeholders include clients, suppliers, owners and staff.
  • Marketing/Advertising/Sponsorship plan.
  • Cashflow/Budget/Revenue & Expense analysis.
  • Risk Management/Contingency Plan
  • Pricing/Price Structure (eg, current pricing and planning for future increase)
  • Staff – roles/nature of employment (eg, part-time, full-time, contract etc)
  • Responsibilities and timeframes – ie, who is going to do what by when.

So what does the Business Plan need to look like? Well, in a nutshell – whatever suits you and your business, that you are going to use – whatever makes it visible!

Whenever business planning is mentioned images of 50+ page documents, which sit in a draw, never get used and collect dust, emerge. But this doesn’t have to be – they can take whatever form that makes sense to a business owner and enables them to run and grow their business. Suggested mediums that business use include:

  • Vision Boards (like the one Kirsty has above)
  • Operational Boards – eg, Marketing Board, Operations Board, IT Board etc
  • Notebook
  • iPad/Tablet/Phone
  • Mind Map
  • Whiteboard

The thing is successful businesses need to have direction and plans. However, those plans need to support the business not hinder.

(Blog contributors – Leonard Whittaker (Action Cycle Learning) Rob Carmody (Australian Integrated Communications) Sally Balwin (Balanix Solutions) Kathy Patterson (Brendale Stationery Supplies) Matthew Fox (Brisbane hosting & Web Design) Kirsty Newbery (Caring Cottage) Brad Davies (Conquest Pest & Termite Control) Scott Deaves (David Deane Real Estate) De Wet van der Nest (Express Air Con Cleaning) Oriano Giammichele (GT Racing, Mobile Mechanic) Stuart Bywater (Bywater Design) Rhennen Ford (Streten Mason Lawyers) Tracey Carter (Scrub Mutts) Jason Matthey (Insurance Web) Damien Jenkins (Australian Unity, North Lakes) Anne-Louise Underwood (SMS Toolkits) Bruce Hall (Wombat Electrical)

Albany Creek Business Contacts consists of local quality and reliable businesses who provide a wide range of services from home and residential services to B2B and commercial services. Our service areas cover primarily Albany Creek, Eatons Hill, Brendale, Aspley, Warner, Chermside, Strathpine, North Lakes. However many members will cover greater areas.

Albany Creek Business Contacts meet fortnightly on a Wednesday morning for a 7am breakfast and networking meeting.

Balanix Solutions – Taxation | Accounting | Business Advise.

Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.

Call us today … we can help (07 3264 4783)

A Tip on the Road to Financial Happiness

HappinessOne of the biggest economic impacts on both business and private costs over the last 12 months has been the drop in oil prices internationally which has resulted in lower fuel prices. The price per barrel has dropped from over $100/barrel down to $47/barrel. Watching Sunrise the other morning Craig James from Commsec stated that the flow-on effect was the equivalent of a .25% drop in interest for a person on a $350,000 home loan.

Given that the Reserve Bank yesterday dropped the official rate by .25% we should really be making sure that we are taking advantage of the current situation.

The old saying of paying down non tax deductible debt as your primary goal is never more true. I have not in my 40 years as an adult seen an economic environment where the opportunity to reduce debt has been more favorable. Yes there are some concerns on the job front with the end of the resource boom in Australia but with home loans at their lowest rates for a longtime and petrol prices way down from when they were above $1.50 to now (the lowest I have seen at 97.8 cents) it really is a great opportunity to reduce personal debt and set yourself up for the future.

If you take the 50 cents per litre on petrol and the quarter of a percent interest cut on home loans and put this against your credit card or home loan you are on your way to financial happiness.

These opportunities do not come along every day and it is very easy for us not to realise just how much this saving adds up when you take into account how not only can you reduce your debt but in doing so reduce the interest you will have on your reduced outstanding balance. It is a win win situation.

David Balwin FCPA Registered Tax Agent Accountant Business Advisor

David Balwin
FCPA | Registered Tax Agent | Business Advisor


Balanix Solutions – Taxation | Accounting | Business Advise

Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.

Benchmarking in Your Business

David Balwin
A good thing about having this budget and getting this process going is that you can then start to benchmark. Benchmarking month to month is of limited value because you can get too many fluctuations over a short period of time. But once you’ve got two or three years of history you can look at what this was for the year, year to year, and what I do, the most common thing I do is, I use sales as a hundred percent. So the revenue from sales equals one hundred percent. Every single one of these, I put that cost over the sales cost and work out what percentage of one hundred percent that is. So I want to know for example, well take a common one, salary and wages, on average, it’s going to vary from industry to industry, on average, that’s probably going to run somewhere around thirty percent. If your wages are running around fifty to sixty percent you know you’ve got a problem – I guarantee you’ve got a problem. If it’s running around ten percent, it might look good, but the question is – are you really utilising sufficiently to generate revenue. So you can be too low as well. But, what we want to do over a two to three year period, we can actually use this information to do benchmarking year to year. And what we’re trying to do is make sure expenses as a percentage of sales are either static or going in which direction? We’ve got one going that way and one going that way – as a percentage of revenue do you want expenses going down or up? You want them going down. That’s correct, the more they are going down the more profit you make. And it’s why I use percentage as opposed to dollars, is because dollars can be deceptive. If my telephone bill went from three thousand to ten thousand, and I was simply looking at dollars, what would I think? Bloody Telstra – I’ve got a problem with the telephone bill. But what would happen if my telephone bill went from three thousand to ten thousand but my sales went from one million to fifteen million. Would I be too worried? No – correct, so that’s why you’ve got to look at it as a percentage. That’s why I like percentages as opposed to dollar value. Because percentages will tell you, particularly over a two to three year period or a three to five year period, it will tell you a lot more facts about the business than straight dollar figures.

Will, David, will MYOB give you that which you’ve got there?

MYOB will give you that, yes. There is a budget which will do exactly that for you on a month to month – you can print it out in one spreadsheet over twelve months. What MYOB will do will let you take last twelve months figures and just bring them straight over and then you can play with them. And it will actually allow you to vary it by ten percent or vary it by percentages too – so you can play around with it. If you don’t know how, give me a yell during the week and I’ll give you a quick demo on how to do that.

Cashflow and Budget in Small Business Workshop

David Balwin:

So what you are going to do here is that you are projecting out for the next 12 months when you think your cash will come in. Budgets also tend to be static so once you have set your budget up you don’t normally don’t change it for the year. What you then try and do is try to explain variations between what has actually occurred and what was budgeted for – you don’t simply change the budget to reflect what the actual is. So you should be able to explain why there is a variance between budget and actual. And that explanation, the better that explanation is the better you will be able to manage the process.

This one here, as I said you can project out where you are going to go for the next 12 months, and then you can work out which month you are going to be short of cash and which months you think you will have surplus cash. That becomes really important – and with cashflow you do adjust it month to month. So, month one which will normally be July, at the end of July, you go back and you actually but in the actual for July. Update your cashflow for July, because then you might then come back and say “Well July was suppose to be super month but it has been a terrible month I’d better start looking at the cashflow for the other months and start adjusting them to reflect what is really going to happen.” And so it means you keep updating all the time to reflect where it’s at. And over a two or three year period, your cashflow should get more and more sophisticated and more and more relevant to what actually really happens. The first time you do it you can be all over the place – sometimes it’s hard to predict what’s going to happen over a twelve month period of time.

Now Dan, if you had a really really cold winter, you might find it’s down twenty percent more than what you anticipated but if you have an incredibly mild winter, you might be up fifteen to twenty percent on what you anticipated and that’s not necessarily easy to measure year to year as we all know what the weather is like time to time.

Ok, what’s a budget look like. As I said a budget is basically reflects your profit and loss. So it doesn’t have those, like if you purchase a car or take out a loan those don’t appear here at all. Purely looking at your sales, your cost of goods sold, and what your expenses are and then coming to a profit at the end of the month. And then you just carry forward your profit to the end of the year until we see where your profit is. You can vary these to reflect what’s relevant to your business.

Who here sells more than one product? Fair few OK. Up there, it just has open stock and in this case you may or may not have stock depending on what type of product you sell, but the relevance is how much detail should your budget go to? I would suggest most small businesses don’t go deep enough. If you showed fifty thousand dollars profit at the end of the year, are you going to be happy. In the main – Yes – You’d think that was a pretty fair result. Question being is – you wouldn’t because fifty thousand is not going to get you much of a house – but you might want a million dollars activity. But what I’m getting at though is if you’ve got six products you want to know how each one of those is going. Because if you have three products that are doing super well and generating that profit but if the other three are actually making a loss, they’re actually holding you back and you are actually better off getting rid of those three and probably make an eighty to ninety thousand dollar profit. But if all you’re recording is at the top level – just “sales” in general – it doesn’t give you enough detail. Now if you take a software package like MYOB or Quickbooks (actually I’m not quite sure about Quickbooks) but I certainly know MYOB does, they have categories – they have things called “categories” and “jobs”. So you can allocate a job to a particular sale. So that job might be “Yellow Lollies” and you might have another job called “Blue Lollies” – or Kathy, you may have things like “office stationery” then you might have “furniture and fittings” or “furniture” and something else, so you actually look at each one of those as a job so you can generate a little profit and loss and a little budget on each one of those and see how each of your main product lines is actually performing against budget. And then you can bring that together in terms of total budget. But really, if you do have a number of products, you do really need to go down to that level. It’s not good enough to simply – and Dan, it’s the same with you mate, if you’re selling six different physical education programs – fitness things, then you want to know how each one is performing. Is it giving you the return you expected it would – and if it’s not then you either have to go back and revamp it or look at dropping it and getting rid of it. But if you’re simply saying “oh, I’ve got three thousand for the month – that’s a good month because I got that in”, you really could be saying “well really it’s actually a terrible month – if I actually got rid of the rubbish you could actually be making five thousand”.


So somebody like me where it is all my time, that would be my hourly rate.


Yes – but when you say “it’s all my time”, tell me some more.


I’ve obviously got other expenses that are included like wages and things like that, but if you broke it down to each individual one, like I could actually bring that down to hourly rates after – what do you think? I don’t actually have a product, but if you say “service is a product”.


If, are you doing a lot of this service that is quicker, easier more profitable or are you bogged down in hard stuff which takes you longer which you’re not charging – so you know what I mean? You are still charging the same hourly rate for that as opposed to that?


No they’re all different hourly rates.


Have you got your’s boken down into carpet cleaning, lawn mowing …


Each one of those is a product in its own right and you need to cost that in terms of revenue, expenses and revenue individually. You are obviously going to have overheads that are spread across, just for example, the electricity in this room, you can’t really say that belongs to sales or it belongs to marketing, you have to say, ok that’s an overhead we have to spread across everyone, you might do that by floor space – so if you have X floor space at a certain percentage, this one here’s floor space – you just have work out how you allocate overhead cost. Insurance – I mean, once you have taken out insurance for the year, it really doesn’t matter if your sales are a million dollars a year or ten million, you’re still a thousand dollars a year insurance, so you just split that accordingly. Does that make sense? So whatever you do – if you’ve got carpet cleaning if you have mowing, each one of those you need to determine what revenues should come in from each of those because if you, for example, mowing – if you do three hours mowing and that generates X dollars, but you could actually spend that time doing carpet cleaning generating X + Y – which one should you be doing?


Carpet Cleaning


Correct. And that is why you have to get that split to see which one is viable and which one’s not or how you do the combination to give you the best result. That makes sense?

So at the end of here we’re going to come to a profit and loss each month and we’ve just said if that’s the case, if you make a loss, you work out why – you go back to individual things.

Balanix Solutions – Accountant, Business Advisor, Bookkeeping.

Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.

Call us today … we can help (07 3264 4783)

4 Things to do NOW for your Business

"David Balwin

David Balwin
CPA | Accountant | Business Advisor

With 30 June fast approaching, now is the time for Business Owners to prepare for the next financial year.  Here are the four main activities you need to be doing right now to position your business for another successful year.

1.      Tax Planning

Make an appointment TODAY with your Accountant for Tax Planning.  Tax Planning looks at a financial situation or plan from a tax perspective with the aim to align financial goals with tax efficiency planning. Basically, tax planning looks to discover how to accomplish all of the other elements of a financial plan in the most tax-efficient manner possible.  However, a word of caution – while tax planning is an important element in any financial plan, it is important not to let the “tax” tail wag the financial “dog.” As most financial actions have some tax implications, decisions on financial actions need to be made having regard for all matters and should not be avoided solely on the basis of tax.

Undertaking tax planning now can look at any actions to be undertaken before 30 June as well as actions for the next financial year.  As planning can be a bit involved depending on individual circumstances, give your Accountant a bit of time to do the best job and don’t leave it to the last minute.

2.      Setting Next Year’s Goals and Targets

Now is the time to start reviewing your business plan.  If it is sitting in a draw (or on the computer) and hasn’t seen light of day for awhile, get it out, dust it off and have a look at what was planned for the business this financial year and what was achieved.  Did things happen as planned?  Were goals and targets met (or exceeded)?  Did projected costs occurred or did they blow-out or result in savings?

Looking at this information, it is now time to update the business plan for the next 12 months.  What goals and targets need to be set?  What timeframes need to be identified for actions to achieve goals?  What research and reviews need to be undertaken in relation to improvement of costs (eg, can you get a better deal on telephone accounts or stationery/office supplies)?

Planning is a vital exercise for all businesses.  It underpins decisions and behaviours as a road map to achieve what you have set out to achieve.

3.      Setting Next Year’s Budget and Cashflow Projections

CASH IS KING  – the mantra for all business owners.  If the business is not making money then it shouldn’t be in business.  But more than that, the business needs to make enough money at the right time to cover expenses.  Now is the time to use the information at hand to set the business’s budget for the next financial year and look at cashflow projections so you know how much money needs to be in the bank and when to pay the bills.

4.      Ensuring Pricing of Goods and Services is Right

This is also the perfect time to review the revenue side of the business.  Look at the pricing of your goods or services and see if any changes need to be made over the next financial year.  Are you competitive with your prices compared to your competitors?  Does CPI increases need to be factored in?  Are your prices positioning you in the market where you want to be?

No matter how hard a business tries, if it has increasing costs and is not able to increase price, then no amount of increased sales will lead to increase profitability – in fact, the business maybe simply increasing its loss.  For more information on this topic, refer my previous Blog – Increase Price –v- Increase Sales – what to think about.

Call the Balanix Team (3264 4783) today – we can help!