Accounting Business Reporting for Decision Making

CHAPTER 1 Introduction to accounting and business decision making 35

discussed below. It covers the three core elements of marketing, operations and finance, and considers

additional issues that help round out the business idea and explain it comprehensively. At the end of this

section, there is an example business plan for the fictitious business, Murphy Recruiting Pty Ltd, which

follows the same plan structure.

Title page

The title page normally shows the name of the business and that of the owner or owners, and provides

contact details (addresses, phone and fax numbers, website URL and email addresses).

Executive summary

An executive summary is an introductory segment briefly summarising the key features that are explained

in more detail later in the plan. It is a quick ‘snapshot’ of the idea and is often critical in influencing a

reader’s judgement of the whole document. Typically, it discusses the following items.

• Business ideas and goals. This section provides an overview of the business project, what product

or service is being sold and what the business owner’s goals are. It also indicates where the business

expects to be in a year’s time and later.

• Marketing. How will the products or services of the business be sold? Who will be the main target

markets (customer groups), and what are the main elements of the proposed advertising and pro-

motional strategy for the firm?

• Operations. Where will the business be located? How many staff will there be, and how will they be

organised? What is the legal structure of the business? How will it be managed?

• Finances. What profit is the firm expected to make by the end of the business plan time period? What

finance is required and what will it be used for? Where will such capital be obtained from, and what

will the repayments be?

If at all possible, it is advisable to keep the executive summary to one page and certainly no more

than two pages in length. It is, after all, the quick teaser designed to make the potential buyer want to

read on.

Background

In this section, the business owner sets down the issues driving the business project, including the

following.

• Mission statement. What is the philosophy and overall vision that the owners have for the business?

Why do they want to start and run such a venture?

• Company history. Many existing businesses already have well-established systems, products and oper-

ating processes and a customer base. It is important to briefly outline these before discussing the

changes planned for the future.

• Business goals. What are the goals of this business? It is useful to provide both short-term goals (those

for the next 12 months) and long-term goals (those covering the next 2 or 3 years, or perhaps even

longer). It is always desirable to provide some specific, measurable targets (such as net profit sought,

anticipated sales revenue, number of staff employed, product range offered and market share to be held).

An important but often overlooked aspect of goal setting is the development of an exit strategy —

what the business owner needs to do to get out of the business. Many business owners hope to build

their wealth by eventually selling their business. A proposed exit strategy is also important for venture

capitalists and other investors who usually want to know how their investment will be returned to them

(McKaskill 2006).

Marketing

The marketing segment provides the rationale for the existence of the business. Among other things,

it gives the business owner the opportunity to show what market research has been done, the likely

level of demand for the firm’s products, what exactly will be sold by the firm and the intended cus-

tomer base.