Student Guide

BSBOPS601-Develop and Implement of Business Plans

 Contents

Overview 3
Topic 1: The process of developing a business plan 4
Topic 2: Implementing a business plan 22

Topic 3: Responding to performance data 27

 Overview

The Student Guide should be used in conjunction with the recommended reading and any further course
notes or activities given by the trainer/assessor.

Application of the unit

This unit describes the skills and knowledge required to lead a business operation that covers the steps
required to develop and implement business plans.
The unit applies to individuals who are running an organisation or who take a senior role in determining the
effective functioning and success of the organisation. These individuals may oversee the work of a number
of teams and other managers.
No licensing, legislative or certification requirements apply to this unit at the time of publication.

Learning goals
Learning goals include:

 You are able to develop a business plan within organisational and legal frameworks, suited to
stakeholder needs.

 You are able to implement a business plan and prepare reports.

 You are able to respond to performance data and review the plan if needed.

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 Topic 1: The process of developing a business
plan

A business plan is a documented set of business goals, objectives, target market information and financial
forecasts. The business plan is usually relevant to a specific period of time such as one or two years.
Preparation of a business plan is particularly important when establishing a business, although it should also
be regularly reviewed and updated as required.

How do you lay a foundation for success? By creating an effective business plan - it should come
together like a blueprint, providing clarity on all aspects of your business.

A business plan is usually developed to set up a business, whereas a strategic plan is used for implementing and
managing the strategic direction of the organisation.
Another type of plan is an operational plan. Operational plans are detailed plans used to provide a clear
picture of how a team, section or department will contribute to the achievement of the organisation's
strategic goals.
It is written by taking specific strategies from the company’s strategic plan, and adapting them to short term
goals. An operational plan is usually informed and defined by a strategic plan.

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 Image by Startup Stock Photos on Pexels

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Legal and organisational frameworks
A business can be legally structured in several ways, with each structure having different requirements. You
need to decide which structure is right for your business – the one that best suits your business needs. This
will depend on the type of business you are going to run, the stakeholders involved and your vision for the
business. A business structure can be changed during the life of your business.
Your business structure can determine:

 how liable you are in your personal capacity

 the amount of tax you will need to pay

 the licenses you require

 your role in the business and how much control you have

 ongoing costs and fees.

You should familiarise yourself with the four general structures:

Structure Description

Sole trader  Simplest structure.

 Gives the owner full control.

 Cheap to establish.

Company  Separate legal entity.

 Complex structure.

 More people involved.

Partnership  2 or more people.

 Profits and losses are distributed.

Trust  The trustee is responsible.

 High setup cost.

 May have tax benefits.

Permits or licences
You may need an Australian Business Number, business name registration, trademark registration and other
requirements.
The business planning process needs to identify any permits or licences that may be required. For example, if
you were thinking of setting up a restaurant then you would need to enquire about what

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requirements there are in terms of food safety and associated permits. Permits and licences are key
components of the planning phase as businesses often cannot legally operate without them.
The RTO where you are studying has a specific licence granted by the government in order to operate as a
training college and so when the business was established this needed to be factored into the business
planning process.

Activity: Research and discuss

Identify a business that needs a license or a permit to operate. Describe the business, the
licence or permit and why this is needed.

Apart from taking care of legal requirements, it is important to define the positions and job responsibilities
in the business. The structure may change as the business grows, but you need to establish an organisational
framework from the start.

A simple diagram or flowchart can be used to show the levels of management and the positions within
them, and can help to clarify the reporting structure.
Your lower-level staff will perform the day-to-day business activities, so you should think about the type of
person best suited to the role and what their qualifications should be. You may need to make use of
contractors, freelancers or consultants and they should be part of your planning.
You should include the following information in your business plan:

 the owners and legal structure of the business

 the management and what their responsibilities are, their background and compensation

 the board of directors, the position they hold and their background.

Vision, mission, values and objectives

A business plan must be based on a company’s vision, its mission, values and objectives. Each of these is
explored below.

Vision Statements
A company’s vision is a big-picture look at what it wants to achieve and where the company aspires to be in
the future.
Read more at the following link: https://www.thebalancesmb.com/vision-statement-2947999

Mission Statements
A mission statement is a general statement of how the company will achieve the vision. There is a close
relationship between the vision and mission statements.

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The vision statement is a static mental picture of what you want to achieve. The mission statement is a
dynamic process of how the vision will be accomplished. An example could be that of a dairy farm. The
mission statement would include how the dairy farm would be financed, staffed, what products it would
make and how they would be marketed.
A company’s mission statement can tell you a lot about how it views the world.
Compare Apple’s mission statement when Steve Jobs was running the company to its current mission
statement. The most fundamental difference between Apple's current ideals and Jobs' vision is that Jobs saw
Apple products as a tool to improve the quality of life for mankind. In contrast, Apple now sees its products
not as a tool for advancement but as the purpose of the company's existence.

Activity: Read

A business plan is different from a strategic plan. Read more about the differences here:
https://onstrategyhq.com/resources/what-is-the-difference-between-a-business-plan- and-a-
strategic-plan/
https://www.bdc.ca/en/articles-tools/business-strategy-planning/define-
strategy/pages/business-plan-vs-strategic-plan-whats-difference.aspx
Take any notes to summarise what you have read and keep for future reference.

Activity: Watch

Watch the following video about how to write a good mission statement Video:
http://www.youtube.com/watch?v=LJhG3HZ7b4o (03:51)

 Why are most mission statements terrible?

 What are the 2 tips to writing a good mission statement?

Activity: Read

This blog describes 12 inspiring mission and vision statements:

https://blog.hubspot.com/marketing/inspiring-company-mission-statements
Take any notes to summarise what you have read and keep for future reference.

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Core values and objectives
Core values define the organisation in terms of the principles and values the leaders will follow in carrying
out the activities of the organisation.
Objectives provide specific milestones with a specific timeline for achieving a goal. They are therefore of
crucial importance in a business plan. Objectives for a business can vary and address financial objectives,
market share objectives, human resources objectives and so on.

Review the information at the following link about important business objectives:
https://smallbusiness.chron.com/10-important-business-objectives-23686.html

Objectives should always be smart.

SMART is an acronym, giving criteria to guide in the setting of objectives.

The letters S and M usually mean specific and measurable.

Possibly the most common version has the remaining letters referring to achievable, relevant and time-bound.
However, the term's inventor had a slightly different version and the letters have meant different things to
different authors.
The principal advantage of SMART objectives is that they are easy to understand and to know when they
have been done.
SMART objectives (or goals) are discussed in greater detail at the following link:
http://www.j6design.com.au/setting-smart-goals/

Activity: Research and discuss

In pairs, review the following web site and choose one business plan:
http://www.bplans.com/sample_business_plans.php
Identify the vision, mission, values and objectives from the business plan. Are they clear? Are
they well described?

Activity: Read

Work in pairs for this activity. Read the ultimate guide to business plans at the following
link:
https://www.shopify.com.au/guides/businessplan

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 Write down key points that relate to effective business planning.
Review the sample business plan. Do you think this is an effective business plan? Take any
notes to summarise what you have read and keep for future reference.

Business plan research / market analysis

A business plan should be informed by, and include research on the market for the product or service that
the business wishes to sell, as well as target customers and their needs. Businesses need to analyse the
environment in which they are operating and assess market conditions.

The research can be conducted using primary research methods such as surveys or interviews. However, this can
be costly and take a long time.
Often, the research will be conducted using available sources of information (secondary data), for example:

 published data on the internet

 articles and advertisements of

competitors

 industry associations and trade media

 reports from trade or professional

associations

 statistics

 industry journals

 media sources

 chamber of commerce and industry

Image by Fauxels on Pexels
 Australian Bureau of Statistics.
Regardless of whether the business chooses to use primary or secondary data, the business plan should be
able to justify that there is a market for the product or service.
An excellent way of finding out about market trends to inform the business plan is through a PESTLE and a
SWOT analysis.

PESTLE Analysis

PESTLE analysis describes a framework of macro-environmental factors used in strategic management.

It is part of an external analysis when conducting a strategic analysis or doing market research, and gives an
overview of the different macro-environmental factors to be taken into consideration.

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Macro-economic forces such as political, economic, social and technological factors can be analysed by
conducting a PESTLE analysis. A PESTLE analysis can be used to determine how well your strategy fits
into the broader environment.

Political

Political factors relate to how the government intervenes in the economy and includes politically motivated
factors that could impact the organisation. It also includes legislation and whether new laws create
opportunities or threats. These factors include tax policy, labour law, environmental law, trade restrictions,
tariffs, and political stability.

Economic
Economic factors include local, national and international economic forces like economic growth,
exchange rates, inflation rate, and interest rates that can affect the growth of an
organisation. Future trends and growing markets should also be considered. For example, interest rates
affect a firm's cost of capital and therefore to what extent a business grows and expands.
Exchange rates can affect the costs of exporting goods and the supply and price of imported goods in an
economy.

Social

Social factors include the cultural aspects, attitudes and trends that impact on your organisation and target
market. Changes in the age, race, gender, culture of customers/clients will affect the organisation. Trends in
social factors affect the demand for a company's products and how that company operates. For example, the
ageing population may imply a smaller and less-willing workforce (thus increasing the cost of labour).
Furthermore, companies may change various management strategies to adapt to social trends caused from
this (such as recruiting older workers).

Technological

Technological factors include technological aspects like infrastructure, automation, legislation around
technology and how competitors are using technology. These can determine barriers to entry, minimum
efficient production levels and influence outsourcing decisions. Also, technological shifts affect costs,
quality, and lead to innovation.

Legal
Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and
safety law. These factors can affect how a company operates, its costs, and the demand for its products.

Environmental
Environmental factors include ecological and environmental aspects such as weather, climate, and climate
change, which may especially affect industries such as tourism, farming, and insurance.

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Also, growing awareness of the potential impacts of climate change is affecting how companies operate and
the products they offer, both creating new markets and diminishing or destroying existing ones.
The following website is also a good source of information on PESTLE analysis:
http://pestleanalysis.com/what-is-environmental-analysis/

Five Forces Model

Porter’s five forces model is an analysis tool that uses five industry forces to determine the intensity of
competition in an industry and its profitability level. This can be another useful tool to use when deciding
whether to set up a business.

These forces determine an industry structure and the level of competition in that industry. The stronger the
competitive forces in the industry are, the less profitable it is.
An industry with low barriers to enter, having few buyers and suppliers but many substitute products and
competitors will be seen as very competitive and thus, not attractive due to its low profitability.

SWOT analysis
The purpose of a SWOT analysis is to create a list of the company’s internal strengths and weaknesses, as
well as its external threats and opportunities to inform the business plan.
SWOT analysis should help businesses improve on its strengths, eliminate weaknesses, pursue opportunities, and
avoid or prepare for threats.
By doing a SWOT (strengths, weaknesses, opportunities and threats) analysis, an organisation can examine
both internal and external risks and opportunities. Developing a fuller awareness of the situation helps with
both strategic planning and decision-making.

The SWOT method was originally developed for business and industry, but it is equally useful in the work
of community health and development, education, communication and even for personal growth.
A SWOT analysis can be used to:

 Explore new ideas or solutions to problems.

 Help in decision making regarding future steps to take. When business opportunities for success are
considered in relation to threats to success, appropriate choices can be made.

 A stocktake of a business’s strengths and weaknesses can help determine priorities and
possibilities.

 Plans can be amended and expanded as new opportunities arise. Alternatively, threat can close a
pathway.

 A SWOT analysis can be a good way to organise information gathered from studies or surveys.

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Listing internal factors: Strengths and Weaknesses

These are the positive characteristics within your organisation that give you an
Strengths
advantage.

These are the negative characteristics within your organisation that put you at a
Weaknesses
disadvantage.

Consider the following:

 Human resources – staff, volunteers, board members. Also, the motivation, talent,
collaboration levels, effectiveness and efficiency.

 Leadership/management style – impact on the organisational culture.

 Physical resources – location, building, facilities, equipment.

 Financial – investments, grants, funding, fees, income streams.

 Activities and processes – programs, systems: employee programs, software systems, and
departmental structures.

 Past experiences – history of learning and success, reputation in the community.

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Listing external factors: Opportunities and Threats

These are the positive characteristics that exist outside your organisation that
Opportunities
you can take advantage of.

These are the negative characteristics that exist outside your organisation that
Threats
will hinder your success.

There are many external influences that affect an organisation at any given time like the behaviour of your
competitors and also macro-economic forces.

Activity: Research

Review the following McDonalds case study: http://panmore.com/mcdonalds-

pestel-pestle-analysis-recommendations
Make notes about how McDonalds is able to use a PESTLE analysis to inform its strategy.

Activity: Research

In pairs, complete the following activity:

 Choose a business that you would be interested in setting up.

 Conduct a PESTLE analysis for that business.

 Based on your PESTLE analysis, decide whether this a favourable environment for the
business.

Activity: Research and discuss

In pairs, complete the following activity:

 Choose a business that you would be interested in setting up.

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  Conduct a SWOT analysis for that business.

 Based on your SWOT analysis would this potentially be a successful business?

Your competitors and your customers

Another external factor to consider are your competitors. You will have to focus on those businesses that
compete with you for sales in your geographic locality. These are the competitors who offer a product or
service that is interchangeable with yours in the eyes of the consumer. You should know as much as you
can about who your competitors are and the details of their businesses, by studying their location, pricing,
advertisements, and even their customers.

You will need to identify the following:

 Against whom do we compete? What are their objectives and strategies?

 What is the size of their business and market share?

 Who are our most intense competitors? What is their image and positioning strategy?

 Which are the most successful/unsuccessful competitors over time? Why?

 What are the strengths and weaknesses of each competitor?

 What is their ability and speed of innovation for new products and services?

 Their assets and competencies?

A scan of the external environment to assist in identifying trends and therefore the need for a product or
service is important but so too is identifying and understanding customer needs.
Researching customers to create a customer profile is important so that a business understands who they are.
Profiling customers provides the opportunity to understand a range of key information about them,
including their income level, location and buying behaviour.

Activity: Watch

Review the following information about identifying customer needs, a video is also included
for review:
https://www.business.qld.gov.au/starting-business/planning/market-customer-
research/researching-customers/customer-needs

Pricing options
Another key part of business planning is to identify pricing options for a business. In setting prices, the
business will need take into account the price at which it could acquire the goods, the manufacturing cost,
the marketplace, competition, market condition, brand, and quality of product.

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Pricing is a fundamental aspect of financial modelling and is one of the four Ps of the marketing mix.
Pricing is the process whereby a business sets the price at which it will sell its products and services, and
may be part of the business's marketing plan. In setting prices, the business will take into account the price at
which it could acquire the goods, the manufacturing cost, the marketplace, competition, market condition,
brand, and quality of product.

Importance of the pricing approach

Pricing is also important as the pricing approach is a key component of the organisation’s branding approach.
For example, a company may choose to be a price leader, offering the highest quality, or becoming a luxury
brand. If the business wants to be positioned as having the highest quality, it would not want to sell its
product at a cheaper price than others in the market.

 Competitive pricing: this is pricing that is very close to competitors. As pricing is close, the
consumer’s decision about which product to buy will probably not depend on price.

 Cost-based pricing: this type of pricing approach is based on pricing simply based on
production costs. No other factors are considered.

 Skim pricing: this type of pricing approach involves setting a high price for customers who are less
price sensitive.

 Penetration pricing: This type of pricing approach involves pursuing the objective of quantity
maximisation by means of a low price.

Marketing
The business plan should also outline the marketing approach of the business.
Marketing will ultimately depend on the overall marketing strategy that sets overall direction and goals for
marketing.

Types of marketing communications that a business could use include:

 Advertising: any paid form of communication using any form of mass media.
 Sales promotion: for example, special offers, money off coupons
 Direct mail i.e., sending publicity material to an individual or business.
 Internet marketing: selling products or services online.
Whatever approach the business chooses, it must be clearly outlined in the business plan.

Stakeholder engagement and consultation

During the development of a business plan, it is crucial to engage with stakeholders. Stakeholders can be
internal and external.

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Internal stakeholders could include business partners, those providing finance for the business (shareholders
or sometimes banks – who would then be considered an external stakeholder) and staff. External
stakeholders could include customers and technical advisers.

Stakeholder engagement is the process by which an organisation involves people who may be affected by
the decisions it makes or can influence the implementation of its decisions.

They may support or oppose the decisions, be influential in the organisation or within the community in
which it operates, hold relevant official positions or be affected in the long term.
An underlying principle of stakeholder engagement is that stakeholders have the chance to influence the
decision-making process. This differentiates stakeholder engagement from communications processes that
seek to issue a message or influence groups to agree with a decision that is already made.
During the development of a business plan, the stakeholders are likely to be those directly involved in the
business such as owners or senior management.

Financial, human and physical resources

When developing a business plan, it is important to identify the financial, human and physical resource
requirements for the business.

Finances

Financial requirements may be initial capital required to set up the business such as for equipment that needs
to be purchased. Finances may also be required to deal with cash flow issues during the early phase of the
business where potentially there may be lots of outgoings but little cash coming in.
A business plan should include financial forecasts that set out the expected sales, as well as the expected
costs and therefore the anticipated profit or loss. The financial forecasts will show if ultimately the business
will be financially viable.
Review more information about financial projects and business planning at:
https://www.thebalancesmb.com/writing-a-business-plan-financial-projections-1200842

Human resources

Human resources are the people who are required in order to be able to run the business. The business
planning process should identify personnel required to run the business both in the short term and long term.
It should also clearly identify the governance structure for the business include the owners of the business and
senior management, as well as any specific governance arrangements such as management meetings and their
frequency.

Review more information about human resources and business planning at:
https://www.thebalancesmb.com/writing-business-plan-hr-1200846

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Physical resources
Physical resources are essentially the equipment that the business needs in order to be able to operate. This
may be quite specialised such as a specific machine to produce a product or general such as office furniture,
computers and phones. Again, the business needs to identify exactly what resources are required and make
sure these are in place in order for the business to function.

Activity: Brainstorm

Work in groups for this activity.

Brainstorm the financial, and physical resources that would be needed to implement a
business of your choice.
Take notes and keep them for future reference.

Key performance indicators

A key part of any business plan is to set performance objectives and measures.
Key Performance Indicators (KPIs) can be used to measure the performance of activities that are critical to
the success of an organisation as documented in the business plan. They are an excellent measure of the
contribution of a team or an individual to the organisation.

The purpose of a Key Performance Indicator is to provide an objective performance measure in a key
activity. This enables organisations to set and communicate their performance targets, and to measure
whether or not they are being achieved. Areas of improvement are identified and highlighted making way
for changes to be implemented that lead to measurable performance improvements.

It is important not to have too many KPIs or the impact and importance of them is reduced.

KPIs will differ depending on the nature and objective of the organisation. They will also differ depending
on the focus, values and culture of the organisation. Therefore, it is important to take care when selecting
the KPIs of your team or organisation and ensure that they represent the business.
Examples of KPIs:

 customer satisfaction
 sales
 quality
 unanswered calls
 speed
 timely delivery to client.

Once you have selected the KPIs that represent the goals of your team you need to determine how they will
be measured. This is very important as it impacts on the validity of the entire exercise.

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Let’s consider an example of the KPI of ‘Timely delivery to the client’. Suppose that the contract that we
have with an existing client outlines that your team needs to deliver a summary of all the client’s
transactions on the last Thursday of each month. In addition, the contract has a clause which states that the
fee the client pays for this service is reduced by 20% each day that the statement is late and continues to
accumulate even to the point where your company owes the client money. In this case the KPI of ‘Timely
delivery to the client’ is warranted. No doubt there are a number of stages that the document needs to pass
through before it is delivered to the client.
There should be a timeline for these stages and each timely completion should contribute to the overall KPI.

Activity: Read

It is important to set the right measures for success. Read more at the link:
http://www.bgateway.com/business-guides/grow-and-improve/benchmark-business-
performance/setting-targets-and-key-performance-indicators
Take any notes to summarise what you have read and keep for future reference.

Developing a business plan

Activity: Research and discuss

In pairs or small groups, spend some time researching different templates for business plans.
You may review the following website about writing a business plan:

https://business.gov.au/Planning/Business-plans/How-to-develop-your-business-plan
Look at the headings and subheadings for each section. Make notes to share with the group.
Come back as a group and discuss an ideal format for a business plan.

Effective communication
Good communication skills are vital in working effectively, building solid relationships and preventing
unnecessary misunderstandings, and navigating day-to-day deadlines.
Effective communication skills include:

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 Positivite body
Empathy Active listening Clarity Patience
language

Articulation and Emotional Asking

Feedback Respect
appropriate tone intelligence questions

Effective communication is important when communicating your business plan to the relevant stakeholders.

Activity: Research and discuss

Complete activities from the following link as directed by your trainer/assessor:

http://blog.trainerswarehouse.com/communication-and-listening-exercises/
The trainer/assessor will facilitate a discussion about the outcomes from the research.

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 Activity: Research and discuss

List down factors that may influence how you choose to present ideas. Also think about how
you communicate and your style of presentation.
This could include:

 Learning style of participants

 Type of material being presented

 Existing knowledge of those to whom ideas are being presented

 Equipment available.
The trainer/assessor will facilitate a discussion about the outcomes from the research.

Activity: Group work

Divide into small groups. Ensure you divide the work equally.
The objective is to write a business plan as a group, which will give you practice for your
assessment.
As a group, come up with a business idea. It can be very simple such as setting up a café in
your local area.
Once you have decided on the business idea, as a group you are to write the business plan.
You could allocate different parts of the business plan to different members of the group or
work on all sections together. Either way, the business plan is to be a group effort.
You will be required to present your business plan to the rest of the group at a time allocated
by your trainer/assessor. It is up to you how you present your business plan. You could use
Power Points or just speak to your plan. Make sure all members of the group are involved in
the presentation.

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 Topic 2: Implementing a business plan

A business plan is of little use to an organisation without a means of putting it into place. The following
information is a general overview of the implementation process.
Implementation is an essential part of the business planning process. The specific implementation process
can vary from organisation to organisation and largely depends on the business plan itself. However, there
are some key steps that can be followed to ensure that implementation is successful and that the business
plan is effective.

Step 1 – Evaluate the Business Plan.

The first step in the implementation process is to step back and evaluate the business plan before implementing it.
It is important to carefully review the plan and highlight any elements of the plan that might be especially
challenging.
It is essential to recognise any parts of the plan that might be unrealistic or excessive in cost, either of time or
money. These should be highlighted and kept in mind as the business plan is implemented with possible back
up plans in case the original plan fails.

Step 2 – Create a vision for implementing the Business Plan.

This vision might be a series of goals to be reached, step by step, or an outline of items that need to be
completed.
It is important to let everyone know what the end result should be and why it is important. Establish a
clear image of what the Business Plan is intended to accomplish.

Step 3 – Select team members to help you implement the Business Plan.

The team should understand the purpose of the plan and the steps involved in implementing it.

Step 4 – Schedule meetings to discuss progress reports.

At the meeting, present the list of goals or objectives, and let the team know what has been accomplished, for
example, whether the implementation is on schedule, ahead of schedule, or behind schedule. It is important
to assess the schedule regularly to discuss any changes that need to be made.

Step 5 – Involve owners if relevant.

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Keep them informed on what is happening, and provide progress reports on the implementation of the plan.
Letting owners know about the progress of implementation makes them a part of the process, and, should
problems arise, they will be better able to address concerns or potential changes.

Skilled workers
The business plan itself outlines staffing requirements as was identified in an earlier topic. It will then be
important to make sure all the staff required as outlined in the business plan are available in order to
implement the plan.
Ensuring skilled staff are in place may occur through a
range of methods such as:

 advertising in a newspaper or journal

 advertising on online jobsites, such as Seek
 advertising on social media such as
Facebook or LinkedIn

 direct mail to your networks

 making use of a recruitment agent.
Image you-x-ventures on Unsplash
Once staff are in place within the business, it may also
be necessary to provide training to these staff.
Training could include providing staff member with specific information relevant to the business and
operations such as how to operate a specific piece of equipment and it can also include providing training in
generic skills such as customer service.
Training can also happen in many diverse ways such as through on the job training or by participating in
courses offered by external providers.

Activity: Reflect

Reflect on the factors that may influence a business to choose one method of advertising jobs
over another.
 What information should be included in a job advertisement?
 How did you find your current or previous job?
 How can a business go about recruiting internally?
 What are the advantages and disadvantages of externally recruiting staff?

Activity: Read

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 Read more about ways to recruit staff at the link:
12 recruitment methods you need to know about - Recruitee
Also read the information about identifying skills needs and training at:
https://www.business.gov.au/People/Managing-and-developing-
staff/Training/Identify-your-skill-needs
Take any notes to summarise what you have read and keep for future reference.

Activity: Research and discuss

Think of a possible role within any business of your choice. Now

think of all of the skills required to undertake that role.
Choose two of these skills and consider what kind of training might be appropriate for a staff
member if they did not have these skills.
Consider and make notes on the different ways that the training could be provided to the staff
member.
The trainer/assessor will facilitate a discussion about the outcomes from the research.

Refining performance measurement systems

Once the business is up and running it will be important to test those performance objectives and measures
identified through the planning stage. It may be that the measures need to be refined. For example, original
performance measures such as expectations of profits may in the end be unrealistic and therefore measures
need to be updated to be more realistic.
It may also be that the measures identified were not specific enough and need to be more specific or that the
measures identified were not relevant.
In all the above cases, the business plan should be updated to include the refined performance objectives and
measures. All stakeholders should also be involved in this process.

Reporting
Using the refined measures, it is important to provide regular reports on the progress of the business with
regards to both financial and non-financial performance.
Financial reports can easily be generated using the business’ accounting software and can provide regular
information on sales, cost of sales and gross and net profit and much more.

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It is important to not just focus on financial performance. For example, the performance of the business in
regard to customer perceptions will be very important. This will be particularly the case for a new business.
Other non-financial performance measures that a business could report on could include marketing
performance such as brand awareness, the business’ environmental impact, the effectiveness of the
governance structure in place, the quality of the business’ products and/or services and staff satisfaction.
The importance of financial versus non-financial measures should also be balanced. For example, a
business may choose to lower its expectation of a financial return if it can see that it can perform higher on
another objective such as environmental impact.

All reports on the performance of the business must include clear and concise information that can easily be
understood by anyone reading it.
The purpose of the report will be to provide information on how the business is performing, as well as
suggestions on how to improve performance as required.
A report should also be able to provide information on any aspects of the business that are not going well or
have failed and any variations that need to be made to the business plan.
A report usually has headings, such as the date, to, from and subject. The body of a report is usually divided
into sections and subsections, depending on its purpose. It usually starts with a brief statement about the
purpose of the report. It can also include data collection methods that were used in gathering information for
the report. Some reports are directed at problem solving and can contain complex analytics and visual
representations.
The longest section in a report contains a discussion of the findings. These details can be organised into sub-
sections and presented in a way that highlights the most important aspects of the analyses.
It is important to summarise results and findings into the last section of a report. The conclusions and/or
recommendations resulting from the analysis should be listed in order of importance.
In general, a report should:

 address information requirements

 expose patterns, trends, problems and opportunities

 present information in way that is suited to different stakeholder interests.

Activity: Report

Choose a business and identify two non-financial performance measures for the business to
report on.

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 Prepare a short report about the business’ performance on the measures you have chosen.
Your report should be between 1–2 pages long and be written in clear and concise English.
Submit your report to your assessor trainer/assessor for feedback.

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 Topic 3: Responding to performance data

Performance systems and processes are monitored to assess progress in achieving business plan targets. It is
important to know progress towards goals on a frequent basis so that adjustments and improvements can be
made quickly with least disruption to the achievement of targets.
For this purpose, it is essential to monitor a number of aspects of the business. What you monitor will
depend on the type of business that you conduct.
Monitoring gives control over the activities that are undertaken to produce the product or service for the
business.
The four key areas for monitoring are:

 Capital asset
 Finance  Materials  Humans
resources

Finance

Monitoring budgetary expenditure will indicate to you the activities that are being conducted, or not being
conducted, as the case may be. It is important to ask questions about budgetary expenditure and ensure that
your records are up to date and reflective of current activities.

Materials

When materials were bought and when they were used will indicate to you what work has been carried out
at what speed and what the next steps need to be.

Humans
The activities, quality and speed at which each individual performs will have significant impact on the
progress towards achieving your goals. It is important to monitor and have knowledge of this, as it will
impact on your planning and deadlines. Don't forget to allow for annual and sick leave in your plans.

Capital Asset Resources

Equipment, transport, machinery and resources that were purchased in the past were purchased on the basis
on a cost analysis that took into account their usage. If presently the equipment is left idle or is being under
used then this is costing the organisation money and it is affecting your performance.
Now that you know what to monitor it is a case of how to monitor. This can be done via observation and
documentation, by calculations and graphs, by reports and memos.

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Budget and actual financial information is analysed and interpreted to monitor profit/productivity performance
Unsatisfactory performance is identified, and prompt action is taken to rectify the situation.
The performance of the process applied, the machinery utilised, and the staff employed all need to be
constantly monitored in order to pick up inadequacies in early stages and to rectify problems with least
destruction to the achievement of the overall goal.

Benchmarking and trend analysis

Another way of monitoring business performance is through benchmarking.

Benchmarking a business is a way of measuring performance against similar-sized businesses in an

industry. It gives you essential information about how to improve a business.

There are many ways to benchmark a business including:

 buying financial benchmarking data to

o compare your business's income, expenses and profitability against your industry
averages
o examine the financial data of similar businesses

 contacting a business or industry association for information about industry standards to measure
performance against

 researching and comparing the business's products, services and practices with your
competitors.
Benchmarking helps to:

 see where is possible reduce costs and improve efficiency

 assess the productivity of the business compared to how many employees there are

 identify opportunities for improvement, new ideas and innovative practices

 highlight opportunities for making a business more competitive

 forecast the impact of any changes and see how to prepare for growth.
Trend analysis can also be used to check performance. Trend analysis is the process of comparing business data
over time to identify any consistent results or trends. You can then refine business objectives and plans to respond
to these trends in line with the business goals.

Read more about performing a trend analysis at the following link:

http://www.business.qld.gov.au/business/business-improvement/trend-analysis-business- improvement

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 Activity: Watch

Benchmarking allows you to compare your business to industry best practice and your
competitors.
Video: https://www.business.qld.gov.au/starting-business/planning/market-customer-
research/benchmarking/video

Performance reports
Whatever method you choose to measure performance, the key is to analyse performance against planned
objectives.
So, for example, if a planned objective was to achieve a profit of 10% in the first year, then the financial
reports would need to be analysed to check whether this had been achieved or not.
Where the objective has not been achieved, it does not mean that the business was not a success. It may mean
that the objective was too ambitious or that unexpected events occurred meaning that the business could not
achieve the forecasted profits. Review of performance against objectives may mean refining of the
performance indicators.

Coaching and mentoring staff

Sometimes it may be the case that on analysis of performance, it was found that staff are underperforming.

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 Image kobu on Unsplash

This may be because the staff were negligent in performing their roles but more often than not is because
they did not have the knowledge and skills to perform their roles adequately.
In this case it may be necessary to provide coaching or training to these staff members. We discussed
training in the last topic but let’s look more at what coaching involves.
We will also extend the term coaching to also include mentoring, as mentoring may also form part of
addressing underperforming staff.
Managers will need to be able to provide coaching and mentoring (or delegate the role) in order to help
staff, gain competency in their role.

Activity: Reflect

Consider a task that you are particularly good at.

How would you coach a fellow colleague so that they can gain skills from you?

How would you mentor a fellow colleague so that they can gain experience and knowledge
from you?

Changing the plan

Based on all the above, it may be necessary to make changes to a business plan. This may involve any
reviewing system processes and work methods regularly as part of continuous improvement for the business.
For example, if the business was constantly under performing in regard to sales and it was found that this
was due to poor customer service, then the business’ customer service procedure would need to be
reviewed. This may also involve providing coaching and training to staff as indicated above.

Activity: Brainstorm

In small groups, brainstorm the following:

 How easy is it to make changes to a business plan?

 A procedure/process to follow for changing a business plan. The

trainer/assessor will facilitate a discussion.

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