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Writing a Business Plan
This fact file gives suggestions about the contents and layout of a business plan.
1. Introduction
A business plan is a complete description of a business and its plans for the next 1-5 years. It explains what the business does (or will do); outlines who will buy the product or services and why; includes financial forecasts; and indicates how much money (if any) is needed.
2. Use
Most people only write a business plan when they need to raise finance for their business. However, the ideal business plan can be thought of like a road map - you define your destination (in other words, your strategic objectives) and the business plan then acts as your route plan for getting there. You should, therefore, revise your business plan each year, set targets and prepare financial forecasts. You should do this regardless of whether you need to raise extra money or not.
3. Contents of a Business Plan
Below is a list of all the items a business plan could contain. Not all of them will be appropriate in every case, so do not worry if it seems best to miss out a section. The cover page should give the business name and the names and addresses of the proprietors.
(i) Summary
The summary should briefly describe the business and highlight the key objectives. You should probably write this last.
(ii) The Business
(a) Describe it and its history to date.
(b) How does its performance compare with its competitors?
(c) Give copies of records if already started - profit and loss account, balance sheet, bank records, present funding.
(d) Major accomplishments.
(iii) Product or Service
(a) Describe it in layman's terms!
(b) What are the advantages of your product or service; what need does it meet; what are its unique features?
(c) Give details of patent or copyright or statutory requirements if appropriate.
(d) Discuss competitive products.
(iv) The Market
(a) Give estimated demand in the short and long term and explain why this demand is expected.
(b) Who are the target customers?
(c) Who are competitors and possible future competitors? Comparison of product/service; why is yours distinctive? Advantages of your business over competitors.
(d) Give an appraisal of the competition.
(v) Marketing Plan
(a) Give details of target markets, and show that a market exists; make an estimate of your current and predicted market share.
(b) Explain the pricing policy.
(c) Explain how the product or service will be promoted.
(d) Give details of the selling and distribution methods.
(e) Explain the longer term plans of the business.
(f) Give details of orders or interest by potential customers.
(vi) Operations
(a) Highlight any competitive advantages.
(b) State where the business is (or will be) located.
(c) Describe the premises and the equipment the business has, or will need.
(d) Describe the production process.
(e) Personnel requirements.
(vii) Management and Organisation
(a) What are the strengths of the people involved?
(b) If there are apparent weaknesses explain how they will be overcome.
(c) Give brief CV details including age, education, experience, etc. of all key personnel.
(viii) Financial Information
(a) Give start up or expansion and budget information; include historical statements if already trading.
(b) Costing and pricing.
(c) Give financial forecasts including cash flow, profit and loss and balance sheet projections, omitting any grant or loan which may be required. Give the break even point (i.e. the level of sales at which the business will start to make a profit.
(d) Include details of personal savings to be invested.
(e) Give details of all personal financial commitments (personal survival budget).
(f) Explain all your assumptions.
(ix) Financial Requirements
(a) Give details of how much is needed, when and from whom.
(b) What overdraft facility will be required?
(c) Specify any other grants or loans, such as the Enterprise Allowance or Local Authority grants, which have been obtained or applied for.
(x) Security
Give details of any assets available as security.
4. Useful Tips
(i) Content
Most bankers and other funders like to see concise 8-10 page business plans with extra information as appendices. If there is too much, it is less likely to be read carefully; if too little, you will be asked for more details. The more money you are looking for the more comprehensive you need to be.
(ii) Getting the Information and Drafting the Plan
Your business plan will change almost daily as you collect information. If you have and can use a computer, you will find this very useful; otherwise, it is best to write the plan after you have done all your preparatory work. It is always useful to try out the plan on a counsellor at your nearest local enterprise agency (or enterprise trust in Scotland).
(iii) Presentation
Good presentation can make a big difference to portraying a professional image and, therefore, to raising the funds you need. Add a cover page giving the name of your business, your name and address. If possible, have your plan professionally bound.
(iv) Funding
Don't underestimate your funding requirements. Make sure you take into account the development of your business over 2-3 years.
(v) Verification
Make sure you refer to any external publications or data to support your information. This will show you have taken time to prepare and will appear more professional.
(vi) Appendices
The CVs of key personnel, plus any other details required, (such as technical descriptions, market statistics or financial figures) should be included as appendices to keep the body of the business plan short and uncluttered.
(vii) Above all
- Be honest.
- Be logical.
- Be consistent.
- Be realistic.
5. Useful Addresses
Livewire
Freepost NT 805
Newcastle upon Tyne
NE1 1BR
Tel: (0191) 261 5584Livewire helps young people to explore the option of starting or developing their own business.
Small Business Units can be found at the following banks:
(a) Barclays.
(b) Lloyds.
(c) National Westminster.
(d) Midland.
Your local Training and Enterprise Council (TEC) or Local Enterprise Company (LEC) will be able to put you in touch with your nearest enterprise agency, enterprise trust of Business Link.
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