Writing a Business Plan
For many people the thought of writing a Business plan can be terrifying. You may have written part of a plan in your job, on the other hand there may be nothing similar that you have ever done before. There are 2 main reasons for producing a Business plan, these are:
To show to potential Investors such as the Bank, Prince's Trust, A Grant Funder, etc. to show them that you have a viable business idea and that you are also able to plan it through. No matter how good your business idea, if you are unable to plan and run the business no-one will feel inclined to risk money on it.
To act as a 'Road map' of where you, and the business, intend to be in the next year, how much you need to set it up, what your sales will be and what cash you will need throughout the year.
For many people setting up a business is possibly the most important thing they can do with their career and yet so few people plan the process through.
If you fail to plan, you plan to fail.
The actual process of putting together the business plan and all the information you should need to use is available freely throughout this site, but the work is yours.
Many Banks have electronic plans (on Disk) or paper based plans with guidance notes. There is no set standard for a business plan, however if you follow this format you won't go far wrong. The Business Plan itself should be logical and read like a good story - remember the people who have to assess whether or not they want to give you the funding may never have met you and may not completely understand the type of business you are going to start as well as you.
BUSINESS PLAN OUTLINE
Cover Sheet with the following: Name(s) of owners(s); name, address and phone number of business.
DESCRIPTION OF WHAT THE BUSINESS DOES (in language everyone can understand, remember your financial backer may not be an expert in the business )
TABLE OF CONTENTS
Description of the Business
Competition and Feasibility Study
Location of Business
Application and Expected Effect of Loan or Investment
Sources and Application of Funding
Capital Equipment and Furniture Lists
Projected Balance Sheet
Projected Income Statements
Cash Flow Projections
For an Existing Business (also include the following documents)
STATEMENT OF PURPOSE
For A Financing Proposal:
DESCRIPTION OF THE BUSINESS
What the business is (or will be):
What market you intend to service, the size of the market, and your expected share;
Why you can service what market better than your competition;
Why you have chosen your particular location;
What management and other personnel are required and available for the operation; and
Why your investment or someone else's money (debt/equity) will help make your business profitable.
If yours is a seasonal business, or if the hours will be adjusted seasonally, make sure that the seasonality is reflected in your replies to the two previous questions.
in addition - FOR A NEW BUSINESS
Why will you be successful in this business?
What is your experience in this business?
Have you spoken with other people in this type of business about their experience, challenges and rewards? What were their responses?
What will be special about your business?
Have you spoken with prospective trade suppliers to find out what managerial and/or technical help they will provide?
Have you asked about trade credit?
If you will be doing and contract work, what are the terms? Reference any firm contract and include it as a supporting document.
Do you have letters of intent from prospective suppliers or purchasers?
In addition - FOR A TAKE-OVER:
When and by whom was the business founded?
Why is the owner selling it?
How did you arrive at a purchase price for the business?
What is the trend of sales?
If the business is going downhill, why? How can you turn it around?
How will your management make the business more profitable?
Generally explain who needs your product or service, and why.
Who exactly is your market? Describe characteristics: age, sex, profession, income, etc., of your various market segments.
What is the present size of the market?
What percent of the market will you have?
What is the market's growth potential?
As the market grows, will your share increase of decrease?
How are you going to satisfy the market?
How will you attract and keep your share of the market?
How can you expand your market?
How are you going to price your service or product, to make a fair profit, and at the same time, be competitive?
What price do you anticipate getting for your product or service?
Is the price competitive?
Why will someone pay you price?
How did you arrive at the price? Is it profitable?
What special advantage do you offer that may justify a higher price? (You don't necessarily have to engage in direct price competition).
Will you offer credit to your customers (accounts receivable)? If so, is this really necessary? Can you afford to extend credit? Can you afford bad debts?
Who are your five nearest competitors? List them by name.
How will your operation be better than theirs?
How is their business: steady? increasing? decreasing? Why?
How are their operations similar and dissimilar to yours?
What are their strengths and/or weaknesses?
What have you learned from watching their operations?
How do you plan to keep an eye on the competition in the future?
LOCATION OF BUSINESS
What kind of building do you need?
What are the attributes and/or salient features of your present or desired business location?
Why is this a desirable area?
Why is this a desirable building?
Does the area around which you intend to locate the business show enthusiasm for you and your business?
What are the advantages and disadvantages of the site in terms of wage rates, unions, and labour availability?
How much space do you need?
Do you need a long-term or short-term lease?
Is the building accessible by public transportation?
Is the building close to customers or suppliers?
Is free or low cost parking nearby?
What are the state and local taxes, laws, utilities, zoning, and variables that may affect the location of you business?
How do you plan to keep an eye on any demographic shift in your area?
What is you business background?
How does your background/business experience help you in this business?
What management experience do you have?
Do you have managerial experience in this type of business?
Do you have managerial experience acquired elsewhere-whether in totally different kinds of business, or as an offshoot of club or team membership, civic or church work, etc.?
What weakness do you have and how will you compensate for them, i.e., will you hire employees or pay consultants who have management abilities/expertise that you don't have?
What education do you have (including both formal and informal learning experience) which have bearing on your managerial abilities or knowledge of the industry?
Personal data: age; where you live and have lived; special abilities and interests; and reasons for going into business?
Are you physically suited to the job? Stamina counts.
Why are you going to be successful at this venture?
Do you have direct operational experience in this type of business?
Who is on the management team?
What are the duties of each individual on the management team?
Are these duties clearly defined? how?
Who does what? Who reports to whom? Where do final decisions get made?
What and how will management be paid?
What additional resources have you arranged to have available to help you and your business (accountant, lawyer, et al.).
NOTE: A personal financial statement must be included as a supporting document in your plan if it is a proposal for financing. Also, include your CV as a supporting document.
What are your staff needs now? In the near future (3years)? In five years?
What skills must they have?
Are the people you need available?
Will your employees be full-time or part-time?
Will you pay salaries or hourly wages?
Certain employee benefits are mandatory. Find out what they are.
Will you provide additional fringe benefits? If so, which ones? Have you calculated the cost of these additional fringe benefits?
Will you utilise overtime? If so, you may be required by law to pay time and a half, double time, and/or other extra costs.
Will you have to train people for both operations and management? If so, at what costs to the business?