A business plan is a useful tool for any business as it is a road map for the business.
It helps you gauge income and expenditure, consider your business model and the assumptions that underpin it, handle unforeseen circumstances and underpins good business decisions. It provides valuable information to those who work for you or with you (such as suppliers) and to potential investors and lenders and assists with the proper allocation of resources.
Preparing a business plan will help you to set clear objectives for your business and clarify your thinking. It will also help to set targets for future performance and monitor finances and profitability. Your plan should provide a thorough examination of the way in which the business will commence and develop. It should describe the business, product or service, market, mode of operation, capital requirements and projected financial results.
The business plan should cover the following areas.
- Executive summary
- An overview of your plans for the business and how you propose to put them into action. This is the section most likely to be read by people unfamiliar with your business so make it concise and try to avoid technical jargon.
- A description of the business, your objectives for it and how you plan to achieve them. Include details of the background to your business for example how long you have been developing the business idea and the work you have carried out to date.
- Details of the key personnel including you and any external consultants. You should highlight the skills and expertise that these people have and outline how you intend to deal with any weaknesses e.g. bringing in expertise by recruiting a non-executive director or a consultant.
- Details of your product or service and your Unique Selling Point. This is exactly what its name suggests, something that the competition does not offer. You should also outline your pricing policy. Do not go into too much technical detail about the product.
- Details of your target markets and your marketing plan. This may form the basis for a separate, more detailed, plan. You should also include an overview of your competitors and your likely market share together with details of the potential for growth. This is usually a very important part of the plan as it gives a good indication of the likely chance of success.
- You will need to include information on your proposed operating practices and production methods as well as premises and equipment requirements. You should also cover the regulatory environment in which you operate and how you comply with any regulations.
- Financial forecasts
- The plan should cover your projected financial performance and the assumptions made in your projections. This part of the plan converts what you have already said about the business into numbers. It will include a cash flow forecast which shows how much money you expect to flow in and out of the business as well as profit and loss predictions and a balance sheet. Detailed financial forecasts will normally be included as an appendix to the plan. As financial advisers we are particularly well placed to help with this part of the plan.
- Financial requirements
- The cash flow forecast referred to above will show how much finance your business needs. The plan should state how much finance you want and in what form. You should also say what the finance will be used for and show that you will have the resources to make the necessary repayments. You may also give details of any security you can offer.
If you are seeking funding for a business idea, having a business plan is critical. You will need to demonstrate to potential backers a strong understanding of how and why there is a need for your product or service and provide information about the business’s strengths and weaknesses and how these will be exploited or overcome. Potential backers will also need reassurances as to how the management team will run the business and how any investments will be repaid.
We can review your business plan and help you to complete it, highlighting its areas of weakness and suggesting how to m. As a first step, it is helpful if you try to complete our business plan questionnaire to assess your plan’s current state of readiness. This will help to provide us with a rough initial picture of its current strengths and areas of weakness, enabling us to target our advice more effectively.
For more information please contact Iain Sim or Gill Groom.