Forum | About Us | Opinion Polls | Advertise | News | Contact Us

Font Size:

Business Plans - A Fast Track Guide 

There are two main reasons for creating a Business Plan and Cash Flow Projection:-

1. To give you something to follow and to detail what's in your head - what you intend to do and how you intend to do it; along with how much business you expect to transact and the profits you expect to reap from your business. The act of compiling a Business Plan helps you sort out your thoughts into logical order. As you conduct your business, you can measure whether you are achieving what you set out to achieve. A business run without a Business Plan or Cash Flow Projection is like a ship at sea without charts - destined for failure.
2. To secure interest in your business from other parties; usually from people who possess the potential to inject capital into your business through loans, venture capital, etc. No-one will give you financial assistance (in any form) without knowing what you want to do with it and what they will receive in return. In other words, they need to see your Business Plan and Cash Flow Projection.

CONFRONT YOUR FEARS
The words Business Plan and Cash Flow strike fear into many who intend to start up a business. I don't intend to argue here for or against business planning, but it is fair to say that if you are seeking capital (money) for your business in respect to loans, grants or investment, then you will most definitely need to write a business plan - and the only person qualified to do it is the person who owns the business.
The fear of writing business plans is mostly unfounded and is usually caused through lack of knowledge as to what is involved. Business plans consist mainly of two things: the story of what you are going to do, and a formal chart showing the flow of cash coming in and out of your business as you do what you say you will be doing.The most important aspect of writing a business plan is to write for the reader rather than yourself. The reader will be asking themselves What's in it for me? So that's what you need to be addressing all through the business plan - what's in it for them?

WHAT THE READER OF YOUR PLAN IS LOOKING FOR
Most Business Plans are compiled to raise finance to attract potential investors. These types of people rarely have time to afford the luxury of reading fat business plans, so they will quickly flick through your business plan in this order:-

1. The Executive Summary (To get a feel for the story)
2. The cash flow projections (To see how the money part stacks up)
3. The profit projections (To see how much money there might be in it for them)
4. The depth of your market research (To see if you've done your homework)

If these 4 pass the test, then they might just read the rest?

THE COMPONENTS OF A BUSINESS PLAN:-

1. EXECUTIVE SUMMARY:- An executive summary of what you want to do, why you want to do it, and what the results of doing it will be. This summary should also include the benefits to others of what you intend to do. It is the most important section of the business plan and should tell your whole story in around one page.
2. WHO YOU ARE:- A summary of who you are with a detailed management history. It would also include your academic qualifications, skills and talents. Include a CV if you wish.
3. YOUR PEOPLE:- Who your staff are, why you've chosen them, what roles they will play, and how much you they will cost you.
4. PAST TRADING:- Details of any past trading history (if applicable) and your association with any other companies as a senior manager and/or director.
5. YOUR IDEA:- Full details and explanations about your product/service?
6. YOUR USPs:- Your unique selling points. What makes your product/service different?
7. PROTECTION:- Details of any patents, trademarks. (if applicable)
8. A S.W.O.T. ANALYSIS:- (Strengths, Weaknesses, Opportunities, Threats of your product/service in the market place.)
9. MARKETING:- Any Market Research you have conducted to date, details of your competitors, how you intend to compete in the market place, and your proposed marketing strategies.
10. CUSTOMERS:- Who your customers are exactly, and how you intend to relate to them.
11. PRICING:- Details of your pricing structures and how they relate to the market place and profitability.
12. YOUR COMPETITORS:- Who they are, how they will affect you, their prices?
13. PRODUCTION:- Your current and future production capabilities, including a detailed analysis of premises and equipment costs and uses.
14. WHEN WILL THINGS HAPPEN:- A Critical Path Analysis of when things will happen. (i.e. Time plan of events)
15. FINANCIAL INFORMATION:- (this is the only part that can be written by someone else - with your input):-

• A monthly cash-flow forecast (preferably 2 - 3 years)
• A projected profit & loss account. (P&L)
• Previous accounts.
• A Break-even analysis
• Your set-up costs and capital expenditure.
• Statement of your assets.
• Statement of your survival budget schedule.
• A projected balance sheet.
• A sensitivity analysis. (How profits could change as a result of variable costs.)
• All of the assumptions made for each of the projected figures, such as sales, profit margins, employee costs, overheads, expenses and contingencies.

FINALLY, THE APPENDICES- This is everything else that backs up your business plan, such as Press Cuttings, References, competitor product lists, CVs, etc. and any other things that may help the reader understand your Business Plan more, and therefore help to create a better impression.

THE HARDEST PART
The toughest job connected to business planning and cash flow projecting is trying to work out what your revenue, sales and top line will be. Nevertheless, you must read your crystal ball and look into the future. There's no other way. However, your revenue needs to appear practical in accordance with the resources, effort and equipment you put into your business. You could also start by finding the total size of the market for your product and working backwards. (e.g. If we achieved 5% of the existing annual £50 Million market, then our annual sales will be £2.5 Million per year.)

Remember, your very first objective is to get the reader to be attracted by the Executive Summary, the cash and profit projections and the depth of your research. If they are not attracted by these, then you are wasting your time writing.

Information provided by John Edmonds  - http://www.getaheadinbusiness.com 
Copyright 2009 John Edmonds