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  Start-up flow chart: The Business Plan.
What is it?

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In detail:
Formulate your products/ services.
Consider the competition.
Attracting customers.
Choosing your premises.
Business Equipment.
Your local Business Link.
Employing staff.
•Your 'business plan'.
Your 'cashflow forecast'.
Limited Company, Sole Trader or Partnership.
Choosing an accountant.



Have you completed a business plan?

What is a business plan?

Completing a business plan encourages you to get passed the 'initial concept' stage of your business start-up and, if it's done properly, leads you to estimate, to the best of your ability, real figures.

E.g. annual figures for:

  • Expected revenue from sales
  • Total direct costs
  • Profit margin
  • Overheads
  • Break-even point
  • Profits
  • Etc.

If you are looking to attract finance for your start-up it is essential to complete this with extra special care. It will be used for the evaluation of your proposal. (See below)

How to compile a business plan.

To raise loan finance or venture capital you must have a sound, well-structured business plan which gives potential sources of finance an insight into your current operation and future proposals. However, many of the best laid plans fall down badly on presentation, no matter how dynamic the idea or the entrepreneur behind it.

If you have never considered a business plan before, you might be a little sceptical, but be assured that a good business plan is an essential management tool which allows you to forecast, and hence avoid, many potential pitfalls. Whether you are expanding an existing operation or starting a new venture the right plan, well presented, has a much stronger chance of success in securing the right funding.

Your plan must cover four basic stages of business development:

1) Planning.

Management's best estimate of future operations is set out in a logical, organised way. This crystallises ideas and identifies any problems and areas for further analysis.

2) Financing.

To determine when money is required and whether it needs to take the form of venture or loan capital, or other forms of funding.

3) Implementation.

Which provides management with guidelines for running the business efficiently.

4) Monitoring.

The means by which management can assess and control the company's progress by comparison with financial projections in the plan.

Putting the plan together.

Resist the temptation to ask your accountant to write the narrative part of the proposal for you. It might seem to be a good idea for a more professional look, but more often than not the result will not convey your individual "spark", your character as an entrepreneur.

In any event lenders and investors will ultimately deal with you direct, a fact best expressed by the well-worn truism that "the three most important criteria for investment are management, management and management". Without this essential ingredient, the best ideas for making money will remain just that.

Here we give you the basics and some points to watch out for in presenting your business plan.

The plan should not be too verbose or too long, conciseness is all do not attempt to include every single detail. Be selective and do not bore the reader. If he wants further information he will ask you.

Arguably, the most important section of the plan is the introduction, or executive summary. This is the investor's first insight into your business. If it is not brief and clear, if it fails to highlight the target information, your plan will be rejected straight away. The majority are rejected at this point.

The arrangement of information is a balanced business plan should be roughly along the following lines:


1) Contents Table
2) Introduction :

First Principles.
Is the venture new or established?
What is the nature of the undertaking?
Who is the management team?
Who is the competition?
How large is the marketplace?
To what extent is the business dependent on suppliers?
What are the projections and financial history?
What are the investment required and the proposed exit route?

3) Background:

The company's background and track record - with a CV in the case of an individual.

4) Products / Services Provided.
5) Management and Organisation.

Management chart.
Staffing plan.
Commitment to company success, financial and otherwise (including share bonus and other arrangements).
Extent of reliance on outsiders such as lawyers, non-executive directors, family and friends; new skills required for company growth.

6) Markets and Marketing.

Your market: who your major customers are, and why; how you plan to find and reach potential customers; how much bearing your marketing budget will have on your success.

7) Methods of Operation.

Production (if appropriate): actual/potential problems in production process; present/projected capacity; proposed quality/efficiency controls; present/future employee need; availability of relevant skills; current/projected labour costs.

Premises and facilities: current/future suitability of premises; vulnerability to rent or leasehold pitfalls (as opposed to property ownership); adequacy of plant and machinery - cost and likely date for replacement.

8) Financial Information.
Projections:

Are revenue and capital budgets, and cashflow forecasts logical and consistent with the rest of the plan?
Are the assumptions realistic given current economic conditions?

Other Information :

How sensitive are the projections to the assumptions you have made?
Is there any reason to doubt the soundness of the projections (e.g. historical results)?
When is the break-even point reached?
What are the alternatives and what is the intended exit route?

This is the area where your accountant should be invited to assist you with the preparation of the figures.

9) Appendices.

This information was kindly supplied by:
Brooking, Ruse & Co. Chartered Accountants.
T.+44(0) 1934 622466



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