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Writing a Business Plan

 

young couple on pc writing business plan

Writing a Business Plan

If you are starting anything more than a very simple business, a well thought out cashflow is worth doing as you can see exactly where any pitfalls might be in terms of cashflow or sales drying up and plan accordingly. Failure to plan properly is a major factor in many small business failures!

bank meetingIf you are going to apply for a business loan, or grant, you will need to prepare a structured business plan. This will set out in words and figures your proposed business venture. It should provide a summary of your market research, detail your finances and showcase your aims and goals for your business.

A business plan will also help you personally with your business start-up, as it will give you a chance to get your aims and future goals down on paper. You will be able to assess your venture more objectively, once it is in black and white.

It will make everything seem more real and attainable, and enable you to make decisions about how you are going to develop and grow your new business. Keep it as simple as you can, you don't want to stifle your creative plans for your new business by getting too bogged down by paperwork.

Especially with the current reluctance of banks to do any lending at all to small and start-up businesses, anyone considering lending you money will want to see that you've done your research, planned your promotion and advertising, and got a good idea about your day-to-day running costs.

Once you have been in business for a few months you will be able to adjust your real figures with your projections, but at first you will have to make realistic predictions. Don't consider your business plan a 'one off', you need to be updating, monitoring and reassessing, it can be a valuable tool for you, as well as initially selling you to the bank manager.

Try to encompass the passion and enthusiasm you have for your business in your business plan, it should then come across in your writing and be evident to any new business prospective investors. Enthusiasm is a highly rated requirement for would-be entrepreneurs, and is an attractive quality in somebody you are considering working with.

Bank managers consider hundreds of business plans, and so it doesn't hurt to stand out. It is a good idea to get help from your accountant with the financial side of things, unless you are confident with figures.

Opening Statement

Grab the reader's interest straight away by beginning your business plan with your reasons for starting a business, and your vision for the future of your new business. Highlight the gap in the market you will be filling, describe the profit you aim to achieve and the investment required to meet this goal. Include your personal details and those of any partners, stating your qualifications and relevant experience. This initial statement should stand out, like the first paragraph in an essay, and is often easier to complete after you've written the rest of your plan.

woman writing a business planOverview of your Business

This is where you put down on paper the 'nuts and bolts' of your business :

Your product or service
Describe your product/service, including the business name, the legal form of business
i.e sole trader, partnership, limited company, the history of when you were established, and in detail how your business will work.This is the point you can explain the advantages of your small business being suitable for being home-based. Describe how you will develop your product for business success.

Market research
Describe the existing market, including your customer profile, the potential size of the market, your identified competition and their strengths and weaknesses (and how you are better and why customers will choose your business). You could include your pricing, with comparison to the existing market, in this section.

Promotion
Set down your plans for advertising and promotion, include costs, and also future options.

Employees
Will you be looking to employ anyone in your business, and if so will they be part-time or full-time workers? Discuss their pay, facilities and any necessary insurance or legal requirements.

Suppliers
Who will provide your materials or goods, do they offer a competitive price? State delivery options and payment requirements.

Finances
You need to work out your cash flow figures - this is money in and out. You should provide details of your actual, or expected, monthly income and expenditure. Set down the money you require, and exactly how it will be used, such as any money you will need to get started for equipment or advertising. This calls for your projected profit, likely overheads and the turnover needed to break even.

Don't be tempted to over-estimate your sales forecasts, it won't do you any favours. Discuss whether there is a seasonal effect on your income and your intended budgets, including your personal expenses.

You also need to address how you intend to repay any loan you secure. This is the point to add any security you may have, and your own personal investment in the business. If you plan to work from home remember you can offset a proportion of your rent/mortgage and lighting, heating and phone expenses. Also a proportion of your car maintenance and petrol costs may be deductable.

It can pay dividends to get an accountant to either work out your financial statement, or to look over your figures before you submit your business plan. If you have been trading you will need to include actual audited accounts for the last two years, rather than the projected balance sheets and cashflow forecasts you would provide if you are a start-up.

Risk Assessment
You need to mention any possible risks to the smooth running of your business, and your plans to address or allow for any such threats to your productivity. An investor will be impressed you are covering all aspects of running a business, including planning how to deal with difficulties.

Professional Advisers
List details of your accountant, solicitor, bank manger, design and marketing experts and insurance adviser.

If you've followed all the above steps to Writing a Business Plan you've created your own invaluable tool, which will hopefully help you realise, and anyone else who reads it, exactly what you need to do to achieve business success.


Legal forms of businesses

Sole Trader

  • You trade under your own name, or business name.
  • You are required to submit financial accounts to HM Revenue & Customs (HMRC).
  • You are liable for any debts incurred by the business.
  • Partnership

  • As above
  • You are advised to get a solicitor to draw up a legal partnership deed.
  • You can be held liable for your partner's debt.

Limited Company

  • Your liability is limited to the share capital of the named company.
  • There are tax advantages, but there is a lot more administration. You need to submit accounts every year to companies house and there are penalties if you fail to do so or are late filing. Unless you are very savvy, you'll need to pay an accountant every year to prepare and submit your accounts.


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