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!
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.
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.
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.
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
Set down your plans for advertising and promotion, include
costs, and also future options.
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
Who will provide your materials or goods, do they offer a
competitive price? State delivery options and payment requirements.
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.
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.
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
- 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.
- As above
- You are advised to get a solicitor to draw up a legal partnership
- You can be held liable for your partner's debt.
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
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.