Sceleton of a Business Plan.

Geographical area covered

• Where will you offer your products and services?
• What geographical area will you cover?  Be as specific as you can.

Size of market

• Estimate the total number of potential customers for your product(s)/service(s) within the geographical area.  
• Is the number of customers expanding, static or declining?  
• If static or declining, how will you get more business?

Competitors

• Who are your main competitors?

• Where are they located?

• What are the strengths and weaknesses of each competitor?

• Can you identify areas where you can develop a competitive advantage over them?
• Why will customers buy from you and not from your competitors?
• What will make you different from your competitors?

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Promoting the business

• How will you promote your business?
• What methods will you use (e.g. advertising, fliers, personal selling, networking, business cards)?
• Where will you promote your business (e.g. particular towns, newspapers, and housing estates)?
• What do you intend to say in your promotional activity?
• When will you carry out the promotional activities?
• What do you want to achieve by doing it (e.g. discount offered to get more new customers)?
• How will you target customers for personal selling?

Pricing

• How did you arrive at your pricing policy?
• Give examples of what you intend to charge for the product(s)/service(s) you will be offering.
• What margin will you get on your products or services?
• Which products or services will make the most money?
• If you offer a mobile service, how will you manage travelling time?

• Will you use a price range, e.g. economy, regular and luxury?

Distribution

• Will you sell direct to customers, from a shop, or some other method?
• If you are selling products and also intend to deliver to customers, how will you achieve this?  
• Will you use your own transport or contract others to do it?

Design and packaging

• If packaging is important in your business, say how you intend to package your product(s)
• Will you use a logo or a certain typeface?  
• How will your stationery, vehicles, premises and uniforms will be decorated?
• Put examples in an appendix at the end of the Business Plan

Market research

• What market research have you carried out (e.g. talking to customers, questionnaires, and market reports)?  
• Demonstrate that you have researched that a market exists for your products or services, and that customers will buy from you.

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6. Employees

• What employees do you intend taking on now and in the near future?
• When will you do this?
• What positions will they hold?
• What will be their responsibilities?
• What will be their rates of pay?
• How will you recruit them?
• What training will they need?
• How will you train them?

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7. PREMISES

• Are you going to work from home or from business premises?  
• Describe the layout of the premises (e.g. number of rooms, facilities, equipment)
• If working from home, have you obtained the necessary permission?
• If working from business premises, have you already obtained them?  
• What rent and rates are involved?
• Is the property owned or leased?
• If leased, how long is the lease for, and when is it renewed?
• What conversion work is needed?
• When will this be carried out?

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8. VEHICLES, EQUIPMENT AND OTHER ASSETS

• What assets will you be bringing to the business (e.g. a computer, vehicle, tools and equipment etc.)?  
• Describe individual items
• What is the value (give a realistic assessment)?
• What other assets will you need for the business?
• When you will need them?
• Where will you get them?
• How much will they cost?
• How do you intend to finance their purchase?
• What equipment will you need to conduct all your communications? (e.g. phone, fax, computer)

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9. FINANCE

Start up costs

• You will be able to calculate start-up costs once you have completed your Cash Flow Forecast.

• Include in the requirements for Fixed Assets those items which you already have, as well as those which you have yet to acquire.  (Balance sheet).

• Working Capital requirements within the total start-up costs will vary from business to business - it depends on how long it will be before cash income is generated.  For some businesses, three months or more working Capital will be necessary; it would be hoped that cash would be received almost from the start.  Use the Cash Flow Forecast to estimate the amount of working capital you need.

• Fixed Assets

• Working Capital
• Total Start-up Costs

Personal contribution (cash and assets)

• Indicate here what you will be investing in terms of both the cash you will be putting into the business and assets, such as vehicles and tools and equipment, which you will be bringing to the business as a part of your capital contribution.  
• Put a realistic value on the non-cash items.

Financing the remainder

• If there is a gap between what you require in total and what you are contributing, indicate how you intend bridging the gap.  
• Do you intend borrowing money?  
• If so, how much?
• From where?
• On what terms?
• For how long?  
• Do you intend applying for any available grants?  
• If so, how much?
• From where?

Security against borrowing

• If you are borrowing money, what will you offer as security (if required)?

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Financial projections

• Complete the Cash flow Forecast for the first 12 months of the business
• Complete the Projected Profit and Loss account for the first 12 months of the business
• Complete a Balance Sheet to show the position at the end of the first full year.

• In order to complete, in detail, the Cash Flow Forecast, Projected Profit and Loss and projected Balance Sheet please listen carefully to the course on financial planning.  Ask about any areas if you are unsure what to do.

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PROJECTED PROFIT AND LOSS ACCOUNT FOR 12 MONTHS TO

£        £

Sales

Purchases

Less: Closing Stock        ----------

COST OF GOODS SOLD                ------------

GROSS PROFIT

Add: Other Income                -----------

Less        Wages

Rent/Rates

Insurance

Repairs/Renewals

Light/heat/Power

Motor Expenses

Packaging

Advertising

Telephone

Postage/Stationery

Sundry Expenses

Professional Fees

Loan Interest

HP/Leasing Charges

Bank Interest/Charges

Depreciation

-------------

TOTAL EXPENSES                _________

NET PROFIT BEFORE TAX                _________

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NOTES ON PROFIT & LOSS ACCOUNT

• This is an attempt to indicate your profitability over the first year of trading.

• All figures in the Profit and Loss Account are exclusive of VAT

• Sales include the total invoice value of all the goods and services (whether you have been paid or not), less any returns.

• Customers with outstanding money debts owed to you are known as debtors.

• Purchases are items of stock brought during the period, whether or not they have been paid for.

• Closing Stock is your estimate of unsold purchases at the end of the period.

• Cost of goods sold represents purchases less Closing Stock.

• Gross Profit is sales less Cost Of Goods Sold.

• Other Income would include any grants or financial input, whether or not it has all been received.

• Expenses - remember to allow for prepayments and Accrued Charges - these are balance sheet items.  That is, estimate the period rather than the amount of money paid in advance (prepayment) while rates, electricity and telephone could be paid in arrears (accrued charges).

• Wages should include the employer’s National Insurance contribution.

• Depreciation - estimate the amount by which you intend to depreciate your fixed Assets over the period.  (Computers and software can be depreciated at 100% - 25/7/00).

• Total up all of the Expenses.

• Deduct Total Expenses from Gross Profit to get Net Profit before Tax

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PROJECTED BALANCE SHEET AS AT ______________________________

£        £        £

FIXED ASSETS        Cost        Deprc

Vehicles

Plant and Equipment

----------------------------

----------------------------                        ------------

CURRENT ASSETS

Stock

Debtors

Cash/Bank

Prepayments        ______

Less:

CURRENT LIABILITIES

Creditors

Accrued Charges

______________        _______

NET CURRENTS ASSETS (Working Capital)        ______

_______

_______

FINANCED BY:

Capital Start                ______

Add: Net Profit

______

Less Drawings

Owners Capital Employed

LONG-TERM LIABILITIES         ______        _______

Loans

_______

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NOTES ON THE PROJECTED BALANCE SHEET

• This is a statement of your Assets and Liabilities at the end of your first 12 months’ trading.

• Make sure you put in the date.

• Fixed Assets - those you intend buying during the year plus those you are bringing into the business.   In the first column put in what they cost or, if part of Capital contribution, what they are valued at on the date of start-up.  Work out the anticipated depreciation for the year for the second column,  and put in the book value at Balance Sheet date in the third column - that is cost less depreciation.

• Current Assets –
• Stock figure is the closing Stock from the Profit and Loss Account.  
• Debtors figure is the difference between Sales in Cash Flow Forecast and Sales in Profit Loss Account with adjustment, where appropriate, for VAT.  
• Bank/Cash figure is the closing Balance taken from the Cash Flow Forecast (unless overdrawn).  
• Prepayments figure is the difference between expenses in the Cash Flow and the same expenses in Profit and Loss Account with any necessary VAT adjustments.  Use blank space for other items.

• Current Liabilities – Creditors and accruals are unpaid bills and accrued charges that have been added to cash flow expenses when preparing Profit and Loss Account. If you have a bank overdraft -show it in this section

• Net Current Assets - Total for current Assets less total for Current Liabilities.

• Add Net Current Assets to Fixed Assets to get final figure.

• Financed by - put in opening Capital figure which is total Capital contribution (Cash plus other assets), add on Profit from Profit and loss Account and deduct Drawings as shown in Cash Flow to get Owner’s Capital Employed.

• Put in any loans you intend obtaining at the start or during the year, less any repayments you will have made by the balance Sheet date.

• Add Owner’s Capital Employed to loans outstanding to get final figures, which should be the same as the total of Net Current Assets and Fixed Assets.

• Any expenses which have been accrued for or paid in advance should appear in the balance sheet.

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10.  BUSINESS OBJECTIVES

Business objectives – first year

• What are you hoping to achieve in terms of turnover (Sales) and Net Profit for the year?

• How do you see the business developing over the first few months?

Development of the business in the next few years

• What estimates do you have for approximate turnover and profit estimates, year by year?
• Do you plan to introduce any additional products or services?
• Do you plan to introduce any new staff?
• Do you plan to introduce any new premises?
• Do you plan to introduce any new equipment?
• When will these be introduced?

Investors In People

• If your business has 3 or more people it could be eligible to receive IIP recognition.  
• This is a high status award which is given to excellent businesses that achieve success through planning and getting the best from their staff.
• When would you like to have this happen?