Starting a Business The No Nonsense Guide

Module 6: Your business plan

Your business plan In this module, youll have the opportunity of compiling your business plan. You can use this module standalone if you wish. However, completing modules 3-5 will provide you with the material to populate your business plan. You may also find module 2 helpful in deciding if business is right for you. Following the icons in each section of the business plan will link you back to the relevant module and section in which the worksheet can be found. Compiling a business plan is a key step in starting a business. It sets out what you aim to do in your business and how youll do it. The business plan has four main purposes: to enable you to develop your vision about your business to make sure youve thought of everything to help you raise start up finance to compare your actual progress with what youd planned at the outset. Your business plan is also a living document that will help you guide business growth and development as the months and years go by. You should review and update your business plan on a regular basis.

Find out more See Module 3: Planning your business for more on business planning. Deciding on what business plan you need We have provided two complementary templates for your business plan: an essential business plan and a comprehensive one. Your business needs will help determine which template you should follow. Everyone starting out in business should create the essential business plan. This plan is evidence that youve given careful thought to your business. It shows youre being professional and businesslike in your approach. Psychologically, its an important statement of your commitment. You may be asked for a copy of your business plan by your bank or other banks you want to borrow money from, external investors, business grant providers, potential partners, or anyone interested in buying your business. If this is the case, you should also continue to complete the comprehensive sections of the business plan. This will give the information your bank or outside investors will require. Of course, even if you are not looking for external financing, there may be areas of the comprehensive plan that you may wish to include in your business plan. Once you have completed the essential sections feel free to complete other sections that make sense for you and your business.

Module 6: Your business plan

You will follow one of two content structures depending on which template you have decided to follow: 1. Essential business plan Contents: 2. Comprehensive plan Contents: Executive summary 6.1 Executive summary 6.2 Business details 6.3 Key personnel Vision 6.4 The business idea 6.5 Business goals 6.6 What the business does 6.7 What makes the business different 6.8 Legal requirements Marketing 6.9 Market research 6.10 Profiling customers 6.11 Profiling competitors 6.12 Managing market risks 6.13 Pricing 6.14 Promotion and advertising Running the business 6.15 Staff 6.16 Premises 6.17 Suppliers 6.18 Equipment 6.19 Managing operational risks 6.20 Start-up costs 6.21 Profit and loss forecast Finances 6.20 Start-up costs 6.21 Profit and loss forecast 6.22 Sourcing finance 6.23 Managing financial risks 6.24 Cashflow forecast 2 3 4 5 5 6 6 6 7 7 8 8 8 9 10 10 10 11 11 12 14 15 15 16

6.2 Business details

6.5 Business goals 6.6 What the business does 6.7 What makes the business different

6.9 Market research 6.10 Profiling customers 6.11 Profiling competitors 6.14 Promotion and advertising

Starting a Business - The No Nonsense Guide is produced by Business Link as part of its Starting a Business service. Business Link provides impartial advice and information to help you start, grow and succeed in business. Help and support is also available online, through local workshops and over the telephone. Visit businesslink.gov.uk or call 0845 600 9 006, for further details.

Executive summary

6.1 Executive summary

6.2 Business details Company name:

Address:

Telephone number:

Legal status:

The business will:

6.3 Key personnel Details of owner(s) Name Position/main responsibilities Experience and knowledge of our industry Previous employment Key skills brought to the business Business experience and any training undertaken Academic/professional qualifications Most recent salary

Vision
4.1+4.5
6.4 The business idea Sum up your business idea:

Other key personnel: Name Position/main responsibilities Experience and knowledge of our industry Previous employment Key skills brought to the business Business experience and any training undertaken Academic/professional qualifications Most recent salary

6.5 Business goals 1. What do you want to achieve in your first year of business?

2. Where do you see your business in 3-5 years time?

Marketing
4.1
6.6 What the business does Product/service Features Benefits

4.2

6.9 Market research Trends in your chosen market are:

How you know this:

4.2

6.7 What makes the business different Your product/service is unique or different compared with the competition because:

4.2

6.10 Profiling customers The customer groups you will be selling to are:

Your customer research has shown what your customers want is:

How you know this: 6.8 Legal requirements The legal and insurance requirements that apply in your business are:

Number of customers you expect to win in each group and what they might pay: You will meet your legal and insurance requirements by: Group Number of customers Price they might pay

4.2

6.11 Profiling competitors Competitor name Strengths Weaknesses

How your prices compare with the competition: Product/service Your price Competitor price

How you can improve on their offer and/or price:

Reasons for the differences between your prices and your competitors prices:

6.12 Managing market risks Write down the risks you have identified:

How you will manage these risks so that they become less of a threat:

4.5

6.14 Promotion and advertising How and where will you promote your product/service?

4.5

6.13 Pricing How you calculate your prices:

Running the business

6.15 Staff Role Total cost Necessary experience Specialist skills and/or qualifications 6.18 Equipment Resource When How funded Cost

6.16 Premises Cost Premises required at start-up:

Premises required in the future (if different):

6.19 Managing operational risks Risk Solution

6.17 Suppliers Your key suppliers and their credit terms Supplier What youll buy from them Number of days credit

Staff

Suppliers

10

11

Finances

5.1

6.20 Start-up costs Calculate how much money you need before you start trading IT and computers Telephones and broadband Equipment Stock Tools Vehicles Professional fees Insurance Rent/rent deposit Stationery Marketing Consumables Licences Training Association fees Wages/recruitment Security/health and safety equipment Market research costs Other: (please specify)

5.2

Personal survival budget Estimated annual personal expenditure Mortgage and/or rent Council tax Utilities (gas, electricity, water etc) Personal and property insurance General housekeeping expenses (food etc) Phone and Internet Car tax and insurance Car running expenses HP repayments Hire charges Subscriptions to journals, professional bodies etc Savings plans & pension contributions Contingencies Tax National Insurance Other (specify)

+ Total personal expenditure Estimated personal income (after tax) Income from family, partner Other income (specify the source) + = = Total personal income =

Total start-up costs Your contribution to these costs

Total survival income required from the business (after tax)

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13

5.3

6.21 Profit and loss forecast Year 1 () Total expected sales Less variable costs Gross profit (sales less variable costs) = Calculate your gross profit margin (gross profit total sales x 100) % % % Year 2 () Year 3 ()

5.2

6.22 Sourcing finance Total borrowing requirements for the business Start-up costs Personal start-up contributions Other start-up contributions =

Salaries/wages (survival income + any staff) Premises (including rent, rates, utilities) Telephone and broadband Printing, post and stationery Advertising and promotion Bank charges Professional fees Insurances Bank/HP/interest (payable to your bank) Equipment and vehicle leasing Depreciation Other + Total fixed costs Net profit (gross profit less total fixed costs) Calculate your net profit margin (net profit total sales x 100) Calculate your break-even Year 1 () Total variable costs + total fixed costs Year 2 () Year 3 () = = % % %

Total required The assets you have available as security Estimated net personal assets

5.5

6.23 Managing financial risks The risks that youve identified for your financial forecasts are:

How you will minimise their impact:

14

15

5.4

6.24 Cashflow forecast Start-up 0 Income Cash from sales (incl. VAT) Cash received from debtors Capital/loans received Other Total income Expenditure Wages to staff (incl. PAYE & NIC) Premises (rent, rates & utilities) Telephone & broadband Printing, post & stationery Advertising & promotion Bank charges Professional fees Insurances Bank/HP Equipment & vehicle leasing Payments relating to variable costs + = Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total

Capital expenditure Other payments VAT Owners wages/salary Owners National Insurance Loan repayments (incl. interest) Total expenditure Income less expenditure Opening bank balance Closing bank balance + = 0 0 + =

16

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Starting a Business The No Nonsense Guide is divided into six easy-to-follow modules. Work through it at your own pace or dip in and out, depending upon your areas of interest. Step-by-step, this invaluable resource will guide you towards your goal and help you succeed in business. Module 1: Overview summarises the basic steps youll need to take in order to set up your own business Module 4: Finding and keeping customers covers researching the market, getting your business offer right and successful selling to customers Module 5: Managing money explains the key skills needed to organise your business finances and how to apply for funding

Module 2: Is starting a business right for you? contains information and exercises to help you decide whether running your own business will suit you Module 3: Planning your business will help you to plan the practical and legal aspects of your business

Module 6: Your business plan enables you to develop a business plan to use yourself or to help raise finance

As well as this guide, Business Link offers the following support: Workshops to help you decide whether starting a business is right for you and explain what you need to know to make your business a success Help and advice over the telephone. Call 0845 600 9 006 to talk to a local Business Link adviser Practical guides and online tools on our website. Visit businesslink.gov.uk

Business Link 0845 600 9 006 businesslink.gov.uk

Published May 2010 Crown Copyright Printed in the UK on recycled paper URN: BL/008