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INTRODUCTION
A business plan is an important document for any business and it can be written for a
variety of reasons. Internally, it can help owners and managers crystallise their ideas, focus
their efforts and monitor performance against established objectives. Externally, the
business plan can act as a medium for attracting finance for start-ups or expansion.
There are many books and publications, which tell you how to write a business plan, what it
should contain and how it should be used. This one is different. This is a work-pack
specifically designed for those who wish to raise finance.
For many people, the experience of raising finance is a new one. The importance of the
plan to this process cannot be over-emphasised. Many opportunities presented to
financiers are subsequently rejected. It is essential, therefore, that the entrepreneur
prepares a quality document. The objective of this work-pack is to help you prepare just
such a document by providing you with the headings which need to be covered.
The sections which follow outline the contents of the business plan. We hope that you will
find the comments relevant and thought provoking and that you will be able to use these
thoughts as a basis for preparation of a business plan which will adequately convey your
ability to succeed.
CONTENTS
The business plan should summarise the proposed activity and the prospects for success
for the venture, paying particular attention to factors that are critical to success or failure.
The contents should be tailored to the particular individual requirements, circumstances or
characteristics of the proposal. However, in general, they commonly fall within the following
categories:
Executive Summary
Current position
Objectives
Competition
Financial plan
We believe that the business plan should be written by you, the management, albeit with
the help of professional advisers. The investor is backing the management and the plan
must be an expression of your objectives. Experience has shown that the advisers provide
a useful role in helping to determine the overall structure of the plan and can provide
helpful ideas and reactions.
Do keep the length of the plan under control and remember that the reader is unlikely to
know the sector as well as you! Avoid jargon and explain acronyms/abbreviations in some
cases a Glossary is a good idea. Do include a title page containing address and contact
details, together with an Index.
EXECUTIVE SUMMARY
Although preferably written last, the Summary should appear at the front of the proposal.
It is essential that the Summary 'catches the eye' and grasps the imagination of the reader
by providing enough information for him to decide in principle if he would be interested in
the deal.
Financiers have different preferences and are looking to invest in different situations. The
Summary must be clear enough for them to establish from the start whether or not the case
is worth pursuing.
The Summary should include:
Why customers will buy from you rather than your competitors;
In the case of new or innovative products, what barriers there are to prevent
competition entering the market;
The potential 'Exit" route/returns for the investor or the ability of the business to
service borrowings.
CURRENT POSITION
This section should be a brief resume of the stage the business has reached and how the
company has developed in the last few years, with reference to factual information.
The following questions should be addressed:
What are the strengths and weaknesses of the business? (SWOT analysis)
OBJECTIVES
The business plan should include a clear and concise statement of the current objectives.
Some factors are easily measured such as turnover or profitability targets. Others are,
however, more qualitative in nature and these should not be disregarded simply because of
their subjective nature. It is important to recognise that performance will be monitored
against these targets by external investors at a later stage; consequently they must be
achievable. Future positive and negative variances will have to be explained.
You should state the following:
Products or Services;
Facilities;
Manufacturing processes;
Routes to market;
Sales pipeline.
COMPETITION
How influential are your competitors and to what extent are they in a strong position to
influence your market share? Is your market dependent on external factors over which you
have no control? If so, these need to be predicted and planned for.
Describe:
Identification of the key function areas e.g. marketing, finance etc. and that each
of these is covered by management with appropriate experience;
The ages of the senior executives. If they are likely to retire soon, what
provisions have been made for succession;
FINANCIAL PLAN
Many business plans fail to raise finance due to the inadequacy of the financial information
provided. Investors will be assessing the projected funding requirement and the anticipated
profitability to establish whether the proposition is commercially viable, and the potential
return sufficient. Ensure that the financial plan reflects the objectives set out in the other
constituent parts of your business plan.
Include the following:
The detailed projections for up to 3 years including profit and loss accounts, cash
flow statements, and balance sheets;
A demonstration that the business has staff with adequate financial skills;
Purpose of Lesson: In this lesson you will learn how to identify the materials, labor,
transportation, shipping, physical location, technology, and other important logistics of how
your business will run.
Therefore, it is critical that the technical and financial data in your study reconcile. If other
parts of your feasibility study shows growth, you will also have to project labor and other
costs and the technical ability to support that growth.
The technical component serves as the written explanation of financial data because if offers
you a place to include detailed information about why an expense has been projected high or
low, or why it is even necessary. It demonstrates to potential investors and lenders (and in
some cases, potential clients) that you have thought about the long-term needs your business
will have as it grows.
Materials
Labor
Transportation or Shipping
Physical Location
Technology
You do not need to include actual financial data in this portion of the study but financial data
supporting your narrative assessment should be included in a separate spreadsheet as an
attachment