- All businesses, at all times, need plans to show how they are going to grow sales and hit profit targets. Different business plans serve different purposes. It could be an internal document which translates into plans for individual departments. Or it is a business plan to support a bank loan, merger or external investment.
- A business plan is vital for start-ups. Especially if they are borrowing money when banks or investors will want to know how they will get their money (plus interest) back.
- Reading a business plan should be like reading a book. It should have a beginning, middle and end. It must be easily understood by the readers - with simple explanations, factual support, short and to the point.
GOLDEN RULE - Before starting to write any business plan undertake some basic market research
A potential new client came to see us. Being made redundant he wanted to set up on his own producing and selling all-weather concrete table tennis tables. He had arranged a personal secured £25,000 bank loan. It was his first business venture and he wanted help with setting up and marketing the business. He had worked out that he could sell the tables for £1800 plus VAT each. His answer to the first question 'Why do you think there is a business for your tables' was 'I have spoken to some local kids and they love it'. 'Who are your customers?' 'I think they will be local councils and schools' was his answer.
While at the meeting we checked the internet for concrete table tennis tables - a German company was selling similar at £1300. By the time of our meeting he had already spent £5500 on product development. After a few more questions our advice was not to start the business. If he had undertaken some very simple on-line desk research and talked to some potential customers it would have saved him a lot of money. If he had launched the business he may have lost all his seed money putting his livelihood and home at risk.
If you were writing a business plan to support a bank loan or outside investment it should have several sections:
- Business introduction with executive summary. The basic questions you need to answer here are:
- What is it you are selling?
- Who will buy it?
- Who are the competitors?
- Why will people buy your product/service and not your competitors?
- How much will it cost and what will it sell for?
- How will you sell it?
- What are the opportunities/ threats?
- What is the state of the market you are in?
- Who is the team behind it?
- How much funding do you need to raise?
- How are the funds to be spent e.g. asset purchase, marketing, working capital?
- Strategic Management - individuals CVs and their roles in the business with an organisation chart
- Marketing Planning- list marketing/sales objectives, target markets, USPs, promotional strategies, market research, sales channels, export
- Operations - product/services plan, staffing, training, procurement, suppliers, distribution systems
- Finance - One year monthly P&L and cash forecasts clearly showing seasonal variations and the effects of delays in receipts and payments. Three year figures required for loans showing break-even. Use 'What If' function in spreadsheet for low medium and high options
- SWOT Analysis - Promote strengths, Avoid weaknesses, Exploit opportunities, Plan for threats
- Appendices - detailed product descriptions , relevant contracts and agreements, detailed drawings, IP statements, marketing literature, etc
Creating a business development plan is a large task. Implementing it can be challenging. There may be skills gaps in the management team. Employing somebody with the skills can be a short term fix and quite costly. We can help. At Deve we have knowledge, skills and processes to help you design an objective business development strategy. We can supply the full range of marketing, management accountancy, copywriting and promotional techniques to implement the strategies. To discuss a project or for more information or just to stay on our list (never passed on) submit your details using the form below or email info[at]deve.co.uk or call 01582 792875