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THE BUSINESS PLAN
FAILING TO PLAN IS PLANNING TO FAIL
Every new business needs a business plan as a basis for starting up, for convincing potential funders of the feasibility of the proposal and for reviewing and documenting its progress.
WHAT YOUR BUSINESS PLAN SHOULD CONTAIN
General Information
Type of proposed business with name if chosen.
Contact name and address.
Background and history of the project.
Information about the people involved Including their personal details, skills and experience.
The reason why you wish to adopt a particular business structure
Management information The decision-making and management structure of the business, how decisions are made, and which individuals have specific responsibility for which areas of work.
Your Proposed Product/Service
List all the things you propose to make or do when you start up. Order them by the proportion of your total projected annual sales that each represents, starting with the largest.
Give details of any other ideas for products/services which your business might get involved in as it develops
Your Business market
Questions you must raise and answer
Do you see your business as filling a gap in the market? (i.e. customer demand for the product/service is not adequately met)? Or are you planning head on competition with existing manufacturers/ suppliers?
Who are your major competitors and what do they offer?
What are the special strengths about your business which will give you the edge and make you able to win the orders?
e.g. The product/service - its quality, features, options, services or technical back up
and warranty
e.g. The price - list price, discounts, allowances, payment period and credit terms.
e.g. The place - location, ease of finding by customers and suppliers
If you identify the right "marketing mix' of product price an place you are more likely to develop a loyal and expanding customer group.
Your target customers
Who are they? List them and order the list by the percentage or proportion of your total target customers each group represents, starting with the largest.
Your proposed promotion strategy
What are the best most cost effective ways to tell your target customers about the goods/ services you will offer. e.g. - door to door leaflets, getting the local press to cover your opening (free), "paid for' adverts in papers etc.
Your pricing policy
How you will charge for each product/service, and the basis on which you've fixed that price. e.g.- cost of materials and labour, length of production time Involved, competitors' prices, contribution to business 'overheads' such as utilities and insurance.
Your proposed premises
Where is the best place for your business to be located and what will it cost? Include details of size and special requirements (e.g.- ground floor, high door clearance etc.); also give likely rental charge, length of lease or purchase price.
Financial information
In order to produce a detailed business plan, you need to produce accurate financial forecasts. To produce this part of a business plan you will need to complete certain tasks.
Gather as much financial information about your business as possible.
Use this Information to work out your break even point to check that you can fix a realistic price for your product/service. The break even point is the level of sales you need to achieve to cover the costs of running your business.
Calculate the gross profit margin In order to work out the overall profitability of your proposed business. The gross profit margin is the difference between sales and the direct costs of making those sales.
These elements are vital in enabling you to check the viability of your business idea and to convince others of its viability.
Completion of these tasks will enable you to produce:
cashflow forecast - this is quite simply 'a record of when
you expect to receive cash In your business and when you think you will have to pay it out. In your business plan you should include monthly cash flow forecasting for at least one year.
A profit and loss forecast: this is a forecast of the level of profit or loss you expect your business to produce, according to the accounting records you keep. You should include a forecast covering two years trading.
A balance sheet: a balance sheet shows what you owe and what you own at a particular point in time. A forecast for the end of your first year will show your estimate of that picture at the end of the period.
A statement of financing this shows the amount of money needed to start your business, where that money Is coming from, and the security (if any) to be pledged to each lender.
A copy of last year's audited accounts (if already trading), could also be included.
Presentation of plan
Remember, to number the pages and put a 'Contents' page at the beginning of the plan to help the reader find each section quickly.
Have several copies of the plan produced so that everyone who needs a copy (including you) can have their own.
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