Tips on how to write a business plan
Monique Borst is an expert in food business development. Monique runs a food business startup bootcamp
How to get started with market research: Because of the internet, a huge amount of valuable information can be gleaned from your desktop in the comfort of your own home. It's a good place to start. Simple online searches can reveal a lot about potential customers and suppliers, as well as your competitors. The Business & IP Centre at the British Library is a fabulous source of information. You can also see what you can glean from company records held at Companies House. However, there really is no substitute for getting out there and talking to prospective customers. And it's not just asking them whether they like your idea for a business, it's whether they will buy from you and pay your prices – that's the crux.
Consider why there is a gap in the market for your idea: A word of warning: if you identify a segment that isn't being served by competitors, do ask yourself why others might have found it impossible to run a viable business in that niche. There might not be enough money in it. Alternatively, you might be onto a winner, having spotted a lucrative gap in the market.
Your financial information MUST stack up when scrutinised - so ask yourself these questions: The first step is to make an estimate of all the different costs involved in starting your new business: startup costs, overheads and working capital - and how you're going to raise the money you need.
• Have you made an estimate of the projected sales income from your business?
• Have you made an estimate of the direct and indirect costs of running your business, including your own personal survival income?
• Have you put together a cashflow projection for at least your first year in business?
• Have you included a reasonable contingency in your forecast in case sales or costs are significantly different from forecast?
• Do you know how much finance you need to fund your business and where you will get it from - for example using your own money, obtaining finance from a bank or from some other source, such as friends and family or an outside investor?
• Have you taken into account in your financial forecasts the full cost of any business borrowing, repaying both capital and interest?
• Have you identified the value of the business and personal assets you can provide as security to lenders, particularly banks?
• Have you drawn up your personal survival budget - that is, the money you will need for your own personal living expenses?
Once you have worked out your startup costs and added a 25% contingency, compare them against your sales forecasts. If your costs exceed expected revenue, you need to find ways to sell more, reduce costs or else find a viable business idea! It can take time for a new business to begin making regular sales, let alone turn a healthy profit. If you can't afford to fund the launch of your business, you at least know how much funding you require.
Emma Warren is managing director at Portfolio Directors. Emma is a business adviser who works with directors and business owners
How long should a business plan be? Well, I think the important thing is to consider who you're writing it for, as different audiences will have different needs. So, if it's for a third party, don't be afraid to ask them what information they need - you can save yourself a lot of time. If you're doing the plan for yourself so that you can develop and run your business, the research and thinking is important. Then the trick is to put it into a format you are comfortable with so that you use it - business plans shouldn't be dusty doorstops. For some people, a one page business plan is fine, for others they need to develop each of the sections to get to the end plan - so it's much longer.
David Barker is founder and technical director at 4D Data Centres. David started his business in 1999 at the age of 14 and has grown 4D every year since
A brief but regularly updated business plan is important for a growing business: Business plans aren't just for startup
companies or new ventures, and can prove useful to an established business for keeping track of its progress. It can help discover how well the objectives that were set out are being met. At 4D we try to have an in-depth look at our plan on an annual basis to make sure we're not missing any new opportunities. Or perhaps changing conditions mean we need to stop some of our activities - deciding what not to do is as important as deciding what you should be doing. In fact, I'd go as far as to say that a brief but regularly updated business plan for an established or growing business is possibly more important than one for a startup. Think of it as a key performance indicator (KPI) for yourself and the rest of the management team.
Don't get hung up on considering all the risks: Risk in a business should always be considered when writing the business plan. However, especially in the early stages, it can be tempting to spend far too much time looking at every possible risk and then trying to mitigate them all. Launching a new business is all about risk but at some point you need to decide that the remaining risks are acceptable. You can always look to review them in six or 12 months, when I'm certain you'll have thought of a few more after trading for a while.
Get to grips with the nuts and bolts of running a business: Few businesses fail because of a fundamentally bad business idea. Most go to the wall because of an unwillingness, or inability, to get to grips with the nuts and bolts of running a business. Doing the stunningly boring stunningly well is not only rewarding in itself, it also reduces stress and frees up time to turn your brilliant business idea into a growing stream of profits.
Jane Hopkins MBE is the founder of MumsClub. Jane was awarded an MBE for services to entrepreneurship in 2012
Don't be afraid to change your original plan: In my experience established business owners do not always refer back to their original business plans enough. I'm sure we're all guilty of it. Entrepreneurs tend to spot new opportunities and can go off on tangents - which is great of course - but you should take care not to lose sight of the end goal. If your end goal changes because of a new opportunity, then the steps you need to reach it will also change so you should take time to revise and update your original plan accordingly.
Daniel Callaghan is the founder of MBAandCo.com and an internationally published author
Update the plan once you've got firm figures: By going back to the business plan and updating the variables in your financial models and forecasts with real time figures you will have a far clearer idea of where your business is - and most importantly where it is going.
Clive Lewis is head of enterprise in the regions team at the Institute of Chartered Accountants in England and Wales
You need to consider the business's ability to cope with change: When preparing or updating the plan, the key points in the lifecycle of the business will need to be considered. The lifecycle changes could result in the need to take on more staff, the opportunity to move into new markets, the requirement to invest in new premises or other assets such as the plant, equipment, new products or services. Or perhaps there will be the need for more working capital to hold increased stocks or debtors, or to negotiate better terms with suppliers.
The business will need to consider its ability to cope with the change, and its financial needs. It will carefully look at all the options that are available. The revisited plan may suggest that significant new finance is required, or that the business is generating more cash than it requires. Issues external to the business (such as a major shareholder wanting to exit) may also suggest a change in financing arrangements. These scenarios may require a conversation with your corporate finance advisers.
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