Once you have decided to start your own business, whether as a sole trader, partnership, or limited company, the first thing you will need to do is create a business plan.
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Your business plan will essentially be your business bible - it will act as your instruction manual, advice guide and companion throughout your entire business life.
A business plan will not only give potential investors and other interested parties a good grasp of what your business is about, it will help you, as the owner, to keep true to your original goals as your business grows.
Although it is possible to research and draw up your own business plan alone, hiring an accountant will ensure that all of the information you provide is not only accurate, but realistic. All you have to do is browse our directory to find an accountant who has previous experience with start-ups - preferably with start-ups similar to your own. With an accountant's help, your young business could be given the stable platform necessary to prosper in the competitive business market.
What is a business plan?
A business plan is a written document that describes every single detail of a proposed business. It should describe clearly and as simply as possible what the business offers, how it will fit into the market, how it will be run, how much it will cost to launch and how much it can be expected to return in terms of profit.
Target audience for your business plan
It is important to think about your audience when writing a business plan. Who are you explaining all of this information to? Your audience may include:
- Potential investors - This could be a friend, or it could be a professional venture capitalist firm. Potential investors will need to know what the likelihood will be of receiving a return on the money they invest.
- Banks - If you need to get a bank loan, your bank manager will need to see realistic financial forecasts to determine the likelihood of you being able to pay it back.
- Grant providers - If you think your business is going to be beneficial to your local or wider community by creating jobs, generating economy or attracting visitors, you may be eligible for a grant. You will need substantial evidence to negotiate a grant, and a business plan is a great way of providing the facts.
- Potential buyers - Although at this point the idea of selling up may seem a distant prospect, it is something you probably will have to consider in the future. Providing an original business plan will give potential buyers an idea of the original business concept, and will also allow them to see how it has developed and grown over time.
- Potential partners - In order to recruit new partners, you will need to provide detailed information about your business.
Remember that these are the people you are trying to impress. Your business plan is essentially a sales pitch. Even if your idea is fantastically original and exciting, if you can't produce the facts to back up the ideas, you could miss out on potential investment. If you can't afford to set up your business without external investment, then you will need to make sure your business plan is completely fool proof.
Business plan template
So what information will you need to include in your business plan? You are generally advised to follow a business plan template:
1. Business concept
3. Products and services
4. Legal Requirements
5. Market research
6. Market strategies
10. Financial Forecast
1. Business concept
This section is designed to draw readers in, inform them of what to expect over the following pages and introduce them to your business idea. This section could include:
- Executive Summary - (Business Link suggests completing this section at the end. By then you will have a clearer picture of exactly what it is you are summarising.) Please note that this is not a brief explanation of what your business does, it is a synopses of the following plan.
- Business Details - Include the business name, address, telephone number, legal status, and what it is your business does (a few brief sentences of description will suffice).
- Key Personnel - This should include details of all owners, including name, position/responsibility, level of experience in industry, previous employment, key skills bought to the business, any business training undertaken, details of qualifications and most recent salary.
- Other Personnel - Details of any shareholders (including the same details as above).
This section should sum up the goals you want your business to work towards. Include the following:
- Business idea - Provide a brief summary of your business idea.
- Business goals - Use this section to specify what it is you want to achieve in the first year of business, e.g. to produce a turnover of £100,000, or to trade at break-even.
- Future hopes - Write a paragraph describing how you imagine your business to look in 3-5 years time.
3. Products and services
Use this section to outline the nature of your business's products or services, including a section on their features and benefits.
4. Legal requirements
Outline all legal and insurance requirements that will apply to your business, and how you intend to meet them. Do you need permits/licenses? Do you need to register with Companies House?
5. Market research
This section allows you to explore the 'playing field' - the current state of the market you are hoping to compete in. Include:
- trends in your chosen market, including evidence
- customer profiles - who will you be selling to?
- what do your customers want? Include evidence (e.g. focus groups, questionnaires)
- volume of customers expected
- how much customers are likely to pay for your product or service.
6. Market strategies
How are you going to infiltrate the market and compete against others trading in the same industry?
- USP - Unique selling points - what does your business offer that other businesses don't?
- Competitors - Include name, strengths, weaknesses and reasons your own business is better.
- Market risks - What risks can you identify? How will you manage these risks so that they become less of a threat?
- Pricing - How will you calculate your prices? How will these prices compare to the competition? What are your reasons for the difference between your price and the competitors' prices?
How will people hear about your business? How will you target your demographic? Think about:
- Advertising - Where should you place your ads? Where does your target audience live? What do they do? Think about flyers, posters, radio ads, TV ads, Facebook ads, Google ads etc.
Will you need help to launch your business? You might need staff for the shop floor, a receptionist, cleaners, managers, delivery people. Use this section to stipulate:
- the role of each employee
- the cost of each employee
- the experience necessary for the job
- specialist skills and qualifications.
More likely than not, you will need to purchase certain items before you begin trade. This could include:
- Premises - Do you require an office? A shop? State type of premises required at start up, including cost, plus any possible premises required in the future, including cost.
- Supplies - Who will you purchase your supplies from? Include supplier name, what you'll buy from them and number of days' credit.
- Equipment - What do you need to launch your product or service? State what it is you need, when it is you needed, how you will fund it and cost per unit.
10. Financial forecast
The financial forecast section of your business plan is generally seen as the most important. This is where potential investors will look for the facts and figures that could determine whether or not they work with you. This section will need to be completely accurate, thorough and professional. For this reason, it is advisable to enlist the help of an accountant.
A financial plan generally consists of four fundamental parts:
1. Starting costs - this should include an estimation of:
- your current assets - available value (cash)
- your capital assets - the value of everything you own
- your start-up expenses - registration fees etc.
2. The starting balance sheet - this should include details of:
- your total assets (calculated from the starting costs section)
- planned investments (equity)
- planned loans (liabilities).
3. A financial forecast income statement - this should include:
- all start-up expenses
- forecast revenue
- forecast of goods cost
- forecast of overhead expenses
- revenue - expenses = net profit.
A cash flow forecast - this should include:
- estimation of monthly sales
- future loans and investments
- total receipts
- estimation of monthly purchases
- estimation for monthly overheads
- estimation for loan repayment
- calculation of disbursements.
Business plan style
Presentation should be treated with as much care as content. Banks, investors and venture capitalists will be basing their opinion of you and your business on the business plan you provide. If it looks scrappy, unprofessional, or lazy, it will not be taken seriously. You are advised to take the following in to account:
Have your plan covered and bound by a specialist. Not only does this show effort and professionalism, it will protect your plan from damage or disintegration over time.
Include a contents and numbered pages for easy navigation. Present your plan in a logical structure similar to the business plan template outlined above, with the executive summary right at the front to draw the reader in. Use a sans-serif font such as Arial or Tahoma and make sure it is set at an appropriate size, such as 11 or 12. Ensure you make full use of paragraphs- splitting text into sections makes it far easier to read. The utilisation of numbering, bullet points and tables can also help with readability.
Write formally with short, clear sentences. Get straight to the point and avoid flowery language or hyperbole. Although you are trying to persuade potential investors to part with their money, it's the quality of facts and ideas that's going to sway them, not descriptive or persuasive language. All you have to do is present all information as clearly and simply as possible.
Avoid spelling or grammatical mistakes at all costs. One simple mistake could easily cost you your credibility. Have your business plan proofread three or four times by different people to eliminate the risk of mistakes. Hire an accountant to go over your financial forecast - one simple error could render all of your calculations invalid and put investors off entirely.
Hiring an accountant to help with your business plan
Hiring an accountant to help with your business plan could be the difference between the success and the failure of your business. Although hiring an accountant could initially set you back in terms of cost, you will benefit in the long run in terms of increasing your chances of external investment, and, perhaps more importantly, ensuring your business is financially viable. Accountants offer objective opinions and will tell you if your plans are unrealistic.
You can use Accountant Directory to search for an accountant according to location or accounting area. Please visit our FAQ section to find out more about how accountants work, how much they cost and any other queries you might have.
Further information about starting a business
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