Essential knowledge for new businesses – business planning

It’s a well know fact that if you write down your goals then you’re more likely to achieve them, and there’s been lots of research over the years showing this to be true.

But when new businesses set out they rarely have a business or financial plan written down. It probably seems like a waste of time and something that gets in the way of getting on with the business itself. But when it comes to business we believe in following what the most successful businesses do, and they plan properly.

We can help our clients prepare a full business plan along with the detailed financial projections but this takes time and can be expensive. If you’re looking for external funding then you may not any choice other than to have a business plan prepared professionally. But if you’re just starting out and can’t afford an accountant to do one then you can do it yourself. Here’s our guide to doing just that so you can plan your business journey properly.

What’s the point?

A business plan can have a number of objectives

  • Firstly it plans how the business will operate from day to day – how will it win sales, how will it deliver its services, what staff does it need, and what systems are required?
  • Secondly it predicts the level of funding required and how this will be sourced this is done by predicting peak levels of cash outflow and narrowing these down to specific periods
  • It also sets out the strategic plan for the business – how will it grow, what is the exit strategy, and where will we be in 5 years time?
  • If you’re looking for business funding then this could be the document to persuade a funder to fund.

Detailed content

Lets have a look at the detailed things that should be included in a good business plan.

Executive summary

This should be a summary of the key parts of the business plan highlighting the important conclusions drawn. It should be no more than two pages in total.

Strategy

In this section we should aim to cover the reason for the business, what its goals are and how we will know if we’ve succeeded.

There should also be a consideration of the exit strategy and what milestones are important along the way.

The product

This section should include details about the product or service. It should explain what needs the product or services satisfies and what are its features that makes its able to to compete and sell in the necessary quantities. 

We need to be able to convince a reader that the product or service has merit, and the process of doing this will help us be able to market it at the appropriate time.

The market

In this section we need to look at how big the market is for our product or service and what the competition looks like. How much of the market share can we sensibly take?

We need to understand who our customers are and what their buying decisions are.

Marketing

Here we need to work out how we will get our products or services to the market, how will they know about our product and how do we persuade them to buy from us?

Once they’ve chosen to buy how does the process work and how do we stay in touch and generate repeat orders?

Operations

Under this heading we should understand how we plan to do everything in the business. How do we manufacture the product or deliver the service? How do customers place orders and how do we provide it to them?

We should consider how we will source our materials or consumables, how many staff are required to operate the business and when will they be needed?

Financials

Most businesses need some element of funding, this is because there is normally quite a lot of expenditure going out of a business before the first sale is made. Even then once a sale is made there can be a wait for the customer to pay you. Most business customers will expect credit and may not pay for what they’ve had for up to 60 to 90 days.

While you are waiting for this money to come in you will have had to buy and manufacture your stock or pay the salaries of your staff who delivered the service. Even if you are on your own you will need to take care of your personal expenditure.

The timing of incoming and outgoing cash can be quite a complicated calculation but there are software packages out there to help or you can use spreadsheets. If you can’t afford for the main business plan to be prepared by a professional perhaps consider seeking help for this part as it is important but quite tricky to get right.

The normal format for the financials in a business plan is to prepare a month by month projected profit and loss account, these will also form the basis of budgets once the business starts. You can then apply assumptions about the cash flow of these transactions which will result in you calculating a monthly balance sheet and cash flow forecast. These should form an appendix to the business plan and be summarised within it.

It is also a good idea to prepare a schedule of the assumptions that have been made it the process of the calculations.

Good Luck

That’s it, this should set you on your way to preparing a great business plan. If you’re a client of ours we provide unlimited telephone and email support and so if you need any further help then just drop us an email or pick up the phone. If you’re not a client then give us a call so we can tell you how how we’re different.

Jason Seagrave – Partner

jasonseagrave@sfbaa.co.uk | 0115 941 5193 | 07515 668 681

 

 

 

 

 

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