New businesses should always have a business plan. It is the key to success and one of the most important aspects of starting a new business
I love it when a plan comes together (Hannibal Smith, The A-Team)
A Startup Business Plan will also help you to set targets for future performance and monitor finances and profitability. The content of the business plan should cover the following areas.
- Overview. This section, often known as the Management Summary, should summarise in brief the key points of the Plan, highlighting your objectives for the business and how you propose to put them into action. This is the section most likely to be read by people unfamiliar with your business, including those who might be called upon to provide finance for your Plan, so try to avoid technical jargon.
- Description. This should supply a concise description of the business, the essence of your business idea and how you plan to put it into practice. Include details of the background to your proposal, for example how long you have been developing the business idea and what work you have carried out on it to date.
- Personnel. Supply the details of the key personnel including you and any external consultants. Highlight the skills and expertise that these people have (it is a good idea to supply brief CVs for the benefit of external funders) and outline how you intend to deal with any weaknesses in the team.
- Product. Explain the details of your product or service and your Unique Selling Proposition (USP). This is exactly what its name suggests, something distinct from what the competition currently offers. You should also outline your pricing policy in relation to the market.
- Marketing. Provide information on your target markets and your outline marketing plans. This may form the basis for a separate, more detailed, dedicated Marketing Plan. You should include an overview of your competitors and your expected market share together with details of the potential for growth. This is usually a very important part of the plan as it gives a good indication of the likely chance of success.
- Practices. You will need to include information on your proposed operating practices and production methods as well as premises and equipment requirements. Explain how your production or service provision will be carried out and outline any need for capital investment.
- Financial forecasts. The Startup Business Plan should cover your projected financial performance and the assumptions made in your projections. This part of the plan converts what you have already said in the commentary about the business into numbers. It will include a cash flow forecast which shows how much money you expect to flow in and out of the business in the first few years, as well as supplying profit and loss predictions and a series of balance sheets over the period. Detailed financial forecasts will normally be included as an appendix to the business plan.
- Funding requirements. The cash flow forecast referred to above will show how much finance your business needs. The plan should state how much finance you want, in what form, and when it is needed. You should also say what the finance will be used for and show that you will have the resources to make the necessary repayments. You may also give details of any security you can offer.
Putting together a business plan is often seen as a one-off exercise undertaken when a new business is starting up. However the plan should be updated on a regular basis, involving the whole team. It can then be used as a tool against which performance can be monitored and measured. There is much merit in this, as used properly it keeps everyone in the business focused on objectives and inspires a discipline to achieve them.
How can we help?
As Financial Accountants we are particularly well-placed to help you with the preparation of the business plan. We provide added value beyond the traditional number-crunching role performed by accountants. For further details on our business planning services, please contact Loveth Watson on 01733 808075.