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Business Plan contents
? Executive Summary: 1-3 pages that summarizes the full document
? Business Description: Mission statement; Legal establishment; history; business objectives/goals (short/longer term); overview of industry sector; start-up plans; Key members of the team.
? Product or Service: Describe what you?re selling; What problems you address; What are customer benefits; Competitive products. (Business planning analysis outcomes)
? Market & Customer Analysis: Your market & market segment; Your customers; Customer needs; Where are your customers; Competitor analysis; Path to market; marketing collateral.
? Business Model: Strategy and Implementation; Technology; Facilities; Management responsibilities; Achievements to-date; growth/survival objectives (short/longer term); performance indicators; risks & solutions.
? Operational management: How product/services will be produced/delivered.
? Management Team: Backgrounds of key members of the team; HR strategy; diversity.
? Competitive Advantage: USPs of company, products, services
? Financial Plan: Profit and loss; cash flow; balance sheet; break-even analysis; business ratios; financial forecasts; funding needs; assumptions, etc.
? Answers to why questions: Money; investment; sale; other whys
? Supporting information: Anything critical that adds value to your proposal
Business Plan models ? critical features
Start-up Investment Internal Management
? Market opportunity
? Finance
? ROI
? Team skills
? KPIs
? Underpinning research ? Market opportunity
? Competition
? USPs
? Finance
? ROI
? Management systems
? Team skills
? KPIs
? Underpinning research ? Market opportunity
? Product/process/market development
? Competition
? USPs
? Finance
? Management systems
? Team skills
? KPIs
Have you answered all these questions?
? Where is your business currently?
? What?s your business goals? Short term? Longer term?
? What?s your business strengths and weaknesses?
? What?s happening in your business environment?
? Where would you like your business to be?
? How do you move new ideas forward?
? What resources do you need to move forward?
? How do you set realistic objectives?
? How will you monitor progress?
? Are all assumptions and evidence substantive?
Some issues to consider
? Is the business capable of making money? Surviving in current economic climate?
? What is the business financial structure?
? What are the overheads?
? How does the business idea translate into cash flow? i.e. how much for how long?
? Is market share realistic?
? How much will potential customers actually buy?
? How often?
? How much are they prepared to pay?
? What will it cost to develop/manufacture/grow the product or service?
? Impact on sales of development/exploitation/growth delays
? The viability and efficiency of the business operations
? Is there a full demonstration of the critical issues?
What VCs look for
1. Financial Frugality
? Saving for a rainy day
2. Time is Money
? Making more in less time
? Cutting back on non money making activity
3. Customer Commitment
? Giving customers what they want
? Making them want what they don?t want!!
4. Thirst for Insight
Getting real answers to success & failure
5. Passion means Profit
? Good ideas ?successful business
? You and your team sharing the passion?
6. Sense of Community
? A team working to a common goal
7. Flexible Planning
? Responsive planning
? Profitable investment of time & money
? SMART planning & objectives
Business Plan assumptions
Explaining any assumptions in a Business Plan is essentially scene setting.
It helps readers to understand the realism of the Plan and should cover:
? the techniques used to arrive at the information in the financial statements.
? how sales and purchases are achieved
? the general business climate of your industry
? risks to success
Financial section critical content/issues
? Absolute musts:
? sales forecast; cash flow projections; P&L forecast
? The more solid information the better, but try to keep it short
? Focus on what is critical to the reader. Use appendices, particularly for high levels of detail such as monthly forecasts and ?what if? scenarios.
? Include financial management control systems
? Needs to be professional
? If using accountants to prepare, make sure it fits the overall document style
Linking business strategy to financial plan
? A company wishes to develop overseas market opportunity
? Company undertakes research and can demonstrate realistic viable market
? Company develops sales and profit forecasts
? Market development is proved viable
But
? Financial plan needs to be developed to understand the total cost of the new opportunity
? Marketing, product development, travel costs, impact on existing sales activities, new staff, approvals, language barriers etc, etc
? Need to know what additional cash will be required?
? Cash flow implications need to be integrated with overall business cash plan
? Risks to other business activities need to be identified
? The financial section of the Business Plan should answer three key questions with hard metrics
? Why is this a good idea/good business?
Key assumptions; Sales forecast; Income (P&L)
? Will/how will the business make money ?
Cash flow; Balance sheet
? Is it a good investment?
Break even; Profits growth, ratio analysis; Sensitivity analysis, Investment return
What goes into a Business Plan?s Financial Information
? Every business plan is different, and must take into account the details and situation of the business or project. The number of pages, tables graphs etc and detail will vary, particularly in the financial section.
? In general, the more risky the business, or the higher the finance required, the more information that will be expected.
? A business plan and particularly the financial section is not a one-off document. It will change with time and progress.
? Similarly the level of content and detail may need to be amended, dependent on the audience for the Business Plan.
? Whatever the business, a good financial plan will show that you have thought about every aspect of the business, and are prepared to deal with both success and failure. This will make you appear less of a risk.
Financial information (#1)
? Sales forecast detailing sales by each month/quarter or year.
? Make sure that this is realistic as it forms the basis for all your other figures!
? Cash-flow
? You must demonstrate that the business will have access to enough cash to survive and at which point cash flow becomes positive.
? P&L (profit and loss summaries) for the next (first) three years of trading.
? Identify break-even point and gross profit margin.
? Balance sheets for next three years of trading
? Usually for bigger or more complex businesses, showing the financial state of business at the beginning and end of each year.
? Business cost structure
? Who owns what?
? Don?t confuse development with production costs
Financial information (#2)
? Detail how much funding is required, the financing schedule and who will be providing the funding.
? Don’t underestimate how much is required. It?s rare to underspend!! Take into account business development for the next two to three years.
? State what the funding will be used for
? e.g. equipment, working capital, wages, product development, marketing.
? Demonstrate where the funding is coming from or how the business can afford or support the funding.
? List any assets that can be used as security.
? Specify any grants or soft loans that have been obtained or applied for.
? For trading businesses, include historic performance for Sales, P&L, Balance Sheet in summary or graphical form.
NOTE:
this is example :
but i want it with more detale
Appendix 1: Business plan for Sport Retail
Business name and address:
Sport Retail
14 Lower Street
Bedford
Proprietor?s name and address:
John Bull
Address as above
Business form: Sole trader
Business activity:
The shop will sell general sportswear, clothing, footwear and sports accessories from a good
secondary retail location close to the main shopping area of Bedford. Sports covered will include
football, cricket, golf, tennis, archery, skiing and other sports, as appropriate to the season. In
addition, the shop will sell general sports clothing and footwear such as track suits, trainers and so
on. Suppliers will include major names such as Adidas, Nike, and so on.
Aims:
The aim of the business is to provide an adequate income for myself and my wife. We shall be living
above the shop.
Objectives:
1. Sales of ?250,000 in the first year
2. Gross profit margin of 40%
3. Net profit margin of 16%
4. Drawings at least ?25,000
Market size and growth:
The last decade has seen a substantial increase in the popularity of sport and consequently the
growth of the sportswear market. It is estimated that two-thirds of time spent on leisure pursuits is
devoted to sport. The estimated size of the sport clothing and footwear market is some ?1 billion. The
market for sport equipment is about the same size and the market for swimwear and beachwear is
over ?200,000. These estimates are very approximate because the demarcation between sportswear
and fashionwear is becoming increasingly blurred.
Competitors:
Names Strengths Weaknesses
Olympus Sports Located in main shopping area Lack of expert advice
Silver St. Very price competitive Lack of personal service
(400 yards away) National promotion Limited range
Shop layout appeal to young Lower end of market
2 Seasons Skiing and tennis equipment Poor location
Harpur St Good service Cramped shop, poor displays
Well known brands
Market stall Cheap No service
Only open market day
Poor quality low end of market
Your business:
Strengths Weaknesses
Personal, expert service Secondary location (better than 2 Seasons)
Wide range of equipment Limited merchandising opportunities
Quality equipment Cannot afford expensive promotions
Competitive advantages:
1. Personal, expert service
2. Football links ? proprietor local football celebrity
3. Links with local sports clubs, schools and so on will enable equipment and sportswear to be
purchased to meet their specific requirements
4. Wide range of quality merchandise
Proposed customers:
General public Typical market segments: School age (male and female)*
Teenage and twenties
Middle age (mainly male)*
Impulse shopper
Dedicated buyer*
Sports clubs and schools*
* These are the groups we expect to attract
Advertising and promotions strategy:
1. Very limited advertising in local paper: shop opening and seasonal sales. It is proposed to get a
well-known sportsman to open the shop.
2. Extensive promotion to sports clubs and schools offering special equipment and sportswear and
?discounts?. Displays may be mounted at Clubs and so on or special evenings could be arranged.
3. In-store seasonal promotions of particular sportswear or equipment. This could include special
displays, promotional signs and, perhaps, a discounted ?loss-leader? to get customers into the
shop.
4. Store displays would emphasise the professional football links.
Pricing strategy:
We cannot compete against Olympus on price and will not attempt to do so. We will offer good quality
branded merchandise at recommended retail prices. We will attempt to stock alternative merchandise
and brands to Olympus. We will offer good value for money but not lowest price.
Premises:
1000 square foot retail premises on Lower Street, Bedford. This is a prime secondary site close to
the main shopping area of Bedford. Bedford itself offers a good location and is the main shopping
centre for the north of the county. The premises are leasehold with 18 years to run, let on a full
repairing and insuring basis with rent reviews every 5 years. There is a two-bedroom flat above the
shop in which I intend to live with my wife.
Equipment
Shop display equipment only.
Key people and job functions:
Mr and Mrs Bull ? Proprietors
There may be other part-time counter staff, as required for Saturday work and so on.
Background details of key people:
Mr Bull
Formerly professional footballer (joined from school). Retired 4 years ago. Worked as a salesman with
Rank Xerox selling photocopiers to large companies. Made redundant 6 months ago.
Still maintains good links with local sports clubs and, in particular, old football club.
Mrs Bull
Housewife. No work experience since marriage.
Prior to marriage was employed as counter staff with Marks & Spencer.
Currently Parent Governor of Priory School and on organising committee for local Youth Club.
Financial highlights
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