smallbusiness.co.uk: Helping your business think big

Writing a business plan encapsulates long-term targets, estimates and forecasts. Remember though that it is not set in stone and will most likely change as your business progresses, so regular reviews are necessary. Here's a list of the issues to get down on paper.

1. Summary of your plan (one to two pages)
Highlighting the attractions of your business
a) What is the business?
b) What is the market?
c) Potential for business
d) Forecast profit figures
e) How much money is needed?
f) Prospects for the investor/lender

2. The past (one page plus an appendix)
a) When the business started.
b) Summary of past performance (last three years’ accounts in Appendix).
c) Indication of how relevant or not past performance is to future progress.

3. Management (as many pages as needed)
This is the crucial section
a) Your past employment and business record. Identify achievements, not just a chronological statement
b) The record of other people working with you.
c) If there are obvious weaknesses in management, how you’ll deal with them.

4. The product or service (two pages plus an appendix)
a) A simple description of what it does. Avoid technical words – if essential, technical descriptions can go in the appendix.
b) Why the product is unique or distinct.
c) Brief survey of the competition.
d) How the products will be developed, what new products are being considered, when replacement will be needed for the existing product range, what competitive products may emerge.
e) Any patents applied for.

5. Marketing (three or four pages with detailed statistics in an appendix)
The market:
a) Its size, its past and future growth.
b) Analysis of market into sectors; identify sector your business is aimed at.
c) Likely customers: who, type (industrial or consumer), size, how they buy.
d) Your competitors: who, their size, position in market, likely response to your challenge.
Selling:
a) How you will sell (Internet, direct mail, phone, intermediaries, and so on).
b) Who will sell.
c) Some idea of your sales pitch (for example, benefits of your product).
d) How you will price.

6. Operational details (length depends on nature of business)
a) Where you will be based – location, premises.
b) Suppliers.
c) Manufacturing facilities.
d) Equipment needed.
e) Information technology strategy.

7. Financial analysis (two to three pages; data in optional appendix)
a) Summary of forecasts.
b) Monthly profit and loss forecast for two years.
c) Profit forecast for further three years.
d) Monthly cash flow forecast for two years.
e) Cash flow forecast for further three years (optional).
f) Forecast balance sheet for two years.
g) Audited accounts for last three years (if available).
h) The assumptions behind your forecasts.
i) What are the principal risks which could affect figures?
j) SWOT analysis – strengths, weaknesses, opportunities and threats.

8. The prospects (one or two pages)
a) Your objectives – short-term, long-term.
b) The finance needed and what it is needed for.
c) Shareholdings suggested (if appropriate).
d) Prospects for the investor or lender (if appropriate, including possible value of business if floated on the stock market or sold, so investors may cash in).

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