Business plans Business plans What is a business

Business plans

Business plans What is a business plan? A document designed to provide sufficient information about a new or existing business to convince financial backers to invest in the business. The business plan will cover all aspects of the business from the proposed marketing strategies to the financial forecasts.

Business plans Purpose of a business plan There are three key purposes of any business plan: 1. To clarify the idea: this is particularly important when the idea is complex and any potential investors are in doubt on the viability of the business. 2. To gain finance: a bank or any other financial provider will not agree to finance any business without a suitable business plan in place. 3. To monitor progress over time: this links into the motivational aspect of a business plan and can set targets for the owners and employees.

Business plans Contents of a business plan The contents will vary depending on the type of business & the expertise of the entrepreneur. However, these will always break down to financial and non-financial items.

Business plans Non-financial items • Summary of the business • Personal information (CV of owners) • Target audience • Objectives (they should be SMART) • Marketing plan • Primary and secondary research • Competitors

Business plans Financial items • Capital input • Projected revenue • Projected profit and loss • Cash flow • Budgets

Business plans Real-life business plans Go to the following websites: - www. barclaysbank. com - www. barclays. co. uk Look at the example business plans that potential lenders will need to complete. Compare them to the previous two slides. A bank will ask a number of questions on the potential competitors and will go into depth on the 4 Ps of marketing. These are priority questions in identifying a viable business proposition.

Business plans Pros and cons There a number of advantages and disadvantages of completing a business plan.

Business plans Pros • Will encourage more potential investors and banks. • Can monitor progress. If things are not going to plan then this will be highlighted and it might be easier to identify the source of the problem. • Clear objectives motivate the owners and employees.

Business plans Cons • A business plan can be time consuming to complete and this could be difficult for new entrepreneurs who have many other things to do, such as plan their primary research and maybe even design their new shop. • They are only forecasts, which could be way off. Costs can be unpredictable and the process of predicting them could be considered a waste of time. • A plan doesn’t consider volatile market conditions e. g. predicting things like energy bills is difficult.