Business Plan Guidelines
HBV Enterprise
HBV Enterprise Centre
34 & 36 Dalston Lane
London
E8 3AZ
[T] 020 7254 9595
[F] 020 7241 7075
HBV 0439 07 09 Issue 4
[M] [email protected]
[W] www.hbv.org.uk
Why prepare a Business Plan?
These notes provide general guidance in the preparation of a business plan,
the purpose of which is to help you to:•
Test the viability of your business idea whilst minimising the immediate
risk and/or expenditure.
•
Focus your own ideas.
•
Structure your business.
•
Prepare your case for raising finance e.g. obtaining a grant or loan or
raising venture capital.
•
Provide a yardstick against which your business performance can be
measured once you start up.
The plan should include everything about your business and be
comprehensive, detailed and clear.
After reading the plan, the reader should know exactly
•
What the business is
•
How it will operate
•
The level of sales and profitability in the first year
•
Why you believe you will achieve the forecasts provided
•
What investment you and/or the lender is required to make in order to
achieve the plan’s objectives
Check the document as it develops to make sure that it meets these objectives
and to eliminate spelling mistakes and typographical errors.
General guidance on preparation & presentation.
•
•
•
•
•
•
•
Complete the text of the plan as a Word document
Complete the Financial Forecasts as an Excel spreadsheet
Be consistent with the font and font sizes used
Do not assume the reader knows about you, your business or your
business idea – ensure these areas are explained in an uncomplicated
manner.
Avoid jargon
Keep the content relevant and concise, but do not leave out useful
information
Include additional information in the Appendix and refer to it in the plan.
1
How to set out your Business Plan
Title page.
Give the following information:• Your name
• Your business name
• Company name. Date of registration and company registration
number (if registered)
• Your contact address, telephone number, fax, e-mail address and
website
• Date of the plan
Contents page (complete once the plan has been finalised)
•
Include a contents page as set out here
Contents
Page No.
Summary
Introduction
Objectives
Product or Service
The Market
Advertising & Presentation
Business Operations
Unique Selling Point
SWOT Analysis
Management and CV's
Premises
Legal Issues
Risks
Financial Information
Appendices
2
Summary (complete once the plan has been finalised)
The summary should be prepared after the plan has been completed.
It should containing key information from the business plan to enable the
reader to understand the nature of the plan at a glance.
SUMMARY
1. Give a brief description of your business idea
2. Explain briefly why you think the idea will work and
why
you are the right person to do it.
3. Give details of the business format to be used and the
people who will be involved.
4. Give details of the Product or Service
5. Indicate to whom the product or service will be sold.
Explain how your Market Research and any Test
Trading support this
6. Show the first year's estimated:Sales
Gross Profit
Gross Profit Margin
Overheads
Net profit
Net Profit Margin
7. Show the following information:
£
a. Finance Required for:Capital Assets
Revenue/Working Capital
xx
xx
Total*
xx
b. Finance Provision:
Introduced by you
Finance from outside sources:
xx
xx
Total*
xx
* Totals to agree
8. Explain briefly how the finance will be used.
3
The Business Plan
1.
Introduction
Provide information covering the following points:•
•
•
•
•
•
2.
Describe your business idea
How you came to the position of wanting to start your own business
Why you have chosen the business you propose.
What the business will do (so that the reader will know exactly what the
proposal is)
Any experience and/or qualifications you have that are relevant to the
business you are starting.
The form the business will take e.g. sole trader/ Partnership/ Limited
Company. Details of any other people involved/ have ownership.
Objectives
State what you intend the business to achieve in the first, second and later
years:
•
•
•
Short term
Medium Term
Long Term
(first year);
(year two);
(third year and over).
(Be specific and quote figures where possible, for example, quote specific
figures for Sales or Profit to be achieved, the number of established clients,
progress with premises or the number of employees. Areas such as
reputation/ branding could be considered although it is sometimes difficult to
be specific on these topics)
3.
Product or Service
This section should give comprehensive details of the product or service you
are or will be selling. Avoid jargon and technical words.
Categorise the different products/ service and group them together. These
groupings can then be used as a means of building the Sales Plan (Financial
Forecasts section)
Describe each product or group of products/ services and what they will do –
what are the features and benefits?
What will make your product(s)/ services attractive to a buyer?
Brochures and drawings should be included in the appendices to the plan.
4
4.
Market Research
Describe the Market Research methods used e.g. desk research using x,y, z
sources of information and field research by undertaking, for example, focus
groups and interviews.
Use the information collected to provide an assessment of the target market
you propose to enter. Your research should confirm to you whether or not a
market exists for your product/ service
The market research information contained in your business plan should
demonstrate your findings, as they relate to your business. Include an
indication of the likely demand for your product/service, as shown by your
research.
Consider points such as:Is the market growing, declining or static?
Is it seasonal?
What segmentation is there? –age, gender, social group etc.
State how you will identify, anticipate and satisfy your potential customers'
requirements so that you can earn a profit.
The product/ service you provide should meet the customers' requirements so
that the customer determines the features and benefits, not the other way
round.
Include relative figures and statistical information to illustrate the market’s
strength, development and trends (make the information as up to date as
possible).
Consider presenting your findings in two sections:i) General industry/ sector overview: (keep the information concise and
current)
Information you have collected on the market place in which your product or
service will be sold. This can be obtained from libraries, books, magazines,
journals, newspapers and trade associations.
What are the trends and developments in the industry?
What does the future hold?
State your conclusion on your findings.
ii) Specific to your business:
It is essential to offer evidence that there is potential demand for your
product/service, otherwise your efforts, money and time spent in trying to get
the business established may prove misdirected.
What is it that makes you believe that people will buy your goods or services?
What evidence can you put forward to support this belief?
(Inquiries, feedback, pre-orders, expressions of interest and the like are all
useful and valid in this respect). Include any Test and Trial Trading results –
giving full details in Section 4 iv & v.
State your conclusions on your findings.
5
iii) Customers
Your knowledge and market research will indicate who your customers will be
and enable you to describe and profile them.
What does or will influence their decision to purchase your product or service
rather than that of a competitor?
If you will be or are selling a product, who do you consider as the ultimate
customer?
For example, is it the shop you are selling to or their customers - or both?
Do not forget that it is the customers who will determine whether or not your
business is successful so make sure you can demonstrate that you know who
they are and what they really want.
What does the customer want from your product or service? If you are a
wholesale business you will be selling to retailers not the end user
(consumer).
This may affect your marketing e.g.
•
•
•
You may have different prices for quantity purchases.
If you supply supermarkets or other large buyers they could insist on
stringent quality control.
Some large purchasers may require their own brand name on the product.
Are they local, national or international? How does this affect your marketing,
distribution, advertising, etc.
iv)
Test Marketing
If appropriate, after initial market research, your product or service should be
evaluated by your identified customer base on a selective basis. This will
enable you to gain feedback and refine your product/ service to meet
customers’ requirements
v)
Trial Trading
Give details of any activity undertaken, stating the period covered, level of
sales achieved and income generated.
Give an indication of the level of activity required to achieve the results.
Give details of any customer who has promised to give you work and any
sources of networking or introduction.
vi)
Competition
Describe your competition.
List their names, location, estimated/actual turnover, their strengths and their
weaknesses.
6
If you are setting up or operating a shop you should enclose a street plan of
the trading area showing your location and those of other establishments in
the same or similar trade.
Consider your competitors Strengths and Weaknesses, their Opportunities
and Threats
Completion of a SWOT on your main competitors can be a useful way of
presenting the information.
(There is an opportunity to undertake a SWOT on your business in Section 10)
It may not be possible to obtain detailed financial information, such as
Turnover, but comparisons can be made in areas such as customer service,
pricing, quality, delivery times to show how your own USP will gain customers.
Name
Strengths
Weaknesses
Opportunities
Threats
Turnover £
Location
Turnover £
Location
Turnover £
Location
Turnover £
Location
5.
Advertising and Promotion
Describe how will you bring your business to the notice of the public e.g.
leaflets, mailouts, targeted mailing, newspapers, press releases, journals,
radio?
What will be your advertising and promotion cost?
When will your major promotional efforts occur?
What response levels do you expect?
7
Summarise your intentions in a Marketing Plan, showing each activity:(the cost and timing should match the figures shown in the Cashflow Forecast)
Summary of Promotional Activity
Where/media
When/timing
Volume/frequency
Cost £ & payment
date
£150 each month
Response rate
1. Local newspaper Feb, March, April
Weekly
6 inquiries pw
advertisement.
resulting in 2 sales
Hackney Trumpet
pw
Rationale for choice:
Weekly circulation of 36000 covering my particular area with a reader profile matching my target
audience.
2.Leaflet drop
February
5000 leaflets
£250 printing
25 enquiries
resulting in 10
sales
Rationale for choice:
Population of targeted areas matches potential customer profile.
(add additional sections for each activity)
6.
Presentation/Packaging (of your goods or your business image)
Products - How will you package your goods and how much will it cost?
Remember packaging is a good way to advertise your business.
Services - All external communications whether letter headings, advertising,
premises and your own personal appearance can be regarded as packaging
your service.
Is your presentation/ packaging appropriate and does it match your customer
expectations?
Brochures
What literature, sales aids or other printed materials will your business use?
Include all these costs in your Cashflow/ Profit & Loss forecasts.
Include samples in the Appendix.
7.
Legal, regulatory requirements, insurance and other Issues
Confirm the legal structure of the business i.e. Sole Trader, Partnership,
Limited Company, Co-operative and give the trading name.
For Partnerships, state whether a Partnership Agreement has been or will be
drawn up and give details of the other partners.
For Limited Companies, give details of the share capital, shareholders, date of
registration, company number and details of Director(s) and Secretary.
Explain what the position is, and what actions have been/ need to be taken in
respect of:Registration as Self-Employed – sole trader/ partnership:
Registration with HM Revenue & Customs for VAT
Employment of staff/ freelance contractors
Detail and clarify the position regarding legal and regulatory requirements
that need to be met to operate your business. Explain whether you are fully
compliant or if further action needs to be taken.
Detail the type(s) of insurance and level of cover required.
State whether it is in place or to be arranged.
State the premium(s) required and when payable
8
What Copyright/ Intellectual Property considerations apply and how will they
be dealt with.
8.
Business Operations
Describe how your business will operate and function on a day-by-day basis
including:i)
Staffing requirements
Do you or will you need to employ staff? How many and on what terms? Will
you use freelancers or sub-contractors?
ii)
Sales Methods
Do you or will you sell directly, through advertising and promotion or will a
sales force be used?
iii)
Order Processing
Describe the routines for quoting, taking orders and fulfilling orders.
When/ how are your terms of trade advised and accepted.
iv)
Distribution requirements
Explain how your product or service will reach your customers.
What are the resources requirements and how will they be met?
v)
Suppliers
Who will be or are your major and most important suppliers?
What are their terms?
Are they reliable and consistent?
9.
USP (Unique Selling Proposition)
Give details of how your product/service is different to that of your
competitors. This could be in terms of quality, size, convenience or a better
range of stock or services.
What will make your customers come to you rather than the competition?
What is your competitive edge?
10.
Business SWOT
Prepare a SWOT analysis of your business
Strengths
Weaknesses
Opportunities
Threats
Strengths of your business/product (e.g. low running costs, a traditional
image, gap, the market place);
Weaknesses (e.g. seasonal demand, many competitors)
Opportunities (e.g. franchise, popularity or products)
9
Threats (e.g. others can copy the idea).
11. Management and CV's
Give details of those involved in running the business and their job
description, explaining how their time will be allocated - marketing, sales,
bookkeeping or production etc. in an average week.
State the qualities and experience each person possesses in order to fulfil
their job.
When is it anticipated that the proprietor/director will work full-time in the
business?
Detail your experience and relevant business skills – particularly those related
to the business you are starting.
A full curriculum vitae (CV) for each of the main people in the business should
be included as an appendix. A CV is a statement showing personal details
including educational and employment history.
Detail any business training you have received
12. Premises
Explain whether you intend to work from home or whether you require
premises immediately or at some later date.
What sort of premises do you require?
If premises are required immediately are you still looking for them or have you
obtained them?
If you are working from home give details of the accommodation available for
business use. Can the business realistically operate from home?
Confirm the position regarding compliance with any local regulations,
landlord, mortgage provider and insurance company requirements.
If it is a commercial property state: • Planning Use category
• whether it is a lease or licence;
• the date the lease will start and finish;
• whether it is an existing or new lease or licence;
• the rent or licence fee per annum, when is it payable (e.g. monthly or
quarterly) and if it is in advance or arrears;
• the dates of any rent reviews;
• the amount of any premium payable;
• the liability for maintenance/repairs/insurance;
• whether a survey has been carried out to advise on the condition of the
building;
• if the premises have planning permission for the use to which you wish to
put them and if not, what is the position regarding change of use;
• the square footage/meterage of the premises;
• the details of any works that need to be carried out before you can start
your business.
13. Risks
In this section you should consider what would happen if various events
occurred which would affect you and your business. Outline the ways in which
10
these risks would be mitigated or overcome, e.g. what would happen if your
sales were considerably lower than expected or if you were taken ill?
14.
Conclusion
Bring the business plan to a conclusion by summarising briefly why you
believe, from the information provided, that the proposed business is viable
and sustainable.
Appendix - Financial Information
You should include the following in respect of the first twelve months:I
ii.
iii.
iv.
v.
vi
vii.
Cashflow Assumptions
Sales Plan
Purchase Plan
Cashflow Forecast
Profit and Loss/ Costing Forecast
Start-up costs - Capital/Revenue Expenditure
Personal Survival Budget
i. Cashflow Assumptions
• Provides guidance to the reader as to how figures in the Cashflow are
arrived at. Explains the basis of your calculations for each line of the
cashflow forecast e.g. state any credit given on sales, interest rate on loans
etc.
• This information does not replace the explanations in the text of the plan.
ii.
•
•
•
•
Sales Plan
Calculate your projected sales, identifying product mix and volumes.
When will people pay you e.g. straight away or after 4 to 6 weeks etc.
Take into account any seasonal fluctuations.
Do not be over optimistic when forecasting sales during the first year of the
life of the business. It is better to set a low target and beat it than to set a
high target and fall short. However, you should have the cash and
production capacity to fulfil a more optimistic level of sales.
iii. Purchase Plan (if required)
• Shows the timing and requirements to purchase the “raw materials” of the
business (not general overhead/ expenses or Capital expenditure)
• Show the timing of payments to your suppliers in the Cashflow forecast.
Will you pay cash or can you get credit?
• Like to Sales Plan, the purchases should reflect any seasonal fluctuations.
iv. Cashflow Forecast
• Uses the figures from the Sales and Purchases Plan.
• Includes all other income and expenditure for the business in the period
covered.
• The cashflow will show the overdraft requirement of the business.
11
• The cashflow must reflect the details of the business set out in the earlier
narrative part and must always be consistent with it.
v. Profit and Loss Forecast
• This forecast is similar to the cashflow but without the timing difference e.g.
sales and the annual figures are shown. It should not contain capital
injected, capital expenditure, grants or loans obtained or VAT.
vi Start-up costs - Capital/Revenue Expenditure
• List everything you will need to get started, distinguishing between the
items you already have and those you need to purchase.
State a £ value for each item.
vii. Personal Budget
• This should be completed to show how much you personally require to live
on monthly and relate to the Drawings/ salary figure in the Cashflow.
Other Appendices
You should include as much relevant material to support the plan as is
necessary and could include items such as:• CV
• Letters of intent
• Drawings/ Illustrations
• Photographs
• Copy of lease
• Street plan
• Example of market research questionnaire
12
Difference between Cashflow and Profit & Loss forecast
1. The Cashflow includes all financial transactions and shows when
money comes in and goes out of the business.
The Profit & Loss Forecast does not include loans received, capital
injected, loans repaid or purchases of machinery, equipment or vehicles.
It does include the interest element of loan repayments and hire purchase
instalments.
Loan REPAYMENTS appear in the Cashflow but only the interest charge
appears in the Profit & Loss
2. The Cashflow shows receipts from sales when they are received, i.e.
immediately for a cash sale or after a credit period e.g. 30, 60 or 90 days.
The Profit & Loss Forecast shows annual sales. (This includes those that
have been invoiced even though payment may not have been received)
3. The Cashflow shows periodic payments e.g. annual or monthly
insurance premiums or quarterly telephone bills. All are shown in the
month they are paid.
4. If you are registered for VAT, then VAT both paid and collected is
identified and shown in the cashflow forecast but not included in the
Profit & Loss forecast.
5. Depreciation allows for a reduction in the value of assets and appears
in the Profit & Loss but not in the Cashflow
13
Calculation of Cost of Finance
Guidance Notes.
The following tables have been drawn-up to assist you in your financial
forecasting. The figures are per £1,000 loan taken and are for guidance only
and may vary to actual quotations received from lenders. All figures are
rounded-up/down to the nearest £1. Alternatively, use the loan repayment
calculator on our website http://www.hbv.org.uk/fund.html#useful in the
‘useful downloads’ section.
Explanation of columns:Column A. This represents the percentage interest to be charged.
Column B. This indicates the monthly repayment inclusive of capital and
interest, assuming the loan is repayable by equal monthly instalments and that
interest is calculated on a reducing balance basis. (Most bank loans and soft
loan providers work on this basis). This is the figure you should use for your
Cashflow forecast.
Column C. This figure represents the capital outstanding at the end of each
anniversary of the loan facility. This figure can be entered-in under the
liabilities section of your projected Balance Sheet(s).
Column D. This figure represents the interest payable during a particular
twelve-month period. This figure should be included as an expense within
your Profit and Loss forecast for the year(s).
Column E. This figure represents the total interest paid during the full loan
period. This is for information purposes only but could be useful in
comparing sources of finance.
Example of Use
For the loan of £7,000 repayable over a period of four years, interest to be
charged at 3% above base rate, with base rate say 7% i.e. 10%.
a.
Review loan table covering four-year period.
b.
Look down column A for relevant interest rate i.e. 10%.
c.
Then multiply the figures in columns B, C and D by 7 i.e.
Column B £25 x 7 = £175 (represents monthly repayments for Cashflow).
Column C £786 x 7 = £5,502 (represents capital outstanding at the end of
Year 1)
Column D £90 x 7 = £630 (represents the interest charged during the
first twelve month period for inclusion as an expense within the Profit
and Loss.) Notes re usage – see overleaf
14
Repayments per £1000
For loans taken over 2 years
Interest %
Monthly
Repayment
End of Year 1
Cap O/S Int.
paid
A
B
C
D
5
6
7
8
9
10
11
12
13
14
15
44
44
45
45
46
46
47
47
48
48
48
512
515
517
520
522
525
527
530
532
535
537
39
47
55
63
71
79
87
95
103
111
119
End of Year 2
Cap O/S Int.
paid
0
0
0
0
0
0
0
0
0
0
0
14
17
20
23
26
29
32
35
38
41
45
Total
Int.
paid
53
64
75
86
97
108
119
130
141
152
164
For loans taken over 3 years
Interest %
Monthly
Repayment
End of Year 1
Cap O/S Int.
paid
A
B
C
D
5
6
7
8
9
10
11
12
13
14
15
30
30
31
31
32
32
33
33
34
34
35
683
686
690
693
696
699
702
706
709
712
715
43
51
60
69
78
86
95
104
113
122
131
End of Year 2
Cap O/S Int.
paid
350
353
357
360
364
367
370
374
377
381
384
27
32
38
43
49
55
61
67
73
79
85
End of Year 3
Cap O/S Int.
paid
0
0
0
0
0
0
0
0
0
0
0
10
12
14
16
18
20
22
25
27
29
32
Total
Int.
paid
80
95
112
128
145
161
178
196
213
230
248
For loans taken over 4 years
Interest %
Monthly
Repayment
End of Year 1
Cap O/S Int. paid
A
B
C
D
5
6
7
8
9
10
11
12
13
14
15
23
23
24
24
25
25
26
26
27
27
28
768
772
776
779
783
786
789
793
796
800
803
45
54
63
72
81
90
100
109
119
127
137
End of Year 2
Cap O/S Int. paid
525
530
535
540
545
550
555
559
564
569
574
15
33
40
47
54
61
68
75
83
90
98
105
End of Year 3
Cap O/S Int.
paid
269
273
277
281
285
288
292
296
300
304
308
20
25
29
34
38
43
48
53
58
63
68
End of Year 4
Cap O/S Int.
paid
0
0
0
0
0
0
0
0
0
0
0
7
9
11
12
14
16
18
20
22
24
26
Total
Int.
paid
105
128
150
172
194
217
241
265
289
312
336
For loans taken over 5 years
Interest %
Monthly
Repayment
A
B
C
D
5
6
7
8
9
10
11
12
13
14
15
19
19
20
20
21
21
22
22
23
23
24
19
823
827
830
834
838
841
845
848
851
855
46
55
65
74
83
93
102
112
121
131
140
End of Year 4
Cap O/S
Int. paid
220
225
229
233
237
242
246
250
255
259
264
17
20
24
28
32
36
40
45
49
54
58
End of Year 1
Cap O/S Int. paid
End of Year 5
Cap O/S Int. paid
0
0
0
0
0
0
0
0
0
0
0
6
7
9
10
12
13
15
17
18
20
22
End of Year 2
Cap O/S Int. paid
630
635
641
647
653
658
664
670
675
681
686
Total
Int. paid
133
159
189
217
246
275
304
336
364
397
427
16
37
44
52
60
68
78
84
92
100
109
117
End of Year 3
Cap O/S Int. paid
430
436
442
448
454
460
467
473
479
485
491
27
33
39
45
51
57
63
70
76
83
90
End of Year 4
Cap O/S Int. paid
220
225
229
233
237
242
246
250
255
259
264
17
20
24
28
32
36
40
45
49
54
58
17
18
19
20
21
22
23
24
Thinking of starting up in business?
Since 1984, HBV Enterprise has bee supporting local people to
start, fund and grow their enterprise
There are three simple steps to starting in business with confidential support from
HBV: Seminars, One to One Advice and Start-up Clinics. These services are free to
anyone starting up in Hackney or the City of London.
Step 1 – Free Seminars
For everything you need to know, come to our start-up seminars. Register with us,
and reserve a place by paying a small deposit. During the seminar, we’ll provide
helpful fact sheets to take away and show you how to access other key information
and develop your own Action Plan. Afterwards, you can carry out your actions at
your own pace, then start developing a business plan to cover everything you need
to start trading.
Step 2 – Free Advice Sessions
Complete Step 1, then let us have a copy of your draft business plan, and talk it
through with an adviser. We’ll help you develop the plan further, and plan your next
step then tell you if there’s other support available. While you progress we will be
there until your plan is complete. At that time, you may also be able to apply to our
loan funds to help fund your start-up and business growth.
Step 3 – Free Enterprise Start-Up Clinic
If you’ve just started in business, or think you’re ready to start, we offer a session at
our Enterprise Start-Up Clinic. We will review your business plan and give you some
independent, professional and confidential feedback on it, and provide specialist
support to help you with any last minute questions or issues you may be facing.
Next Steps
Don’t lose touch with us once you’ve started up, because there are plenty more
ways in which we can help you stay in business. Take a look at our website for more
details, or ask us for more information on funding and growing your enterprise, and
the other services available at HBV Enterprise Centre. We look forward to showing
you how we can help.
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HBV Enterprise Services
HBVe charges for the services it provides. However, you may qualify for a subsidy of up to 100%
Start
Fund
•
Start-up Seminars
•
•
Business Plan seminars
•
•
Enterprise Coaching
•
Understanding Finance
for business
Loan Fund Clinic
HBV Loan Funds for
Business
Grow
Our Enterprise Centre
•
Business Reviews
•
Serviced Office
•
Growth Service
•
Computer suite
•
Turnaround/ Recovery
service
•
Training/ Meeting Room
hire
For full details of all our services and for dates and times of
events, please visit our website www.hbv.org.uk
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