Day 8 the business plan

B R I A N W S T E E Ldeveloping higher performance

Starting in BusinessThe Business Plan


The Start-up Programme – City of Bristol College

Why write a business plan?



Executive Summary

Write this section last.

Make it two pages or fewer.

Explain the fundamentals of the proposed business: What will your product be? Who will your customers be? Who are the owners? What do you think the future holds for your business

and your industry?

Make it enthusiastic, professional, complete, and concise.If applying for a loan, state clearly how much you want, precisely how you are going to use it, and how the money will make your business more profitable, thereby ensuring repayment.



Company description

Mission statement – guiding principles of business.

Business goals and objectives.

Nature of your industry

Business strengths and core competence.

The legal form.

Why the legal structure has been chosen.



Products and services

Detail description of products and services offered.

What is your competitive advantage or USP.

What is the basis of your pricing policy.



Marketing plan

Market research undertaken.

Key characteristics of market.

Current state of market - Economic factors- Geographical factors- Current demands and trends- Market potential- PEST factors affecting market

Product/Service perception – the customers view of P/S

Customer profile. cont...



Marketing plan II

Competitor analysis – 5 major competitors

Key competitor strengths and weaknesses

Buyer imperatives and major drivers.

Your niche – the selling position you will assume.


The Start-up Programme – City of Bristol CollegeMarketing plan II

Marketing strategy- Promotion methods- Pricing policy- Proposed location- Distribution channels

Sales forecast

Key Operational Factors- legal issues inc licensing- personnel

Inventory and Suppliers

Credit policy

Support and key advisers



Start up costs and capitalisation- all start up costs +20%

Financial Plan

- Cash flow and profit forecast- Break even point



A consultant has a private income of £12,000 per year. He needs hisconsultancy work to top his income to £30,000 per year. He has fixed costs of £2,500 per year and can make £500 per day. How many days paid work does he have to achieve in order to break even?



BEP = [£30,000 – £12,000 + £2,500]

= £20,500 / 500

= 41 days

Proof = 41 days x £500

= £20,500 + £12,000

= £32,500 - £2,500

= £30,000



Another way of looking at BEP:

On looking at the costs of a business its calculated that its fixed expenses are £50,000 per year. The analysis also shows that its variable expenses are 20% of the estimated turnover [sales].In this case the BEP is calculated by dividing the Fixed costs by the variable expense %age [20%].

£50,000/20% = £250,000

The business needs therefore to make £250,000 to break even.



What happens if the variable expenses are higher or lower?

Say the variable expenses are 30%

This would result in the BEP being:

£50,000/30% = £167,000 or £83,000 less than before

In contrast if the %age was less, say 15% the BEP would be:

£50,000/ 15% = £333,333 or £83,333 more than before.



Borrowing money, at any time, is difficult – more so at present.

Most investment requests fail because of 3 main reasons:

Business owners fail to answer basic questions about the business

Business plans fail to ‘sell’ the business.

The wrong bank is pitched.



Does your plan reflect your business and its current operations?

Does it contain sufficient financial information?

Does it contain a comprehensive, 1 page, Executive Summary?



Is the plan clear on the following key areas:

What the business does?

How much finance you need and what its for?

The ‘Value Proposition’?

The route to market?

The market demand?

You competitive advantage?



What are lenders looking for?

Strong management Defendable strategic assets including IP Has a strong USP The business operates in a growth sector The business is scalable, commercial and realistic. Market demand is demonstrable The business is generating good revenue Its a ‘must have’ product or service Profitability is high and there is good cash generation The offer package meets customer expectations



Do you know the numbers?

TurnoverProfitGross margin [Revenue – COGS] x 100 = x%

Where COGS is cost of goods soldNet profit margin [Net income/revenue] x 100 = x%

Where Net income is Revenue – costsBEPOverdraft requirementsCapital requirement



Concise. Your pitch should take no longer than 30-60 seconds.

Clear. Use language that everyone understands. Don't use fancy words thinking it will make you sound smarter. Your listener won't understand you and you'll have lost your opportunity to hook them.

Powerful. Use words that are powerful and strong. Deliver the "Sis-Boom-Bang" to grab their attention!

Visual. Use words that create a visual image in your listeners mind. This will make your message memorable.

The elevator pitch.



Tell a Story. A short story, that is. A good story is essentially this: someone with a problem either finds a solution or faces tragedy. Either type of story can be used to illuminate what you do.

Targeted. A great elevator pitch is aimed for a specific audience. If you have target audiences that are vastly different, you might want to have a unique pitch for each.

Goal Oriented. A kick-ass elevator pitch is designed with a specific outcome in mind. What is your desired outcome? You may have different pitches depending on different objectives. For instance do you want to: make a sale, gain a prospect, enlist support for an idea, or earn a referral.

Has a Hook. This is the element that literally snags your listener's interest and makes them want to know more. This is the phrase or words that strike a chord in your listener.

The elevator pitch.