Business Planning - an introduction With Dave Green

Who are we and what we do? Business Link provides the information, advice and support you need to start, maintain and grow a business. We help businesses in the South West alone! We are here to help, ultimately government funded and provide services which are:- Independent Impartial Confidential

Content What is a business plan & why you need it What goes into it – typical content headings & what to include Cash flow – lifeblood of the business Manage income & expenditure to maximise liquidity Profit & Loss forecasting – will you make money The Balance Sheet – what your business is worth What next?

A Business Plan is a written document mapping business objectives & how they will be achieved evidence of your understanding of the market and how you will operate a management tool – allows you to monitor progress essential to establish feasibility and viability valuable document for raising outside funding a living document - to be referred to and revised regularly

Reasons for preparing a Business Plan To raise money To cut down the risks to yourself It reminds you why decisions were reached It allows you to “sell” your business to customers, bankers and suppliers You know where you are going – and when you have got there! You know It forces you to deal with all aspects of the business It encourages realism It helps to convince you of the viability Failure to plan = plan to fail!

The Plan should include Title Page Synopsis/Executive Summary Written Objectives - Short, Medium & Long Term Key Personnel – profile style highlighting skills/experience relevant to business Description of products and services – USP, features & benefits, IP (patents held/applied for, trade marks, design rights etc)

The Plan should include - continued Market Research activities – market size/potential, customers, competition – Marketing Plan – justification of product service to target market, pricing, advertising & promotion, distribution etc Premises – Location, type, size Financial Plan – costings, cash flow, profit & loss, balance sheets etc (include written assumptions) Contingency Plan – ‘what if’ scenarios

Cash flow – lifeblood of the business Helps to establish pre-start expenses and capital introduced/required Month by month illustration of income and expenditure Shows monthly surplus or deficit Shows cumulative effect over period Identifies funding requirement and justifies borrowing Proves viability Allows you to make decisions about purchases Enables you to manage the business & plan for the future

Cash flow – maximising liquidity Consider leasing, renting or second hand to avoid heavy capital outlay Look at impact of payment terms – yours and suppliers Consider timing of purchases Remember – Cash flow depicts actual movement of money – useful tips Do include a pre-start column Monitor performance and re-cast forecast as necessary Consider VAT payments and build into forecast Do include own remuneration Make surplus funds work for you CASH IS KING!

Profit & Loss forecasting Does not reflect movement of money Identifies value of sales in period Identifies actual costs of achieving those sales Identifies profit (or loss) for trading period ‘Profit’ as a term must be qualified to be meaningful – gross; operating; net etc. Figures must be exclusive of VAT if registered May help in choice of legal status Sole trader/partnership drawings are excluded Can be used as basis for determining likely future tax liabilities

The Balance Sheet – what is your business worth? Balance sheet reflects worth of business at a single point in time Statement of assets (what it owns) … … and liabilities (what it owes) Helps to show the health of the business through various key ratios E.g. current ratio & quick ratio (measures of solvency) Capital account includes owners capital +/- accrued profits/losses i.e. theoretical worth of business

What next ? The Business Link Start up programme will help you to fill the gaps and find the answers in a supportive, friendly and informal environment. The programme typically contains:- 3 distinct modules:- Planning & Regulations Sales & Marketing Finance & Accounts Plus ongoing business advice and support from our advisers

You can reserve a place on the programme today by completing the booking form on the Internet or by telephone. Comprehensive website: support Information Help Line Access to specialists via Ongoing Support

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