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Business Planning:

 A business plan is a written statement of your business, what you want to achieve with it and how you will do that. It should outline the structure of your business, the product or service, the customer, the growth potential and the financials. But as well as giving information about your business it should also inspire you for the future. A business plan should give you an idea of what you need to achieve.

Every business should have a plan. Whether it is to open a second shop or float on the stock exchange. It is why you are in business. It helps you to define strategy and, if properly used, will help you involve and motivate key members of staff.

It allows you to work out how to make your business a success and can help you avoid failure by plotting the pitfalls along the way. It should outline a realistic target for how that can happen while remaining flexible enough to make changes along the way. By setting out a plan and some targets, you can also monitor your progress and get the business back on track fairly quickly if anything goes wrong.
 

Think about why you are writing a business plan and who will be reading it. Most businesses put together a business plan to raise money and the plan becomes even more critical in determining the success or failure of your business.

It is the initial selling document and it will either get you in the door or not.

Think about who your audience will be and the information they will need before committing funds. Make sure that the plan is prepared to a high standard, is verifiable and void of jargon or general position statements.

A bank manager, business angel or venture capitalist will all be poring over your business plan in great detail before they risk putting their money into it.
If you are looking to raise a bank loan, a bank manager will be looking for how likely it is that the business can repay the money. That is more likely to come from a steady business with a gradual growth plan and a steady cashflow capable of supporting the repayments.

An equity investor, whether it is a business angel or a venture capitalist, is likely to want to see good growth prospects. Unlike a loan, equity investments are not repaid and these investors will only make money by taking a percentage of your business and selling it for a higher sum in
Because these investors only get a return when they sell their stake in the business, they will also want to see an exit route which will allow them to cash in their investment.
 

 The plan is basically split into four parts the business; marketing; finance and the management team.

The business
It should start with the basics of your business. A cover sheet should outline the company name, address and current owners. Start by outlining the legal structure of your business and who owns it. Keep this brief as an investor is more concerned about how the business will operate in the future.
Then describe your business and the product or service that you provide. Explain why the product will be profitable and why your customers will buy it, whether your product is unique or simply better than other products on the market.
If you business is in the high-tech or biotech sector, you may include any patents or intellectual property owned by the business.
Try to give a break down of the overall sector and its potential. Perhaps you can use competitors to show how big the market is and what percentage of sales you think you can capture. However, avoid falling into the trap of basing your business on simply taking a small share of a large market. Trying to capture a 1% share of the whole Chinese population just because it is a big population won't impress. You will need to have a clearer idea of who your customers are and how you will get them to buy your product.
All of these will tie into your goals and objectives for the business. The eventual aim for the business and how you expect to achieve that.

Marketing
The key to marketing is understanding your customers. You must be able to profile your target customer and their likes and dislikes accurately. This will help you understand how to position the product in the marketplace and how to price the product. You must also be aware of how your customer base is likely to change over time, whether it is declining or growing.
It should offer the reader a combination of clear description and analysis, including a realistic SWOT (strengths, weaknesses, opportunities and threats) analysis of each area.
This will demonstrate to investors that management is realistic about the company's prospects. This includes spelling out any competition. By ignoring any competitors, readers will think you have overlooked a major problem for your business.

Finance
This should include all the financial data on your business. Include any previous year's accounts, up to three years if you can, as well as details of any outstanding loans or assets. Also include the current management accounts, cashflow forecasts and a breakeven analysis.
Make sure that realistic financial projections are outlined and that you provide different scenarios for sales, costs and cash flows for both the long and short term. Don't be tempted to dress up the figures. Sales figures growing ever steadily will not impress a seasoned investor. Similarly, be realistic about your costs. Consumer products, particularly those on the internet, will need to plan for a large upfront marketing budget. Neatly spreading an equal amount of your marketing budget across the whole year simply isn't realistic.

The management
This section should outline all background and experience of all the key members of the management team. You should attach CV's for each individual and outline the strengths and weaknesses of the team as a whole. If you are missing certain skills in your management team, this can easily be solved. Business angels often take an active part in the companies they invest in and any venture capital firm will have a wide network of contacts that may be able to join the board in a non-executive capacity.

The executive summary
The last thing written is the first thing that appears in the business plan the executive summary. This is the most important section and summarises in two pages what is written in detail in 10 or 15. This is where, among other things, you state the company's mission statement a few sentences encapsulating what the business does for what type of clients, your aims for the company and what gives it its competitive edge. The mission statement should combine the company's business' current situation with your aspirations.
Just as the business plan, the executive summary should be clearly written and powerfully persuasive, yet it should balance sales talk with realism in order to be convincing. It should be no more than 1,000 words.
Any investor should be able to get a good feel for the business from that summary. In fact, this summary may be the only opportunity you get to put your case to investors. Venture capitalists refer to the elevator test. If you can't convince an investor of how good your business is in the time in the lift between the ground floor and whatever floor you exit on, you may have missed your opportunity.

That sounds harsh but venture capitalists are busy people. It is common for a venture capitalist to see hundreds of business plans a year.

Despite the common complaint that there is a lack of money available for startups in the UK, there are actually many sources of capital on offer.

But not all are suitable for every type of business. The choice may vary depending upon the industry or region your business is in. It will be influenced by how much money you need and what other security or finance you can offer when setting up.

There are two main types of capital; debt and equity. They are very different and will have a big difference on the business as it grows and develops.

•           Banks

•           Grants

•           Factoring

•           Leasing & Hire Purchase

•           Incubators

•           Business Angels

•           Venture Capitalists

•           Corporate Venturing

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