11. Produce your business plan

A business plan is usually contained in a document that sets out the details of management’s plan for the business – it helps the business focus on its aims and objectives, what it wants to do and why. More importantly, it sets out the allocation of human and financial resources and related activities that will enable the business to reach the place it wants to be in the future, it usually also highlights potential problems and opportunities that may lie in the pathway ahead. Essentially the business plan should enable focused business development and growth i.e. growth in line with business and, just as importantly, social priorities!

Why should you produce a business plan? The planning process is crucial for a potential enterprise, the social entrepreneur needs to maximise the likelihood of success as much, if not more so, than the private entrepreneur. Often people are tempted to start taking action when they have a rough business plan in their head – holding off until you have gone through the business planning process and drafted the document is always recommended as it can help improve an idea and potentially spare you from nasty surprises and potential expenses!

The document however is fundamentally important to others outside your organisation too – banks, investors and funders will all expect to see a Business Plan. These people essentially fund people and their ideas, they have to be satisfied that both are appropriate for investment. Few business ideas are original so the better researched, more focused your business plan is the better – but you also have to show that your organisation possesses the right skills, abilities, experience and commitment to make the business venture a success and so provide a “safe home” for the money you seek.

Business plans have various potential uses, such as:

Defining a new business
Supporting a loan application
Defining and setting objectives, and action plans to achieve those objectives
Establishing a process of regular business review and course correction
Defining agreements between stakeholders
Valuing a business for sale or legal purposes
Evaluating a new product line, promotion, or expansion

Regardless of the primary purpose of your Business Plan, the better the quality of the business plan, the more likely it is to help you achieve your objectives! So, what makes a good business plan?

A good business plan will lay out the required information in a logical manner. The information contained in the plan should be relevant. The objectives set should be specific (e.g. increase sales by 10% over the next two years), realistic (Can that actually be achieved or is it an impossible target?) and should be capable of being measured (You can measure increased sales but you may find it more difficult to measure how many people are familiar with your business or aims). The plan should also detail how much the activities and actions will cost, how much you will realistically make over the period and it should also specify who is responsible for various tasks defined.

The format of business plans vary but generally they contain similar types of information, such as a description of your organisation, the proposed product or service, your market, forecasts, management team, and financial analysis. Have you considered or addressed the following key parts of your business plan?

Business Summary

What is the name of your business?

What is your product or service?

Who owns/operates this business and what are their backgrounds?

What is its legal structure (sole proprietorship, partnership, corporation or cooperative)?

Have necessary permits and licences been obtained?

Market

What price will be charged for your product or service?
What geographical area will the business serve?
What businesses are already providing a similar service or product in that area?
How is your product or service different from your competitors?
Why would people choose your product over those of your competitors?
How will you promote your product or service (signs, flyers, radio, etc.)?
What is your target market (age, sex, education, income level, marital status, occupation, interests and needs of your potential customers)?
How many of these potential customers are in the proposed geographical area?
Are there popular trends that could help or hurt sales?
What are your sales estimates?
What months of the year are most popular for your product or service?

Operations

Where will your business be located?
Are there local noise, environmental or zoning laws to consider?
Will you lease or buy space? At what cost?
Describe the facility (parent's, spare bedroom, rented office, etc.)
Is there enough space for all your "stuff" (including stock and raw materials)?
Does the facility have adequate heating, electrical, plumbing, washrooms, safety equipment and ventilation?
Is it wheelchair accessible?
What renovations must be undertaken?
Is there room for customers (including parking)?
Is the location visible to, and convenient for, potential customers?
What are your planned hours of operation?
Will employees require specialised skills or training?
What wages will be paid to employees?
How many employees will you have?
What kind of insurance is needed for your building, equipment, employees, customers?
Who will supply the materials needed to run the business?
Is there a time of year these supplies are easier or harder to get?

Financial Information

What are your projected start-up costs? These are one-time costs such as land and building, equipment and machinery, renovations and legal fees.
What are your projected ongoing operating costs (salaries, utilities, supplies, rent, insurance, property taxes, etc)?
What are your estimated sales for each month of your first year?
What are the anticipated differences between your costs and revenues for each month of the first year?
What is your break even point (the number of products or services that must be sold to just cover your costs)?
How much of your own money (equity) are you willing and able to invest?
What additional financing will be required from outside sources such as bank loans and other investors

Downloadable Support Materials

	A Sample Business Plan has been included for your convenience.
	Click to download a Cashflow Forecast template.

END OF TRAINING COURSE