Business Plans

Business Plan: Document setting out a proposal for a new business, important for planning and for raising capital.

Getting a business operating takes detailed strategy, planning and preparation to move from ideas into reality. A business plan raises questions that show where further research is needed.

Vitally, it provides evidence for bank or other lenders that the proposal has been thought through and has a good chance of generating profit in order to repay loans.

There are several things that are included in a business plan. The subheadings are not standardised, so variation is possible, but there are areas that every plan covers.

This includes:

• business name, type and aims
• product and proposed price
• market information (often from research)
• personnel
• suppliers and likely production costs
• premises and equipment
• profit and cash flow estimates
• financing arrangements 

Financial Information: data on costs, revenues and profits, a key part of a business plan.

Some information is completely accurate, for example the business name, however the financial information on pricing, revenue, costs and profit will be estimates and (hopefully) based on thorough research. Even if this is the case, it is unlikely to be completely accurate.

Potential lenders will scrutinise financial estimates. If the business is only using its plan to raise finance, then there might be little interest in the plan once money has been raised.

A more sensible approach is to use the plan as a template to be amended by real data once this becomes available.

This will give a continuing picture of:

• progress made
• the prospects of success
• whether intended actions need to be amended.