The Business Plan (Tutor Version)

This worksheet was written for Biz/ed and the BBC by Sue Hall of Embley Park School in Romsey. It uses much of the information that is available on the Internet to help small businesses to plan for the future. It will be of most value to students who are studying A-level Business Studies or AVCE Business.

A number of the banks have information for business planning. This worksheet concentrates on Barclays. For additional information you may want to try:

NatWest
Lloyds TSB
The Halifax
The Woolwich

Step 1 - Planning ahead

What are the main areas a business plan should cover?

1. Objectives for yourself and your business
2. Your service or product
3. The Market- including competitors and how your service/product is different
4. Pricing- what are you going to charge? Work out your expenses. What do you need to earn to break even?
5. Promoting your service/product- look at the options available and cost these too
6. Selling- need to be clear about who your target customers are before you devise the right sales approach.

Step 2 - What sort of business are you?

1) Sole Trader

The most common form of ownership. People have the freedom to choose how to do things and the business is relatively simple to manage. However there is unlimited liability.

2) Partnership

In most cases limited to 2-20 people. A partnership agreement needs to be drawn up to cover:

• Who has put what into the business?
• Who does what work?
• How profits are shared.
• What would happen if the partnership were wound up.

3) Private Limited Company

A limited company is separate from its owners. Consequently owners are not liable for its debts. The company must be registered and submit properly prepared statutory financial statements.

4) Franchise

A franchisee is granted the right by the franchiser to run a business using an agreed format. The franchiser provides an established trade name, product or service plus the management skills and back up for successful operation.

Step 3 - So what are you forecasting?

1) Cash Flow

Forecasts changes in the cash flow into and out of a bank account. Cash flows predict when cash might have to be borrowed or when it could be invested. For some more information on cash flow you may like to look at the Biz/ed Cash Flow Learning Trail.

2) Profit and Loss Account

This is a projection of the profit or loss the firm thinks it will achieve.

The 12 steps necessary are:

1. The concept
2. Personnel
3. Operations
4. The Product/Service
5. The Market
6. The Marketing Mix
7. Market Research
8. Sales Forecasts
9. Profit and Loss
10. Cash Flow Forecast
11. Extras
12. Reality Check

Step 4 - "Show me the money"

The 5 sources given are:

1. Venture Capitalists
2. Business Angels
3. Bankers
4. Friends and Family
5. Sharks

Step 5 - Do you have a "cunning plan"?

The example of Halls Foods provides the necessary information to complete the financial projections and the cash flow forecast answers. It has obviously been simplified, as the business plans are very detailed.

The rest of the business plan can be filled in with pupils using the basic idea to create a hypothetical business, thinking of realistic objectives using ideas from the planning section earlier for the company.