THE BUSINESS PLAN 4

4.1
CONTENTS OF A BUSINESS
PLAN; WHAT MAKES A GOOD
BUSINESS PLAN

. Writing A Business Plan

. Social Enterprise Business Plan Guide

. Constructing A Business Plan Exercise

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 CONTENTS OF A BUSINESS PLAN; WHAT MAKES A GOOD BUSINESS PLAN 4.1
WRITING A BUSINESS PLAN
At this stage, you have the idea for a business and have thought
a little about how it might actually operate. Now you have to
describe the business in much more detail and be able to show
that it is feasible and properly planned. You will have to write the
business plan.

The business plan is a planning tool. It . Test assumptions, especially if the idea
is written for a purpose and describes an is realistic;
actual or intended organisation, what the . Identify strengths and weaknesses.
organisation is trying to achieve or become
and how it will achieve its objectives, A business plan has two purposes: firstly,
including both timing and how tasks will to bring in extra resources; and secondly,
be allocated. to help us manage resources better.

It is designed therefore to influence the

external environment and the internal
What Do We Use
environment. It is both outward-looking
A Business Plan For? and inward-looking. A business plan is used
Drawing up a business plan helps to review the operations of an organisation,
an organisation to: to draw up a list of necessary changes in
a coherent and easily understood form,
. Control finance, to get a realistic idea
and to get the agreement and support of
of the financial implications of a business
everybody required to bring about or live
idea and future finance needs;
with those changes.
. Establish objectives, especially directions
for the future;
. Set targets, which can encourage Proving The Feasibility
better-directed and purposeful work; /Making The Case
. Define actions, priorities and the At the ideas stage you probably chose the
timetable for actions; most feasible idea. Now you have to prove
. Analyse performance, and exactly how viable the business will be. This
correct weaknesses; is the most important part of the business
plan. The first stages of any feasibility study
. Assess needs, in terms of human
are straightforward and common-sense. It
and other resources;
is only later that you may need to bring in
the experts.

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 CONTENTS OF A BUSINESS PLAN; WHAT MAKES A GOOD BUSINESS PLAN 4.1
You need to look in more detail at the Calculating the costs is not complicated - but
following questions: it can be disappointing to discover that there
is no way you can do what you want to do at
Can it be done? If the answer to this is no
the right price and be viable. Too often the
then you have to find another idea.
idea is possible, the market is there, but the
Will it sell? This question is also crucial as if sums just dont add up.
there are not enough people your business
will not be viable.
Will it pay? If the business does not pay Writing The Business Plan
enough, then your outgoings will be more
The business plan is the document at the
than your in-comings and the business
centre of your enterprise. It states what you
will fold.
intend to do, how and when you will do it,
Can you get all the resources? If not, you how much it will cost and how to fund it and
are going to be in difficulties and perhaps keep it going. In looking in more detail at the
you have to think again. feasibility of your idea you have now got
nearly all the information to bring together
The heart of the business plan is you into a business plan. Its first function is
describing your product or service, to demonstrate the potential viability of
explaining how you will make and sell it, your idea to possible backers. Its second
what it is going to take to do this and function is to give you a model plan for
describing both the resources you have the development of your business and
and the resources you will need to make a model against which you can compare
it happen. Can you do this? what actually happens.

Ensuring It Will Pay Presentation

Work out how much it will cost you over The presentation of a business plan is very
one or two years to provide a service or important as it will be read and assessed by
make your product. Include everything possible funders.
that will cost the business money i.e. raw
Leave nothing to chance and make sure
materials, wages, administration costs,
that you make good use of photographs,
rent, rates, insurance, heating, lighting,
graphics, tables, etc.
maintenance, postage, stationery, telephone,
travel, advertising, professionals fees, Be as meticulous as possible in writing the
bank charges, fixtures and fittings, plant plan on a computer and make sure it all
and machinery, vehicles and staff training. hangs together in a nicely presented form.

Can the number of products you plan to It is a good idea to try to get hold of other
produce be sold at a price to meet these successful business plans to give you an
costs and make a profit? idea of what is required.

Will customers buy your services often Also enterprise agencies should be able
enough to cover your costs and what price to give you advice on the plan, its contents
will they have to pay? and possible ways of presenting information.

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 CONTENTS OF A BUSINESS PLAN; WHAT MAKES A GOOD BUSINESS PLAN 4.1
SOCIAL ENTERPRISE
BUSINESS PLAN GUIDE
1 : Basic Information 4 : Marketing
Name of the business or organisation; Customers : location, age, spending habits
What stage are you up to? and buying power
What is the business selling or producing? What are the trends in the market?
What money or other resources do you What share of the market will you need?
need to start the business?
Who are your target customers
What do you hope to achieve? (those buying often)?
Who are your main competitors?
Does the way you plan to price your
2 : People Involved
product fit the market?
Names, abilities, qualifications,
How will you prevent or deal
experience of people involved
with complaints?
How will your business be managed?
Describe the jobs involved running your
business and the skills required 5 : Production/Delivering
Will people need training? What training Your Service
do you need? Premises needed, their layout and
their suitability for producing/delivering
the service
3 : The Product Or Service Machinery, equipment, fixtures and
Describe in detail what you plan tools required
to make/sell
Suppliers, their terms and the availability
What research have you done? of alternatives
Do you plan to develop your Sub-contracting (if any)
product/service?
Stock and quality control
How well does your planned
product/service fit the market?

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 CONTENTS OF A BUSINESS PLAN; WHAT MAKES A GOOD BUSINESS PLAN 4.1
6 : Legal Issues 8 : Other Information
Legal status of the business or organisation Research findings, other information,
CVs of key personnel
Licences, permits, agreements needed,
leases on premises Publicity materials or photographs
Ownership of assets, patents, Premises plans/layout
commercial information

7 : Financial Issues
Prices and basic costs
Budgets or projections of your costs:
labour, materials, overheads
Cash-flow forecasts; When will you break
-even? When will you start to be profitable?
How profitable is the business? How large
will your mark-up be?
How much money will you need - grant,
loan or overdraft?

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 CONTENTS OF A BUSINESS PLAN; WHAT MAKES A GOOD BUSINESS PLAN 4.1
CONSTRUCTING A
BUSINESS PLAN EXERCISE
This is a simple exercise about planning to draw up a business plan.
Participants must decide about the contents of the business plan,
its structure and then allocate resources to it.

The Business Exercise 1

The Wood N Tops furniture workshop A funder has told you that they will consider
provides work experience and training a business plan from the group so long as it
to people in joinery and carpentry skills, is not more than 5,000 words long. Assign
repairing and refurbishing old furniture a number of words to each part of the
with items sold or repaired for the cost of business plan.
materials. Refurbished furniture has been
given away on a first come, first served
basis. The local council is now insisting the Exercise 2
furniture project become self-financing and
The group has 45 person-days to devote
it has been decided to draw up a business
to drawing up a business plan. Look at the
plan for a financially self-sustaining business.
information you have. Then for each section
assign a number of person-days which
A business plan consists of the following:
will enable the group to: a) gather more
. Basic information
information, b) undertake analysis and
. The people involved c) prepare the information.
. The product or service
. Marketing information
Exercise 3
. Operational information
Using the information presented overleaf,
. Legal, governance and management assign one part of the business plan to each
. Financial information member of the group. That person should
write not less than 100 and not more than
. Other information 300 words on the topic and present the
information to the group. If they dont have
the information they need, they should list
the things they dont know and which the
group will need to research before they can
complete the plan.

Answers can be found in the appendix

on pages 413 and 414

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 CONTENTS OF A BUSINESS PLAN; WHAT MAKES A GOOD BUSINESS PLAN 4.1
The Business The current time being worked in the
workshop is 100 person-hours. The
Wood N Tops is situated in the middle of
maximum capacity is 240 person-hours.
a depressed overspill estate. The main town,
Shiverton, is three miles away but a busy
The following quotes for fitting out the
main road passes along the estate. There
showroom have been received: new
are many families with young children and
floorboards 80; wiring 300; glazing
an old peoples home but people do not
120; painting 100; carpets 250; laying
have a lot of money.
carpets 50; making and fitting shelf units
180; painting sign 90; plastering 160;
The workshop has the necessary
constructing office 250.
equipment to make bookshelves, coffee
tables, bedside cabinets, cots, bunk beds,
There is a Steering Committee consisting
office desks, wardrobes, dressers, TV
of Jack Haycox (Chair), Deirdre (Secretary),
cabinets and picnic tables. It does not
Frank (Group Member), Susie (Group
have the equipment (a bandsaw) to
Member), Brian (Group Member).
make toys or sofas. A second-hand
bandsaw would cost 800.
The workshop has a health and safety policy
written in 1990, an equal opportunities policy
The workshop could sell sofas and picnic
adopted in 1995 and insurance is provided
tables wholesale and all the rest retail.
by the Council.

It is anticipated that the showroom would

be visited by 600 people per week of which
60 would purchase something.

The following are the direct unit costs of

the products: bookshelf 10; coffee table
8; cabinet 8; cot 15; bunk bed 50;
office desk 45; wardrobe 12; dresser 15;
TV cabinet 18; picnic table 40; toy 3;
sofa 70.

The following are the person hours to make

each item: bookshelf = 3 hours; coffee table
= 5 hours; cabinet = 6 hours; cot = 10 hours;
bunk bed = 12 hours; office desk = 10 hours;
wardrobe = 5 hours; dresser = 6 hours; TV
cabinet = 4 hours; picnic table = 7 hours;
toy = 1 hour; sofa = 15 hours.

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