Advice for a business plan

In a previous post we set out our recommended contents for a business plan for a typical small business. In this post we briefly give advice on the most important aspects of the business plan, to avoid the main pitfalls and to give the best chance of success in securing funding.

Keep in mind the big picture. The plan overall should present a convincing scenario of one or more capable individuals needing to borrow money from the bank, to fund a profitable business, which will generate enough cash to repay the loan.

Demonstrate the commitment that you, as the owner, have to the business. Explain the extent to which you have worked on the business, and how important it is to your future. State how much of your own money is being invested in the business.

If you can offer any security for the borrowing, include details. You could include a recent valuation of a property which you could use as backing for the loan.

Explain your Unique Selling Point. What protects the profitability of your business?

If you are buying a business from someone else, be clear about what you are buying. Is it the shares in a limited company, an unincorporated business, or just a business premises or trading name?

In your financial forecasts:
Explain how you forecast your sales. Give details of any contracts or orders that you already have.
Don’t assume that your sales credit terms will always be adhered to.
Don’t forget the effects of VAT.
Don’t underestimate the level of some expenses (for example, insurance, motoring, accountancy, additional payroll costs).
Make it clear which wages and salaries costs are your own drawings, and which are other staff.