REASONS FOR PREPARING A BUSINESS PLAN

• It is a valuable tool  for the development, expansion and ongoing operation of a  business, whatever the sector the business may be in
• It helps the business to work smarter, not harder
• It will be necessary when you are selling the business to investors and lenders
• It specifies the objectives of the business and how these are to be performed  
• It enables you to think through your ideas and exposes possible shortcomings (such as lack of sufficient market research) that you need to address.
• It forecasts  the assets that will be required by the business to achieve these objectives (plant, vehicles, buildings, staff, cash)
• It enables the businessman to establish what commitment he is prepared to make to the business.  
• It helps build commitment because you have publicly named your objectives.
• It gives your business a sense of direction and action timelines to reach desired targets.
• Acts as a measure against which actual results can be measured and appropriate steps taken for variances .  
• It allows you and your staff to measure progress towards targets, which leads to a shared sense of achievement (and makes recruiting more good staff easier)
• It builds credibility and convinces others (including lenders) that you know what your doing and where the business is heading.
• Planning significantly increases chances of success.   It enables you to perform better than you would without a plan.   Research shows that businesses that undertake regular business planning have higher profit margins than those that do not.

MAIN COMPONENTS OF A COMPREHENSIVE BUSINESS PLAN

Cover Sheet

• Identifying information e.g. business name, address, principals

 Executive Summary

• Outlines the business plan, its major objectives, how these objectives will be accomplished and the expected results
• It is just a summary so should be reasonably short

 Table of Contents

• Gives headings and page numbers for contents of the plan

 History of Business

• History of business

People

• Information about the principals- their positions, experience, skills, qualifications
• Numbers to be employed and in which job functions

   Location

• Location
• Premises
• Will premises be sufficient for business plan
• Details of lease agreement if applicable  

Product

• Listing of its products and services.
• Any trade marks, patents held
• Past and future development of the product or service.
• Major suppliers of raw materials

  Marketing

• Target trading area and customers.
• Promotion strategy
• Distribution strategy
• Price strategy
• Competitors- who they are, their strengths and weaknesses

   Financial

• Indicate the expected cash flow, profit and loss and balance sheets, financial ratios
• Project asset purchase requirements, funding required
• Should show prospective investors and lenders why they should provide funds, when they can expect a return, and what the expected rate of return on their money is.

  Appendixes

• Organisational charts
• Resumes of the key staff and directors
• News items
• Letters of recommendation.