Sample Business Plan

CONSTRUCTING A BUSINESS PLAN CONSTRUCTING A BUSINESS PLANINDEX PAGE 1 2 3 Index 1. Basic Principles 2. Suggested Outline 4 3. Executive Summary of Plan (What you are) (Your aims) 4. Objectives of Organisation 5 4. Objectives of Organisation Page 1 of 11 CONSTRUCTING A BUSINESS PLAN 6 7 5. The Market 5. The market 6. The Service 7. Promotion (Your market) (Your service) (Your advertising) 8 7. Promotion 8. Management 9. Operational details (Your details) (Your procedures) 9 9. Operational details 10. Financials (Your figures) 10 11 10. Financials 10. Financials 11. Useful Contacts 1. BASIC PRINCIPLES Keep it as simple and concise as possible, ensuring, however, that you put all the information within the document that the person reading the plan will need to make the judgement / decision that you want them to make. If you are using a business plan to support a funding request then do not forget to put details of what you require and what it is for, either in the plan or in a covering letter. Presentation is extremely important. Word process or type if possible, if writing use lined paper for neatness and ensure your hand writing is legible. Ideally in black ink as this makes a photocopy of the document easier to read. Avoid waffle. Ensure that the important information stands out and is not hidden amongst all the words. Use bullet points or short sentences / paragraphs wherever possible. Page 2 of 11 CONSTRUCTING A BUSINESS PLAN Be objective and realistic. Treat the development of the plan as the most important part of setting up or changing your business. Ensure that you have fully researched all areas of your plan. Get someone you know to review the plan for you, to comment on clarity and ease of understanding of what you have written. Ensure that you retain ownership of the plan at all times, it is your plan for your business. 2. SUGGESTED OUTLINE 2 3 Executive Summary of Plan Objectives of organisation The Market The service Page 3 of 11 CONSTRUCTING A BUSINESS PLAN Promotion Management Operational details Financials Appendices 3. EXECUTIVE SUMMARY This is the first and one of the most important sections of your business plan, as you are aiming to give someone reading your business plan, a overview of your business, what you want to achieve, how and by when. In order to get them interested enough to read the rest of the document you need to really sell your ideas and highlight the attractions of your plan. However make it brief and concise, you can go into detail in later sections – the idea is to give readers a “flavour” of the rest of the document. Start with the name of the business, it should be easy to remember, may describe the type of business and should convey the image of that which you wish to be associated with the business. Next you will need a description of what the business will do, in a very general sense. For example “XXX has been set up to provide the highest quality childcare and education to young children” Then a brief description of how your business will achieve what it wants to do. Identify its distinguishing characteristics and how it will differ from any local competition. Page 4 of 11 CONSTRUCTING A BUSINESS PLAN For example, you may want to give a summary of the type of day care you will offer, how many places you will offer, the age range you will cover, your location, the geographic area you will get your children from and a brief breakdown of charging structure. Finally include what you have done so far, what “milestones” you still need to complete and an idea of when you hope to achieve these targets. Give an indication of the starting date of your business. You may find it easier to write the executive summary after you have written the rest of the plan. 4. OBJECTIVES (AIMS OR GOALS) OF ORGANISATION Within this section you want the reader to understand what the business is trying to accomplish and what steps are to be taken to get there. It is also vital that you understand exactly why you are going into business to ensure that you are always heading in the direction that you want to. Start with the long-term objective of the business, that is, what you ultimately want the business to achieve (sometimes called a “Mission Statement”). This will be similar to the one you have put in your Executive Summary, but will probably be more detailed. You then need to show how you will break down this vision into how it is to be achieved, by splitting the long term objective into short term SMART goals (Remember you can only eat an elephant by breaking it down into bite sized chunks). By SMART, your objectives / aims / goals needs to be: S Specific - Make sure that the objective is detailed enough to say exactly what you want to achieve. This will avoid future confusion. - Ensure you have an objective that you can measure, so that you can objectively check whether you have reached it. - Do not make the objective so difficult that you will never reach it, make it challenging and stretching but attainable. - Set an objective that is relevant and in line with your business activities. - Set yourself a time scale to achieve your objectives by. M - Measurable A - Achievable R T - Realistic Timed The short-term goals should be for a period of no more than a year. The shorter the time scale the more you will be able to focus your efforts on to it. Page 5 of 11 CONSTRUCTING A BUSINESS PLAN You should set enough goals to ensure that you can meet your objectives, but to ensure that you can keep track of them, there will probably be no more than half a dozen. For your own guidance you should then plan the actual steps you are going to take to reach these goals. You may decide to enter this information into your business plan, but only do so if it will add value to the plan. If you do decide to include this information put it at the end of the plan under „Appendices‟. This will give the reader additional information if they want it – but will not detract from the readability of the section overall. You must ensure that you regularly monitor and review your efforts against these goals. Do not be afraid to revise your plans or goals as appropriate to keep you on track with your longterm objective, which may also change over time as your business develops. For example Long Term Objective “XXX will provide high quality childcare and preschool education which will be measured by questionnaires to parents where 90% answer that they are happy or very happy with XXX. By quality Ofsted reports and low staff turnover and that 75% of staff are professionally qualified” “1. By the beginning of each term we will set a planned curriculum for that term, to ensure that we meet the early learning goals set by Ofsted. 2. Each term we will fund raise £200 to purchase new and up to date play equipment. 3. Within one year all staff will have achieved appropriate NVQ2 qualifications. ……………….” Short term goals 5. THE MARKET This section describes the market (industry) that your business will operate in, and looks at your customers and your competitors. It will contain the market research you have carried out to determine who will use you services, why they will use your services and how much of your services they will require. Use this section for the overview, putting any detailed statistics as an appendix. Who will use your services is about your target market. Explain who you are going to target, it may be a particular estate known to have a large number of families, and why. Do not only be subjective (that is just putting down your thoughts), you will also need to be objective, that is, have hard evidence and statistics. Try to get demographic data (information on the ages of people in your chosen area) from your local council, get other local data from your library or try the Internet. Why they will use your service is about how the service you are offering will attract customers. What needs are you meeting, are you in a convenient location, will you have good premises and equipment, do you have a good reputation in the area or is it that you can offer good qualifications and experience in childcare. Page 6 of 11 CONSTRUCTING A BUSINESS PLAN Make a list of your strengths and weaknesses. For weaknesses show how you will overcome then. Highlight and expand on your strengths. To help you find out what it is that your customers require, carry out market research. Include a copy of the questionnaire in the appendix if appropriate. Send out questionnaires to the local population and/or to the local schools. Give a summary of their responses in this section, with details in the appendix. How much of your service your target market will want can also be obtained from a questionnaire. (ie 3 mornings a week out of 5 mornings sessions). Here you will also you will also need to note what investigations you have carried out looking at competition in the area. Find out what they are offering, what makes competitors successful or not, their strengths and weaknesses, how they promote themselves. Detail your findings and explain how this will impact on your business and then what you will do about it. For this type of information talk to your area Senior Development Officer (Childcare), PreSchool Development Worker or Childcare Development worker. The Early Education and Childcare Unit should be able to let you know what other childcare there is in the area. Use the yellow pages or trade magazines. Visit competitors. 6. THE SERVICE This is your chance to sell your service. Build on your market research to show there is a need for your service. Highlight all your strengths. Give a description of exactly what you will provide where you will provide it and how you will provide it. Include information on the age range you can accommodate, how many sessions and at what times these sessions are. List your fees, including registration and session charges, and when these are payable. You may want to include a brief description of your facilities, who owns them and if applicable the type and length of any lease or details of hire contracts. List what you can / hope to provide. If you are actually after funding for capital build, then include proposed plans and pictures in the appendix. Depending on whom the business plan is for, you may want to want to include some detail on your curriculum and how it meets the early learning goals. Again these could be put in as an appendix. Page 7 of 11 CONSTRUCTING A BUSINESS PLAN 7. PROMOTION In this section you need to show how you are going to let the market know about your business. Include any promotional literature, including brochures in the appendix. Create an image, which is easy to associate with your business and which you will use to attract attention. Use staff uniforms to reinforce the image. Describe your proposed campaign including what features of your business you will use, what advertising media you will use (local newspapers, parish magazines, leaflets, posters, local radio or cinema). Try to think of ingenious, fresh and eye catching ways to remind people of your name at times when they may need you. Remember the power of word of mouth advertising. Satisfy your customers needs and have good relationships with them, build up a good reputation through the quality of your business and protect it by sorting out problem quickly. In an industry like childcare this could make or break your business. List any public relations exercises, for example holding open days for parents, free or reduced rate sessions as tasters. Get a local dignitary or personality to attend the opening to attract the local press. 8. MANAGEMENT Give brief details of the backgrounds, experiences and length of time in the industry of the people who will be running the business. If you employ a manager or supervisor include them in this section, along with any other key staff. Include information only relevant to your business, for example only put in qualifications and previous employment that directly relate to the business. 9. OPERATIONAL DETAILS Within the plan there should only be the briefest of information on the various subjects listed below, with supporting documentation, as required, dependent on whom the plan is for, in the appendix. Some of the areas that may need to be in this section include: Timetable – time scales for any proposed action, including if a new setting, a start date, showing date, action required by that date, and the monitoring of completing the action. Page 8 of 11 CONSTRUCTING A BUSINESS PLAN Staffing – structure, how many staff are required, availability of staff, what experience they have / you will require, what will be their areas of responsibility, job descriptions, contracts of employment, what training opportunities you can provide, rates of pay, holiday and sickness entitlements. Legalities – what regulation needs to be complied with for example Health and Safety, Employment and Discrimination laws, what are the Ofsted registration requirements, how will you meet the National Standards, what systems do you have in place to meet Tax and VAT legislation, (although childcare, where classed as education is usually exempt from VAT registration) and Data Protection Act requirements Administration – what forms and systems will you have in place for recording information on children including admission procedures, registration documentation and regulations, and employees. Also systems and files required for finance issues. What method of book-keeping will you use – and who will do the PAYE Insurance – Employers Liability and transport insurance are compulsory by law (make sure if you or staff are using their personal vehicles on company business those vehicles are insured for „personal business use‟), but others to be considered are Public Liability, Product Liability, Buildings and contents insurance, Business interruption, loss of money, legal expenses. Professional Advisors – include names of accountants, solicitors bank managers or business advisors used. Constitutions and policies – club or business constitution documentation and copies of policies, including Health and Safety, Security, Equal Opportunities, Special Needs, Behaviour Management, Hygiene, Food, Families and others, could be attached in the appendix if required. Fund raising – what targets you have set yourselves, examples of how you want to achieve it and what it will be used for. Typical Daily routines – including details on meals and refreshments and hygiene issues. 10. FINANCIALS This section contains all the details about the finances of the business, and must show were all your anticipated income will come from and what expenditure you will have to make. Probably the most important document for your business is the cashflow forecast. This is simply a record of when you think you will receive cash and when you will have to pay it out and should be completed by anyone who runs a business. It is important because a cashflow forecast will allow you to plan ahead. For example it will show you when you may be paying out more than you are taking in and therefore require additional funding. It will also let you see when you may have extra cash and how best to use Page 9 of 11 CONSTRUCTING A BUSINESS PLAN it and it will allow you to ensure that you have sufficient cash to meet large capital expenditure. More businesses fail due to a lack of cash to pay suppliers bills, staff wages or meet production expenses than for any other reason. Please note that you may also be asked to provide a profit forecast. From the start you must be clear that profit and cashflow are not the same, a profit or loss figure can be affected by nonmonetary items. The Inland Revenue, for tax purposes, will require Profit and Loss statements at the financial year-end. They can be complex and therefore you should always seek professional advice from an accountant to complete them. A cashflow forecast should follow your chosen accounting period. For tax reasons this is usually a year from when your business starts, although it can be a shorter or longer period for the first year only. Choose a year end date in a quieter part of your year (ie if you close for the summer period – your accounting year end could be 31 July) In the plan you should include monthly cash flow forecasting basis for at least one year and maybe for two and an annual forecast for the second (if not monthly) and third years, and possibly for a further two years beyond this. Your cashflow forecast will, in part, be based on assumptions. You should use research to make these as realistic as possible. If you are unsure of a figure then be cautious but do not get too pessimistic. Always state your assumptions, not only will this help the readers of your plan but also yourself, later in the year, as you are reviewing your cashflow budgets. It is very important that you see the cashflow forecast as a valuable business tool, and monitor your income and expenditure on a regular basis, at least monthly. This will highlight any differences (variances) and will allow you to take the appropriate action at the right time. Be sure that you get the timings of your income and expenditure right. For example, your income will include parental contributions, but when will you receive these. Do you get them a week, a half term or full term in advance? There may also be Nursery Education Grant funding. Although this is for each term, it will not usually be received until the month following the first month of term. In your expenditure you may have telephone bills, which are usually issued on a quarterly basis. Ensure it is entered on the appropriate quarter months on your cashflow forecast. You may need to pay Insurance on an annual basis, again enter it only in the month of anticipated payment. As well as being a valuable monitoring tool, the cashflow forecast can help your decision making, by using it for “what if” analysis. For example once your cashflow is set up, see what effect changing your session charge makes to your cash position by increasing or decreasing the income lines accordingly. Further „what if‟ analysis could include how changes in the way you charge parents, for example a change from one week in advance to a half term in advance, changes your funding needs. Or how a change of your children‟s ages from one term to the next will affect the amount of Nursery Education Grant you receive. Page 10 of 11 CONSTRUCTING A BUSINESS PLAN On the expenditure side experiment with changes in staff structure or salaries, see what affect a change in the amount of rent would make to you. 11. Useful Contacts For advice on business planning, in addition to your own organisations, you may wish to contact Martin Parker, Business Support Officer, Early Education and Childcare Unit, County Education Office, The Castle, Winchester, SO23 8UG. All High Street Banks will have a small business centre that will supply you with business planning literature and advice as appropriate. Accountancy firms will also usually have a Small Business Advisor who will help you put together a business plan. – but do ask about the cost first – it can be an expensive way to do something which really you should do yourself. The local Business Link Wessex office should also be able to give you advice. For local contact details ring 01202 758400 or visit their website at www.businesslinkwessex.co.uk. Another potential source of advice is the local Enterprise Agency, their telephone number is 01234 345055, or try www.smallbusinessadvice.org.uk Page 11 of 11