Operational Business Plan

For Demonstration Purposes Only Operational Business Plan For Subpostmaster Applicants Applicant name: Office applied for: Reference no: Operational Business Plan (Hardcopy version) 1 For Demonstration Purposes Only Version 1.7 October 2005 Operational Business Plan (Hardcopy version) 2 For Demonstration Purposes Only Contents Please complete all of the sections Page Introduction 3 Section 1 – Business plan Your business (Post Office® and retail) Taking your business forward Financing your business Personal finance Profit budget and cash flow 4 9 10 14 16 Section 2 – Sales Marketing Your customers 22 22 Section 3 - Staffing Your staff Staffing planner 23 25 Operational Business Plan (Hardcopy version) 3 For Demonstration Purposes Only Introduction A business plan is a planning document that outlines in words and figures your proposed business idea. All references in this document to „the business‟ refer to both the Post Office® and any retail/ancillary business you intend to operate at the premises you specified in your application. There are business standards required by Post Office Ltd for the operation of the Post Office® branch which may incur costs and these should be reflected in this plan. When you are considering starting a new business, there are many aspects to think about and putting these things down in black and white will help to highlight the areas you need to consider. In order to complete the business plan fully, you will need to carry out sufficient investigation into customer requirements and local competition. This procedure in itself is a good exercise in business management, a skill needed by all effective business people. In order for Post Office Ltd to consider your application, all the relevant sections in the business plan must be completed. Failure to complete: All the relevant sections indicated on the contents page or provide the appropriate documentation to support the entries, may result in your application being delayed or rejected. The business plan is a monitoring tool for you. When you first begin your business you will have a tremendous amount of things to do and there is always the temptation, once you have been appointed by Post Office Ltd to open up a drawer, drop the business plan in, and then forget all about it! But it is important to keep it close at hand, and to look at monthly to see how you are progressing. Are you still following the plan? If not, how are you able to rectify the situation. It is very easy in the early days to feel that you are doing well because you are busy and there is cash in the bank but it is PROFITABILITY that counts. Remember this is YOUR business plan – you are responsible for its contents and projections. Post Office Ltd hereby excludes its liability for any act or omission, negligent or otherwise and for any negligent mis-statement, on the part of itself, its employees or agents in connection with this business plan. It should not be assumed or implied that the business plan has been prepared, checked, approved or endorsed either as a whole or as to any particular part by Post Office Ltd. Figures included in this business plan should be assumed to be estimates in all cases and no warranty or guarantee as to their accuracy is given by Post Office Ltd. You are recommended to obtain expert professional independent advice and assistance in preparing the business plan. Your decision to proceed with the application should be based on the opinion of professional independent advice. Operational Business Plan (Hardcopy version) 4 For Demonstration Purposes Only Section 1- Business plan Your business (Post Office® and retail)  Please provide the following details about your business proposal: Trading position e.g. sole trader, partner, franchisee, limited company If the business is to trade as a partnership then list the partners, if the business is to trade as a limited company then supply the company name and registration number. Reasons for purchasing this business, and in particular, wanting to run a Post Office® branch:  Please indicate below the planned nature of your retail business. (Please choose the category which most closely matches yours): Confectioner/Tobacconist/Newsag ent Convenience store Garage/Service station General stationer General store Greetings stationer Pharmacist/Chemist Supermarket/Hypermarket None Other (please state) Yes Yes No No  Will the business be registered for VAT? Do you intend to buy the retail side of the business and maintain it at the existing site?  Operational Business Plan (Hardcopy version) 5 For Demonstration Purposes Only  Do you intend to buy the retail side of the business Yes with the intention of moving to another site in the future? (If you have answered ‘yes’ to questions 3 and/or 4, then a letter of intent to purchase the business should be enclosed with this business plan) No   Do you intend to buy the retail side of the business from the outgoing Subpostmaster and begin your appointment at an alternative site immediately? Yes No Please give details of where you intend to relocate the business  Do you intend to relocate the Post Office® into an existing branch or new retail business? Ye No s (If you answered 'yes' to question 6 and intend to relocate into an existing business, please supply the latest set of trading accounts for this business) Have you already acquired the retail side of the business from the outgoing Subpostmaster? Ye No s (If ‘yes’, then a copy of a signed provisional contract should be enclosed with this business plan)   Is the proposed location for the business leasehold or freehold? Leasehol d Freehol d Do you require planning permission? Ye s No Operational Business Plan (Hardcopy version) 6 For Demonstration Purposes Only (Check with your local planning department that existing planning permission covers your requirements. You may need to apply for a „change of use‟) If you do require planning permission, please provide details of the application Note: You will need to consult with Post Office Ltd about the security aspects of any relocation Are there any operational restrictions on the lease of the proposed location of the business? If ‘yes’ please give details below Yes No Operational Business Plan (Hardcopy version) 7 For Demonstration Purposes Only Premises Where and how you run your business will contribute greatly to its success. It is essential that the outlet you provide is welcoming to customers whilst also being pleasant for you and your employees to work in.  Describe the business premises in terms of location and state of repair.  Having read the enclosed leaflet ‘+1 Standards, Sales and Service Standards’, how closely does the present state of the outlet match the standards outlined?  What actions are you planning to take where gaps in expected standards have been identified including any conditions of appointment? +1 Standards planned change Time frame (within 3/6/9/12/15/18/21/24 months) 3 months Cost e.g. new flooring on public side, Fascia, Lozenge, repainting £150 Total A £ (It is IMPORTANT to transfer these costs to the appropriate section of your cash flow forecast and profit budget)  Yes No Do you plan to improve/extend the property in order to increase profitability? Please complete the table below and include a floor plan highlighting the changes. +1 Standards Time frame Cost planned change (within 3/6/9/12/15/18/21/24 months) e.g. convert storeroom into retail space 6 months £1500 Operational Business Plan (Hardcopy version) 8 For Demonstration Purposes Only Total B £ (It is IMPORTANT to transfer these costs to the capital payments section of your cash flow forecast, with details of any associated loans. Additionally, interest on loans should be carried to the profit budget)  Please detail below the current and your proposed opening hours in the retail side and Post Office® branch side of the business and cost projections for extra wages, energy costs etc. Retail Post Office® Cost Current Monday Tuesday Wednesda y Thursday Friday Saturday Sunday Total C £ Proposed Current Proposed  Please detail in the table below any improvements that you intend to make on the retail side of the business, stating when the activity will take place and the estimated costs involved: Activity Implemented Cost e.g. install new freezer cabinet Month 2 – June £250 Total D £ (It is IMPORTANT to transfer these costs to the appropriate section of your cash flow forecast and profit budget) Operational Business Plan (Hardcopy version) 9 For Demonstration Purposes Only  Please detail below any technology that you plan to implement in your business and outline the benefits expected: Technology e.g. EPOS(electronic point of sale) Benefits Improved stock control etc. Time frame 6 month Cost £250 Total E £ (It is IMPORTANT to transfer these costs to the appropriate section of your cash flow forecast and profit budget)  Growth in sales will only occur as a direct result of positive action. Enter into the table below the total costs of the initiatives contained within the earlier sections of this plan and any others that you have planned. For each, enter an estimate of the additional sales that you anticipate generating as a result. Section ONE ONE ONE ONE ONE TWO *Others (provide details) Activity +1 Standards Improvements Opening hours Retail improvements Technology Advertising Total Total A Total B Total C Total D Total E Total F Total Costs £ £ £ £ £ £ £ £ £ £ Estimated sales growth - £ £ £ £ £ £ £ £ £ £ Total estimated sales growth resulting from planned initiatives Operational Business Plan (Hardcopy version) £ 10 For Demonstration Purposes Only Operational Business Plan (Hardcopy version) 11 For Demonstration Purposes Only Taking your business forward It is essential for the success of your business that you investigate its viability before taking it on. It is imperative that you are satisfied that the business is a viable one. This can be achieved by the assessment of the outgoing Subpostmaster‟s accounts either by yourself, if you are experienced enough, or by your accountant or business advisor. You should also undertake some research to substantiate the financial projections that are made.  Have you, or your accountant, studied the outgoing Yes No Subpostmaster’s accounts? (If available, copies of the accounts for the previous three years should be enclosed with this business plan) Business objectives  What are your short /medium term business objectives?  What are your long-term business objectives?  Please provide the following information from the last 3 trading accounts, and then also forecast your sales for the next two years Forecasted figures for the next two Current Subpostmasters last three trading years accounts Year Year 1 Year 2 Retail Sales £ Less Cost of Sales £ Gross Retail Profit £ Gross Retail Profit margin % Post Office Remunerati on £ Operational Business Plan (Hardcopy version) 12 For Demonstration Purposes Only Total Income £ Less Expenditure £ Net Profit £ Net Profit Margin % Operational Business Plan (Hardcopy version) 13 For Demonstration Purposes Only Financing your business To get your business off the ground you may have to borrow money. Even if you do not, you will certainly need to keep a tight control on the finances of the business, especially in the early months. The business plan allows you to assess the financial viability of the business by asking questions about start up costs, business expenditure etc. These figures are then transferred to a cash flow forecast and profit and loss budget. These documents are a very important part of your overall Business Plan. Rented/leased premises  Please give below the name, address and telephone number of the landlord Name: Address: Telephone No. Have you provided a copy of a provisional lease agreement or letter from solicitor? Yes/ No If no please give reasons …………………………………………………………………………………………………………………… ………………………………………   What is the annual rent? Include any VAT if applicable When is the rent payable? Monthly Quarterly In advance In arrears £    What are the ongoing lease charges? How long is the lease? £ If the lease is for less than five years, please state below what has been agreed with the landlord beyond that date?  When is the next rent review? Operational Business Plan (Hardcopy version) 14 For Demonstration Purposes Only  How much is the premium payment (where applicable)? £ (Premium or ‘key money’ is a one off payment charged for the privilege of taking on a desirable lease. This must be included in your cash flow forecast and profit budget).  State the cost of legal fees £  Who is responsible for structural repairs? You Landlord If you answered ‘Landlord’, please give details of the agreement. Pleases state your proposed insurance premium and terms. Planned capital payments/start-up costs, in years 1-2 State the cost of: Premises Fixtures and fittings Equipment/machinery Opening stock Goodwill (where applicable) Improvements/Alterations/Technolo gy etc. (Total A to F from page 8) License fee (if applicable) Legal fees Operational Business Plan (Hardcopy version) £ £ £ £ £ £ £ £ 15 For Demonstration Purposes Only Loan arrangement fees (if applicable) £ Total costs To be funded by: £ Own resources (Total from page 12) £ Loans (from page 12 &13) Additional funding (from page 14) Total funding (Should be greater than or equal to Total Costs) £ £ £ Operational Business Plan (Hardcopy version) 16 For Demonstration Purposes Only Details of own resources Item D Item e.g. savings account, Isa’s, shares, Peps etc Details Halifax 12345678 Value £5,000 £ (If funds are gifted from family members a letter detailing “The Loan” is required which stipulates repayment terms if any) Has evidence of funding from all sources been provided? Yes/ No If no give reasons…………………………………………………………………………………………………………… ………………………………………………………………  If the sale of a business/residential property is Yes No required, have contracts been exchanged? (If ‘yes’, a copy of the contract/proof of sale plus a copy of the latest accounts of the business or a mortgage statement (for a residential property) should be enclosed with this Business Plan). Details of loan(s) (if any) Name of bank Address of bank  Type of loan Amount of loan Period of loan Rate of interest Operational Business Plan (Hardcopy version) £ 17 For Demonstration Purposes Only Amount of monthly repayment including interest £ Will any loan be deferred? Yes No If ‘yes’, when will payments begin? If the loan is on an interest only basis how will the capital be repaid? (If by endowment, savings, pension plan etc. Please include costs in personal requirements, page 14) Do you require additional finances from other sources? (If ‘yes’ please give details overleaf in part 3 on page 13) Yes No  Name of lender Address of lender Type of loan Amount of loan Period of loan Rate of interest Amount of monthly repayment including interest Frequency of repayment £ £  Do you need further funding to meet capital payments after initial start-up costs? Yes No Operational Business Plan (Hardcopy version) 18 For Demonstration Purposes Only How will these payments be funded? (i.e. retained profit, own resources, additional loan(s)) State amount of funding required £ Operational Business Plan (Hardcopy version) 19 For Demonstration Purposes Only Personal finance The purpose of this section is to ensure that the plan generates sufficient funds to meet your normal outgoings. Please enter your projected future personal income and expenditure. If the business is a partnership then the sections below should include the income and expenditure for all the partners. Personal expenditure (monthly)  Give the following details for monthly personal expenditure. Exclude all business costs. If you reside on the business premises only include that proportion of the accommodation costs proper to the living area. £ Mortgage/rent Council tax Insurance (e.g. building, contents) Credit card/loans/other credit payments Housekeeping (food, cleaning materials etc.) Clothing Services (e.g. electricity, gas, water) Rental costs of household appliances (e.g. TV, video) Telephone Motoring expenses (e.g. fuel, tax, insurance) Life assurance/pension Leisure activities Holidays Savings Repairs/maintenance Provision for Income Tax liabilities and National Insurance Contributions £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ Operational Business Plan (Hardcopy version) 20 For Demonstration Purposes Only Any Other (list below) £ (Personal bank statements for all current accounts for the last six months should be enclosed with this Business Plan) Total £ Personal income (monthly)  Give the following details for monthly income: Average net profit from business (One twelfth of annual net profit shown on profit budget.) Pension Interest on savings £ £ £ £ Spouse’s net salary (Provide evidence from bank statements, last three months pay slips or set of audited accounts if self employed (exclude any income from the Post Offic® business) Any other (provide details, including income from other business or rental income) £ Total £  What do you (and your partners if applicable) expect to take out of the business as a personal income (drawings)? £ Now you have finished the first section of this business plan you are ready to complete the profit budget and cash flow forecast. You will need to refer back to the information on all previous pages in order to complete them correctly. Operational Business Plan (Hardcopy version) 21 For Demonstration Purposes Only It should be noted that you may be asked detailed questions regarding your profit budget and cash flow forecast during the operational interview. Operational Business Plan (Hardcopy version) 22 For Demonstration Purposes Only Profit budget and cash flow What is the purpose of a profit budget? The purpose of a profit budget (or operating budget) is to show, at the end of a given trading period, if a profit or loss has been made during that period. Income Income is calculated from: Sales – this is the figure that you charge your customers. Cost of sales – this figure is arrived at by taking the sales figure from above, less the value of opening stock plus purchases less closing stock. There may also be some added income to the business. For example, rent from residential accommodation above the business premises. Finally, there is your Post Office ® remuneration. Overheads These figures should be available from the outgoing Subpostmaster via his or her final accounts. If they are not, however, it is a reasonably simple task to get this information from the relevant authorities, e.g. electricity costs from your regional electricity board or Uniform Business Rate (UBR) from local council offices. Any overheads which will be met from capital expenditure as part of start-up costs should be excluded from the Profit & Loss forecast i.e. Legal fees, improvements/alterations. VAT If you should be or intend to be VAT (Value Added Tax) registered please attempt to calculate all figures net of VAT, as VAT never „belongs‟ to you but to HM Customs & Excise and all you do is collect it on their behalf. If you are not VAT registered, however, you will have to include VAT in your expenditure calculations as you have no way of reclaiming this tax and, therefore, it plays a small part in your profit levels. You should note that, even if you are registered for VAT in respect of your private business, the remuneration you will receive from us, for the Post Office® services you provide on our behalf, is outside the scope of VAT. This means that you will not account for VAT on your Post Office® remuneration, and you will not be able to recover any VAT that you incur on expenditure related to the provision of Post Office® services. Operational Business Plan (Hardcopy version) 23 For Demonstration Purposes Only Complete your own profit budget below on the blank table provided. Profit budget for period ____________ to ____________ INCOME budget Sales (excluding VAT) Less cost of sales (excluding VAT) GROSS RETAIL PROFIT Post Office® Remuneration Rental Income Other Income (give details) Total Income OVERHEADS Staff wages (and employer’s NI where applicable) Rent Uniform business rates Water rates Insurance (Business) Repairs/renewals Heating/lighting/power HP/leasing Postage Advertising Printing/stationery Motoring expenses Telephone Legal/Accountancy fees Bank interest (on loan for example) Bank charges Miscellaneous Total overhead expenditure Net profit before tax NB:  Personal Drawings Annual actual    Operational Business Plan (Hardcopy version) 24 For Demonstration Purposes Only Tax and National Insurance Liability Loan capital repayment Total Personal Expenditure Year 1 surplus / shortage   Cash flow forecast What is a cash flow forecast? The purpose of a cash flow forecast is to assess whether there will be enough cash available to meet the business expenditure. It is important to remember that the cash flow indicates when and how much cash will be received and when and how much cash will be paid out. No averaging must take place. Therefore, you must consider your business trading activities. Are you a cash business? If so, then the amounts that you receive into the business will appear at the time of sale. However, if there are some sales that are via credit terms (e.g. newspaper accounts) then they will appear when the amount outstanding is paid and not when the transaction occurs. Receipts Receipts are calculated from: Sales – the amount you charge your customers Post Office® remuneration – this amount appears on the profit budget Rental income – if applicable Loan – for the purpose of this business plan, the figure will be the amount you have borrowed to start the business. This will appear in Month 1, the month in which it is received into the business. Any other loan capital introduced into the business (to fund improvements etc.) should be shown in the month in which it is introduced. Owner’s capital – for the purpose of this business plan, the figure will be the amount you have personally invested into the business. For example, from the sale of a residential property, or from savings. This will only appear in Month 1, the month in which it is received into the business. Any other owner‟s capital introduced into the business (to fund improvements etc.) should be shown in the month in which it is introduced. Overheads Equally, for the expenditure side of the cash flow forecast, if you pay cash for your purchases then this figure will appear in the month of the purchase. However, if you receive credit terms from your suppliers, the amount for the purchases must appear in the month of payment, not of delivery. Operational Business Plan (Hardcopy version) 25 For Demonstration Purposes Only VAT VAT is included in a cash flow forecast because although you are simply collecting it on behalf of HM Customs and Excise, it is still income or expenditure to your business and cash flow is all about cash. These figures must be as accurate as possible and must never be averaged. An example of a partially completed cash flow forecast appears overleaf. When you have studied the example complete your own cash flow forecast using “Table 17” in the Business Plan Spreadsheet, in the Cash Flow Forecast” section. Operational Business Plan (Hardcopy version) 26 For Demonstration Purposes Only EXAMPLE Cash flow forecast for period RECEIPTS Month 1 budge actua t l Sales Post Office® remuneration Rental income Loan Owners capital VAT refund TOTAL RECEIPTS  134,25 0 11,75 0 13,75 0 10,000 112,50 0 11,000 750 to Month 2 budg et 11,00 0 750 actua l Month 3 budg et 13,00 0 750 actu al PAYMENTS Stock/materials Staff wages (& employer’s NI where applicable) Rent Uniform business rates Water rates Insurance (Business) Repairs/renewals Heating/lighting/power HP leasing repayments Postage Advertising Printing/stationery Motoring expenses Telephone Legal/accountancy fees Capital payments Bank charges Loan repayments Drawings (you + partner) Operational Business Plan (Hardcopy version) 7,750 440 7,700 440 9,100 440 168 20 20 20 4 144 345 852 122,00 0 265 570 4 4 45 45 265 570 265 570 27 For Demonstration Purposes Only VAT payments TOTAL PAYMENTS NET CASH FLOW  Opening bank balance Closing bank balance NB:- = 1,242  133,00 8 1,242 9,044 2,706 1,242 3,948 10,44 4 3,306 3,948 7,254 Operational Business Plan (Hardcopy version) 28 For Demonstration Purposes Only Complete your own cash flow forecast using the blank sheet provided. Cash flow forecast for period RECEIPTS Month 1 budge t Sales (including VAT if applicable) Post Office® remuneration Rental income Loan Owners capital VAT refund to Month 3 budge t actual Month 4 budge t actual Month 5 budge t actual Month 6 budge t actual Half year budge t actu al Month 2 budge t actua l actual TOTAL RECEIPTS  PAYMENTS Stock/materials Staff wages (& employer’s NI where applicable) Rent Uniform business rates Water rates Insurance (Business) Repairs/renewals Heating/lighting/power HP leasing repayments Postage Advertising Printing/stationery Motoring expenses Telephone Legal/accountancy fees Capital payments Bank charges Loan repayments Drawings (you + partner) Business Plan (Hardcopy version) 29 For Demonstration Purposes Only VAT payments TOTAL PAYMENTS  NET CASH FLOW  Opening bank balance Closing bank balance NB:- = Cash flow forecast for period RECEIPTS Month 7 budge t Sales Post Office® remuneration Rental income Loan Owners capital VAT refund to Month 8 budge t actua l Month 9 budge t actual Month 10 budge t actual Month 11 budge t actual Month 12 budge t actual Full year budge t actu al actual TOTAL RECEIPTS  PAYMENTS Stock/materials Staff wages (& employer’s NI where applicable) Rent Uniform business rates Water rates Insurance (Business) Repairs/renewals Heating/lighting/power HP leasing repayments Postage Advertising Printing/stationery Motoring expenses Telephone Legal/accountancy fees Business Plan (Hardcopy version) 30 For Demonstration Purposes Only Capital payments Bank charges Loan repayments Drawings (you + partner) VAT payments TOTAL PAYMENTS  NET CASH FLOW  Opening bank balance Closing bank balance NB:- = Business Plan (Hardcopy version) 31 Section 2 – Sales Marketing  What are your specific marketing and advertising plans for the next 12 months? Advertising activity Time frame Cost Newspaper advertisement e.g. 3 months £220 Total F (It is IMPORTANT to transfer these costs to the appropriate section of your cash flow forecast and profit budget) Your customers If your business is to succeed, you must retain existing customers and try to attract new ones. To do this you must have a clear understanding of who your customers are, what they purchase from you, and, most importantly, why they choose to shop in your outlet. You need to identify what price your customers are prepared to pay and the level of service they expect to receive.  What customer research have you carried out relating to this particular business?  Following this research have you identified a need to change or reduce any of the Products / Services currently on offer? Business Plan (Hardcopy version) 32 Section 3 - Staffing Your staff As a Subpostmaster and employer you are responsible for your assistants (staff), for complying with the provisions of any legislation, which imposes obligations on employers e.g. Transfer of Undertakings (Protection of Employment) Regulations TUPE. It is essential, therefore, that you are aware of all legislation relevant to your undertaking in your business plan.  Key Personnel - current staffing levels in Retail and Post Office® branch Position Name PO/Retail Hours per week (Average) Weekly Total  Proposed staffing levels in PO and retail. Please ensure you provide sufficient staff to cover any planned increase in opening hours or business growth. Position Name Post Office experien ce (years) Hours per week (averag e) Hourly rate Weekly cost Business Plan (Hardcopy version) 33 Owner Partner To be funded from drawings £ £ £ £ £ £ £ £ X52 £ Weekly total Multiply by 52 annual total Total G - Annual cost carried to profit budget and cash flow If your staffing proposals indicate a significant change in staff costs in comparison to the latest trading accounts, please explain how you intend to achieve your proposals:  Please enter the details below of any additional staff who would be available to provide cover for sickness/holidays etc: Name e.g. Joe Bloggs Cover for: Key personnel/PO staff/Retail staff Key personnel/Post Office staff Business Plan (Hardcopy version) 34 STAFFING PLANNER POST OFFICE Please indicate how you will staff the Post Office® counter; which staff will be employed (including Subpostmaster) and the number of hours they will work. Number of counter positions at the branch is __________ Day Counter Position Number (CPN 1,2,3,4) CPN 1 CPN 2 CPN 3 CPN4 CPN 1 CPN 2 CPN 3 CPN4 CPN 1 CPN 2 CPN 3 CPN4 CPN 1 CPN 2 CPN 3 CPN4 CPN 1 CPN 2 CPN 3 CPN4 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 Monday Tuesday Wednesday Thursday Friday Business Plan (Hardcopy version) 35 Saturday CPN 1 CPN 2 CPN 3 CPN4 Total Hours Business Plan (Hardcopy version) 36 Business Plan (Hardcopy version) 37