Introduction
If you intend to start a business you need to write a business plan.
Your business plan will help you flesh out your idea and get a better feeling of whether you are ready to go ahead. Taking time to complete a thorough business plan before you start your business will reduce the risk of you missing something. A plan will also be required by your bank and other lenders before they offer you credit, business loans or overdraft facilities.
This quick start business plan outlines the main points and will give you and others a clear snapshot of your business idea, or where your business is heading. Completing the plan will help you think methodically and sharpen your ideas about your business concept.
The plan will also enable a stranger to grasp your business idea without getting bogged down in details.
Template
Business plan template
If you decide you need a more comprehensive business plan, then you can download the business plan template which covers a range of business issues in more depth.
Read our briefing on writing a business plan.
Your concept
Start by explaining clearly what you intend to do. This can be harder to achieve in a couple of sentences than a couple of pages.
The main question you're answering in this section is how does (or will) your business work?
What exactly is the nature and purpose of your business?
What benefit are you providing or what problem are you solving? If you have a strong business purpose, then it often builds into a strong competitive advantage.
The nature and purpose of your business:
Next, where did your idea come from? Outline the factors that helped you come up with the idea.
Background of this business concept:
Expert tip
Building a prototype can be a good way of both testing and explaining a new product idea. Read our guide on how to create a prototype.
Your vision and values
Your business vision is crucial because it underpins the development and planning of your business.
Anita Roddick of The Body Shop had a strong environmental vision: to provide environmentally sound cosmetics that were not tested on animals. What values and vision underpin your business?
Expert tip
Your vision gives force and impetus to your business development, so if you lose sight of your original vision, the progress of your business may be hampered.
Your current position
Describe where your business is at present. What have you achieved so far to implement your vision?
Parts of the vision that are already in place:
What do you still need to do to achieve your vision?
What still needs to be done:
Your competitive advantage
Without some point of difference from competitors you cannot hope to survive long in business. So what exactly is your competitive advantage?
Try to avoid generalised words like 'quality, 'service' or 'price' in describing your competitive advantages. Everyone uses these terms. Can you be more specific about why customers should deal with you and not others?
Competitive advantage of your business concept:
Expert tip
Remember, you ALWAYS face competition for customers, even if you have no direct competitors: customers always have a choice of how they spend their money.
Why will the idea work?
Assume that some people think the idea is unrealistic. Convince a cynic why it's such a great idea.
Strengths of this business concept:
Your industry
Describe briefly the characteristics of your industry. For example, is your industry in a fast-growth cycle or mature? Is it labour intensive or knowledge intensive (such as software programming)?
Your industry association may hold a range of industry specific information to help your analysis.
You can find associations relevant to your business on the Trade Association Forum website.
Get more information on trends in your sector.
How are your products or services produced?
If you have physical products, outline how you make them or who you order them from. If you're selling a service, outline how you will do the work.
Remember that the people who you need to impress with your business plan don't necessarily understand your industry like you do.
Market research
What evidence do you have that people will buy your product or service? Outline the evidence you have gathered such as market research, overseas trends or potential customers you've spoken to that support the feasibility of your idea.
Be realistic. Top-down market analysis such as: 'There are 50 million people in Britain and if only 10 per cent of them buy...' is not realistic. Use bottom-up analysis instead: work from what you know from research or have achieved in the way of sales or trial marketing.
Market potential
Estimate the market potential for your product or service. Explain exactly how you've arrived at this estimate (such as market research, your trading history or trial marketing).
Read our briefing on researching your market.
Your key targets
Who are your key targets?
Outline the main types of people or businesses that will buy from you. Be as specific as you can. Rather than: 'everyone in my town'; narrow this down to: 'mothers within a 15 mile radius of my location'.
Who are your main competitors?
Describe businesses that are likely to compete with you for customers.
Promotion
How are you going to promote your business?
Outline your promotion ideas to make potential customers aware of your business. Explain why you think these will work.
Describe your distribution channels to market
In other words, how are people or businesses going to buy from you? Will they contact you directly, will you sell to a wholesaler or will you be a retail business? Will you also sell from a website?
Expert tip
Successful businesses often have multiple channels to market. For example, a manufacturer might sell though agents, but also have a factory shop and sell online through a website.
Your business structure
What business structure have you chosen?
Our article on Forming a business will help you find out more about the pros and cons of different business structures and then work through a checklist of what you need to do.
What legal protection do you have?
What patents, brands and trademark protection do you have? How do you know others won't copy you?
External influences
What is outside your control?
Consider factors that could impact your business. These could include major trends, international changes, tariff barriers, technology and changing regulations.
Factors outside our control:
How will you use technology?
How will you use technology such as customer databases, accounting software and Internet applications to lower your costs, speed up your business and make it more efficient?
Expert tip
It’s important to insure your key assets (including yourself). HSBC can help you undertake a survey of your insurance needs, enabling you to save up to 10 per cent on a Small Business Insurance Package.
Personnel
Describe in this section your business skills and experience, or what you're doing to gain both of these.
Then describe the skills and experience of your staff, and also your support network, such as accountant, lawyer, business mentor, friends, partners, etc.
What have you achieved so far?
The more credibility you have, the better. What have you achieved that will convince people that you know what you are doing? Do you have any specific experience in the industry?
List your skills and achievements or your preparation to be in business:
My skills and achievements:
Do you have anyone else helping you?
Outline any staff you already have. What skills and experience do they have to help your business succeed?
Staff skills and experience:
Other help
Who else will help you?
Outline any other advisers, consultants or people (and their skills) who will be helping you in this venture:
Other help, partners and advisers:
Do you belong to any business organisations or groups that could provide support and assistance?
Business support network:
Expert tip
This is a good opportunity to think through your own strengths and weaknesses, and make sure you really want to start your own business. Find out if running a business is for you.
Recruitment
What staff do you still need for your venture?
Required staff: (Also outline the required skills and experience.)
There is nothing more crucial to the success of a start-up business than the skills and attitudes of the first few people it employs. Every time you recruit someone, you take a risk. But if you put in the time and effort needed to find the right people, your investment will be repaid many times over.
Our article on Recruitment and interviewing explains how to:
1)
Decide the type of person you need.
2)
Attract the right applicants.
3)
Interview to select the best candidates.
Profit
What's the potential profit?
How much can you make? Does your business have the potential to pay you a reasonable salary and also have funds left over for further development?
How have you calculated a charge-out price for your time? Even though you may be selling products, have you worked out what you need to make each hour to cover your costs, and expected profit?
Read our guide to pricing your product or service.
Charge-out rate has been calculated by:
Template
Chargeable hours
Work out your charge-out rate with this Excel template.
Measuring progress
What you can measure, you can manage. It is important to measure your progress towards your business goals. Outline here what key performance indicators (KPIs) you will use to make sure that you are on track to your goals:
Progress will be measured by:
It can be useful to enlist the help of your accountant for your financials. Your accountant will be able to tell you if your financials are realistic and can also help you identify the key performance indicators that are important for your particular type of business. Not all of these KPIs will be financial. Some, for example might relate to your marketing activities or measure factors such as staff turnover or absenteeism that indicate staff motivation.
Cashflow and financing requirements
Starting a new business costs money. As well as initial costs such as buying any equipment and supplies you need, it usually takes time to build up a customer base, win new orders – and get paid for them. It may take several months or even longer before your business income is higher than your costs. If you run out of money your business won't last, so a cashflow forecast can be the most important indicator of whether your business will survive the first 12 months. A cashflow forecast will help you see when money might be tight so you can plan in advance. The worst scenario is running out of money without realising this was going to happen.
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Cashflow
You'll need a cashflow forecast to show you won't run out of cash in the first year.
Expert tip
Run all figures past your accountant before showing your cashflow forecast to people outside your business.
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Cashflow tips
Download this document for some extra tips on how to prepare your cashflow forecast.
Your cashflow forecast helps you decide how much money you will need to start the business. You’ll probably need to provide at least some of this money yourself. Read our guide to financing your business.
You may also want bank financing to help with some of your costs, or to cover temporary cashflow shortfalls. Find out how HSBC can help with financing your business.
You may qualify for a grant to help with some of your costs – read our guide to grants.
Cashflow assumptions
When you have completed your cashflow forecast, outline how you came to each decision. This will help you remember how you prepared the forecast. It will also help explain things to other people reading it.
Sales revenue: How did you work your monthly sales estimate? Outline why certain months may vary.
Drawings: Include details of how much you need each month to live, and why this might fluctuate over the year.
Wages: How did you calculate the wages (these can be yours or your employees)?
Marketing: What will you spend money on, and how are the ideas relevant to the customers you have in mind?
Cashflow assumptions
Other payments: If you have a number of smaller expenses, they tend to be entered as 'other'. If the amount starts to add up you'll need to explain exactly what the payments are.
Other assumptions: Is there any other information that needs to be explained to help a reader understand how the cash will flow in your business?
What sales do you need to break even each week? You need to calculate exactly how much you need to sell each week to cover your costs. Can you actually do this amount of work?
Volume of products or services needed to break-even each week:
Template
Break-even template
Use this Excel template to work out how much you need to sell to break-even.
Action items
There are a range of other ideas and issues that you may have not covered. Select anything you have yet to think about. We'll save them to your action plan which you should complete before you start your business.
Add items to your Action Plan.
Conclusion
•
Business plans fail because they are: Incomplete: for example, they lack market research or financial forecasts.
•
Too vague and lack specific detail on how the plan will be achieved.
•
Too optimistic and lacking in realism.
•
Fail the 'reasonableness' test.
Template
Business plan template
Use the information you have gathered in this quick start business plan to build a more comprehensive business plan. Use this template as a starting point.
Expert tip
Final note
A business plan is never complete. Regard it instead as a living document that you will need to monitor and adjust at regular intervals to reflect changing circumstances such as market changes or indeed changes in your own goals and business vision.
Next steps
Get more practical information in our plan, launch and run your business sections and keep yourself up to date with out weekly small business news.
HSBC offers a range of financial services to help your business. Find out about business bank accounts from HSBC and finance and borrowing solutions.
Your local Enterprise Agency can help you start up and grow your business. They may offer free or subsidised advice, training and sometimes workspace. Find your local Enterprise Agency on the NFEA website.
Your local Enterprise Agency is ideally placed to help you start, run and grow your business. Contact them for immediate assistance at www.enterprise-link.co.uk