The Business Plan (Student Version)
This worksheet was written for Biz/ed and the BBC by Sue Hall of Embley Park School in Romsey. It uses much of the information that is available on the Internet to help small businesses to plan for the future. It will be of most value to students who are studying A-level Business Studies or AVCE Business.
The main aims of the worksheet are:
- To understand the need for a business plan
- To look at the different types of business status
- To be able to complete cash flow forecasts and financial projections
- To be able to outline overall business objectives
Step 1 - Planning ahead
No matter how big or small a business organisation some sort of plan is vital. Planning ahead is essential if you are to establish a successful enterprise. You need to set business objectives such as profits and growth and then gather information from market research. You need to analyse your information and set an action plan. Financial planning is a core component of a new business.
Look at Barclays' Guide to Writing a Business Plan [PDF, 40 KB].
What are the main areas a business plan should cover?
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Step 2 - What sort of business are you?
A business plan should include details of the legal status of the business. Use the 'Starting a Business' section of the Barclays web site and follow the link to 'What type of business?'.
Write a brief account of each type of business given below:
1) Sole Trader
2) Partnership
3) Private Limited Company
4) Franchise
You could follow this up in more detail by having a look at the factsheets on the Companies House web site.
Step 3 - So what are you forecasting?
Making a business plan helps to explore the potential of a business. The plan will specify all aspect of the firms' scope and intentions including detailed financial projections. It will show whether ideas will work and if any adjustments need to be made. Financial information will include cash flow forecasts and projected profit and loss accounts for at least the first year.
Find out the meaning of each of the terms below:
1) Cash Flow
2) Profit and Loss Account
Now go to the step by step guide for starting a business on the Channel 4 Real Deal web site. What are the 12 steps you need to go through?
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Step 4 - "Show me the money"
Particular attention will need to be paid to the sources of finance. Use the 'Shatter the Illusion' section of the Real Deal site to find out the various sources of finance avaiable for your business idea. Summarise each of them below:
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Step 5 - Do you have a "cunning plan"?
Using the hypothetical example below you are to devise a complete business plan.
Now download a template from the 'Make it Happen' section of the Real Deal web site. Try filling it in for the sample business idea below.
HALLS FOODS
Steve Hall has been working in catering for a number of years and has seen the gap in the market for delivered gourmet meals. His kitchen is to be based in Romsey Hampshire and he will deliver to the local market. In the first year he will employ two catering assistants and a delivery driver. He will assist with the catering as well as the administration of the business. There is no competition in the immediate area.
Steve is renting the property at an annual cost of £11,400, the Uniform Business Rate is £600 annually. He is using cost plus pricing and does not have any competitors in his local area. He anticipates sales of 25 meals a day for the first 3 months, 30 meals a day for the next three months, 35 meals a day for the following four months, a slack month in November selling 25 meals and then 50 meals a day during a busy December.
He is promoting the business locally using the local newspaper, radio and flyers. His yearly advertising cost is £2004 (Newspaper £504, Radio £1000, Flyers £500)and he pays this monthly.
His annual indirect costs are:
Salaries £48 000
Light, Heat £600
Power £204
Insurance £600
Transport and packaging £600
Maintenance £408
Telephone £240
Postage and Stationery £240
He spreads these costs over the year using budget payments and so for the cash flow forecast divide each item by 12. His start up costs is £40 000 for capital items and other equipment. He is making a personal contribution of £10 000 and has obtained a loan from the bank for £30 000 over 5 years at 10% interest, payable monthly. He intends to charge an average of £20/meal based on cost plus pricing and the raw material purchase cost per meal is £10.
He does not allow credit and his main suppliers, S. Ella foods require immediate payment also. In the second year of trading he is hoping to expand into function catering and lunchtime sandwich delivery.
Using the Real Deal Business Plan construct the Business Plan for Halls Foods.
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