Key facts about business plans
A business plan is a crucial document for starting a business, detailing each element and helping entrepreneurs consider all necessary aspects.
It typically includes sections like an introduction, business objectives, resource plan, marketing plan, production plan, and financial plan
Creating a business plan helps entrepreneurs understand their business better, minimise risks, and make informed decisions.
A business plan is essential for raising finance from banks or investors, as it demonstrates the potential for business success.
What is a business plan?
A business plan is an essential part of starting any business. Entrepreneurs create business plans to help them consider all of the elements they are going to need for their new business to be a success.
What is the role and importance of a business plan?
Jaap talks about being a self-employed carpenter and about business success, profit and independence
Hi guys, my name is Jaap.I'm a carpenter.I work mainly in west Wales and I do all aspects of carpentry work.
An entrepreneur is someone who looks at opportunities and sees a way to do that as a job or employ people and feels passionate about whatever it is that you want to do. Knowledge of services or products is really important, being able to answer questions that your customer might have, so they know that you know your stuff.
You have to be able to be skilled in your field but you also have to have interpersonal skills, you have to have financial skills, you have to have planning skills and if you combine all of them, then I think you can be a successful entrepreneur.
Often it isn't just the case of quitting your job and starting a business the next day, it's a transition period that happens. I think the business plan was something that was very good because it gives you a very clear indication whether something is viable and you have to be very honest with that, you have to make sure you do your research, listen to the experience of other people and make sure you are trying to be as realistic as possible. There is no point looking at it through rose-tinted glasses.
We just went and did online research of what's available in the area. Okay, so are there other people doing similar things? Look at what's available, what's popular. Identify the opportunities and go talk to the potential customers, potential clients, potential suppliers and make sure that you kind of set everything up before you start. Equip yourself with as much knowledge as you can.
My main objective was to be able to support myself and my family, to be able to make sure that financially, it would work. I don't employ anybody so I am self-employed. It means that I don't get holiday pay, if I'm sick I don't get paid, so you have to look after yourself. So you do very simple maths and you then compare that to other figures from other providers and if you feel that you can offer a good or even better service in that area, you know that your figures should be the same, if not better.
Goodbye, hope that helped.
A business plan is a document created by a business or A calculated risk-taker who sets up a business in return for financial gain. that provides details about each element of the business. Creating a business plan means an entrepreneur considers all of the different elements of their business.
A business plan is usually made up of several sections:
introduction to the proposed business
the business and its objectives
a resource plan
a marketing plan
a production plan
a financial plan
What is in a business plan?
Below is a list of the different components or parts of the business plan.
| Component / section | What sort of information might be included? | |
|---|---|---|
| 1 | Introduction to the proposed business | • business name and address • details of the business idea |
| 2 | Business objectives | • business strengths and past achievements • the value of business & source/s of funds • legal status (sole trader, partnership, LTD?) • personal details of the owner/s |
| 3 | Resources plan | • HR: who are the founders? What are their qualifications / skills / experience? • assets: Premises • assets: Equipment / machinery • raw materials needed |
| 4 | Marketing plan | • competition • market research evidence of demand for the product |
| 5 | Production plan | • production details: how will the product be made |
| 6 | Financial plan | • sales revenue predictions • break-even predictions, calculations, graphs • cash flow forecast |
By completing each section of the business plan, an entrepreneur gains a full understanding of each element of their business. This also gives the entrepreneur a better understanding of whether the business is likely to succeed or not. If there is a chance the business might not succeed, the entrepreneur can amend the business plan in order to minimise this An estimate of the probability of an unwanted outcome. It depends upon the chance of it happening and the consequences if it did happen..
What is the purpose of planning business activity?
Minimising risk
A A document that sets out the future intentions of the business. allows an A calculated risk-taker who sets up a business in return for financial gain. to minimise the level of risk when setting up a business. This is important because there is a high risk of business failure within the first year.
Lu Li talks about the importance of internal growth for a business
Hi, my name is Lu and I'm the founder of Blooming Founders.
So, in the simplest terms, business growth means when a business is growing and typically it means that it turns over more revenue. Business growth is important because that means typically, more jobs can be created, the business can expand and serve more customers across the country or even internationally.
A business plan is a document that helps the founder understand what he or she is actually doing and it's a document that shows what the business is about and what they are planning to do in the next couple of years or so.
Data is really important for decision making because data doesn't lie, so it's a really clear indicator whether your strategy is planning out, whether things are going in the right direction and whether you can afford the things that you want to do for your business, whether you are turning a profit or not. Whether you can hire someone to help you with the business or not.
There are different sources of finance for a new business. It can come from the savings of a founder, it can also come from a bank, it can come from friends and family, or it can come from outside investors. So, these are other people who would give you money to start up your own business but then they would demand a share of your business in return and they would hope that you would grow the business, so their share would get more valuable over time.
Positive cash flow is when there is more money coming in than money going out, which is a very good thing. Having positive cash flow is super important for business growth because it's a strong indicator that you can actually afford to grow.
One of the mistakes that a lot of business owners do is that they try to grow too quickly and too fast, which means that they commit to costs and liabilities without having the cash flow to back it up. When you know the economy hits a recession then everything looks a bit more gloomy and it's a bit more difficult when it comes to business growth because the normal consumers think, "I'll just hold on to my own money," which means they are not giving it to you, as the business owner.
When there is an economic boom that tends to be good news, consumers are spending more, you are more likely to sell your products and services. You can hire more people to expand. You can maybe think about exporting or going to other countries. Things to be wary of, not to get too euphoric about the boom and commit to too many investments because you don't know how long the boom is going to last. It's just kind of like, keeping a balance between how fast you want to grow the business and how you think the economy will actually help you to do that or not.
Alright guys, I hope that was helpful and you have learned a lot more about business growth.
When creating a business plan, an entrepreneur has to consider all of the key elements of a business and address any issues. They must also conduct Market research is the process of collecting information about the market or what customers want that might help a business to be more successful and spot gaps in the market. around their idea to gain a better understanding of the market, their potential customers and where to locate the business. Market research will also help them to create A business aim is the overall target or goal of the business, whereas business objectives are the steps a business needs to take to meet its overall aims. for the business. The two types of market research a business might undertake are primary and secondary research.
One of the key documents used to minimise risk in a business plan is a A prediction of the money flowing in and out of a business.. This is a prediction of the money a business might have coming in or going out over a period of time. By completing a cash flow forecast, an entrepreneur will see if there are any times of the year when they may lose money. They can then use this information to make changes to their budget and payments or increase The money flowing into a business, otherwise known as inflows..
Do you need a business plan to raise finance for your business?
A business plan is essential when a new business is attempting to raise Any form of money used by a business. from a bank or potential business investors. An entrepreneur is able to take a business plan into a meeting with a bank or A person or group that buys part of a business with the aim of making money. to provide evidence of why the entrepreneur believes the business will succeed.
When an entrepreneur applies for a loan or for a mortgage on a building, the bank reviews the business plan and decides whether it believes the business will be a success. If the bank thinks the business is too risky and may not succeed, it may decide not to let the business borrow money.
Investors want to see a business plan to ensure that they will not lose money. The primary purpose of an investor is to make more money, so they want to make sure the business has the potential to be a success.
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Final checks
What is one key purpose of a business plan when seeking to obtain finance?
A business plan helps convince banks or investors that the business will succeed, reducing their perceived risk in lending or investing money.
