Business Plan, Checklist for a

The business

The following information about the nature and objectives of the business should be given:

Personal details For the founder, proprietor, partners, or directors state each person's name, address, age, and profession if it is relevant to the business. Some details of their background and experience should also be given.

Structure of the business State whether the business is or will be set up as a sole trader, a partnership, or a limited company.

Business activities Describe the product or service the business will offer for sale and to what extent (if at all) it will manufacture the product.

Commencement date State the date on which trading will start (for a new business) and why this date has been selected.

Objectives State what the business is expected to achieve in general terms of sales and profitability, referring to a more detailed analysis later in the plan.

History A new business will probably have no history; however, something should be said of how it came into being. A restructured business or a business seeking new capital will have a history and this should be given here, paying special attention to any mergers or takeovers.

Personnel

State the number of employees (other than directors, partners, etc). For all senior personnel give names, ages, qualifications, position, and salary. If no staff are currently employed but some will be required, state the numbers you propose to recruit and their salaries as accurately as possible. An overall plan of staff requirements, together with any further recruitment or redundancies, should be given. If this requires considerable detail it should be given in an appendix.

The product(s) or service(s) in relation to the market

Product or service details Provide details of all products and their proposed sale prices. Explain your pricing policy, taking into account the price and quality of competing products or services.

Market details State the nature of the market; whether it is growing, declining, static, or seasonal. Give brief details of any market testing undertaken and profiles of intended customers. If substantial orders, or letters stating an intent to place substantial orders, have been received, attach copies. State if any market research has been undertaken.

The competition Give the names of major competitors, their pricing policy, strengths, weaknesses, etc. Explain how the company's products or services will be better than those of competitors and any other ideas you have about overcoming competition.

Proposed marketing methods Give details of how you propose to market your products or services and the cost of doing so. Include in your budgeted expenditure a figure for advertising. If advertising and PR are important to your sales plan, give details in an appendix.

Suppliers Give details of your principal suppliers as well as alternative sources of supply. Give a brief account of the advantages in using the chosen supplier. If you have any letters from suppliers that could be of interest, attach copies.

The premises

Property type State whether offices and any manufacturing or storage units will be leased or bought. If the premises are to be leased, state the length of the lease, whether there is an option to renew, the present rent, and the frequency of rent reviews. Mention should also be made of who bears responsibility for internal and external repairs. If you own the premises, state the purchase price and when they were bought. If a valuer's report has been obtained, enclose a copy. If the property is freehold, state its written-down value In both leasehold and freehold property state the amounts payable in rates.

Specifications State the overall size of the premises and how they are (or will be) subdivided, e. g. production space, storage space, retailing space, office space. If appropriate, supply a plan.

Equipment required If the business manufactures or is intended to manufacture its product(s), it may be useful to give a brief outline here of the process involved.

Manufacturing equipment Give details of equipment already owned, including the purchase price, depreciation, and current value. Also give financial details of any manufacturing equipment currently hired, leased, or borrowed. Add a note about the cost of servicing equipment.

General trading equipment Give details of any equipment owned for trading purposes, e. g. cash tills, company vans or cars, including the depreciation, present value, and purchase price. Mention any such items leased or borrowed, stating the rent paid and terms of leasing.

Equipment on hire purchase Give details of any equipment currently being bought on hire purchase, together with the date and terms of the contract.

Equipment required Give details of all equipment you intend to buy, either to begin trading or to increase existing production. State the prices, leasing arrangements, and source of funds.

Sales forecasts

The business plan should state how sales are to be achieved, with details of any distribution network. Discounts and agency fees should be stated and a breakdown of the sale price in the form of a pie chart is often useful. Provide a detailed forecast of sales either on a monthly basis, if this is feasible, or on a quarterly or annual basis. The sales forecasts should be projected as far into the future as possible (certainly three years but longer if a sensible forecast can be made). These figures will form the basis of the all-important cash flow projections.

Financial summary

Source of funds For an existing business the capital structure should be given. This may consist of shares, loan stock, and debt. The long-term debt may consist of debentures, while the short-term debt may be in the form of bank loans. For a new business, the intended capital structure should be outlined together with a list of shareholders, stock and debenture holders, etc. For a business seeking new capital, state your requirements precisely and explain what form of security you can offer.

Cash-flow projection This is probably the most important part of the business plan. If the plan is to be credible, it is essential that the cash-flow projection should not contain any estimates that cannot be substantiated as fair and likely. For a convincing business plan the cash-flow projection might cover the first three years in detail and the next two years in less detail. If an outline projection for ten years can be provided the picture becomes increasingly credible.

Projection of profits Give an estimate of the profit over at least three years. This should be realistic, even if it shows that the venture is unlikely to be profitable in its initial year (or two).

For a restructured business or a business seeking new capital the supporting documents should also include copies of the balance sheets and profit and loss accounts for at least the past three years.