What is a Business Plan?

A business plan is a complete description of a business, giving information on the product or service,
marketing and finances. The plan brings your main ideas into focus, helps you work out what you want to
achieve and how you are going to do it.

An effective business plan can:

Identify if there is a market for your product/service
Determine your competition and identify advantages
Estimate start-up costs, income, expenses and profit
Show if your business idea is worth pursuing

It is recommended that everyone complete a business plan before starting a business and it is normally a
requirement when applying for grant or loan assistance.

Business plans vary in content and length; a concise plan is normally around 10-12 pages long. Remember -
this is just a guide. Some of the questions may not apply to your business.

They are normally typed to create a professional image. This guide gives suggestions about the content
& layout and can be used for your notes as you complete the business plan.

What Support is Available?

This guide helps develop a structured plan for your business and can be used alone or as part of the business
start up workshops. These workshops help to develop your business skills and provide more information
about completing your business plan.

For further information or assistance in completing a business plan, or booking a place onto a workshop,
please contact TEDCO Business Support.

Telephone: (0191) 428 3300

E-mail: bussupport@tedco.org
Web site: www.tedco.org
 index
GLOSSARY

SECTION 1: Overview
a. Business Details
b. Summary of the Business
c. Aims of the Business
d. The Business Product/Service

SECTION 2: Market Research

a. The Market
b. Competition
c. The Environment
d. Suppliers Information

SECTION 3: Marketing
a. Marketing Strategy
b. Branding
c. Advertising & Promotion
d. Internet Strategy
e. Pricing Structure

SECTION 4: Operations
a. Management
b. Staff Resources
c. Premises
d. Regulations
e. The Future

SECTION 5: Financial Forecasts

a Survival Budget
b Personal Survival Budget
c Your Survival Budget Start Up Costs
d Capital Expenditure Analysis
e Sales Forecast
f Cash Flow Forecast
g Projected Profit and Loss Account
h Projected Balance Sheet
Glossary of Business Terms
Section 1: Overview

1a Business Details
This section contains basic information about the business such as the name and address, status of the business
(e.g. sole trader or partnership) and contact details.

NOTES
Business name
Owner / Directors
Business address

Contact telephone
number
Email address
Web address
Legal status of the
business
Main contact
Accountant
Business banker
Solicitor
Section 1: Overview

1b Summary of the Business

This is normally the last part of the business plan to be written, and should provide the reader with a brief
description of the business. The summary will normally include:
What your product or service is and how you are going to deliver it. Which part of the market you are going to
target e.g. cheap and cheerful or designer. How you are going to achieve the financial forecasts in the first year?
Your reasons for starting the business and how you will make it a success.

NOTES
Section 1: Overview

1c Aims of the Business

What do you see in the future, will the business just provide a living for your family or do you see yourself
employing people in the future, or running a chain of businesses?

NOTES
Section 1: Overview

1d The Business Product/Service

A detailed description of your product or service (avoid technical words). What makes your product or service
different? Advantages & Disadvantages. What new products and services are being developed if relevant?

NOTES
Section 2: Market Research

2a The Market
This section is where you demonstrate to the reader the need for your product or service and the research you
have undertaken into your chosen market. Have you talked to anyone other than family and friends?
You should explain in detail the particular sector you are going to be targeting and trends within that market.
What is the size of the market and do you specialize in any part of it? Who are your target customers and how
many are there?
Within this section you should include both:
Primary Research (research you complete yourself e.g. customer surveys)
Secondary Research (research someone else has completed e.g. statistics)
You should demonstrate what your potential customers want and may wish to include some of the following:
Customer questionnaires. Telephone surveys. Expected market share. Details of potential customers.

NOTES
Section 2: Market Research

2b Competition
Here you should list your competition and show what products and services they offer. Examine how your business
is different to that of you competition. A SWOT (strengths, weaknesses, opportunities, threats) analysis of your
competitors is also advisable. Explain why your potential customers will no longer use their existing suppliers and
buy from you instead.

NOTES
Section 2: Market Research

2c The Environment
Are business conditions healthy at the moment? Are there any political issues, which you may need to address? Will
technological changes affect your business? E.g. is your product likely to be out of date quickly?

NOTES
Section 2: Market Research

2d Suppliers Information
Researching your suppliers is vitally important, as is a comparison of different suppliers so that prices, delivery
times, reliability, credit and any possible discounts can be assessed. Advise which suppliers you have decided to
use and the reasons why. Will you have to pay cash or can you get an account? This effects your cash flow.

NOTES
Section 3: Marketing

3a Marketing Strategy
Outline your unique selling point (USP) and how you intend to sell your product or service to potential customers.
Consider the 5 Ps of marketing: Product, Price, Promotion, Place & People (Customers). Highlight your strengths
and weaknesses.

NOTES
Section 3: Marketing

3b Branding
Does the business name reflect a professional image? Have you checked whether anyone else is using it? (Contact
TEDCO). Are you using a logo, image or particular font in all of your literature and is it consistent?

NOTES
Section 3: Marketing

3c Advertising & Promotion

What forms of promotion will you be using? Will you be advertising in local papers, Yellow Pages, trade directories,
etc? What literature will be produced business cards, leaflets, brochures, posters, mailshots, etc?
Will you be producing regular press releases or any other form of public relations?

NOTES
Section 3: Marketing

3d Internet Strategy
Do you need a website? Would your customers expect you to have one for your type of business? Do you need a full
e-commerce site with the ability to trade on-line? Who will complete the design for you, how much will it cost, is a
suitable web address available, how often will you update the site?

NOTES
Section 3: Marketing

3e Pricing Strategy
This may change once you look at your costs. This is all part of the process of finding out if your business will be
profitable.

NOTES
Section 4: Operations

4a Management
Who will manage the business? What skills and experience do they have? How will they cope with the key areas of
production, marketing, sales, finance and administration? How much time and money will the management team
invest? What share of the business will each have? Include CVs in the appendices.

NOTES
Section 4: Operations

4b Staff Resources
How many staff are needed to run the business? What skills are required? How will they be recruited? Consider
contracts of employment, HR policies, future staffing requirements and any other HR issues.

NOTES
Section 4: Operations

4c Premises
Here you need to address where the business will operate from and why. Does this give you any competitive
advantages? What type of lease will you be signing? Will you need somewhere larger/smaller in the future? Why are
you in this location? If working from home have you informed your insurers? Do you need planning permission?

NOTES
Section 4: Operations

4d Regulations
Here you need to list all statutory regulations which will affect your new business, examples are health and safety
legislation, planning permission or employment legislation. Have you considered what insurance policies you may
need e.g. employers liability, professional indemnity, public liability or equipment cover? Do you need to be aware
of patents or copyrights? Will you comply with minimum wage legislation?

NOTES
Section 4: Operations

4e The Future
Include a brief outline of where you expect the business to be when it has become more established. How many
staff will you have, when will you recruit them, where will the business be based, what do you expect the turnover
to be?

NOTES
Section 5: Finance

5a Summary

Survival Budget
Based on your personal expenses calculate what your monthly personal wages will be for your first year, not
forgetting to include Class 2 National Insurance Contributions in with your drawings.

The figure arrived at should be increased by 25% to cover Income Tax, Class IV National Insurance
Contributions and possible loan capital repayments.

Start-up Costs
List all of your expenditure required to set up your business in the form of two lists.

1) What you have 2) What you require

The costs under 2) should represent capital requirements and business overheads for up to the first three
months of your financial forecast.

Overheads
What are the projected costs involved in running the business? If you are introducing a vehicle into the
business the running costs, i.e. road tax, insurance, fuel etc. can be offset as business expense less any
personal use.

The overheads will include costs such as rent, marketing, insurance, salaries and motor costs. Remember to
record business and private use of where applicable.

Costing/Pricing
Launching your own business can be a nerve-wracking experience. You need to be confident that your
idea/proposal is financially viable, i.e. that you can make enough money out of the business to, at least
survive, but hopefully, create a better standard of living for you in the future.

Using the figures you have prepared in the following sections will enable you to quantify your minimum sales
required for year one, by the following formula:

OVERHEADS + DEPRECIATION + SURVIVAL BUDGET x 100

GROSS PROFIT

= MIN SALES PER ANNUM

Relate this figure to the number of units sold weekly or a minimum hourly rate.
Section 5: Finance
5b The Personal Survival Budget
No two people will have the same domestic commitments. Lifestyles vary and someone who has a
reasonable pension or capital will be in a different position to someone who has very little income.

Weekly Monthly Yearly

Mortgage/Rent
Rates (General/Water)
Heating, Lighting, Gas
Electricity
Telephones
House Keeping, Food
Clothes
Insurance
Car Costs
Travel Costs
Children
Christmas/Birthdays
Holidays
TV/Video/Papers etc
Hire Purchase
National Insurance
Tax (Year 2+)
Other expenditure
Contingencies
TOTAL (A) GROSS
Less Income From:
Spouse
Family
Pension
Other
TOTAL (B) GROSS

Find the GROSS by multiplying the WEEKLY TOTALS BY 52 and the MONTHLY by 12 and
ADDING the sums to the YEARLY Figure.

The difference between TOTAL (A) and (B) is the amount of income you require from your
business over the years trading.
Section 5: Finance
5c Start Up Costs
List below all the costs you will have to meet in setting up your business. Show also the value of any
equipment, vehicles etc, that you already have.

What you will need to set up Value of what you have Cost of what you must
now pay for

Motor Vehicle
Plant & Machinery
Tools & Equipments
Fixtures & Fittings
Furniture
Leases
Land & Buildings
Advance Rent
Business Insurance
Legal & Accountancy Fees
Advertising
Printing & Stationery
Telephone Installation
Equipment Maintenance Agreements
Vehicle Tax & Insurance
Licences
Subscriptions
Stock & Materials
Other Costs
TOTAL (s)
Section 5: Finance
5d Capital Expenditure Analysis
An example of capital expenditure analysis for a clothing business.

Breakdown:
Section 5: Finance

5e Sales Forecast
Once market research has been conducted you will be in a position to prepare a sales forecast, to cover
the first years trading. The initial few months sales need to be supported by market research evidence,
the following months will be based on assumptions, seasonal trends etc.

It is important that you provide evidence of actual customer interest to support the first three months of
projected trading.

Will your customers pay you immediately? Will they pay 30 days after settling an invoice, or even at the
end of a job which may take several weeks?

Cash Flow Forecast

The Cash Flow Forecast is the heart of the Business Plan.

It says, in figures what the plan discusses in words - it is a forecast of cash flowing in and out of the
business (on a monthly basis) for the next 12 months, this is exactly the same as your household budget.

It should be based on (a) hard facts and figures from your research and (b) assumptions which should be
clearly stated in your plan.

As a result of your training and your research you should be able to prepare your Cash Flow Forecast.

The first step is to estimate your likely SALES TURNOVER

The initial three months should be supported by evidence gathered in market research (see section 2).

The following months will be based on your assumptions etc. That you will be able to obtain the stated
levels of business/numbers of jobs/orders. Dont forget that there may be some times of the year busier
than others depending on the type of business.

Income
Include the Income section, all receipts from whatever source - e.g. own funds. Start-Up Support,
Grants, Loans. Indicate who is being approached for particular sums, e.g. Bank, Princes Trust/Arts
Council. Include the value of capital assets you already own and intend to use in the business e.g.
vehicle, tools, equipment insert under capital invested, but remember to also show these items
under the appropriate heading of expenditure.
Ensure that monthly totals are correct and that the figure in the final column totals the 12
individual months.
Section 5: Finance

5e Continued

Expenditure
Ensure that the figures included in Month 1 include the start-up costs in Section 5.

Ensure that cash is spent during the year at/in appropriate months e.g. Will you have advertising costs every month

or just at particular times?

Rent of premises may be paid monthly/quarterly in advance as outlined in your lease.

Telephone charges occur quarterly, if you use an Accountant to finalise your accounts, the fee would appear in

month 11 or 12.

Again, ensure that monthly totals and annual totals are accurately added and cross-balanced.

The NET FLOW in each monthly column is the difference between the Total Income and the Total Expenditure.

The Opening Balance always starts at nil for a new business and then each month equals the closing Balance for the

previous month.

Ensure that NET CASH FLOW (NCF) is correctly calculated - if income exceeds Expenditure then NCF is positive (+),

if Expenditure exceeds Income then NCF is negative (-).

N.B. Prepare your Cash Flow Forecast using a pencil and rubber - you will probably change it several times!

If you have decided on say 100% mark-up in your selling price, the result of your calculation (of gross profit) will

be 50%. If it is considerably lower you may need to re-examine your pricing calculations.

The first target you have set yourself is the Monthly Sales Forecast Target. When you subtract the cost of goods

to produce these sales you have the Gross Profit.

The resulting percentage Gross profit is then a Target or benchmark which you can use each month/quarter to

monitor the progress of the business. Above it (and no complaints from customers) and youre doing ok. Below it,

with constant demand from customer, maybe you can increase your prices. Similarly, by comparing Net Profit with

Sales Turnover, you can set a percentage target for future comparison and control.

Remember your Net Profit should be sufficient to cover your Drawings, any Tax liability and leave a surplus to

retain in the business to support growth.

 Section 5: Finance 5f Cash Flow Forecast

Income 1 2 3 4 5 6 7 8 9 10 11 12 Total
Invoiced Sales
VAT on Sales
Sales Income
VAT on Sales Income
Grants
Car already owned
Equipment already
owned
Capital investment
Loan
Other
Total Income
Expenditure
Materials
Drawings & Pers NIC
Wages & NIC
Rent
Rates
Water Rates
Gas & Electric
Phone/Fax
Insurance
Advertising
Print & Stat
Vehicle Purchase
Road Tax
Motor Insurance
Petrol
Motor Repairs
Petty Expenses
ACC/Legal Fees
VAT Payments
Loan Cap Payments
Loan Int Payments
Bank Charges
Equipment
Repairs/Renewals
Total Expenditure
Bal this Month
Bal last month c/f
Closing Balance
Section 5: Finance

5g Projected Profit & Loss Account

Projected Profit & Loss Account for the
to
Period

Sales (a)

Opening Stock
Add Purchase (b)

Less Closing Stock (c)

Cost of Sales (d) (b-c)

Gross Profit (e) (a-d)

Overheads
Staff Wages/Salaries
Rent
Rates
Insurance
Heat, Light & Power
Repairs & Renewals
Telephone
Advertising
Postage, Printing &
Stationery
Motor Expenses
Driver Expenses
Professional Fees
Bank Charges
Loan Interest
Other
Depreciation

(f)

Net Operating Profit (g) (e-f)

Section 5: Finance

5h Projected Balance Sheet - as at

Fixed Assets
Vehicles
Plant & Equipment
Fixtures & Fittings

(a)

Less Depreciation @ %(a) (b) (c) (a-b)

Current Assets

Stock
Debtors
Cash at Bank

(d)

Less Current Liabilities

Creditors
V.A.T/P.A.Y.E
Loans o/s

(e)

Net Current Assets/Liabilities (f) (d-e)

NET WORTH (g) (c+f)

Financed by:

Initial Capital Invested

Grants
Operating Net Profit

(h)

Less Drawings (c)

(g) (h-i)
Appendices

NOTES

Evidence of:

Potential customers (quantified sales for first 3 months)

Market research e.g. questionnaires

Potential suppliers

Premises (rent/rates/location etc)

Letters of intent/orders

Other supporting information

e.g. operating licence
planning permission
NOTES
The Tyneside Economic
Development Company Ltd

TEDCO Business Centre, Viking Industrial

Park, Jarrow, Tyne & Wear NE32 3DT

Tel: (0191) 428 3300

Fax: (0191) 428 3388
E-mail: bussupport@tedco.org
www.tedco.org