Finance companies and banks demand a written
business plan before putting up financial support to a new business.
All medium and large companies inevitably prepare a financial budget
for the coming year. That should tell everyone that not producing a
written business plan is the first mistake everyone starting a new
business might make.
Starting a new business without a proper business plan is akin to
taking a blind walk in the dark without no road or map to follow. It
should not come as a surprise to learn that the majority of new start
ups consequently fail within the first two years dashing the hopes and
dreams of many budding entrepreneurs.
The benefits to an entrepreneur in producing a detailed comprehensive
business plan when some-one is considering starting a new business lie
strongly in the thought process that goes into producing that plan
rather than the ultimate plan itself. New start ups should regard a
business plan as a road map to get the show on the road.
A properly thought out and written business plan for a small business
should contain the details of how the small business is going to get
started. A typical plan might include a short synopsis of the new
business with sections on sales and marketing, operations or
production, purchasing, personnel plus a financial section evaluating
those plans and putting real numbers on the written text.
The short synopsis should briefly describe the main business and
mention each of the main ingredients contained within the plan to
attain the objectives. The rest of the business plan should support
that synopsis and should be factual rather than a sales document.
Sales and marketing should include an analysis of the potential and
forecast sales, competition and how the sales will be achieved.
Identify the sales channels that will produce the sales and why they
will produce the sales. The sales section should specifically state the
volume of sales of each product over at least the first year and the
price at which each of those products will be sold and note the
sensitivity of all items to unexpected events.
The operations and production section is dependent upon the type of
business and will be variable depending on whether the new start up
business was providing services, retailing or manufacturing. The
production section is basically a detailed picture of the vehicle that
will be used to generate the products to be sold.
Purchasing would include an analysis of how the products to be sold
would be sourced. Volumes should be stated and sources of supply
specifically identified with a real purchase cost of all major items
specified not guessed.
Personnel would include the names of the people involved with brief
details of their knowledge, qualifications and previous experience. The
personnel section would also include details of people yet to be
recruited if the work to be performed is going to be critical to the
new business.
The financial section of a business plan should contained a forecast
profit and loss account preferably each month for the first year at
least with perhaps a summary of the second year. In addition to the
profit and loss account a cash flow statement taking into account
capital introduced and stock levels should also be produced.
The sales and production or purchasing numbers including volume and
prices contained within the report should be reflected in the financial
report. Each major critical assumption within the plan should be
subjected to a financial sensitivity analysis that takes into account
all potential risks to volume and price levels.
The process of preparing a detailed comprehensive business plan that
has been properly researched has significant benefits in itself. If the
business has been researched and thought through before the new
business starts there is a much higher can it will succeed and suffer
fewer negative surprises once the real work of generating sales and
profit begins.
Article Source: http://www.articlesbase.com/business-articles/producing-
a-successful-business-plan-to-start-a-new-business-335194.html
About the Author
Terry Cartwright, DIY Accounting qualified accountant designs Small
Business Accounting
Software on excel spreadsheets and Payroll Software
for small to medium sized business providing a complete accounting and
bookkeeping solution and also supplies Company Formation packages for
new limited liability companies
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