Business Planning - 10 Top Tips

When you are looking for finance to start or expand your social enterprise, above all you need to convince potential lenders that you are a sound investment. You need to show them how your dreams will develop into long-term viability by presenting a business plan that is accurate, believable and complete.


But there are other reasons for having a business plan too. It helps to communicate to all your employees exactly where you are going with your business, and how you are planning to get there; that way everyone can pull together, and knowing how their own efforts fit in to the whole is both much more efficient and more motivating.


At London Rebuilding Society we like to see the following elements in a business plan when we are assessing an application for a loan:

Summary

It is important to start with a clear statement of exactly what the business proposes to do (ideally in two minutes - the ‘elevator pitch’). It’s surprising how many business plans omit this; if you can’t explain clearly what you intend to do, how will you be able to do it?

Social Impact

You also need to explain why this is socially, environmentally or ethically of benefit, and to whom. Will jobs be created or safeguarded? Which stakeholders will be involved?

The Market

You need to show that you have a complete understanding of the market you are going to be operating in. The future trends, your potential customers and what motivates them, the needs which are fulfilled by your product or service, actual and potential competitors, how your offer is different form others in the market.

Product /Service and Operations

Explain the nature of the business model - the product or service and the operation, and the form and process of production and delivery.
Aims and Objectives

This should include your vision for the business; positioning; barriers to growth; SWOT; targets and objectives; critical success factors

Organisation

Here say which legal structure you have chosen and why, and how your enterprise will be managed and organised, including details of key employees, board or management committee - their track record, strengths and weaknesses. Explain the staff (skills, management, and commitment) that will be needed, and the personnel management policies that will be applied. Also the relationship with suppliers and customers, and ethical policies and practices.

Resources

Here you need to show that you have a realistic understanding of the other resources which will be needed to run the business - premises, equipment, systems including IT, etc.

Marketing

Explain your planned Marketing mix - the four Ps: product; pricing strategy; place/sales channels; promotional strategy. Summarise your sales and marketing plan; key customers; marketing costs; sales management; sales forecasts.

Finances

Track Record

Historical audited figures, if applicable; how the business has grown, how profitable it has been, what has financed the business to date?

Projections

Financial projections are there to show that the business will generate enough in surpluses to repay the loan. You should show that these are based on sound assumptions e.g. show best and worse case scenarios. You should also be clear and realistic about all the costs involved in running your venture. Including an analysis of margins, breakeven and sensitivity will show that you understand profitability.

First of all you need to forecast your monthly cash flow over the next three years - that is, the exact month where cash will enter or leave your bank account. Then you need to construct forecast Profit and Loss accounts and Balance Sheets for the next three years. London Rebuilding Society has a simple model to help you do this - it is available under the Business Support tab on our website.

Risks

A summary showing that you have assessed and understood the main risks to the business, their likelihood and impact, and have a strategy for mitigating them. These can be external (the market, the environment, competition, etc.) or internal (the product, operations, personnel, financial, etc.).