This week we asked our Credit Manager, Simon, for 10 top tips of features he looks for when reading a business plan. Here’s what he said:
1. Does the applicant have a level of direct experience within the chosen sector?
2. Does the applicant hold any sector-specific qualifications and, if so, can they be evidenced?
Experience is always a great way of providing comfort that you’ll be able to hit the ground running. Don’t just think of this as regurgitating your CV, but add value where you can – what was it about the duties you conducted or the responsibility you previously had, or the skills which you acquired, which make you the ideal person to run this business?
3. Has the applicant undertaken an adequate level of research covering the opportunity, including existing providers, competitors, their products, prices, potential demand and delivery etc?
4. Have the Four P’s been assessed and documented? (Product – Price – Place – Promotion)
5. Have all routes to market been researched and explored? Can this be evidenced or articulated?
The more research you have conducted into your market, and who is already catering for your market, the better prepared you will be to compete in that market and to correctly position yourself within that market. Once you understand who you’re up against, and what they do well, and not so well, you’ll be able to take inspiration from their strengths and potentially avoid their weaknesses.
6. Has a SMART action plan been devised and documented? (Specific, Measurable, Achievable, Realistic, Time-restricted)
Your business plan should be a live tool you refer back to once you’re up and running. Without a ‘boss’ to keep you on track, knowing how well you are performing and keeping yourself motivated can be difficult. If you plan specific goals and objectives and ensure these are realistic and time-bounded, you’ll find it much easier to monitor your progress. This will let you appreciate the great things you’ve achieved so far, and also let you know which areas still need to be developed. Setting manageable goals from the outset also ensures the initial set-up stage does not becoming too overwhelming so you don’t feel pressured to activate all your great ideas right from day dot!
7. How will the product or service actually be delivered to the customer? Have all associated costs been assessed, evidenced and articulated?
8. Are projected sales realistically achievable?
9.Have any sales been achieved to date? If so, at what level, to whom, and at what value? Or, are any sales pending? Orders placed? Intent received? Can these be evidenced?
Managing cash flow will become very important once you’re up and running so it’s vital that your costs are as accurately predicted as possible. Once you know what you want to buy, start shopping around for the best prices. Once you’ve found them, start collating quotes that you can easily refer back to. This will help once it comes to applying for funding also. When it comes to forecasting sales, break down the figures into how many you’d need to sell per day/hour and make sure it’s still realistic. The more conservative the forecast, the more peace of mind you’ll have that the business can function on a lower trade therefore you won’t be putting yourself under as much pressure from the outset.
And as Simon keeps mentioning…EVIDENCE!
10. Has the applicant access to other income streams, and, or, can a survival budget within the household income and expenditure analysis be covered from an alternative income stream? If so can this be evidenced?
Whilst we, alongside other members of your support network, will give you as much support as we can to help your business succeed, in the unfortunate event the business does not succeed, you will need a back-up plan to meet your household expenses and to repay any Start Up Loan funding. Accurately completing the personal survival budget within our cash flow forecast template can help you understand the drawings you’ll need to take from the business each month.
Think you’re now ready to draft your own business plan? Click Here for a free business plan and cashflow forecast template and begin your journey into entrepreneurship with free business advice, resources, start-up funding and mentoring.