Business Plan FAQ - United Kingdom


A Business Plan is a document that you can present to lenders and investors that describes your business proposal. A business plan should contain a business history, product description, market description, projected financial statments, and an analysis of competitors all in a format that is familiar to lenders and investors.
Business Plan
Why do I need a Business Plan?

Lenders and investors are constantly presented with new business proposals. If you provide all the required information in a consistent format then lenders and investors can make an efficient and fair analysis about the viability of your business ideas. By preparing a comprehensive business plan you send a message to your lenders and investors that you have already made an objective assessment of your business ideas and that you are serious about your business plan.

What are the benefits of a Business Plan?

Benefits of a Business Plan include:

  1. Ensures you take a disciplined approach to analyzing your business ideas.
  2. Shows your investers and lenders that you have systematically analyzed your business ideas.
  3. Helps you clearly define your goals and what you want to accomplish.
  4. Helps you identify and analyze your risks as well as your opportunities.
  5. Helps you assess the strength of your target market.
  6. Helps you define your day-to-day business processes and challenges.
  7. Helps you analyze costs and capital requirements.
Definitions
What is an Executive Summary?

An executive summary is a brief overview of a document. It allows the reader to quickly get an understanding of the content of a document without having to read the entire document.

What is a Mission Statement?

A Mission Statement describes the current purpose for the business. It answers the question "What is our current business?". It should identify the products, services, markets and customers of the business. The mission statement should be easily understood and should help employees and customers understand the day-to-day focus of the business. Be honest and objective when drafting a mission statement. A mission statement that is unrealistic or inaccurate may cause cynicism in employees as well as in existing customers.

What is a Vision Statement?

A Vision Statement describes the future aspirations for the company. The Vision Statement should describe a strong and positive future that is beyond the comfort level of current day-to-day expectations.

What is a 'least-cost' provider?

In any market there are businesses that target the high-end luxury market, companies that target the middle market (good value but lower price) and finally companies that sell a comparable product but for the least cost. Typically the product in this final category is a no-name brand and may be of a lesser quality. This final group is called the 'least-cost' provider.

What is a SWOT analysis?

A SWOT analysis is a planning tool to help you objectively assess a business situation. The acronym SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are internal factors affecting the success of your venture while Opportunities and Threats are external factors affecting your success. A SWOT analysis helps you objectively analyze the potential for your organization. A SWOT analysis can be used for planning at the organizational level or it may be used at a departmental level.

What is a Capital Requirements Plan?

A capital requirements plan describes how much money you need to finance any new business purchases as well as day-to-day operations in order to accomplish your business plan. It should describe how much cash you and other investors have provided and how much more you will need. It should also describe how this cash will be paid back.

Financial Statements
What is an Income Statement?

The income statement (also called profit and loss statement) establishes the profit or loss a business has made in a given period by comparing revenue to expenses. The income statement will show the financial progress of an organization over a period of time.

What is a Cash Flow Statement?

The cash flow statement shows the net change in cash holdings for an organization by comparing the cash coming in to the cash going out for a fixed period of time. Projected cash flow statements will help an organization anticipate cash requirements and help prevent crippling cash shortages.

What is a Balance Sheet?

The balance sheet describes the net worth of an organization by comparing assets, liabilities, and owners equity. The balance sheet shows the financial state of the company at one point in time.

What is Cost of Goods Sold (COGS)?

In a manufacturing environment, Cost of Goods Sold includes the material costs AND the direct labor costs necessary to produce finished goods. In a simple retail or wholesale environment COGS can be calculated as beginning inventory plus purchases minus ending inventory. Ideally this indicates the inventory consumed in the reporting period.


 


 

Ready to create a free Business Plan?
Know someone who could benefit from legal FAQs? Pass this along:
back to top