Business Plans

What will be in a business plan?

• Business model, USP, products

• Executive summary - synopsis of entire plan

• Product and market positioning

• Management team

• Financial forecasts

• Market research

• Key opportunities and threats

• Investment requirement

• Operations

• Production plan

Purpose of business plan:

• Raise finance

• Ensure firm has a healthy financial structure

• Help identify problems

• Set targets

• Provide realistic expectations

Advantages:

• Clarifies business idea

• Identifies problems in advance

• Can help get loans - why is the money needed, will it be paid back, is the business trustworthy, what are they investing in, how is it going to sustain itself or compete

Disadvantages:

• Uncertainty

• Time consuming

• Lack of experience

Limitations of cash flow forecasts:

• Prone to error - especially if you look too far ahead

• Doesn’t take external environment into account

• Cost of materials may increase

• Consumer tastes may change

• Demand over estimated