Testing your Client’s Business Plan
Your clients will need to show their plans to potential funders when making the case for funding. To ensure that the plan is as good as possible, it may be helpful to go through it with the client and ask some hypothetical questions about possible events. In this way, you can both identify where the plan needs to be strengthened or where a client’s assumptions are incorrect. Potential funders will often ask ‘What If…’ questions, to make sure that your clients know what they are doing and can make a success of their businesses.
Executive summary – a brief overview of the business plan
The business plan should contain the following information:
- the likely market and buyers for the product
- the product’s unique selling point (USP) – what is special and unique about it
- a profit forecast, indicating the profit your client is likely to make in the first year of trading and in the two succeeding years
- details of business development opportunities, such as new markets and areas to explore, or diversification of the product range. For instance, an outside catering business could open a café, or a translation business introduce a training course for would-be translators.
- financial details for set-up and maintenance, explaining the projected establishment and maintenance costs of the client’s business.
People – your Client and others
- Client’s track record and achievements – what makes them confident, competent and skilled at this business?
- Client’s team – who else will support them in their business and work with them on a day to day basis?
- Strengths and weaknesses – what they are good at, and who will they bring in to support them in areas where they are less skilled, knowledgeable or experienced?
- What is the product and what needs will it meet?
- What is the market for the product? Who will buy, and how many current and predicted customers are there?
- Who are the competitors and what will clients do to compete successfully with them?
- What is so special and different that it will catch people’s interest (USP) and encourage them to buy?
- A SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is a standard section in all business plans.
Sales and Marketing
- Price – what is the price, and why has your client decided on that figure?
- Location – where will the client be selling the product?
- Selling – who is going to be selling the product?
- Promotion – what will the client do to promote the product?
- Suppliers – where will the business buy its raw materials and other resources?
- Resources and equipment – what does the client need to start up and maintain production?
- An explanation of the profit forecast and the assumptions behind it
- Cash flow forecast, with details of the monthly income and expenditure on direct costs and overheads
- Profit and loss forecast – the money your client expects to make and to spend usually over a month or a year. The difference between the two will be either a profit or a loss.
- Balance sheet – this is what the business owns (assets) and owes (liabilities) at a given date, 31st March in each year for most businesses. Assets include money in the bank, equipment, products for sale, supplies and fixtures. Liabilities include money owed, debts and the money that the client may have invested in their business.
This information is intended as a starting point only. Whilst all reasonable efforts have been made, ECON- IT2 offers no warranties that the information is accurate and up-to-date and will not be responsible for any errors or omissions in the information nor for the consequences of any errors or omissions. Professional advice should be sought where appropriate.
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