About The Book

Preparing a Winning Business Plan
Matthew Record

This book provides a full guide to writing a business plan, explaining what a business plan is, why you need one and how it should relate to your business idea, objectives and projected growth. A vital book for anybody planning to start a business

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Book Contents »

 

1. Preface

2. Writing A Business Plan

3. Your Business Idea

4. Defining Your Market

5. Compiling Your Marketing Plan

6. Your Operational Plan

7. Your Sales Forecast

8. Your Financial Analysis

9. Adding Your Appendices

10. Presenting Your Plan

11. Running Your Business To Plan

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Your Financial Analysis

 

Unless you are one of the few people with plenty of savings or capital to finance your business yourself then the chances are that you will be looking for further financial assistance. Many of the businesses launched without the further need to borrow go on to become highly successful and prosperous. However even these businesses may need to borrow at a later date as they expand and develop.If you do need to borrow any more money it is important to be well prepared before seeking any outside help.

Specifying Your Financial Needs

Three Key Questions

The financial analysis of your business plan should lead you to the answers of the following questions:

  • How much money do you need and exactly what will you need it for?
  • What type of finance do you need and when will you need it?
  • How will the money be repaid, and how will your investors or backers benefit from their investment?

 

This chapter will help you answer the above questions which will have to be answered in your business plan.

Planning Your Borrowing

Your cashflow and balance sheet forecasts will be invaluable tools when you are planning how much money you will need and what it will be used for. Even though your forecasts will not be a true picture of exactly how your financial year will develop, they will act as a very good indicator (provided your research is accurate). Your cashflow forecast will show the available funds you will have access to at any one time, assuming you achieve your expected level of sales and your overheads do not exceed your forecast.

Your reader will not have the time to work out how much money you will need and what it will be used for so you will have to supply this information in the simplest way possible. The best way to do this is to draw up a financial requirement statement. This will summarise how much money you need and quickly show your reader what it will be used for.

Example Financial Requirement Statement

A net investment of £200,000 will be needed which will be distributed in the following way:

 

 
The money will be used to purchase: £
Premises 75,000
Plant 10,000
Equipment 15,000
It will provide:  
Working capital for the first twelve months of trading 150,000
Total capital investment 250,000
Less personal investment (50,000)
Total net funding 200,000



Every financial statement you make in your business plan must be supported with evidence that the figures you have presented are correct. Your balance sheet can be used to support the totals of your fixed assets; your cashflow forecast will provide the necessary evidence for your working capital needs. Once again, remember that these figures have already been substantiated with your forecast so just a reference to these documents will be sufficient. However, ensure that the money you say you need matches the figures in your forecasts.

There is a very fine line between borrowing too much finance and not borrowing enough. Too much means that it will cost you more than you really have to pay, whilst too little will mean going back to your lender at a later stage, and he will not look favourably on your request if your initial projections were way out.