First impressions count. A well prepared business plan reflects on you and your business, thus it should portray a professional image. Whether it is your first venture or you are looking to secure funding for a new pub or restaurant, nothing is more important than getting the business plan correct.
The business plan does not have to be over-complex. In fact, the more complicated it is the likelihood of errors increase, as does the fact that the plan may not be understood by the person you are hoping will lend you the money.
The plan should describe the property and include photos, an executive summary detailing the business proposal and CVs of key personnel. As lenders look for further security, the experience of managers is more crucial than ever, so don't overlook selling yourself as well as your business.
Include a section on marketing the business, especially if it's a new venture or one that requires substantial turnaround. It is also wise to highlight staff training and how the staff will deliver the offer you are proposing. Show that you have researched the market and wholesale costs by including sample menus for both food and drink with pricing, this will also help you calculate your gross profit margin. Not to be left out are marketing and advertising plans with routes to attract new custom.
It is critical that financial profit and loss account and cash-flow for the next three years are covered in your main section. Larger companies may also require a balance sheet demonstrating how the vision and targets of the business will be met based on the previous section's research and aims.
Details of current trade as well as projected trade will also be of great assistance. If ambitious growth is forecasted, back it up with clear goals as to how this will be achieved. Be honest about your ambitions and the business.
In your financial forecast, it is important you can show that you have your own resources and the cash-flow should demonstrate how any purchase can be funded through cash-flow. It should also show how the loan can be repaid over a proposed term, and a sensitivity analysis should be incorporated to show how a lower turnover could affect the net operating profit.
A SWOT (strengths, weaknesses, opportunities, threats) analysis is a highly effective tool that can help. This covers detail on the market, competitor information and what differentiates you from them. With today's market conditions, a risk analysis is a good idea, broken down into categories including economic, financial and political risk; legal and regulatory risk; physical risk; occupational risk; leasing risk; and market risk. This is also extremely useful for banks and lenders.
Make sure any figures you quote are reasonable and justified - not overly optimistic - as incorrect figures could result in an unexpected lower valuation.
Daniel Mackernan is an associate director at Davis Coffer Lyons and a RICS-registered business valuer
Five key steps for a successful business plan
1 Keep it simple Stick to the point and don't waffle.
2 Do the research Provide a solid case for your business and financial proposals.
3 Sell yourself on a CV In today's market, lenders are very keen to learn about who they are lending to. They want to be confident they know the person, not just the business.
4 Presentation is crucial A poor business plan may reflect on how you are going to operate your business.
5 Use professional advice early on Informing the lender early on that your business plan has been looked over by an RICS-registered business valuer who has undertaken a ‘pre-lending review' and can endorse the plan, may further speed things up and give the plan greater credibility.