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Business plan

Business plan

Preparing a solid business plan is the key to securing funding. A robust business plan helps potential lenders or investors understand the vision and goals of the business. It also brings focus to management’s understanding of the business strategy.

The type of information you need to include in your business plan will depend on the target audience, but it should incorporate:

  • an executive summary. This should highlight the main points, and be designed to grab the attention of potential lenders or investors
  • details of key personnel, their responsibilities, skills and experience
  • market analysis of the company, its products or services and its competitors
  • details of current and intended client base
  • a marketing plan targeting new or existing customers
  • historical financial information covering the last three years of trading (if available) – accounts (audited if available), and key accounting ratios
  • cash-flow data, including information about standard payment terms and typical debt turn
  • financial forecasts for the next three to five years. This should include historical information, and highlight the key underlying assumptions
  • cash-flow forecasts covering the next two to three years (or in the case of a start-up or turnaround, until the business moves into profit), clearly highlighting the level of funding required
  • demonstrate how creditors, capital expenditure, debtors and stock will be managed over the forecast period
  • include additional ‘flexed’ forecasts showing the impact of key downside scenarios. These might include scenarios such as sales targets not being met or cost savings taking longer to come on stream
  • explain how equity investors can exit or refinance the business and realise their investment.

Financial considerations for the business plan

It must be clear how much of the existing owner’s money is committed to the business. If a lender or investor thinks the existing owner does not have enough ‘skin in the game’, securing a loan or investment is likely to be more difficult, if not impossible.

The business should consider whether investors would be eligible for tax reliefs (see Helping hand from HMRC) and ensure that it communicates this in the business plan. The amount of any backing already received from other banks or investors must be clearly stated. This demonstrates the attractiveness of the business as a potential for investment. If a business is looking for debt finance, the plan needs to demonstrate how the business will be able to both meet interest payments and repay the capital element over the period of the loan.

A repayment schedule linked to the forecasts will make this clear. When looking for equity, the plan will need to show how the potential shareholder would receive dividends. This will demonstrate how the value of the business and therefore their stake would grow.

The plan should always be ‘fully funded’. What this means in practice, is allowing sufficient headroom so that the whole process will not have to be revisited too soon. Whether for short-term debt finance or long-term growth capital, different equity investors and different debt providers all have specific requirements when it comes to the content of business plans.

Need more information and tips?

There is more detail on how to prepare a business plan on the websites of many of the contributors to this guide. These are all independent bodies representing each of the potential financing options that may be available to you.

Restart Your Journey Equity vs Debt
Helping hand from HMRC


Together on the journey

Access to the right kind of finance at every stage in your growth journey enables businesses like yours to invest, grow and create jobs. That’s why the British Business Bank and ICAEW’s Corporate Finance Faculty, and partner organisations representing finance and business, have created the business finance guide.

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