Monthly Archives: September 2016

Help You Write a Winning Business Plan

Writing a business plan is one of the most important things an entrepreneur must do when starting a new business. However, writing a compelling business plan is easier said than done, particularly when time can be so precious. This article outlines the key resources available to UK entrepreneurs when preparing a business plan. Use them for assistance with the writing of the plan, as well as for understanding the implications of certain business decisions you make in the process, such as those regarding corporate structure, sources of funding, and more.

 

1. Business Plan Pro UK software

Business Plan Pro is the best-selling business plan software available for several reasons. It is easy to use, saves time, and has over 500 sample business plans to get you started. It also provides a structure whereby you can complete a plan in a methodical manner, while enabling you to benefit from a helping hand at every step.

Where: Business Plan Pro is available from www.paloalto.com/uk
Cost: RRP is only £79.99 for the Complete version and £129.99 for the Premier.

 

2. Business plan competitions

Numerous business planning competitions are taking place in the UK at any given time. These competitions test a wide range of skills that are often neglected by entrepreneurs. By producing a credible business plan and presenting your case persuasively, you will significantly enhance your ability to secure funding. These business plan competitions are an invaluable resource enabling you to road test your business plan in a safe environment before submitting the plan to potential investors.

The main advantages of submitting a business plan to a competition include:

  • Tap into Increased Support for Entrepreneurs in the UK
  • Obtain Critical Independent Analysis of Your Business Plan
  • Gain Access to Mentors and Networking Opportunities
  • Improve key Transferable Skills, e.g. Presentation Skills
  • Enhance Your Understanding of What Investors Want

Where: Use a search engine such as Google to find a list of competitions
Cost: Entry costs are usually negligible, although some competitions limit entry to students or locals.

 

3. Start-up websites

There are a number of start–up websites that can help you understand what needs to be done and how. These websites normally consist of a mix of articles and relevant products and services from third-party vendors. Most also have specific business-planning sections to help you with your plan. The following three well-known UK sites can give you some further insights into the building blocks that make up a winning business plan.

Where: www.startups.co.uk , www.clearlybusiness.com, www.bytestart.co.uk
Cost: Free

 

4. Government sites

There are also a number of government websites designed to assist people in starting a business which can also help you in writing a business plan.

  • Companies House www.companieshouse.gov.uk

The website contains information on incorporation procedures. It also provides annual accounts of companies which can be purchased so as to enable you to assess the financials of comparable companies.

  • HMRC www.hmrc.gov.uk

HM Revenue and Customs has an easily accessible site where you can access information and calculators relating to employing people, paying VAT, paying Corporation Tax, and so on.

Write a Business Plan

If you, like many entrepreneurs, are time rich and cash poor, option 1 quickly removes itself from the equation, given the cost of having someone write a plan for you.

You are then faced with the choice between using Business Plan Pro or building everything yourself, from scratch, in Microsoft Word and Excel. Why are we not recommending other business plan software options? Because Business Plan Pro is the best business planning software available – without exception. Palo Alto Software (the maker of Business Plan Pro) has a proud history, has had category leadership for years and has extensive lists of testimonials and independent reviews on the website, all corroborating this view. By all means, consider other software options; however, we are confident that your own analysis will reveal that Business Plan Pro stands head and shoulders above the alternatives.

When it comes to using Word and Excel there are undoubted benefits – not least the fact that they are ‘free’ in the sense that they are bundled on most PCs. The interface is also familiar, given the popularity of their use. However, while these tools are excellent when you know exactly what you need to produce, they offer negligible assistance when it comes to producing specific content, such as that required for a business plan. If the purpose of the business plan were simply to jot down a few notes to keep you on track, they would suffice. However, if you intend to circulate the plan to peers, colleagues or prospective investors, you will need to produce a plan worthy of your name. After all, you are the author!

Here are the reasons why we believe that using Business Plan Pro is the easiest way to write a business plan:

1. Offers significant time saving

Business Plan Pro was designed to help you write a plan as efficiently as possible. It comes with extensive help, lots of examples and expert advice.

2. Provides the structure

Business Plan Pro walks you through a list of specific tasks, step by step, in stark contrast to the blank screen and flashing cursor you face when you create a new document in Microsoft Word.

3. Includes hundreds of examples

Business Plan Pro includes over 500 sample plans so you can browse plenty of examples to help give you ideas.

4. Ensures you do not leave out any sections

Over ten years of history means that we know what sections to include, where they should appear in the document and what you need to put in them.

The BBC2 show Dragons

This article attempts to shed some light on the key mistakes being made and recommends some key changes required by future entrepreneurs pitching to investors. Obviously, the lessons here will apply regardless of which finance sources you intend to approach.

1. Complete a business plan in advance

The first thing that is evident is that many of the entrepreneurs appearing on the show have a business idea, but have no clue as to whether the idea is commercially viable or not. A business plan forces entrepreneurs to cover all aspects of the business – not just the idea. If a thorough business plan has been produced, entrepreneurs should be able to handle most questions the Dragons throw at them. They are not trying to catch the participants out. They are simply trying to assess the opportunity to determine whether it is a credible investment option for them. Usually the idea is easy to grasp from the presentation – what prospective investors really want to understand is whether there is a demand for the product, what the scale of that demand is, and how these markets can be accessed.

2. Know the basics

The investor is seeking to diversify their portfolio, investing in some high-risk ventures in return for some attractive upside return. The entrepreneur is seeking investment to develop the idea further. If the company is currently trading, you will be required to have clear answers as to the current actual turnover, gross profit and net profit. Any vagueness regarding these rudimentary financials will set alarm bells ringing. Any credible business person will be expected to have a grasp of these numbers, and an investor will need to know them to make an informed decision as to whether to invest.

3. Share data and information truthfully

There is an information asymmetry between the entrepreneurs and the Dragons, i.e. the entrepreneurs have a lot more information to hand than the Dragons. The investors have to rely on the data the entrepreneurs provide when they assess the risk and the likely return. Hence, unless the entrepreneurs provide the information in their presentations, the investors are going to be asking for it. The information that is provided had better be accurate, as the due diligence that follows will examine the data in detail and will need to substantiate the figures provided in the Den. While it is natural to not want to divulge a lot of information, without it the Dragons may be reluctant to invest.

4. Research the Dragons’ backgrounds

One of the classic tips for any presenter is to ‘Know your Audience’. This is particularly important if you believe one of the Dragons can offer you more than just finance, e.g. distribution and access to a market. The Dragons tend to cover a number of different industries – if your product is relevant for one of their industries, you’d better be sure you know that in advance and have your facts right! Similarly a recent entrepreneur had 3 equal offers and needed to select 2 – he chose the 2 he was more familiar with whereas he should have researched all of the Dragons or at the very least asked the last Dragon what additional value they could bring over and above the cash.

5. Make sure there is evidence of demand

Before you enter the Den and before you spend a lot of money on trade marks and patents, you must establish that there will be a demand for your product or service. Do not be too precious keeping your idea secret – people do not routinely run off with others’ ideas. It is better to discuss it with a number of confidantes who are willing to give objective feedback, rather than develop a concept in isolation. A recent Dragons’ Den participant had spent £200,000 developing a shower head holder – the SHUC – for which I, personally, saw negligible demand. Is there really a significant latent demand for such a product? Enough of a demand to achieve the monthly break-even targets required? This idea struck me as something that a very small group of people may actually want – and an example where this participant’s focus was more on protecting their idea than undertaking sufficient market research to ensure there was a demand for such a product.

6. Polish your pitch

The Dragons’ Den is not a jumble sale for ideas. The investor is investing in the business as a going concern, and hence the entrepreneur will be required to continue to play a role in the company. In many ways the Dragons are making two investment decisions – is the idea investible, and is the entrepreneur investible? If you produce a competent pitch, demonstrate a command of the numbers, and the idea appears commercially attractive, the Dragons will be very interested. A good idea and an entrepreneur lacking business acumen is unlikely to fly. Like everything, practice makes perfect – it is recommended that the business plan pitch has been practiced and honed a number of times before you step into the Den.