Business Plans For Small Business - Are They Different?

Business plans for small business are a favourite topic of mine so I was pleased to see that Business Link, the UK business support agency, recently published a new template and guidance branded ‘Prepare a business plan’. As you would expect they have provided a thorough but not too complex business planning template. Of course business plans for small business and business start-ups are essential yet they often miss the mark because a critical factor that usually gets ignored is time management – what I refer to at ‘the art of the possible’. This is important in all businesses but often critical in small service based businesses where the owners generate all the fee income.

For several years now I have worked at creating simple spreadsheets and tools to help small business owners, especially those that charge fees by the hour or day, understand what they can and cannot achieve in their business. This often comes down to how they manage their time and the rate at which they charge out their time. Both have a direct impact on their capacity and need to be looked at as part of the business planning process.

If you are a sole operator or a small team of two or three people you will have a clear limit in terms of the number of hours or days that you are able to bill for, yet you may not have looked at or understood where your capacity limit is.

In developing business plans for small business I believe it is essential to go a step further than doing a profit and loss forecast and a monthly cash flow forecast. Business plans for small business need to focus on having an activity plan that clearly identifies all the regular activities that must to be undertaken by the business owner(s) splitting them down into:

­ billed hours/days per service type
­ prospecting hours per service type
­ lead generation activities
­ other business and administrative activities

This will help to provide a reality check on what you can really achieve and different scenarios can be tested out in term of levels of fees charged and activity/time inputs per service or client. This helps to draw out what the split is between billed and unbilled activities, what additional support you might need and whether the additional support is affordable. Once created an activity plan provides a simple forecasting and monitoring tool that is far more meaningful than a standard cash flow forecast.

It is often a sobering moment when unpaid prospecting hours and billed hours per client are added together and divided by the fees earned per client or service, to discover the real hourly rate that you are earning.

Good business plans for small business will have involved lots of background work and should always have included some scenario testing in terms of profit and loss forecasts. I always recommend the creation of a simple spreadsheet tool that automatically recalculates annual profit and loss figures, based on different price levels and sales forecasts per service – such a tool can easily be created and once compiled provides an excellent management tool.

Many early stage business owners think they are doing OK but expect to do better next year, yet are struggling to fit in everything that needs to be done at the current level of income. If this is you, you may find that you actually do not have a clear idea what your capacity limit is, so the first task is to get that clear so that you can decide whether they are satisfied with your potential. If you are not satisfied now is the time to investigate growth strategies that will produce the income levels you desire.

Business plans for small business, especially those where the owners(s) are directly engaged in delivering fee based services such as designers, architects, trades people, therapist and many more, are different in that they need to be simple yet also ruthlessly address issues of capacity and pricing. These aspects of a small business are quite easy to draw out so it makes sense to create business planning and monitoring tools that focus on these critical factors to support the business plan and owners from the word go.

Join my free workshop and get more information on business plans for small business here

Tips for Writing Winning Investment Business Plans

In my experience many UK business plans are written solely as investment business plans to raise funding. I wish more business owners would make planning part of their everyday operations. But as they don’t, I thought it might be helpful to pull together some key tips for writing winning investment business plans.

There are a few potential pitfalls that a business owner and business plan writer, seeking loan or investment funding, needs to be aware of. I have put together my main tips to help you and your advisors write a winning investment business plan.

Before I go further it is worth reiterating that your business plan should tell a story about who you are, what you do, how you go about doing it and where you want it all to end up, or at least where you are headed over the next three to five years.

If your story is for the eyes of potential investors, you need to establish credibility and you need to do this without boring them to tear, i.e. in as short a space as possible, so if you are not good at writing clearly and concisely about yourself and your business, it is worth investing in a business plan writer.

At the end of the day what the investor will be seeking to find out is whether your company is worth investing in, which means they need to know how much risk is involved in making the proposed investment.
Here are some tips and thing you need to think about when writing investment business plans:

1. Remember the investor does not believe in you and your business, like you do, so you are selling yourself and your business, be as concise as you can, ideally less than around 30 pages excluding appendices (that is not 30 pages of miniscule type! 12 pts is a good typeface size).

2. Even start up businesses have history, so if you are a start-up say why you are starting this particular business and what you and your team’s experience is, that equips you to set up and run the business. A word of warning for start-ups – you will need to be able to demonstrate ‘proof of concept’, if you cannot do this you are unlikely to get funding.

3. For an investment business plan, in particular (less so for a business plans for a bank loan or overdraft), you need to demonstrate that you have assembled a good team, covering all the main skills you need in your business, including a financial advisor and a legal advisor.

4. No surprises – investors won’t want any unresolved issues left in the plan, so if there things that need resolving, like a patent that is due to run out, that is very important to the business, or a key person that is coming up for retirement, deal with them before seeking investment.

5. The investor wants to quickly get a feel for what the business is about and your earning potential, so ensure that you include an executive summary, to enable the reader to gauge the risks and potential rewards early on.

6. The following headings are a guide to the main areas of content for investment business plans:

a. Executive Summary
b. General Background
c. Business Environment
d. Business Background
e. Operations
f. Marketing
g. Investment
h. Financial Plan

If you use business planning software all these sections will be covered by the software.

7. The finance plan needs to look forward for at least three years and include a balance sheet forecast, a profit and loss forecast and a cash flow forecast - good business planning software such as Business Plan Pro is invaluable in helping you get the financial sheets together. Don’t be tempted to be over optimistic in your forecasts, put some time into your figures to make sure your forecasts are as accurate as you can reasonably make them.

8. Presentation is important, so bind your plan, include an index and write in plain English without using jargon. The people who read investment business plans will not have knowledge about every business sector, so they may not have as much knowledge about your business sector as you do, treat them as an educated layperson in terms of what they may know about your business sector.

I wish you every success with raising finance for your UK business plans.

If you would like help with finding funding, or writing UK business plans I am a professional business plan writer - find out more about my services by clicking this link to UK Business Plan - tips.


I recommend using business planning software, I use Business Plan Pro to write my clients business plans, if you would like to know more about Business Plan Pro click this link.