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Section 5 – Business planning guidance

The business plan structure has been drawn up following an analysis of business planning literature produced by four of the major high street banks.

For ease of reference the structure is divided up into discrete subject areas.

The questions that follow are linked to the business plan structure and are aimed at covering all the major issues associated with each subject area.

The questions address all the issues raised by the four high street banks in their business planning literature.

  • Business planning
  • Define your idea
  • Market research
  • Personnel
  • Marketing and advertising
  • Pricing
  • Premises
  • Equipment
  • Finance

 Define your idea

  • Mission statement
  • What type of business is it (new/existing)
  • What service will you provide
  • How will you be trading (sole trader/partnership/limited company/charity)
  • Provide the name of the project leader
  • What are your reasons for starting/expanding the business
  • When will the new/expanded business start trading
  • What are your business objectives:
  • Short term
  • Medium term
  • Long term

Market research

  • Who will your customers be
  • Where do your customers live
  • Who are your major competitors (name/location/distance from your business)
  • How much do your competitors charge for their service
  • What are your competitors strengths/weaknesses
  • What makes your business idea better/different from your competitors

Personnel

  • Currently employed

Management

  • What are their names/ages
  • What date did they join the business
  • What is their role in the business
  • What are their qualifications
  • How much relevant experience have they got (with whom/years)
  • How much is their annual salary plus on costs (NI and pension)

Staff

Currently employed

  • What are their names/ages
  • What date did they join the business
  • What is their role in the business
  • What are their qualifications
  • How much relevant experience have they got (with whom/years)
  • How much is their annual salary plus on costs (NI and pension)

Not yet employed

Management

  • What are their names/ages (if available)
  • What will be their role in the business
  • What date is the post required from
  • What qualifications will they require
  • What relevant experience do they require (with whom/years)
  • How much is their annual salary plus on costs (NI and pension)

Not yet employed

Staff

  • What are their names/ages (if available)
  • What will be their role in the business

 Marketing and advertising

  • How will you promote your service
  • How do your competitors promote their service
  • What is the cost per annum of promoting your idea (£)
  • How are you going to decide if it is money well spent

Quality assurance

  • Quality control – evidence that your organization is / will be working towards an accredited quality assurance scheme

Pricing

Draw up a fees policy that answers the following questions:

  • How much will you charge for your service
  • How do these charges differ from your competitors
  • How will you collect income (cash in advance/arrears, direct debit)
  • Will you offer payment by instalments (describe the offer)
  • Will you offer discounts (describe the offer)
  • What will be your policy on late payments
  • What date is the post required from
  • What qualifications will they require
  • What relevant experience do they require (with whom/years)
  • How much is their annual salary plus on costs (NI and pension)

Premises

Current

  • What is the address of the business
  • Are the premises owned/rented/leased/mortgaged
  • Describe your premises (no of rooms/floors)
  • How much do you pay per annum for the premises (£)
  • How long will you be able to stay in these premises
  • What is the date of the next rent/lease review
  • What insurance do you have on the premises (type/£ per annum)
  • Describe the state of repair of your current premises

Planned

  • How much space do you need (to start)
  • When do you think you will need more space (date)
  • What type of space do you need (open plan, single floor)
  • Have you identified an existing building or plot of land (location)
  • Will you own/rent/lease/mortgage the premises
  • What date do you require the premises from
  • How much are you prepared to pay per annum for the premises (£)
  • What insurance will be required on the premises (type/£ per annum)
  • Describe the state of repair of your planned premises

Equipment

To set up

  • Describe the type of equipment you will need (office / play)
  • How much will the equipment cost (each item)
  • What is the lifespan of the equipment (each item)
  • Will you buy/rent/lease the equipment

Ongoing

  • Describe the type of equipment you will need (office / play)
  • How much will the equipment cost (each item)
  • What is the lifespan of the equipment (each item)
  • Will you buy/rent/lease the equipment

  Finance

  • Prepare 2 financial forecasts (a best case and a worst case) that cover the first 3 years of your business.

Very important

  • The forecast should be based on a realistic occupancy.  Best case – 50% rising to 75% occupancy in the first year.  Worst case – 30% rising to 50% occupancy in the first year.
  • The forecast should include the following statements:
  • Profit and Loss Account
  • Cashflow Statement

Profit and loss account (for each month) should include:

  • Income from all sources (fees, grants, loans)
  • Expenditure associated with setting up the business
  • Expenditure associated with maintaining the business (recurrent costs)
  • Net profit/loss each month (this will enable you to see when your business will break-even and move into profit)
  • Enter income and costs in the month when they were incurred

Cashflow statement (for each month) should include:

  • Income from all sources (fees, grants, loans)
  • Expenditure associated with setting up the business (equipment, fees, building)
  • Expenditure associated with maintaining the business (salaries, consumables, insurance)
  • Please see list of examples
  • Net cash inflow/outflow each month (this will enable you to see if you are generating sufficient income to cover costs)
  • Enter income and expenditure in the month when you actually receive money and pay for services/goods)

Very important:

  • All your assumptions used to create the profit/loss account and cashflow Statement must be sourced. i.e. numbers of
  • children attending per month/week, fee paid per session, number of staff employed, hourly rates of pay, rent charges, value and source of loans/grants

Contingencies / risks

  • What you will do if there is a lack of take up
  • What will happen if new competition enters the market
  • How will you try to build up reserves for unforeseen circumstances

Projected annual income/costs

  Income  £
Sale of childcare places
NEG
Funding income
Bank interest
Income from meals
Any other income
a TOTAL £
Staffing costs
Nursery Manager
Deputy Manager
Senior nursery officer
Nursery officer
Nursery assistant
Admin worker
Cook
Cleaner
b TOTAL £
Premises costs
Rent
Electricity
Gas
Water
Rates
Repairs and maintenance
Fire inspection cost
Electrical inspection
Security
c TOTAL £
Other costs
Admin
Equipment & materials
Publicity
Catering
Cleaning & laundry
Printing & stationary
Communication (phone)
Building & content insurance
Auditor
Registration fee
Training
Car allowance
Recruitment costs
d TOTAL  £
a-(b+c+d)= Grand Total £