Business plan Workbook_aw.qxd:Layout 1 8/5/08 15:21 Page 1 6th “Practical, professional advice presented in a highly accessible format. Based on the e d i t i o n Enterprise Programme at Cranfield School of Management, it contains 25 assignments with Based on methodology developed at Cranfield School of Management worksheets and examples to help construct your plan, learning from others as you write.” THE BUSINESS PLAN WORKBOOK Internet Works “A pleasing read, unlike many other books on this topic… full of practical and professional advice.” Professional Manager “Highly informative and instructive.” THE City Business Magazine The Business Plan Workbook has established itself as the essential guide to all aspects of business planning for entrepreneurs, senior executives and students alike. Based on methodology developed at Cranfield School of Management and using successful real-life business plans, The Business Plan Workbook brings together the process and procedures BUSINESS required to produce that persuasive plan. The step-by-step approach covers all the key topics, including: • validating your business idea; • keeping the books; • examples from the plans of successful • controlling the business; PLAN entrepreneurs; • writing up and presenting your • practical ways to research your market; business plan; • developing your marketing strategy; • links to free business spreadsheets and • raising finance; online tools. • building a website; WORKBOOK The many examples have been fully updated and include a cross-section of businesses at various stages in their development, making the book invaluable reading for anyone in The Definitive Guide to Researching, business. Writing up and Presenting a Winning Plan Colin Barrow MBA was until recently Head of the Enterprise Group at Cranfield School of Management, where he teaches entrepreneurship on the MBA and other programmes. He is also a visiting professor at business schools in the United States, Asia, France, Ireland and 6th edition Austria. His other books published by Kogan Page include Starting a Business from Home, Practical Financial Management and The Successful Entrepreneur’s Guidebook. Paul Barrow is an author, a visiting professor at Cranfield, and also a consultant advising BARROW BARROW, SMEs on growth strategies. AND BROWN Robert Brown directed the Graduate Enterprise Programme at Cranfield where he led a course on entrepreneurship. £18.99 ISBN: 978-0-7494-5231-5 US $39.95 Kogan Page Kogan Page US 120 Pentonville Road 525 South 4th Street, #241 COLIN BARROW, PAUL BARROW London N1 9JN Philadelphia PA 19147 United Kingdom USA Business and management/Small AND ROBERT BROWN www.koganpage.com business / Business planning Business plan Workbook_HP.qxd:Layout 1 29/4/08 13:17 Page 1 THE BUSINESS PLAN WORKBOOK THIS PAGE INTENTIONALLY LEFT BLANK ii Business plan Workbook_TP.qxd:Layout 1 29/4/08 13:18 Page 1 THE BUSINESS PLAN WORKBOOK The Definitive Guide to Researching, Writing up and Presenting a Winning Plan 6th edition COLIN BARROW, PAUL BARROW AND ROBERT BROWN London and Philadelphia Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and authors cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or any of the authors. First published in Great Britain by Kogan Page Limited 1988 Second edition 1992 Reprinted with revisions 1994, 1995 (twice) Third edition 1998 Fourth edition 2001 Fi�h edition 2005 Sixth edition 2008 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permi�ed under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmi�ed, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 120 Pentonville Road 525 South 4th Street, #241 London N1 9JN Philadelphia PA 19147 United Kingdom USA www.koganpage.com © Colin Barrow, Paul Barrow and Robert Brown, 1988, 1992, 1998, 2001, 2005, 2008 The right of Colin Barrow, Paul Barrow and Robert Brown to be identified as the author of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. ISBN 978 0 7494 5231 5 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Barrow, Colin. The business plan workbook : the definitive guide to researching, writing up and presenting a winning plan / Colin Barrow, Paul Barrow and Robert Brown. – – 6th ed. p. cm. Includes index. ISBN 978-0-7494-5231-5 1. Business planning. 2. Business enterprises– –Finance. I. Barrow, Paul, 1948– II. Brown, Robert, 1937– III. Title. HD30.28.B3685 2008 658.4'01– –dc22 2008010356 Typeset by JS Typese�ing Ltd, Porthcawl, Mid Glamorgan Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall Contents Preface vii How to use the workbook 1 Why prepare a business plan? 6 What backers look out for 10 Phase 1: History and position to date 21 Assignment 1: Business purpose and aims 25 Assignment 2: A description of your business 34 Assignment 3: A description of your products and/or services 53 Phase 2: Market research 71 Assignment 4: Customers 75 Assignment 5: Competitors 91 Assignment 6: A plan for market research 105 Phase 3: Competitive business strategy 129 Assignment 7: Pricing 142 Assignment 8: Advertising and promotion 150 Assignment 9: Place and distribution 166 vi Contents Phase 4: Operations 181 Assignment 10: The selling methods plan 185 Assignment 11: Making, outsourcing and supplies 193 Assignment 12: People and related administrative procedures 200 Assignment 13: Legal and regulatory factors affecting operations 211 Assignment 14: Building a website 219 Assignment 15: Communication systems 232 Phase 5: Forecasting results 245 Assignment 16: The sales forecast 249 Assignment 17: Pro forma cash-flow statement 259 Assignment 18: Pro forma profit and loss statement 267 Assignment 19: Pro forma balance sheet 275 Assignment 20: Break-even analysis 284 Assignment 21: Financing requirements 295 Phase 6: Business controls 321 Assignment 22: Financial controls 325 Assignment 23: Sales and marketing controls 336 Assignment 24: Other business controls 339 Phase 7: Writing up and presenting your business plan 341 Assignment 25: Writing up and presenting your business plan 345 Appendix : Sources of business help, information and advice 359 Index 367 Preface In this workbook we have a�empted to distil the knowledge and experience of the faculty at Cranfield School of Management gained in teaching the many thousands of students, business executives, entrepreneurs, public sector managers and those charged with running charitable, not-for-profit and social enterprises, who have taken part in our programmes. Business planning is at the core of organizational and business strategy and is the essential precursor whether you are starting a new business, expanding an existing one, gaining approval for funding for a project, securing a grant or even entering a competition such as Dragon’s Den. Over the years we have developed and tested this method of helping people to research and validate their proposals, and then to write up a business plan themselves. Towards the end of each programme we invite a distinguished panel of senior bankers, venture capital providers and others involved in appraising proposal for external support of various kinds to review and criticise each business plan presentation. Their valued comments not only have spurred our programme participants to greater heights, but have given the faculty at Cranfield a privileged insight into the minds and thought processes of the principal providers of capital for new and growing enterprises. This workbook brings together for the first time the processes and pro- cedures required by the relative novice to write a business plan. Also in- cluded throughout are examples from the business plans of entrepreneurs and others who for the most part have gone on to start up successful enterprises. viii Preface In addition, we have included criticisms, warnings, and the experiences of backers, investors and of recently successful entrepreneurs when they have a direct bearing on writing and presenting a business plan. We don’t pretend to have made writing up business plans an easy task – but we do think we have made it an understandable one that is within the grasp of everyone with the determination to succeed. Thousands of students have passed through Cranfield’s business plan- ning programmes going on to make their mark in business, charities and the public sector in this country and around the world. How to use the workbook The workbook contains 25 assignments that, once completed, should ensure that you have all the information you need to write and present a successful business plan. That is, one that helps to accomplish your objective, whether it is to gain a greater understanding of the venture you are proposing to start and its viability, or to raise outside money or gain support for your proposals from senior levels of management. Throughout the book the term ‘entrepreneur’ has been used interchangeably with innovator, manager, champion and similar terms used in a wide range of organizations in both the profit and not-for-profit sectors. The definition of entrepreneur used is that of someone who shi�s resources from a low to a higher level of value added; this is the defining characteristic of almost everyone who writes a business plan regardless of the nature of their organization, actual or prospective.