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T here can be few phrases that strike more fear into

13th December 2001
Page 36
Page 36, 13th December 2001 — T here can be few phrases that strike more fear into
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Which of the following most accurately describes the problem?

most hauliers' minds than "go away and write me a business plan". Cashflow forecasts, predicted profits, return on capital—it's small wonder that even the most high-powered executives say that they find the experience of writing a business plan an intimidating one. However, they are a fact of modern business life and if you've plans to expand in the future, it's a fear you are going to have to overcome,

Increasingly, it is not just banks offering to finance your expansion plans that ask for them. It is now not uncommon for a company entering into a long-term commitment to ask a supplier for an up-to-date plan. In the City some top chief executives won't consider working for a company until they have had a good look at the last business plan it produced.

Put simply, a business plan is nothing more than a document that "sells" the business to potential backers. Leading accountancy firm Deloitte Touche describes it as "a plain-English guide or road t; map for making the daily decisions within which a glowing

g business contends" but ultimately, most business plans are a 'FAcc means to an end—a way of persuading the reader that the corn

pany is worth investing in.

At its heart, it should identify the amount of money the company wants to raise, how that money will be spent and what the likely outcome of that expenditure will be.

Next three years

According to Lawrence Whitehead, director of corporate finance at one of the UK's most respected firms of accountants, Macintyre Hudson, most business plans should cover the next three years.

"If the company is about to sign a seven-year contract then the plan should examine that period—otherwise three years is a typical period. You are trying to present your company in the best possible light and although the financial information is central to the plan, it is not the only thing a potential backer will want to read about."

He says a good plan should not be afraid to identify weaknesses in an organisation as long as they are coupled with a plan to resolve them. He also suggests companies should be up front about the actual amount of money they are looking to raise.

"If you need £50,000 to finance your expansion plans, then put that in the document. There is nothing to be gained by applying for £70,000 as the person examining the plan will just wonder what the extra money is for," he says.

Areas to avoid

While it might be tempting to hand the writing of the plan over to a trusted accountant, all the advice is that you should do it yourself.

"It is important to convey your enthusiasm and excitement for the project—after all, if you can't get excited about it, you can't really expect anyone else to," says Whitehead. "You should also avoid becoming too technical. Financiers aren't experts in every field in which they get involved and won't be interested in the nuts and bolts of the project—remember they will be looking at it as a commercial venture."

The other temptation, according to Deloitte Touche, is the many computer software products on the market. These take the author through an interactive, menu-driven process to create a complete plan—but they all look the same. The bank will immediately recognise your plan as derived from a canned source," he says.

Outside advice

While most agree you should write it yourself, experts recom mend you get some outs advice, to not only check o and edit the finished plan, I also suggest possible sour of capital.

While most hauliers natun gravitate to the bank, there ar huge number of other organ i tions which lend money expanding businesses—of more cheaply than the ma banks. Most of the larger accca tancy firms have a departm, specialising in putting invest in touch with potential client! for a fee.

"Having read the plan w have a good idea of the sort organisation that might be MI ested in funding such a proj■ Because we do it all the time, are able to put clients in tot with groups they wouldn't no rally contact," says Whitehead.

Lastly, he says, it is impoitan tailor the plan to its readers] and again a professional advi will help in this area.

Once the plan is corn plet Deloitte & Touche says it shol not simply be put away in cupboard but updated every y and used regularly to guide company.

It should be distributed to 1 members of staff and reviey and updated at least once a yt After all, you don't want to hav( start again in three years' fir do you?


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