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Last Updated: Friday, 21 November, 2003, 14:03 GMT
Lunch Lesson 11 - Making a business plan
Socks off cartoon
You need to knock investors' socks off with your plan
Much as you love your kids, there are times you just want to sit and relax for a few minutes.

Difficult when you're out and about, perhaps doing the shopping.

But entrepreneur Scott Haughton saw this dilemma as a business opportunity.

His idea is to combine a coffee shop with a play centre.

Upmarket

Parents can relax in his upmarket cafés while the youngsters get entertained.

Child playing
The idea is to keep the kids entertained
Getting his idea off the ground will cost money - lots of it.

So to persuade potential investors to stump up their cash, Scott has had to come up with a business plan.

It's not like Hollywood, where yoiu can go to a studio and pitch a movie in one sentence.

Scott has spent huge amounts of time and effort making sure his plan covers all the questions he's likely to be asked and makes the business sound as attractive and potentially successful as possible.

WHAT'S IN A BUSINESS PLAN
You need a stunning summary of what it's all about to put investors in the picture.
Then explain your idea and who the customers will be.
Look at the competition. Why will you be better?
How much will your idea cost - and how much will you charge for it?
What's your selling strategy - how you'll promote and distribute your idea.
What risks are involved? Be honest!
How much money do you need to raise and when will investors get any return?

He's travelled the world looking at similar concepts.

"It's one of the hardest things that anybody will ever undertake," says Scott. "It's taken me probably about 18 months to get to where I am now, having raised the money.

"The business plan itself took in the region of at least three months of hard graft."

But it's vital that the business works on paper before it can work in reality.

That seems to have paid off for Scott, whose Café Joué concept has already raised more than £500,000 from banks, investment funds and private backers.

Scott Haughton
Scott: Saw an untapped market
Scott was helped by venture capital adviser Oliver Woolly. He says getting the business plan right is vital - 98% fail to win the start-up business any money at all. It's easy to make mistakes.

"When they just rattle on and on about something without actually getting to the specifics of what the business is about," explains Oliver.

"Also, when you read the business plan and get to the end of page three and are not sure quite what the business is about.

"You've got to make it very, very clear at the beginning."

Real need

Scott's plan went down well. His idea is to charge £6 for looking after the children and to make money from the parents through the sale of food and drink.

There are too many business plans out there that nobody understands.
Oliver Woolly, Envestors Advisory Services
"Being a parent myself I recognise there's a real need for this sort of thing," says Oliver.

"I could understand it and all the investors could understand it. There are too many business plans out there that nobody understands.

"Secondly when I met Scott, he's a reasonable, sane sort of guy and that's important."

With the funding nearly all in place, Scott is looking for his first location.

By the time Café Joué opens, it will have taken two years to get off the ground.

But it wouldn't have happened if Scott's 30 pages of detailed research hadn't been spot-on.


Student Guide

Starting a business? Lots of people turn to the bank to raise money for their start-up.

They're probably after a few thousand pounds to top up the money they've raised from their savings and people they know.

What happens if your brilliant idea means you're looking for mega-bucks? Even then, there are people out there who will help.

Scott Haughton's brilliant idea, Café Joué, was to create a chain of cafés where parents could take their children and eat in peace while they were entertained.

Scott was looking for £680,000 to get the business up and running - much more than the High Street banks would lend to a newcomer.

Just think...

Why do you think High Street banks are unwilling to lend such large amounts of money to a newcomer?

Do you think Scott's idea will be successful? Why? What will he have to get right if it is to be successful?

Raising the money

The High Street banks have lots of guidance on their websites for people who want to borrow money to start a business.

The guides take them through the information that the bank will need before it considers lending money.

Here's a typical list of what's needed.

Summary Business Description

  • name
  • location
  • product or service offered
  • market and competition
  • your management and technical skills
  • business goals
  • financial needs and how money will be used
  • earnings projection.

    Market Analysis

  • total market for product or service being offered
  • industry trends
  • target market
  • competition.

    Product or Service

  • full description
  • how your offerings compare with the competition - quality and price.

    Market Strategy

  • overall strategy
  • pricing policy
  • how you will sell and distribute, and provide after-sales service.

    Management Plan

  • type of business, e.g. sole trader, partnership or limited company
  • number of employees
  • CVs of key personnel
  • organisational chart
  • capital improvements
  • operating plan, including projected outputs.

    Financial data

  • two years' projected figures
  • profit and loss forecast
  • balance sheet forecast
  • cashflow forecasts
  • capital expenditure forecast.

    Just think...

    Pick one of the sections and work out the information that Scott would have provided.

    A business plan looks just like a Business Studies specification. It makes a great basis for revision because you can see how it all fits together.

    Think up an idea for a business and turn it into a plan. As you go through the course and learn more about the business, add another section to your plan. You might end up with a great piece of course work or even an idea for your own business!

    Finding an angel

    Scott needed more money than a bank was prepared to lend so he had to look elsewhere.

    Scott had to prepare detailed proposals
    Business angels are people who want to invest in new or growing businesses.

    They want to be absolutely sure that they will get a return as they are putting their own money up.

    They often develop a great interest in the businesses they have invested in.

    People reading business plans often see hundreds of them so yours really needs to stand out.

    It needs to be exciting and very clear to persuade them to stay reading.

    An introduction which sums up the business plan and projects the excitement of the idea will grab a potential investor and persuade them to read the rest of the plan.

    Remember that an investor will be looking for an entrepreneur with oodles of motivation if the business is really going to work.

    But you need to be careful - someone with a new business idea is probably brimming with enthusiasm and may be over-optimistic.

    Just think...

    Why does a new entrepreneur need to be highly motivated?

    What effect can too much optimism have?

    What characteristics do you think a business angel is looking for in someone who is planning to start a business?

    Write 250 words which sum up your business idea and could persuade someone to read more of your plan.



  • WATCH AND LISTEN
    The BBC's Simon Gompertz
    "It has to work on paper before it works for real"



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