Starting a business may seem easy to many people think it to be; the common perception being that you have to simply open up a store, place some things in it and you're ready to sell. Unfortunately, all businesses, regardless of their size or intended market share, have to go through a process of registration and set up. In the UK the registration rules for sole proprietorships and partnerships are comparatively easier to form, but do not have a legal identity. Limited Companies, on the other hand have a legal identity, and their owners are afforded protection by legislation against claims by creditors and other finance providers.

In any case, since small private businesses cannot be strictly assumed to confine to their size for generations on-end, and neither are their owners likely to fulfil all their financial requirements by themselves. It is quite obvious then that they would look to expanding their business, seeking more investments, possibly introducing partners or shareholders, and paying their annual tax dues. Most businesses construct a business plan at the start of their venture, and some wait till they really require an extra helping of business resources. However, it is advisable that a business, no matter what level they start off at, will need a well-presented business plan, and it is helpful to create one right in the beginning. Not only does it help to attract outsiders to get involved, but also helps the owners/managers to analyse if they have been following the right path.

The essentials of a business plan have been summarised below, many of which may not be necessary for all business types, but have relevance to the overall requirement of most prospective business owners. Remember: at any time should you choose to contact the outside world for any help whatsoever, you will have to disclose information regarding your company. So if you think that preparing a business plan will expose you, then you might as well just sit back and stay the way you are.

Introduction

• A description of the business.

• The legal structure (Sole Proprietorship, Partnership, Limited Company).

• The business skills of the owners or appointed managers of the business.

• The difference between "we" and "they"

Marketing

• Describe the products/services offered.

• Identify the customer demand.

• What is the market for your kind of business and your products/services?

• How will the business be marketed?

• What kind of pricing strategy will be exercised?

Financial Management

• What is the source of initial capital?

• Prepare an operating budget for your business, for the first few months.

• Prepare and analyse the cashflow budget for the first few months of the business.

• Provide projected income statements.

• Discuss the break­even point of the business.

• The adopted method of compensation.

• Discuss how the business financial statements are to be maintained.

• Problem solving techniques, for all possible situations that can be foreseen to arise.

Operations

• How will the business be managed?

• Employment procedure.

• Insurance and leases arrangements applicable to the business.

• An analysis of the assets that may be acquired to initiate the business, i.e. to produce the products/services.

• The production process to be employed and delivery of products/services.

Conclusion

A summary of the goals and objectives of the business and an expression of commitment to work toward the achievement of such objectives.