Investment – Cannon Moorcroft Limited

What no business plan should be without

CannonMoorcroft — Thu, 27 Mar 2014 20:35:49 +0000

Business plans aren’t just used for tempting investment; they should also drive your company in the right direction and provide a benchmark for ongoing evaluation. Here are some key points that a good business plan should include.

Many entrepreneurs fall into the trap of diving in before they have fully planned their new venture and then they wonder why it fails. If they had put the time into researching and writing a business plan, they would either have predicted the company wasn’t viable, or addressed the business model straight away.

The act of writing a business plan forces you to examine every aspect of your proposed business, exposing any weaknesses and how to address them before you spend a single penny.

It’s a common misconception that a start-up only needs a proper business plan when you come to secure investment. Of course, this is when it becomes indispensable, but you’ll also find a business plan invaluable in establishing a company that even makes it as far as funding. Not only will it clarify your thinking as you set your business up, but it will go on to help you evaluate its performance against your projections. This is essential for identifying areas of shortfall or poor performance that could go on to affect your start-up’s profitability and potential for growth.

So how do you write an effective plan?

Sadly, you can’t just download an off-the-shelf template, because every business has different requirements and your considerations will vary massively, depending on the type of operation and the return that you hope to realise. Perhaps the most effective technique is to put yourself in the shoes of a potential investor; what would you want to know before putting your money into someone else’s big idea? This will temper your own passion for your dream, forcing you to evaluate its potential more rigorously.

Broadly speaking, every business plan should include the following information:

1) An executive summary

Brief and to the point, this should summarise the contents of the plan. It should include what your business will do; where your businesses opportunities are; if you or your team have a track record in the sector or in business; financial projections; costs and funding needed. If you are using your plan to attract funding, remember that this might be the only sheet that gets read before it lands on the ‘no’ pile. You’ll find it easier to write this last, once you’ve collated all the data for the plan and your thinking will be at its most informed.

2) Background detail on your business

This should expand on the executive summary and explain in more depth what the business is; what it does, what its advantages are, what makes it different, why customers will buy your product or service, and what position the business is presently in.

3) Research based market analysis

This should establish that there will be a market demand for your offering. Combine primary and secondary research. In other words, talk to potential customers; and read up on the market, whether you do it online, or at the library. Actually speaking to potential customers will give you a real world response to your idea, so ask what they would like to see included. If their needs aren’t being met by competitors, find out why and aim to incorporate this into your business model.

4) The competition

It’s unusual to identify a unique market sector, but if you have, congratulations! The rest of us will enter a market with established competitors, so it’s crucial to understand their strengths and weaknesses. They will have proven there is a market in your sector, but how can you adopt their customers? Look at factors including cost, customer service and advancement.

5) Sales strategy

Explain how you will sell your product or service and how will it reach the end consumer. Include your marketing plan here, explaining how you intend to generate growth and, most importantly,projected profit margins. State any existing customers or interested parties for large orders.

6) Relevant experience

Remember that if someone is considering investing in your business, they are investing in you or your management team. You need to convince them that the business either has industry specific or general business experience, preferably both. Even if you’re not seeking investment, you still need to ensure that your business has the right leadership to ensure success.

7) Financial forecasts

This is the single most important area of your plan, so you should spend a lot of time on it. It should detail projected expenditure and income to establish whether the business is profitable. You’ll need to include realistic forecasts regarding sales, cashflow forecasts, three-year profit-and-loss forecasts, break-even analysis, and projected balance sheets.

Don’t fix the figures to suggest rapid growth and unrealistic profits. Any investor will see through it and you’ll only be fooling yourself. If the income you need to cover the required spend based on your research is unrealistic, this is the time to revise your business model, or consider another venture entirely. Far better to do that now, than after months or years of hard graft and penny pinching.

Personal finance mistakes to watch out for

CannonMoorcroft — Thu, 10 Jan 2013 09:15:11 +0000

Entrepreneurs often fail to pay attention to their personal finances, which are often interconnected with their business. Here are some financial issues you might not be thinking about, but you should be:

1. Protecting your personal credit rating. Often, small-business owners don’t consider how their company can affect their personal credit rating, says Bill Collier, author of How to Succeed as a Small Business Owner … and Still Have a Life (Porchester Press, 2006). For example, if you sign a personal guarantee when buying from a supplier, you are liable should your business be unable to pay within the typical 30-day term. If you don’t come up with the money, your supplier can file a report with one of the credit rating agencies and damage your personal rating. “Keep yourself from being personally obligated to the business’ debts as much as possible,” Collier advises. If you are worried about making payments on time, seek suppliers who don’t require you to sign a personal guarantee and are willing to extend credit terms to the business.

2. Diversifying your portfolio. Some small-business owners gravitate toward personal investments in companies in their same industry, says J. Jeffrey Lambert, a Sacramento, Calif., financial planner and co-author of Ultimate Guide to Personal Finance for Entrepreneurs(Entrepreneur Press 2007). That lack of diversity can make an entrepreneur even more vulnerable to an industry downturn. For example, the owner of a technology business may like investing in other tech-related companies, but both his business and his portfolio could face many of the same risks. To protect your wealth, Lambert recommends aiming for no more than a 5 percent investment in any one company. Furthermore, consider broad-based mutual funds that are not concentrated in your industry and include a mix of stocks and bonds, large and small companies, and international as well as domestic investments.

3. Choosing the right business entity. Be it a partnership, sole trader, or Limited company, the choice of business entity will affect your personal finances. It’s wise to investigate the tax laws, as well as seek an accountant’s advice about the best type of business entity for you. As a sole proprietor or partnership, you would be held personally liable if your company faced litigation or creditors demanded payment of business debts, while a Limited company is held liable instead of you personally.

4. Discussing finances regularly with your spouse or partner. Small-business owners can get so wrapped up in their company that they make the mistake of leaving family finances completely in the hands of their spouse or partner. If you and your partner are not talking regularly about your personal finances, you should set a date on the calendar once a month to make sure you confer. It takes a lot of energy and focus to manage a business; sometimes it’s easier to let our personal finances slide. If you just make it a priority and look at the numbers every month, you can make a lot of progress.

5. Keeping personal credit cards out of your business. While a personal credit card may seem like an easy source of cash for your business, you can quickly incur high interest costs. Unless your business is very new or you have a poor credit rating, a better option is a loan from a small bank at a much lower interest rate than most credit card issuers charge. While it may take extra work to secure a bank loan, it will help you establish a solid credit rating for your business in the long run.

6. Aligning your salary with your business cash flow. Small-business owners often don’t adjust their own salaries to match their company’s fluctuating cash flow and end up borrowing money to pay themselves. Taking borrowed money and turning it into taxable income is not a good idea. Instead, you should be diligent about matching your own pay with the cash flow of the business and taking home less when your company’s cash flow is lower.

Crowd funding could be the answer to your cash woes

CannonMoorcroft — Thu, 19 Jul 2012 12:25:08 +0000

A couple of interesting articles about alternative financing for your business or project.
https://ow.ly/cloba

https://ow.ly/clKfg

Going green? Check available allowances

CannonMoorcroft — Thu, 19 Jul 2012 09:00:18 +0000

Through the Enhanced Capital Allowances regime, the government has been keen to encourage businesses to take advantage of green technology for some time.

However, some changes to capital allowances regimes allows businesses to claim 100 per cent allowances on a wide range of energy efficient and other environmentally beneficial plant and machinery.

Smaller businesses will obtain 100 per cent relief in any event through the Annual Investment Allowance, which provides a full deduction for expenditure on plant and machinery up to £100,000 in each year. The allowance does not, however, apply to expenditure on cars.

For slightly larger businesses thinking about going green, here are a few suggestions of things which attract enhanced capital allowances.

Water efficient products

Businesses seeking to reduce their water usage might consider investing in the following types of technology:

cleaning in place equipment
efficient showers
efficient taps
efficient toilets
efficient washing machines
flow controllers
leakage detection equipment
meters and monitoring equipment
rainwater harvesting equipment
small scale slurry and sludge dewatering equipment
vehicle wash water reclaim units
water efficient industrial cleaning equipment
water management equipment for mechanical seals
water reuse

To investigate further, those interested can follow up particular products by performing a product search on the eca website. For example, under rainwater harvesting equipment, buyers can search for the products which meet the criteria of the three types of equipment needed for a system – rainwater storage vessels, rainwater filtration equipment and monitoring and control equipment.

The website then lists the manufacturers and product information together with technical details of each individual product. Contact details for manufacturers are also provided.

The product search in relation to water technologies is at https://www.eca-water.gov.uk

Energy efficient products

The list of products is much wider and is grouped into a number of technologies, which is updated every year. The changes to the list of approved technologies for 2008 were:

The introduction of four new technology categories:

Compressed air equipment
Flow controllers
Master controllers
Heat pumps for space heating
Heat pump dehumidifiers
Lighting
White light emitting diodes for accent and amenity display lighting

Housekeeping changes to the current eligibility criteria in 11 areas as follows:

Boiler equipment
Biomass boilers and roomheaters
Gas-fired condensing water heaters
Localised rapid steam generators
Steam boilers
Compressed air equipment
Refrigerated air dryers
Lighting
Controls
High efficiency lighting units
Motors and drives
Variable speed drives
Integrated motor drives
Refrigeration equipment
Packaged chillers
Compressors

Those interested in installing energy efficient plant can again search the relevant technology type by going through https://www.eca.gov.uk and choosing Energy.