Why you should have a business plan might well be the first question to ask.

Here are two good reasons. Both reasons assume that the idea is to start a business with the firm intention to come through the critical early years and continue afterwards.

• If banks and/or financial partners are required to help finance the project from the outset, they will want to know and see in a clearly presented form exactly what is involved, with projected results, so that they can give the proposal their best consideration.
• Even if no outside finance is involved, a carefully prepared business plan will plot out the objectives and which ones to keep the right side of, on the necessary route to success and also convince key suppliers, with whom you’re seeking generous credit terms, of the business’ viability.

The business plan should, of course, be in French if it is going to be presented to organisations and suppliers, and professional help from a specialist company (consult conseils et études in the Page Jaune) will almost certainly be necessary. They will have experience of clear, positive and attractive presentation, and of getting the content just right and expressed in concise French. A foreigner who has had no experience at all of running his/her own business, despite considerable managerial experience, is unlikely to be able to present a project as convincingly as a specialist company’s presentation. That said, the initial draft should come from the entrepreneur who is the only person, at least to begin with, to know what the project is all about. Take time over this and only present it to your professional helpers to check-over the project description and lay-out when completely satisfied with the draft. The financial details will almost certainly have to be drawn up by an accountant.

The plan should be a ‘selling’ tool containing the following elements:

• summary;
• presentation of the entrepreneur (and his associates);
• general presentation of the product or service;
• financial details.

You should also include appendix documents which may be available such as the company articles, agreed sources of finance, official references from independent professionals, firm commitments from future customers, etc.

SUMMARY

Like a good novel (except it’s a real plan) the summary (résumé) should arouse interest immediately and in a sense it is the most important document. It is recommended that the summary is no longer than two pages.

PRESENTATION OF THE ENTREPRENEUR

The presentation (présentation du ou des porteurs de projet) is an adaptation of a classic CV. As everything is known about the (future) business concerned by the ‘candidate’ entrepreneur(s), only personal skills and previous employment experience which are directly relevant to the nature of the business and its objectives should be shown. Personal motivation – don’t overdo it – should also be included in this document as well as details of any professional studies and courses which support the presentation. The latter might include completion in France of a basic business management course (see page 35 in Chapter 3) and/or certificates showing practical knowledge of the products or services the business will market.

PRESENTATION OF THE PRODUCT

The product presentation (présentation d’informations générales sur le projet) can be split into three parts:

• 1.A description of the revenue-producing product/service, and any patent taken out, with material and any staff required.
• 2.A brief survey of the market, its trends and competition and reserve or contingent plans. If you have a market research report (see Chapter 2) indicate that this is an annexe document.
• 3.An outline of marketing strategy, not forgetting to cover sector and market-share objective, pricing policy, distribution channels and publicity methods.

Use the following checklist to prepare the information which is usually expected:

• Business name, legal form, address and telephone number.
• Business capital with shareholding details.
• Personal details of the entrepreneur:
• Spouse’s details:
• The project:

FINANCIAL DETAILS

The financial nuts and bolts of the business plan (dossier financier) should have four component surveys:

• setting-up costs and funds available
• forecast results for first three years
• three-year financial plan, and
• first 12 months’ cash-flow breakdown.

Taken together these should show, ideally, sufficient income and resources for healthy business development over the first three years. They should at the same time be realistic and precise as possible, allowing for teething problems or hiccups such as having to modify the product or re-think publicity if the initial campaign doesn’t work Businesses don’t usually run exactly to plan. As a foreigner and/or a newcomer to starting and running a business you will need to make special efforts to master French business terms and/or understand business finance so that you know and understand, and can be seen by financial organisations and business people to know and understand, what you are talking about. (Bear in mind also that three years’ certified accounts will be expected by potential buyers if the business is put up for sale in the future.)

Here are simplified examples of lay-out for these surveys and items to be included in each:

Setting-up costs/funds (Bilan de depart)

If the besoins total is more than the ressources total another loan at sensible interest rates will be necessary to show a positive balance.

Costs/Besoins	Funds/Ressources
Fixed assets/immobilisation (cost of premises, fittings, machinery, office equipment, company vehicles, etc.)	Deposited company capital/capital social and current account registration costs, holdings of directors in limited companies, or amount provided by entrepreneur/ sole trader
Cash flow situation (value of warehouse stock for products, plus amounts due/créances from customers, minus amounts due/crédits to suppliers).	Grants and subsidies (subventions) awarded
Cash, in trading account/solde en banque	Loan details and repayment periods/emprunts, overdraft facility
Total	Total

Forecast for first three years (Comptes de resultat sur trois ans)

In the same way that three-year results are expected from any would-be future buyers, the first three years forecast is the document most closely examined by financial organisations. While you may be able to produce a skeleton forecast based on a market research report, ask an accountant to check that all appropriate items are included and that the figures are realistic if there are any guesstimates. (This type of service may be available free through associations for conseil à la création des entreprises.)

	Year 1	Year 2	Year 3
Turnover/chiffre d’affaires excluding TVA (HT)
Goods, services, rental income (marchandises, produits, productions de biens, prestations de services, etc.)
Total	______	______	______
Purchases: raw materials, stock/achats: matières premières, marchandises
Outgoings/charges
Subcontracting (sous-traitance)
Leasing agreement (crédit-bail)
Rent (loyer)
Electricity, water, gas
Maintenance costs
Accountant (honoraires comptable)
Publicity budget
Travel expenses (déplacement)
Phone, post, Internet, etc.
Gross salaries (salaires bruts)
Employer’s social security payments (charges sociales patronales)
Director’s remuneration (if applicable)

	Year 1	Year 2	Year 3
Local business tax (taxe professionnelle), if applicable
Loan interest (intérets sur emprunts)
Bank charges (agios)
Depreciation (amortissements)
Total	______	______	______
Turnover – Purchases and Outgoings = pre-tax profits/bénéfice avant impôts	______	______	______
Profits tax (IS or BIC/BNC)	______	______	______
Net profit (bénéfice net d’exploitation)	______	______	______

If you work from home the general rule is to allow for 33 per cent of gas, heating, water, electricity, rent (if applicable) and maintenance costs for your property as business outgoings. A more precise percentage corresponding to the overall floor area your office or workshop covers in relation to the property is necessary if this is obviously more than a third.

Three-year financial plan (Plan de financement sur trois ans)

This sets out the resources available throughout this period against the business’ financial needs (besoins). The year’s balance is the resources total minus the financial needs total. The cumulative balance will show if any previous year’s deficit is made up in the following year. Cash flow requirements (besoin en fonds de roulement (BFE)) usually vary from year to year and the forecast difference for this item in the financial plan may be a financial need (if the requirement increases) or a resource (if the needs are less) in the following year. In the following simplified example of a three-year financial plan the cash-flow requirement (besoins) increases in Year 2 by 1,000€ (to 5,000€) and in Year 3 by a further 800€ (to 5,800€).

There are no loans in this example but there is a small grant entitlement, after three years, of 1,000€ towards the cost of replacing essential machinery and vehicles. This is a healthy example of a financial plan showing adequate resources to cover the business’ development over the crucial first three years with sufficient funds for re-investment in capital goods.

	Year 1	Year 2	Year 3
Financial needs/besoins
Registration costs	3,000€	–	–
Investments (machinery, vehicles, etc.)	5,000€	–	10,000€
Cash-flow requirements	4,000€	1,000€	800€
Total	12,000€	1,000	10,800€
Resources/ressources
Grants, subsidies (subventions)	–	–	1,000€
Company capital and bank account holdings	11,000€	–	–
Year’s operating profit allowing for depreciation amounts (marge brute d’autofinancement: MBA)	2,000€	8,000€	8,000€
Total	13,000€	8,000	9,000€
Year’s balance/solde de l’année	1,000€	7,000€	–1,800€
Cumulative balance/solde cumulé	1,000€	8,000€	6,200€

Cash-flow plan (Plan de tresorerie)

The layout model below shows on a month-by-month basis how receipts and outgoings can be set out and will be particularly useful for businesses that have seasonal peaks of income or who have customers that enjoy extended credit terms or are slow payers. Negative balance periods will therefore be anticipated and suitable temporary overdraft facilities can be negotiated if necessary, and in advance, with bankers so that fixed-period payments common to all businesses, such as monthly salaries and quarterly TVA and social security contribution payments can be met.

The annual plan totals all income and outgoings and will also show the break-even point (seuil de rentabilité/point mort) for the new business: the point at which gross profit covers fixed costs. Realistic break-even point figures can attract additional finance if this is required for long-term development.

	Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Balance/solde at beginning of month
Receipts/encaissements
– from turnover
– from company capital, bank a/c holdings
– from any loans
Total A
Operating payments /décaissements	_______________________________________________

	Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
– purchases (raw materials, stock, etc.)
– sub-contracting
– leasing agreement
– rent
– electricity, water, gas
– maintenance costs
– gross salaries
– social security payments
– phone, post, Internet
– TVA payments
– local business tax (if applicable)
– profits tax
Other costs
– loan interest
– depreciation
Total B	______________________________________________
Monthly balance	______________________________________________
(A – B)
Cumulative balance	______________________________________________

USEFUL VOCABULARY AND DEFINITIONS