WHAT IS INCLUDED IN THE BUSINESS PLAN?

A suggested format for your business plan is as follows:

• summary;
• the pub;
• the environment;
• your plans to develop the business;
• marketing;
• management of the business;
• financial forecasts.

Each section is discussed below.

Summary

A well-written summary ignites the reader’s interest. It should be logical, factual and summarise the key factors about your business. It may also present requirements for any additional finance that may be necessary. The summary will include succinct details of the following:

• The pub: type of operation, whether tenancy, lease or freehold; description of facilities; clientele; key strengths of the pub.
• The environment: location; summary of catchment area; analysis of the market; trends; environmental opportunities.
• Your plans to develop the business: how you will increase sales; improve profit margins; cut costs or introduce new income streams, such as food or accommodation etc.
• Marketing: who your target customers are; how you will promote the business, such as advertising, word of mouth, public relations etc.
• Management of the business: your own skills and experience; qualifications; staff and how you will organise roles.
• Financial forecasts: ingoing costs; breakeven; profit forecast; how you will fund the business and whether you require any additional funds to cover the cost of ingoing, or any development plans.

These sections are covered in more detail in the body of the business plan, with at least a page of information on each. Additional pages will be required for your 12-month profit and cash-flow forecasts.

The pub

The purpose of this section is to give the reader an understanding of the type of pub you are intending to run. You need to describe the pub and the facilities that it has available and whether the pub is tenancy, lease or freehold. You should explain what type of clientele the pub attracts, where it comes from and why it uses the pub. A potted history of the pub’s recent past may be useful too. Turnover, barrelage figures and rent, if applicable, can be included in this section. You can often find some of this information in the particulars that breweries, pub companies and business agents send out, for pubs that are to let or for sale.

You must give an honest assessment of the pub’s strengths and weaknesses. It is important to demonstrate that you have taken time to look at the pub objectively and considered both its positive and negative aspects. You should show how you can maximise the pub’s strengths and manage or overcome its weaknesses.

The environment

This section can include both the micro environment in which the pub operates and the macro environment, ie the wider influences that may affect the business. An example of a pub’s micro environment would be its catchment area, including local housing, competitors and other businesses. A pub’s macro environment includes the social, economic, political and legal issues that may affect the business. Examples of these would be growing trends to eat out (social) or smoking bans in public places (legal). A good source of macro environmental issues is the trade press, which often covers these and explains how they will impact on the licensed trade.

It is important to understand how changes to both the micro and macro environments may affect your business. These changes can be positive or negative and should have been identified in your SWOT analysis as opportunities and threats. Some areas to monitor are:

• competitors;
• the building and development of properties;
• changes to road systems;
• local employment issues;
• new businesses;
• alternative leisure businesses.

The local press, council offices and the public library are good places to gather this type of information.

Your plans to develop the business

You should have a plan on how you aim to develop the business by building on existing strengths and exploiting any opportunities that are available. The overall objective is to earn more profit, and in simple terms, this is done by increasing turnover and/or cutting costs. Examples of ways to develop the business can include:

• food, or further increasing the food trade;
• accommodation;
• new products;
• new facilities;
• new income streams;
• promoting high-profit margin products;
• increasing gross-profit margins;
• more efficient purchasing arrangements;
• encouraging new customers to use the pub;

• encouraging existing clientele to spend more;
• better cost control;
• reducing wastage.

Your development plan should have clearly set objectives. These should follow the SMART acronym and be:

S	Specific (exactly what you are intending to do)
M	Measurable (what you aim to achieve in money terms)
A	Achievable (how you are capable of achieving it)
R	Realistic (whether you have the resources to succeed)
T	Time based (exactly when you want to achieve it)

Set a SMART objective for each of your development ideas against which you can track your progress.

Marketing

Marketing is a means of communicating to customers and potential customers. The aim of marketing is to satisfy customers’ needs and at the same time make a profit.

This section of the business plan should explain how the pub currently serves the needs of its customers and what opportunities there are for attracting more customers or getting the existing customers to spend more. It also needs to identify who your target customers are and how you can influence them. In order to do this you must have a good understanding of what they want and when they want it. The next step is to make sure that what you are offering is attractive to your target customers. You then have to find ways of communicating this to them. Your plans for marketing the pub should be well researched and have SMART objectives.

See Chapter 14, Marketing, for more information on this subject.

Management of the business

The most important parts of a business are its people, and above anything else, it is the people running the pub, that are crucial to its success.

This section should focus on your skills, abilities and experience and include any past examples of your successes, qualifications and areas of expertise. It should demonstrate how you will play a positive part in building the business.

You should also show how you divide the responsibilities in order to best utilise your skills and operate the pub effectively. Staff should also be discussed, including any key staff that may be important to achieving your objectives. (An example of this would be a food pub with a highly prized chef.) It should also cover any contingency plans, when people are unable to fulfil their roles or decide to leave the business.

The aim of this section of your business plan is to give the reader confidence in you and convince them that you are capable of making a success of the pub.

Financial forecasts

This section is where you translate your business into hard cash. It shows how much profit you are likely to generate and your cash-flow forecasts. It is the section that will be scrutinised by lenders when you wish to borrow money. It will also be your budget and a means of measuring your performance. As a result, your financial forecasts should be thorough and well researched. Any errors or omissions could have a major affect on your business.

Profit and cash-flow forecasts should cover a minimum of twelve months and show the position broken down month by month for this period. The profit forecast shows the amount of profit (or loss) you predict to make on a monthly basis and excludes VAT, as this does not directly affect the profitability of the business. Costs are usually apportioned equally over the twelve-month period. For example, an annual rent of £ 12,000 (excluding VAT) will be divided over the year at £ 1,000 per month.

An example of a profit and loss statement is given in the Appendix.

A cash-flow forecast shows the business’s requirement for cash on a monthly basis, over a twelve-month period. It shows the inflows and outflows of cash of the business. Figures are entered into the month when the money is due to be received or paid out and includes VAT. For example, if your annual insurance payment is due in February, the full amount payable would be entered in the column for the month of February. Any VAT or tax payable would be shown in the months that they are due to be paid.

An example of a cash-flow forecast is given in the Appendix.

Where copies of audited accounts are available, these should be included in

this section of your business plan, together with any supporting trading information like barrelage figures etc.

Supplementary information

A small number of photos is a useful addition to your business plan. The pub and its main facilities should be included together with a photo of its position. Other information, like location maps, menus, price lists and CVs can be added in the business plan appendix. This keeps the body of the business plan free of clutter.