Business Plan

for seeking
investment

For use with Financial

Projections Package
 Business Plan for Social Investment 1

This business plan format has been designed to reflect the

information required when applying for a loan and has involved
input from a range of social investors, intermediaries and social
enterprises. The intention is to help investees move through the
process more smoothly and reduce the workload created in the
application process by ensuring that your business plan contains
the majority of information required for a loan application.
By considering the requirements of different lenders, we aimed to
produce a document that will have relevance to most social investors.
This is a template, not all of it will be relevant to everyone, but it
offers guidance and prompts to produce a strong, investment focussed
plan. Your finished plan should be appropriate to the business you
are running and the support you require. Plans are judged on content,
not weight.
This work has been funded by The Connect Fund.

Table of Contents Page

Executive Summary 2
Background to Company 2
Mission and Objectives 2
Trading History 3
Current Business Model 3
New Plans/Business Proposition 3
Management and Organisational Structure 4
Running the Business 5
Market Analysis 7
Finance 8
Risk and Risk Management 9
Conclusion and Exit from Investment 10
 Business Plan for Social Investment 2

1. Executive Summary

This section should give a concise overview of your plan, explaining your organisation
simply, specifically covering who you are, what you do and what your futures plans are.
You should also explain what additional outcomes and social impact will be created as
you carry out your plans.

For example “We are Rocking Horse Nursery, a company and registered charity, providing
30 childcare places in a community setting in Durham. We have been running for 5 years
and want to raise £200,000 to buy the property we work from. In doing so, we will
reduce our outgoings, establish an asset base and be able to roll out plans to expand to
a 50 place nursery.”

2. Background to Company

• What is the name of your organisation?

• What is your registered address and if different, what is your operational address?

• What parts of the country do you operate in?

• What is your legal structure, when was it established and what are the associated
registration numbers (company, charity, CBS etc.)?

3. Mission and Objectives

• What is your purpose as an organisation? You may wish to refer back to your constitution.

• Do you exist to serve a particular geographic area or community of need?

e.g. Grimsby or single parents.

• What social impact do you currently create?

• If you have a mission statement or Theory of Change, this is a good place to include it.
(See tools section for theory of change)
 Business Plan for Social Investment 3

4. Trading History

• Briefly explain how you have reached the current point in time.

• What did your organisation look like when it was created and what does it look like
now? For example, have you moved from being primarily grant funded to building
trading income? Have your activities or areas of operation diversified? Have you expanded
or perhaps contracted?

An investor will ask to see your last two or three sets of audited accounts, if you have them.
They will expect to see some of the narrative here reflected in the numbers in your accounts.

5. Current Business Model

• Where do you stand now as an organisation?

• What are your current activities?

• What resources do you possess? (e.g. staff, equipment, buildings)

• Where does your funding come from and are the sources stable?

• What is the mix of grant, trading and contract income in the organisation?

Using a tool such as a balanced scorecard may help you to plot the previous section,
this section and the next section of the plan. (See tools section)

6. New Plans/Business Proposition

Outline your future plans.

• What are you going to keep doing, start doing and stop doing?

• What will need to change in your organisation in terms of staff, resources, skills and
expertise in order to realise your plans? Please be as specific as you can.

• How will your organisation, your stakeholders and your clients benefit from your plans?
 Business Plan for Social Investment 4

• How much investment are you looking for?

• What, specifically, will you use it for?

• Over what period of time would you like to repay the money?

• What, if any, security could you offer on the loan and what other funders will be involved?

7. Management and Organisational Structure

An investor will want to know how decisions are made in your organisation, who makes
which decisions and if there are external influences on what you do (e.g. advisors, mentors,
stake holders).

Outline in as much detail as you think is appropriate:

7.1 Leadership

Who are the managers in the organisation, what are their responsibilities and what
are their relevant skills and qualifications?

What experience do they have of running similar businesses?

7.2 Governance

Who are your directors/trustees/committee members and what are their skills and
qualifications? How often do they meet, do they have any sub-groups and what decisions
do they make? What financial and management information is shared with them and how
often is it shared?

If relevant who are the nominated or regulated individuals?

7.3 Skills

What is the mix of skills and experience in the wider staff team? If you work in a regulated
environment, how do you maintain the required levels of staff skills and qualifications?
 Business Plan for Social Investment 5

7.4 Compliance

Are there professional or regulatory standards that you must meet to run the business
(e.g. Care Quality Commission, Homes and Communities Agency)? For example, this might
be training, advice, financial services or health and safety considerations. Who awards your
accreditation, how often do you need to prove compliance and how do you manage this?

What other quality standards do you hold? E.g. Matrix, IIP, ISO, Fair Trade Mark, Social
Enterprise Mark.

7.5 Audit

What are your processes for internal and external audit? This might be completed by
accountants, a finance manager or responsible person in a care setting for example.

How often are policies and procedures reviewed?

7.6 Advisors (Financial, Legal)

Who do you take advice from? Your answer should include regular legal and financial
advisers and any specific advice required to carry out your future plans. This may include
an architect, quantity surveyor, business advisor or marketing expert for example.

Who are your bankers?

8. Running the Business

This section considers the day to day operation of the business and helps an investor
to understand how you do what you do and who you work with to achieve your goals.

8.1 Production

What are your products and services and how are they made and delivered?
E.g. a starting point might be “we make and sell fair trade chocolate in a rented
production kitchen, employing the long term unemployed.”
 Business Plan for Social Investment 6

8.2 Staff

Give an overview of the staff team, possibly in a diagram, but making sure to show how
the team interacts and why this structure is important to running the business. How many
staff do you have? Are they full or part time? What are the contract terms for your staff
(fixed term, zero hours, full/part time split)? Are you reliant on volunteer labour?

8.3 Premises

Describe the premises you work from and explain why they are suitable for your business.
Do you own or lease the building and has it been valued recently? If you lease premises
what are the terms and conditions of the lease and who is your landlord?

Do the premises require adaption or development to be fit for purpose?

8.4 Suppliers and Partnerships

Who are your main suppliers and partners, how do you select them and what value do
they bring to your business? Are you reliant on regular subcontractors and how do you
secure the supply of services?

e.g. If you are you part of a consortium what value do they bring and what agreements
do you have in place to ensure service delivery? For example, if you are in the food
business where do you source your ingredients and what commercial agreements do
you have in place?

8.5 Funders

What will you future income streams be? How are they divided between grant, contract,
sales and borrowing?

What, if any, conditions are attached to those income streams?

Is your income seasonal or performance related?

Do you have any existing debt?

 Business Plan for Social Investment 7

9. Market Analysis

It is really important that an investor understands what you do, the market place for your
product or service and how you plan to keep selling successfully. In this section, you should
set out the need and demand for your service.

9.1 Product/Service

Simply, state what it is that you offer, who buys it and why they buy it? You may have
to do this separately for different products or services. Who are your typical customers
and do you have specific target markets?

9.2 Competitors

Who are your competitors? This might be for similar services such as another café,
another supplier on a framework agreement or a company competing for the disposable
income of a customer.

9.3 Unique Selling Point

What makes you different from your competitors, why is this relevant to your customers
and how will this help you win their business?

9.4 Marketing/Route to Market

How do you reach your customers, is it by social media, email, word of mouth, advertising
or on the radio? Are they the right ways to reach your customers currently and in the future?

What are the costs of reaching your customers?

 Business Plan for Social Investment 8

10. Finance

The effective flow of money in and out of a business is vital to survival and growth.
Provide a summary of historic financials and comment on any unusual or exceptional items.

The finance section is also a good point to reiterate what you need from an investor
and then to demonstrate how that investment will affect the future of your business.
Any investor will want to know:

10.1 Background financials

• What has happened in the business up until now?

• What sources of income have you received?

• How profitable have you been and where do you currently stand financially?

In order to better understand your business, investors will ask for your management accounts
and your audited accounts, including Profit & Loss and Balance Sheet. If available they will
probably want to see account for the last 3 years, so they can spot any trends in the business.

You may wish to seek input from your finance manager or accountant.

10.2 The Future

In order to understand your financial future, an investor will ask for 3-5 years of cash flow
forecasts, sales projections and an understanding of profit margins. This will show how money
will move in and out of the business in the future, where your income will be sourced from,
what your costs will be and what role investment will play in moving you forward?

All projections are built on assumptions, e.g. how much of your product or service you will
sell, what the cost of sales will be, when your customers will pay. You should ensure that
you clearly explain all the assumptions that underpin your forecasts. Please see the Profit
and Loss/cash flow tool which accompanies this business plan guide.
 Business Plan for Social Investment 9

11. Risks and Risk Management

All businesses face risks. They might be operational, financial, reputational or legal.

Whilst investors will have some experience of most business sectors, it is important to be clear
about the risks your business faces, what the potential impact of those risks are, how you will
monitor and address risks within the business and what changes may occur as a result.

A good starting point is a PESTLE analysis which considers political, economic, social,
technological, legal and environmental risks. (See tools section)

A simple way of undertaking initial risk analysis is to set each activity, product or service
in the right place on the chart below. For example item A shows low levels of risk and
low impact if things go wrong, however item B shows high levels of risk and impact. This
means that item B might be an unattractive option or simply means it will require more
detailed and active risk management.

High

B
Level of Risk

A
Low High
Potential Impact

Following initial analysis it is advisable to undertake a more detailed risk assessment that
identifies the risk, potential impact, the likelihood of problems and importantly what you will
do to manage the situation.
 Business Plan for Social Investment 10

Risk Impact Type Liklihood Mitigation

No customers High Performance Low Marketing campaign

Poor service Medium Reputation Low Staff training

Some non-payment Low Financial High Good credit control

Conclusion

All business plans are slightly different, hopefully, this document will give you a good
start in making yours fit for purpose. Your plan should evolve with your business and
its’ scale and detail reflect the relative complexity of your organisation and ambitions.

Tools

1. Theory of Change

A theory of change, in its simplest form, is a summary of actions that you will take because
you expect them to result in defined outcomes within the context of your environment.
For example because of 1. We will do 2. Which we expect to result in 3, giving the final
outcome 4.

In this model, 1 represents the issue you are wishing to address, for example homelessness,
2 represents the specific actions you will take, for example buying houses and making them
available to homeless people. Point 3 would be the impact of your actions, for example due to
now being in stable accommodation, tenants felt better able to engage with health, education
or employment services. Finally the outcome would be increased employment, reduced need
to draw on public services and a better quality of life for the individuals concerned.
 Business Plan for Social Investment 11

2. PESTLE

Any business will have opportunities that can be created by things such as government
policy or market failure for example. Describe the key influences on your business
environment and how they create opportunities for you. Give a broad policy description,
state the relevance to your business and give links to any other section of the plan.

Describe the key external influences over your business using the headings Political,
Economic, Social Technical, Legal and Environmental.

3. Balanced Scorecard

A Balanced Scorecard is a simple way to present the rounded characteristics of a

business over time and how the financial, social, organisational and business model
inter-relate and change.

As a Social Business, your financial and social targets will be inextricably linked and require
equal consideration. The business model and organisational features will reflect the route by
which the financial and social targets will be achieved. In this way we would expect to see
changes in one area reflected in the others.

If your business is a new one, we would not expect high levels of social impact in the
early stages of operation.

When completing the scorecard try to use summary bullet points and really focus on the
core information. This will make the information much clearer and enable you to contain
a little more within the template.
Financial Long Term Social
200K Turnover 3 jobs created
10% Profit

Medium Term 2 jobs created

120K Turnover
5% Profit

Short Term 1 job created

50K Turnover
3% Profit

Business Organisational
12
 PESTLE Template 13

Change Nature of Impact Market Key Strategy

Type Change Implication Driver Success Response
Factors

Political

Economic

Social

Technological

Legal

Environmental
 Building a Marketing Plan 14

Product Price
• What does the customer want from • What is the value of the product
the business? or service to the buyer?
• What features does it have to meet • Are there established price
these needs? points for products or services
• How and where will the customer use it? in this area?

• What does it look like? • Is the customer price sensitive?

• What size(s), colour(s), should it be? • What discounts should be offered

to trade customers?
• What is it called?
• How will your price compare
• How is it branded? with your competitors?
• How is it differentiated versus
your competitors?

Target Market

Place Promotion
• Where do buyers look for • Where and when can you get
your product or service? across your marketing messages
• If they look in a store, what kind? to your target market?

• How can you access the right • Will you reach your audience
distribution channels? by advertising in the press,
or on TV, or radio, or on billboards?
• Do you need to use a sales force?
• When is the best time to promote?
• What do your competitors do,
and how can you learn from • How do your competitors do
that and/or differentiate? their promotions? And how does
that influence your choice of
promotional activity?