Business planning
Why have a business plan?
Businesses evolve and are constantly subject to change and progress. Business planning is therefore an essential process that helps you to react to challenges, and adapt to new circumstances. Having a good business plan will enable you to identify not only where you want your business to be but also how you are going to get there.
A business plan is a working document that should be revisited at regular intervals and whenever any changes occur or are planned. It is also a document that will be used when approaching potential sources of funding.
The process of producing the plan is as important as the plan itself. It will tell everyone involved what needs to be done, why, when and by whom. When it comes to writing the plan, you can design your own or use the template below. Before you start you must consider who is going to read it and what they need to know.
What to include
Executive summary
The executive summary needs to contain all the information necessary for the reader to understand what your business is and what your plan is for the future, but without the evidence and detail that you will include in sections which follow.
It is the first, and sometimes the only, section that people read. For this reason it is the most important, and will be written last, after you have completed the rest of the document.
Background
Provide a brief history of the business containing details of legal status, the main activities of the business and an explanation of the structure of the organisation, including key staff. A summary of income and expenditure from the last financial year should be included. If your business is already established you may want to see whether the legal status that you have chosen is still the most appropriate for your business.
If your business is a new venture you will need to consider a number of factors before deciding on your status. Your business development adviser can provide information to help you decide.
Legal obligations
You will need to ascertain that all legal requirements are met. These might include Ofsted registration, public liability insurance, employer’s liability insurance, lease or premises agreement, planning permission, registration with Inland Revenue.
Your service
Describe in detail the childcare services you will offer. Market research will help you to identify the potential gaps in the market and you will be able to decide exactly how you might tailor your services in the future. A SWOT analysis is a useful tool here to help you to decide on the detail of your operation.
To enable you to do this we recommend that you look at internal and external factors that might affect your childcare business. Using McKinsey’s 7S model and the Marketing Mix (7Ps) we can get information to feed into the strengths and weaknesses.
Market Research
In this section you should paint a picture of the local childcare market in terms of both your potential customers and also your competitors. This information will enable you to plan effectively with a clear idea of where you fit in to the existing market. The Market Research section gives further information on finding out about the local childcare market.
Using the PESTLE model will enable you to see what is happening in the wider (National) external market. These will influence the opportunities and threats.
Using SWOT analyses
A SWOT analysis may help you to see how you can change your weaknesses into strengths and if you are aware of potential threats you can take action to counter them. It can also be helpful to give this exercise to others to gain a different perspective. Staff and colleagues are often more supportive of plans if they have been involved in their development. The subject of the analysis can be anything that is relevant to your business.
Strategic Direction
In this section you need to identify your long term view of where you will be in 3, 5 or 10 years (vision), the purpose of your setting (mission) and aims and objectives. Your aims outline what you want to achieve as a business. An objective breaks down the aims into the steps you need to take to reach your goals. For example you may want to increase occupancy and need to identify what steps you will need to take to achieve this. These steps are your strategies and could include:
- Growth Strategy - Promote and sell more places to existing parents or new parents. Develop new services for existing parents or for new parents.
- Marketing strategy - Effective marketing is one of the essential tools that will help you to become a sustainable childcare business, fill current childcare places and continue to attract new customers in the future. The Marketing section gives more information on planning your marketing effectively.
- Quality strategy - The recruitment and retention of appropriately qualified, high quality staff is essential to the success of your childcare business. You could also look at building improvements and customer service procedures.
When considering your objectives it is useful to try to make sure they are SMART:
- Specific
- Measurable
- Achievable
- Realistic
- Timebound
For example, to increase occupancy by 2 full time children by end of the Autumn term.
Work programme
Explain the daily operation of your business and set out a programme (implementation plan) of the key tasks you need to deliver your service. This should include both the financial and human resources required. When considering the work programme remember to set realistic time scales and allocate each job to a specific person. You should also set down how you will monitor progress towards the aims and objectives.
Resources
In this section you will need to identify the financial and human resources that you will need to achieve your goals. The most effective way to achieve this is by setting a budget and monitoring how closely you stick to it (see Financial Planning) If you are setting up a new childcare business you will need to work out exactly what equipment you will need. The Inland Revenue are a useful source of advice.
Monitoring and Measurement
Using Key Performance Indicators (KPIs) such as income, occupancy and expenditure can ensure you keep on the right track by being able to identify future problems. This gives you chance to take remedial actions before a major problem arises. Different monitoring may be weekly, monthly or quarterly depending on the importance.
Contingency planning
This is a risk assessment process, which should highlight anything that might go wrong and a brief summary of how you would deal with this. This is your opportunity to identify any possible problems that might affect your plans. This could include the possibility that expenses might be higher than predicted or that fewer children will take up places. You should also consider what would happen if your personal circumstances were to change.
Contact us
Our childcare business advisers are happy to meet with you or you can contact them for advice by phone on 0116 305 8048 / 8039 or email childcare@leics.gov.uk.