Short, sweet and to the point

A short, punchy business plan is essential for persuading banks to part with cash, says Marlborough Leisure commercial director Simon Stracey

1. Length

What constitutes a good business plan? A short one. Big, fat documents that land on bank managers' desks quickly end up at the bottom of the in-tray. A short, punchy

document of three to four A4 pages can be read in a few minutes. People often feel that they have to create hefty documents. But a large document often rambles rather than being clear and concise. A brief, punchy document invariably has a better impact than an

encyclopaedia.

2. Target the plan

Consider the person you are writing the

business plan for. If the plan is going to be read by a bank manager you will need to include a more detailed explanation of industry specific matters as the average bank manager will not have an understanding of the pub sector. You should explain the benefits of a freehouse in terms of buying power and associated higher GP margins or explain the situation with a lease and beer tie. Obviously if the business plan is for a pubco, this is not really necessary.

3. Yourself

Talk about yourself. If you have specific

industry experience, don't simply list the

places where you have worked during your career. Explain exactly what your role was and emphasise what your key responsibilities and achievements were. This includes anything from doubling sales or slashing staff costs, to implementing a better stock-control system or organising better entertainment. Include a CV if it makes it easier to understand. If you are new to the trade, emphasise abilities that are applicable to your new career. Perhaps you have excellent customer-service skills or have worked in financial budgeting.

4. The property

Describe the location and appearance of the venue. Banks want to picture the pub - is it a cosy boozer or a gastropub or a big, open-plan pub? It is a good idea to include a few photos of the pub as it is easier than describing the venue in words. Include details of any

changes you plan to make to the building and the cost.

5. Current trade

Describe the nature of the business. Think about what you sell, who your customers are, what you do well and how you could do it better. Pubs sell beer and food - everyone knows that but what do you do differently. If you serve an unusual type of food or

speciality beers, mention it. If you plan to make changes, estimate how much those changes will cost and any potential sales increase. The more you can demonstrate, the better. For example, explaining that a £30,000 refurbishment is going to bring £50,000 of extra sales by attracting five new people every day who are going to spend extra money. Include a SWOT (strengths, weaknesses, opportunities and threats) analysis as it demonstrates you have thought about what you are doing.

6. Financial analysis

Include accounting records whenever

possible and explain the good and/or bad points. The key issues are sales, gross profit margins and staff costs, although there will be other significant considerations for different types of business. Provide as much information as possible. Banks typically ask for three years' accounts, which some people have difficulty in producing, but the closer you get to that, the more comfortable banks will feel. If you are moving into a pub and the accounts are difficult to obtain, then you should question whether it is a sound investment to pay thousands for the pub without proof of sales. The minimum you need is a set of VAT returns, as at least you can demonstrate the sales.

7. Financial forecasts

Most banks expect to see a cash-flow forecast and a projected profit-and-loss account for at least a year and sometimes up to five years. Try and avoid providing forecasts more than a year ahead, because it involves too much guess work. If there is a major development in the pipeline and you expect the second year of sales to be vastly different from the first year, it is worth forecasting for longer.

8. What you want

Don't forget to tell the bank what you want. If you need a loan, explain how much you need and how long you plan paying it back for. State the obvious. Place this information at the end as banks know you are looking for a loan and you have a chance to impress them first by telling them what an attractive business you have and what great plans you have for the

future. It is softening the blow.

9. Security

Banks don't like to loan against leaseholds because technically, these offer no security. If you can offer the bank collateral for the

money that you want to borrow (such as a legal charge over your house), it usually

improves your chances of success. Include its value and details of the mortgage.

10. Presentation

Everybody makes spelling errors but you would be amazed how obvious it is to

somebody reading a document for the first time. Use a spellcheck programme on your computer. The presentation of the

document is also important so make it look

professional. Bind the documents in a folder with clear plastic. If it has to be sent via e-mail, use a PDF format.

11. Outside help

If the idea of writing down your thoughts or making sense of cash-flow forecasts is too much to bear, there are people who can help. The big pub firms and banks offer templates. Alternatively speak to your accountant or another specialist.

Simon Stracey is commercial director at

Marlborough Leisure - the independent

provider of funding to the licensed leisure sector. Stracey helps clients construct a business plan, including detailed financial projections. He previously worked at HSBC for 11 years.