Contact us | Membership Enquiries 0800 028 0245 | Search

Creating a business plan

As the first instalment of the How to Open a Shop Guide, we’ll take a look into creating a business plan, including knowing your ‘why’ and understanding your commitment, this will help you immensely when self-doubt no doubt makes an appearance when the going gets tough. We’ll look at your umbrella proposition and your ethical positioning too – these details will help set the foundations to build your future brand.

Finally, we’ll cover the basics on preparing your business plan and knowing the numbers to ensure you’ve got to grips with cashflow management right from the get go.

Knowing your why

Make no mistake, running your own business is very, very hard work. Long hours, tough decision-making, staff management and financial worries will make you wonder whether it is all worthwhile. However, a well-managed business is a joy to behold and can bring immense satisfaction and financial reward to those involved.

So, it’s important to know your ‘why’ to keep you going in the good times and the bad!


Your commitment

Are you prepared for all the hard work and money that you will need to put into the business to get it to succeed? Who will run the store if your staff are on holiday or sick? Will you be willing to go that extra mile for customers who may be very demanding? Are you the kind of person who doesn’t mind being in the same place for most of the day, day-after-day?


It’s perfectly possible to run a successful, profitable shop which runs like a well-oiled machine. There are numerous retailers who manage their stores so they can work just a few days a week handling the macro-management, enabling their staff to take care of the day to day. Other retailers prefer to be at the sharp end, helping the majority of their customers and leaving their staff to handle the back-room aspects of the business.


Think carefully which aspects of owning and running a shop really appeal to you and set the plan in place to ensure that is what you end up doing. A year later, if you find yourself packaging up the mail order parcels yourself in the store room at 10 o’clock at night, you’ll have no-one to blame but yourself!


A good start is to draw up a five and ten year plan for your personal circumstances. Decide where and how you want to be living, how much time you will be willing to dedicate to the business at these time markers.


Think about:

  • Preparing a business plan – see more information on this below
  • Decide on the type of business that is most appropriate for you – limited company, partnership etc.
  • Draw up personal five and ten year plans



Philosophy and ethical positioning

Before embarking on such a life-changing venture as opening your own shop, it pays to take some time to decide exactly what you want your store to say about you. A co-ordinated ‘stick-of-rock’ proposition that runs through everything concerning your enterprise will pay dividends later. Un-doing a rushed, unconsidered project will take time and money later.


Ensure your core philosophies are reflected throughout your business – if you decide your underlying principles for your business are, for example, fair trade, sustainability and education, then you must reflect this in everything you do from recruitment to the typeface on your business card.


As the gatekeeper of your store, once you have your principles settled in your mind, you have a vital role to play in the retail industry, that of encouraging suppliers to raise their standards to meet yours.


Think about:

  • Information provision
  • Uniforms
  • Physical materials
  • Packaging
  • Suppliers
  • Colour schemes
  • Point of sale


Without a strong Umbrella Proposition, every decision you have to make on a day-to-day basis will be more of a struggle. Once you have your ideals in place then you can be swift and strident in moving the business forward with clarity and conviction for yourself, your staff and your customers.



No successful retailer has ever done it alone. Running a successful business requires a team of people including some highly qualified experts.


Seek guidance from other local businesses like your Chamber of Commerce when appointing these key players in your business. A few weeks spent researching could save you years of misery in the future. Don’t be afraid to ask for references and offer work on a small project basis initially to see how they perform. Make sure you like your accountant for example, you will be spending a lot of time with them over the next few years! We recommend TaxAssist with fixed fees and discounts for Bira members, find out more here.


Preparing a business plan

Every business should have a realistic working business plan – and it’s essential when you’re starting up a business. A business plan is a written document that describes the business, its objectives, its strategies, the market it is in and its financial forecasts. It has many functions, from securing external funding to measuring success within your business.


Many people think of a business plan as a document predominantly used to secure external funding. This is important – as potential investors, including banks, may invest in you as a result of the strength of your plan. But there are other benefits to creating and managing a realistic business plan – even if you just use it in-house.


A well written business plan can:

  • Help you spot potential pitfalls before they happen
  • Structure the financial side of your business efficiently
  • Focus your development efforts
  • Work as a measure of your success


You should also bear in mind that a business plan is a living document that will need updating and changing as your business expands. And regardless of whether you intend to use your plan internally, or as a document for external people, it should still take an objective and honest look at your business.


Your plan should include:

  • An executive summary – this is an overview of the business you want to start. It’s vital. Many lenders and investors make judgments about your business based on this section of the plan alone.
  • A short description of the business opportunity – who you are, what you plan to sell or offer, why and to whom.
  • Your marketing and sales strategy – why you think people will buy what you want to sell and how you plan to sell to them.
  • Your management team and personnel – your credentials and the people you plan to recruit to work with you.
  • Your operations – your premises, facilities, your management information systems and IT.
  • Financial forecasts – this section translates everything you have said in the previous sections into numbers.


Choose your support team carefully, looking at:

  • Banking
  • Accounting
  • Solicitor
  • IT specialists
  • Recruitment
  • Shopfitting
  • Electronic equipment (ie tills)

(For discounts on equipment like ipads, computers, lighting, security equipment, tools purchase from CPC through Bira Direct)

  • Refrigeration suppliers
  • Printers/clothing suppliers



You wouldn’t start a car journey without a map, you wouldn’t start cooking without a recipe and you wouldn’t ski down a mountain without lessons – why? Because you would become confused half way through and make a mess of everything. The same is true in business, it is imperative you know where you are at all times otherwise the journey will be fraught with U-turns and dreaded dead ends.


You don’t need an MBA to run a business, providing you have a reliable book-keeper for day-to-day paperwork and an accountant to take care of the macro issues, you can keep your eye on some key markers of the health of your business.


A well-designed till will offer some of these figures to you hourly if required. Discuss the kind of statistics and information you would like to have on a daily, weekly and monthly basis with your accountant and IT professionals right from the start.


Cashflow management: the basics

Turnover is vanity and profit sanity, but cash is king.


Many very successful companies, experiencing fabulous sales growth fall foul of cashflow demons. Cash is the oxygen that enables a business to survive and prosper, and is the primary indicator of business health. While a business can survive for a short time without sales or profits, without cash it will die. For this reason, the inflow and outflow of cash need careful monitoring and management.


Cash is the measure of your ability to pay your bills on a regular basis. This, in turn, depends on the timing and amounts of cash flowing into and out of the business each week and month – your cashflow.


Cash includes coins and notes, current accounts and short-term deposits, bank overdrafts and short-term loans but importantly it does not include and ‘trapped’ funds such as long-term deposits, long-term borrowing, money owed by customers or stock.


It is important not to confuse cash with profit. Profit is the difference between the total amount your business earns and all of its costs, usually assessed over a year or other trading period. You may be able to forecast a good profit for the year, yet still face times when you are strapped for cash.


Every week or month, you will have to pay the wages. Each month, the rent, rates and National Insurance bill must be paid and quarterly the VAT will need to be met. You will also need to pay suppliers for the stock you have purchased. The cash needs to be in the bank ready for these demands.


To trade effectively and be able to grow your business, you need to build up cash reserves by ensuring that the timing of cash movements puts you in an overall positive cashflow situation. Bear in mind, however, that having a lot of cash in your bank does not necessarily make good business sense. If you do not need to use it immediately, put spare cash in an account where it will earn high interest, or invest it in short-term investments. Get advice from your accountant, financial adviser or bank such as Bira Bank.


Cash inflows and cash outflows

Ideally, during the business cycle, you will have more money flowing in than flowing out. This will allow you to build up cash reserves with which to plug cashflow gaps, seek expansion and reassure lenders and investors about the health of your business.


You should note that income and expenditure cashflows rarely occur together, with inflows often lagging behind. Your aim must be to do all that you can to speed up the inflows and slow down the outflows. To improve everyday cashflow seek extended credit terms by asking suppliers or joining a buying group, order less stock but more often by using the buying groups special terms on minimum stock order quantities, lease rather than buy equipment.


You can also improve cashflow by increasing borrowing, or putting more money into the business. This is acceptable for coping with short-term downturns or to fund growth in line with your business plan, but shouldn’t form the basis of your cash strategy.


If you are registered for VAT, it makes sense to buy major items at the end rather than the start of a VAT period. This can often improve your cashflow, because you can set the VAT on the purchase off against the VAT you charge on sales. This may help plug a temporary cashflow gap.


Ideally, you should always have a contingency plan, such as retaining a minimum amount of cash in the business, perhaps in an interest-earning account. This “rainy day” money can be used to meet short-term cash shortages.



You are at a trade show and you are offered a to-good-to-be-true discount from a supplier. The usual margin is 50%, but today for an order of £5000, the company will give you a margin of 70%. Think: how quickly will you be able to convert the stock into cash? In the meantime, will you be able to meet your overhead without the £5,000 in your cashflow?


Effective cashflow management is as critical to business survival as providing services or products. Below are some of the key methods to help reduce the time gap between expenditure and receipt of income.


Think about:

  • Cost / Sales per square metre
  • Turnover
  • Profit
  • Cash flow
  • Stock turns
  • Average customer spend
  • Customer numbers
  • Sales per department / brand / category


Go to next section – choosing a location

Go back to How to Open a Shop Guide