Creating a Business Plan for your Community-led Housing Project

Writing a business plan can be a daunting task so this document has been designed by the

Communities Creating Homes team to help community-led housing groups to produce a business

plan to enable them to create their community-led housing project.

It will cover:-

- Why do you need a business plan?

- Key characteristics of a good business plan

- What goes into a business plan?

If you require this form in Welsh or would like support to create your business plan, please contact

Communities Creating Homes on 0300 111 50 50 or email co-op.housing@wales.coop. Although we cannot

write your business plan for you, we can help by providing hands-on support and advice.

Part 1

Why Write a Business Plan?

Writing a business plan is one of the most important tasks when starting up a new community-led housing

scheme or helping to grow and develop an existing one. It will help you set targets, collate all your ideas,

plan for the future, and confirm that your ideas are realistic and workable. For community-led housing

schemes, a well written business plan will also help to illustrate how your scheme will be financially

sustainable in the long term.

The business plan is also an essential tool for attracting funding / finance and investment. It is a dynamic

document that should be reviewed regularly to help you monitor and measure the performance of your

social business.

This guide describes what a business plan should include. At first, this may appear a little daunting and

overwhelming but once the plan is broken down into manageable sections amongst group members and

colleagues, the process becomes MUCH easier… and in most cases, the Communities Creating Homes can

help you manage this by offering facilitated workshops to coach you through the process, if required.

Characteristics of a Good Business Plan

There are some key considerations to apply when developing the business plan:

• Assume the reader knows nothing about the business.

• It should describe the community-led hosuing scheme concisely and accurately.

• Keep it simple and concise, use simple language and avoid acronyms (e.g. WG)

• Avoid waffle – make sure each sentence is relevant and there is no repetition

• Use appendices for detailed information such as financial forecasts, breakdown of equipment

required, market research, CV’s, questionnaires etc.

• Have a clear structured layout consisting of short, concise, numbered paragraphs.

• In most instances a business plan can be kept to within 15-25 pages of A4.

• Involve as many people within the business as is practical in writing the plan, including key

stakeholders if possible – it can solve communication problems and obtain agreement on objectives,

structures and methods of running the business

• The business plan represents the group/the organisation, not just the perspective of an individual

• The plan will normally cover a three year period and include detailed financial forecasts

• Always include an Executive Summary - it will allow the reader to obtain an overview of the project

immediately. It should be possible to read the complete business plan within half an hour

• The Board should use it as an ongoing method of monitoring - it is not produced simply as means

of raising finance but is an important working document.

Part 2

Writing your business plan

Please note, not all schemes are the same size and scale and therefore not all of the questions and prompts

in this guide will be relevant. The guide will help you to consider the information required to structure a

comprehensive business plan.

Throughout your plan, ask yourself these 3 questions:-

1. Have you covered everything?

2. Is your answer clear, understandable from the neutral reader’s perspective and free from

acronyms?

3. Is your answer complete?

What information needs to go into a business plan?

1. Executive Smummary

This should be a brief summary of the rest of your plan and should be no more than two pages long. It

should convey the following:

a) What the group/scheme has been doing;

b) where it is now;

c) where it wants to go;

d) How’s it going to get there.

This section is normally completed last and should include a brief paragraph from each section of the main

body of the plan. Some things to include:-

The name of the group/scheme?

The legal structure

A brief background

Details about the location of the business.

The purpose of this business plan?

Details about the products and services.

A brief market overview.

The aims and objectives.

2. Business Description

2.1 Strategic Framework

Vision

This is your overarching vision. Usually a single aspirational sentence that will capture the essence of your

scheme. Think big but be realistic!

Examples of vision statements from leading companies are as follows:-

“A computer on every desk and in every home” – Microsoft’s founding vision

“A world withough Alzheimer’s diseas” – Alzheimer’s association

Mission Statement

A mission statement states the aspirational impact on the client group; it’s the “what”, who” and “why”:

Examples of mission statement from leading companies are as follows:-

“To help people around the world plan and have the perfect trip” Trip Advisor

“To create a better every-day life for many people” – IKEA

Values

Values are the beliefs of the group/organisation that are embedded in its culture.

Example values are:

“A commitment to innovation and excellence” Apple Computers

“Be co-operative – we work collaboratively for mutual support” Wales Co-operative Centre

Aims

An aim is where you want to take your group/project in the future and is a statement of purpose.

Examples of aims are:-

“We want to create more local affordable housing”

“We want to have an exeplary record for health and wellbeing amongst our tenants”

Objectives

These are the primary actions your scheme will make to take it that step closer to achieving your Aims; an

aim is what you want to achieve while and objective will provide more detail on how you are going to meet

it. 3-5 Objectives are recommended but each objective should be SMART (Specific, Measurable,

Achievable, Realistic and to Timescale) i.e. they are tangible targets that are possible to achive, you can

measure your progress against and you’ll know when you’ve achieved them.

For example… “ We will create 10 new homes in [area x] by 2022” or “By 2022, 80% of tenants in [area x] will

state that their home has a positive impact on their health and wellbeing”

2.2 Business Background

This section provides you with space to give a detailed overview on the business background. It should

cover critical details or your organisational development and business activity, as well as information

relating to your legal status. Example questions that can help you complete this section include:-

When was your scheme established?

What does it do?

Trends of your market (e.g. growth of the community-led housing market)?

Where is it based and geographical reach?

How many members?

Significant acheievements to date?

What is your proposed project activity i.e. the basis for this business plan?

What makes you/your activity unique/different?

Who are your key stakeholders (e.g. funders, key beneficiaries, authorities in fact anyone who has an

interest in the success of the project)?

Provide details about the legal structure (what is it? why was that particualr structure decided?)

2.3 Management/Organisation Structure

The people in any business are the most important asset and how they are organised will affect its

efficiency. It is important to provide information on the Board of Directors/Trustees, the operational and

management team and any volunteers that support the delivery of the business activity.

It would be useful to provide an organisational chart. Organisational charts are diagrams that show the

internal structure of the business. They make it easy to identify the specific roles and responsibilities of staff.

They also show how different roles relate to one another and the structure of departments within the social

business. You may want to include CV’s of key personnel within the appendices.

Provide details about the Board of Directors / Trustees - What are their experience and

responsibilities? What specif asset do they bring to the project? What particular “business”

knowledge/experience do they have?

Provide details about the Operational and Management team – What are their experience and

responsibilities? Provide details of who will deal with administration and legal documentation.

Provide details about other personnel / employees / support team that bring a specific skill or

experience to the project (e.g. marketing experience, construction, finance etc.)– What are their

experience and responsibilities?

Provide details of an exernal support your entitled to (e.g. Communities Creating Homes,

Development Trust Association Wales, external consultants – which are free support, and which need

to be paid?)

2.4 Products/Services

Clearly explain what it is that your community-led housing scheme wishes to provide, whether a product,

service or a combination of the two. It is important to cover everything while keeping it as simple as

possible – keep in mind that the reader may have no knowledge of the product. Questions to consider are:-

What products or services will be provided? Explain clearly what they are. Break down each different

product of service.

What are the benefits to the customer?

Provide details of how your products or services will be manufactured or delivered?

Where and how do you distribute your products and services?

What are the pricing objectives?

What are the costs to produce your product or service?

Are your products/services seaonsonal?

What is the estimated life span of your product or service ?

3. Market Research

3.1 Market Overview

Provide an overview of your findings from your research and what actions you will take as a result.

3.2 Market Research

Explain what desk research you have conducted, and present your findings

Desk research is the information that you can access from a desk such as (official) websites and publications.

Desk research is usueful for investigating market trends and identifying particular demographics and

geograhics.

Explain what field research you have conducted, and present your findings.

Field research is research that you’ve conducted yourself via questionnaires, workshops and/or meetings.

Field research is imperative within community-led housing one needs to capture the views and opinions of

the community , not just of a few individuals. The more field research that is presented, the more evidence

of a community-led process. Field research should be used to capture demand, public opinion and/or

feedback.

With research, you don’t need to present everything, just the core findings and conclusions.

3.3 Customer/Clients/Beneficiaries

Be precise as possible on identifying your customers/clients/beneficiaries? Who is your project/product

aimed at? What are their demographic (ages, couples/families, lifestyle, employment statuse/ income etc.)?

Where are they based?

3.4 Alternative Providers

Who else does what you do locally? Are they competition? Who could create a barrier to your project?

What possible problems could arise because of this third party and will be your strategy in this instance? It

could be advantageous to complete a SWOT Analaysis (see 3.6) of your nearest alternative

provider/competitor(s) and campare them to your own SWOT so that you can a) idenify their strengths for

you to learn from, identify their weaknesses to harness potential opportunities and c) to idendity your

Unique Selling Point (USP; what makes you different).

3.5 PESTLE Analysis

PESTLE is an acronym for political, economic, social, technological, legal and environmental. A PESTLE

analysis provides a framework for reviewing your business in the light of external factors that may affect it in

the future. By carrying out a PESTLE analysis you can demonstrate that you have considered the 'bigger

picture' when writing your business plan. The process may inspire you by generating new ideas or alert you

to potential dangers to be aware of in the marketplace.

How will/can your busines, project or product can be affected by the following:-

Political changes (e.g. Housing policy?)

Economic (e.g. Income levels?)

Social (e.g. lifestyle changes?)

Technological (e.g. social media?)

Legal (e.g. Home ownership law?)

Enviornmental (e.g. Envirtonmental Sustainaibility?)

3.6 SWOT Analysis

A strengths, weaknesses, opportunities and threats (SWOT) analysis helps you focus on the internal

strengths and weaknesses of you, your group, your product/service and business processes.

At the same time, it enables you to look at the external opportunities and threats that impact on your

business, such as market and consumer trends, competitor activities, changes in technology, legislation and

financial issues.

Strengths are what your group has access to/what is can do/what it is good at.

Weakensses are what your group realises it’s missing or not good at (…yet). A weakness is something that

have control of – you could could fix this with time or resourses.

Opportunities are what you can do if you had certain resources/took a certain direction.

Threats are external to the organisation and where don’t have control. For example, a change in the law, a

competitor setting up next door, cost of living going up etc.

As mentioned previously, you may find it useful to also do this with your nearest alternative

providers/competitors in mind so that you can identify their strengths that you can learn from and their

weaknesses that you can caplitalise on. It is also recommended that you complete your SWOT alongside

some other people that sit outside of your group/organisation as they will probably identify different

strengths, weaknesses, opportunities and threats – of both you and your alternative provider/competition.

4. Sales and Marketing

4.1 Marketing Strategy

The sales and marketing section of your business plan should address your principle sales tactics,

advertising, and an overall marketing plan. Your sales and marketing strategies need to coincide with your

overall business objectives and mission. External influences, including changes in the marketplace,

competition, and the overall economic climate, play a role in how you plan to market your business.

4.2 Marketing Methods

What are your marketing methods?

(You could consider a number of the methods identified below).

Provide details of your branding.

(Don’t limit this to your logos and colour schemes but define your service standards and the wider promise of

the business, and how you will monitor it to ensure that standards are upheld).

4.3 Partnerships/Networks

List your close partners (Communities Creating Home project, your local authroity, local social landlord,

suppliers, developers etc.), and very briefly state what support they provide to your project.

4.4 Sales Strategy

State how you intend to sell your product or service. Questions to consider:-

Direct Mail Word of Mouth Exhibitions

Leaflets / Brochures / Cards Door to Door / Cold Calling Websites

Yellow Pages / Yell / web

directories

Sales Parties Social Media

Press Releases Telesales Pay per click advertising

Radio / Television Agents Mobile display advertising

Advertising Offers (discounts, BOGOF

etc.)

As what price do we sell and who to (different prices to different markets for different products)?

How much do you need to sell to break even/make profit?

How does this compare to your competitors?

What tactics will you take to adapt market changes?

5. Policies and Proceedures

5.1 Meeting Current Legislation

What legislation is your project required to meet and how does it (e.g. Wellbeing of Future Generations Act

(Wales) 2015, Social Services and Wellbeing Act 2014, Planning Policy Wales, Housing (Wales) Act 2014,

‘Homes for Wales’ (2012)).

5.2 Internal Policies and Compliance

What Governance policies or standard marks do you have? Place copies of these in your appendices.

Examples include:-

Equality and Diversity Policy

Environmental Policy

GDPR Policy

Health and Safety

5.3 Insurance

State what insurance policies you have here, along with the level of cover. You may want to include the

insurance certificate in your appendices. Examples include:-

Public Liability

Product Liablity

Employers Liability

Professional Indemnity

6. Action Planning

Here you state what you plan to do and when. You should at least provide an idea of your key actions for

the first year and may wish to elongate this, depending on how quick/gradual you anticipate your project to

be. One easy way of depicting this is by an annual Gantt Chart (see example below):-

7. Financial Projections

Cash flow forecasts, profit and loss forecasts and balance sheet forecasts are required for at least the first

twelve months, preferably for the first three years and included in the appendices. These must show all

working capital requirements, expected income in terms of grants, loans, fees and sales and all expenses

such as wages, expenses, rent, telephone and all other overheads. These costs must be properly explained in

this section with summary information provided and sensitivity analysis e.g. what if overheads increase by

5% unexpectedly?

For projected sales identify the cost of each unit (consider the market rate for similar products/ services) and

estimate how many you expect to sell each month. If you cannot be as specific as this then estimate what

you consider to be the likely turnover each month based on your marketing. Consider seasonal fluctuations

and be prudent. You should provide a breakdown by activity in the cash flow. You should also identify the

nature of the revenue being brought into the business, i.e. term contracts.

You need to ensure your projections provide a year-on-year comparison and you should look to provide

assumptions which explain any changes to the figures on a year-on-year basis. You should also indicate if

the activity is time sensitive.

Also consider:-

J F M A M J J A S O N D

Consultation Exercise

Advertising Campiagn

Implementation

Monitoring exercise

Do the projections take into account different contract payment approaches e.g. advance / arrear

payments?

Can you differentiate between restricted and unrestricted funds?

What will the business do if it looses any key contracts?

Can you identify any purchases you need to make to achieve the above turnover? In your business it

may be the situation that you have no purchases that directly relate to turnover.

You will need to calculate your overheads. The types of expenses you may well incur include heat,

light, rent etc. You should provide full explanations for these costs in your assumptions.

You will need to identify the payroll. The number of employees, the different wage rates and the

hours worked. If any staff are paid on commission or directly related to output, just provide a note as

to how this will be calculated.

Is equipment important to the running of the business and what are the costs and frequency of

replacement?

You should provide an up to date debtor and creditor list in the appendices.

Does the business have a clear policy in respect to reserves?

7.1 Cash Flow Forecast – A financial statement that summarises the amount of cash entering and leaving

the business/project. A useful guide and template is provided by Business Wales can be found here:

https://businesswales.gov.wales/starting-up/managing-your-finances/cashflow-forecast#guides-tabs--0.

7.2 Profit and Loss Forecast – A financial statement that shows the business/project’s income and

expenses. It is used by HM Revenue and Customs to check your calculations for tax and by potential

investors to understand how the business is performing. A useful guide and template is provided by

Business Wales can be found here: https://businesswales.gov.wales/starting-up/managing-your-

finances/profit-and-loss-account

7.3 Balance Sheet Forecast – A Balance Sheet gives you a snapshot of the financial state of your

business by listing a business’ asset, liabilities and equity. A useful guide and template is provided by

Business Wales can be found here: https://businesswales.gov.wales/starting-up/managing-your-

finances/balance-sheet-and-ratios

8. Critical Risks / Sensitivity Analysis

Review your completed business plan. Look at each aspect and identify a) the level of risk and b) your

actions to minimise risk, and c) your consequential actions if things didn’t go to plan.

For example:-

Risk Level of risk to the

business

Actions to minimise risk Consequential action

Slow sales than

envisaged

High Monthly review of sales

and sales strategy

Reduce overheads

Identify the most critcal risks. It is imperative that these are addressed in oder for the project/scheme to

succeed. Therefore you will need to present a comprehensive plan of action in order to minimise or

eradicate these risks.

9. Appendices

The business plan must be free from waffle and easy to read. To achieve this skill will be required however, if

appendices are used correctly, they can assist in achieving these aims.

In the first instance the detailed financial forecasts should be included in the appendix – normally Appendix

1 due their great importance. Selected main points should be drawn from these forecasts and contained in

the main body of the plan.

Other appendices could include:

Policies

Insurances

Up to date debtor and creditor list.

CV’s of the key individuals on the Board and in the operational structure of the business.

Lists of required equipment or other capital purchases with relevant quotations.

Details of any market research carried out and sample questionnaires.

Product details, drawings etc.

Details of premises with photographs, quotes, specifications.

Any letters of support.