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Sensitivity analysis can help you predict the impact of changing variables
While you have used the most accurate information you can fi nd to calculate your forecasts there will be some areas that are out of your control, so another SWOT analysis is wise at this point. You can apply to the business the same techniques that you used to analyse yourself earlier.
What risks does your business face and how will you manage them? Common problems that new entrants identify include disease outbreaks, interest rate changes, personal injuries, reductions in the prices achieved for outputs or rising input costs. Once these are identifi ed they can often be tackled with a robust risk management plan. Sensitivity analysis can help you to predict the impact of changing variables on your business and demonstrate it in a simple form. With thorough analysis you will be able to calculate the breakeven point for your business in the event of price changes or performance variations.
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What else should be included in the plan?
By the time you have calculated all the
fi gures and forecasts, whether you do that yourself or use a consultant, you will be very familiar with your plan, but some of the people who read it will need some explanation. To help them understand the plan you must include some narrative that explains your history, your plans for the business and your ambitions and goals. This is the part where you can demonstrate the depth of your hard work. You can explain about the market research you have done, your investigations into the farm and the surrounding area and how you have predicted your income and expenditure. It’s also your opportunity to blow your own trumpet. Tell your readers about your SWOT analysis and the actions you have taken so far to minimise the weaker areas and use your strengths. Finally, you will need to include some evidence that you have the funds available that you have claimed in the plan. To prove this you must include copies of recent bank statements, valuations of livestock and machinery, details of family loans and mortgages etc. You will have produced a hefty document and it will have taken many hours of toil. It may seem a daunting prospect, but you don’t have to take it on alone. There are courses available and consultants who can help you put together a really strong plan. What you will have generated will give you the confi dence to know that your business is based on sound assumptions and accurate forecasts. Your bank manager will be impressed and he will be willing to lend you more money on more favourable terms and your potential l andlord will have the confi dence to grant you a tenancy.
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