How to write a business plan for a chemical engineering advisory firm?

Creating a business plan for a chemical engineering advisory firm is an essential process for any entrepreneur. It serves as a roadmap that outlines the necessary steps to be taken to start or grow the business, the resources required, and the anticipated financial outcomes. It should be crafted with method and confidence.

This guide is designed to provide you with the tools and knowledge necessary for creating a chemical engineering advisory firm business plan, covering why it is so important both when starting up and running an established business, what should be included in your plan, how it should be structured, what tools should be used to save time and avoid errors, and other helpful tips.

We have a lot to cover, so let's get to it!

Why write a business plan for a chemical engineering advisory firm?

Being clear on the scope and goals of the document will make it easier to understand its structure and content. So before diving into the actual content of the plan, let's have a quick look at the main reasons why you would want to write a chemical engineering advisory firm business plan in the first place.

To have a clear roadmap to grow the business

Running a small business is tough! Economic cycles bring growth and recessions, while the business landscape is ever-changing with new technologies, regulations, competitors, and consumer behaviours emerging constantly.

In such a dynamic context, operating a business without a clear roadmap is akin to driving blindfolded: it's risky, to say the least. That's why crafting a business plan for your chemical engineering advisory firm is vital to establish a successful and sustainable venture.

To create an effective business plan, you'll need to assess your current position (if you're already in business) and define where you want the business to be in the next three to five years.

Once you have a clear destination for your chemical engineering advisory firm, you'll have to:

• Identify the necessary resources (human, equipment, and capital) needed to reach your goals,
• Determine the pace at which the business needs to progress to meet its objectives as scheduled,
• Recognize and address the potential risks you may encounter along the way.

Engaging in this process regularly proves advantageous for both startups and established companies. It empowers you to make informed decisions about resource allocation, ensuring the long-term success of your business.

To get visibility on future cash flows

If your small chemical engineering advisory firm runs out of cash: it's game over. That's why we often say "cash is king", and it's crucial to have a clear view of your chemical engineering advisory firm's future cash flows.

So, how can you achieve this? It's simple - you need to have an up-to-date financial forecast.

The good news is that your chemical engineering advisory firm business plan already includes a financial forecast (which we'll discuss further in this guide). Your task is to ensure it stays current.

To accomplish this, it's essential to regularly compare your actual financial performance with what was planned in your financial forecast. Based on your business's current trajectory, you can make adjustments to the forecast.

By diligently monitoring your chemical engineering advisory firm's financial health, you'll be able to spot potential financial issues, like unexpected cash shortfalls, early on and take corrective actions. Moreover, this practice will enable you to recognize and capitalize on growth opportunities, such as excess cash flow enabling you to expand to new locations.

To secure financing

Crafting a comprehensive business plan for your chemical engineering advisory firm, whether you're starting up or already established, is paramount when you're seeking financing from banks or investors.

Given how fragile small businesses are, financiers will want to ensure that you have a clear roadmap in place as well as command and control of your future cash flows before entertaining the idea of funding you.

For banks, the information in your business plan will be used to assess your borrowing capacity - which is defined as the maximum amount of debt your business can afford alongside your ability to repay the loan. This evaluation helps them decide whether to extend credit to your business and under what terms (interest rate, duration, repayment options, collateral, etc.).

Similarly, investors will thoroughly review your plan to determine if their investment can yield an attractive return. They'll be looking for evidence that your chemical engineering advisory firm has the potential for healthy growth, profitability, and consistent cash flow generation over time.

Now that you understand the importance of creating a business plan for your chemical engineering advisory firm, let's delve into the necessary information needed to craft an effective plan.

Information needed to create a business plan for a chemical engineering advisory firm

You need the right data in order to project sales, investments and costs accurately in the financial forecast of your chemical engineering advisory firm business plan.

Below, we'll cover three key pieces of information you should gather before drafting your business plan.

Carrying out market research for a chemical engineering advisory firm

Carrying out market research before writing a business plan for a chemical engineering advisory firm is essential to ensure that the financial projections are accurate and realistic.

Market research helps you gain insight into your target customer base, competitors, pricing strategies and other key factors which can have an impact on the commercial success of your business.

In particular, it is useful in forecasting revenue as it provides valuable data regarding potential customers’ spending habits and preferences.

Your market research might reveal that your chemical engineering advisory firm could have an increased demand for services related to renewable energy sources. It could also suggest that the need for services related to improving sustainability and energy efficiency within the industry may be rising.

This information can then be used to create more accurate financial projections which will help investors make informed decisions about investing in your chemical engineering advisory firm.

Developing the sales and marketing plan for a chemical engineering advisory firm

Budgeting sales and marketing expenses is essential before creating a chemical engineering advisory firm business plan.

A comprehensive sales and marketing plan should provide an accurate projection of what actions need to be implemented to acquire and retain customers, how many people are needed to carry out these initiatives, and how much needs to be spent on promotions, advertising, and other aspects.

This helps ensure that the right amount of resources is allocated to these activities in order to hit the sales and growth objectives forecasted in your business plan.

The staffing and equipment needs of a chemical engineering advisory firm

Whether you are at the beginning stages of your chemical engineering advisory firm or expanding its horizons, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is vital to ensure your business's success.

To achieve this, both the recruitment and investment plans must align coherently with the projected timing and level of growth in your forecast. It is essential to secure appropriate funding for these plans.

A chemical engineering advisory firm might incur staffing costs such as wages for engineers, chemists, and administrative staff, as well as benefits packages for employees. They might also incur costs for office space, furniture, computers, software, laboratory equipment, and other materials necessary for their work. In addition, they might incur costs for travel to visit clients, or for attending conferences and seminars.

To create a financial forecast that accurately represents your business's outlook, remember to factor in other day-to-day operating expenses.

Now that you have all the necessary information, it's time to dive in and start creating your business plan and developing the financial forecast for your chemical engineering advisory firm.

What goes into your chemical engineering advisory firm's financial forecast?

The financial forecast of your chemical engineering advisory firm's business plan will enable you to assess the growth, profitability, funding requirements, and cash generation potential of your business in the coming years.

The four key outputs of a financial forecast for a chemical engineering advisory firm are:

• The profit and loss (P&L) statement,
• The projected balance sheet,
• The cash flow forecast,
• And the sources and uses table.

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for a chemical engineering advisory firm shows how much revenue and profit your business is expected to make in the future.

A healthy chemical engineering advisory firm's P&L statement should show:

• Sales growing at (minimum) or above (better) inflation
• Stable (minimum) or expanding (better) profit margins
• A healthy level of net profitability

This will of course depend on the stage of your business: numbers for a startup will look different than for an established chemical engineering advisory firm.

The projected balance sheet of your chemical engineering advisory firm

Your chemical engineering advisory firm's forecasted balance sheet enables the reader of your plan to assess your financial structure, working capital, and investment policy.

It is composed of three types of elements: assets, liabilities and equity:

• Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
• Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
• Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.

Your chemical engineering advisory firm's balance sheet will usually be analyzed in conjunction with the other financial statements included in your forecast.

Two key points of focus will be:

• Your chemical engineering advisory firm's liquidity: does your business have sufficient cash and short-term assets to pay what it owes over the next 12 months?
• And its solvency: does your business have the capacity to repay its debt over the medium-term?

The projected cash flow statement

A cash flow forecast for a chemical engineering advisory firm shows how much cash the business is projected to generate or consume.

The cash flow statement is divided into 3 main areas:

• The operating cash flow shows how much cash is generated or consumed by the operations (running the business)
• The investing cash flow shows how much cash is being invested in capital expenditure (equipment, real estate, etc.)
• The financing cash flow shows how much cash is raised or distributed to investors and lenders

Looking at the cash flow forecast helps you to ensure that your business has enough cash to keep running, and can help you anticipate potential cash shortfalls.

It is also a best practice to include a monthly cash flow statement in the appendices of your chemical engineering advisory firm business plan so that the readers can view the impact of seasonality on your business cash position and generation.

The initial financing plan

The sources and uses table or initial financing plan is a key component of your business plan when starting a chemical engineering advisory firm.

It shows where the capital needed to set up the business will come from (sources) and how it will be spent (uses).

This table helps size the investment required to set up the chemical engineering advisory firm, and understand how risks will be distributed between the business owners, and the financiers.

The sources and uses table also highlights what the starting cash position will be. This is key for startups as the business needs to have sufficient funding to sustain operations until the break-even point is reached.

Now that you have a clear understanding of what will go into the financial forecast of your chemical engineering advisory firm business plan, let's have a look at the written part of the plan.

The written part of a chemical engineering advisory firm business plan

The written part of the business plan is where you will explain what your business does and how it operates, what your target market is, whom you compete against, and what strategy you will put in place to seize the commercial opportunity you've identified.

Having this context is key for the reader to form a view on whether or not they believe that your plan is achievable and the numbers in your forecast realistic.

The written part of a chemical engineering advisory firm business plan is composed of 7 main sections:

1. The executive summary
2. The presentation of the company
3. The products and services
4. The market analysis
5. The strategy
6. The operations
7. The financial plan

Let's go through the content of each section in more detail!

1. The executive summary

In your chemical engineering advisory firm's business plan, the first section is the executive summary — a captivating overview of your plan that aims to pique the reader's interest and leave them eager to learn more about your business.

When crafting the executive summary, start with an introduction to your business, including its name, concept, location, how long it has been running, and what sets it apart. Briefly mention the products and services you plan to offer and your target customer profile.

Following that, provide an overview of the addressable market for your chemical engineering advisory firm, current trends, and potential growth opportunities.

Next, include a summary of key financial figures like projected revenues, profits, and cash flows.

Finally, in the "ask" section, detail any funding requirements you may have.

2. The presentation of the company

The second section in your chemical engineering advisory firm's business plan should focus on the structure and ownership, location, and management team of the company.

The structure and ownership part provides an overview of the legal structure of the business, who the owners are and how much each has invested and owns. If you are seeking financing it is important that the reader gets a clear picture of which legal entity is receiving the funds, and who controls the business.

The location part should give an overview of the premises from which the company is operating, and why that location is of particular interest (catchment area, accessibility, amenities nearby, etc.).

When describing the location of your chemical engineering advisory firm, you could emphasize its access to key resources such as transportation hubs, a talented workforce, and a vibrant business community. You may highlight its proximity to a major metropolitan area, which could provide easy access to potential partners and other investors. You could also emphasize the area's potential for growth, and the benefits that come with being part of a diverse and growing economy. You may also point to the region's strong educational institutions, which could provide access to a talented pool of graduates and employees. Finally, you might emphasize the potential for cost-savings through the availability of competitively priced real estate and other services.

Finally, you should introduce the management team. Explain each member's role, background, and experience.

It is also important to emphasize any past successes that the members of the management team have achieved, and how long they've been working together, as this will help potential lenders or investors understand why they should trust in their leadership.

3. The products and services section

The products and services section of your business plan should include a detailed description of the offerings that your company provides to its customers. 

For example, your chemical engineering advisory firm could offer consulting services to help customers identify the best and most efficient materials for their projects, develop new chemical processes, and streamline existing processes. It could also offer research services to help customers understand new trends in the field, as well as analytical services to enable customers to make informed decisions. Finally, it could offer technical training to help customers hone their skills and stay up to date on the latest developments in the industry.

When drafting this section, you should be precise about the categories of products or services you sell, the types of customers you are targeting and how customers can buy them.

4. The market analysis

When presenting your market analysis in your chemical engineering advisory firm business plan, you should detail the customers' demographics and segmentation, target market, competition, barriers to entry, and any regulations that may apply.

The goal of this section is to help the reader understand how big and attractive your market is, and demonstrate that you have a solid understanding of the industry.

You should start with the demographics and segmentation subsection, which gives an overview of the addressable market for your chemical engineering advisory firm, the main trends in the marketplace, and introduces the different customer segments and their preferences in terms of purchasing habits and budgets.

The target market section should follow and zoom on the customer segments your chemical engineering advisory firm is targeting, and explain how your products and services meet the specific needs of these customers.

For example, your target market might include companies that need help with research and development of new products. These could be companies in the pharmaceutical, food, or cosmetics industries. Additionally, these companies could be looking for help with chemical engineering processes like synthesis, purification, and testing.

Then comes the competition subsection, where you should introduce your main competitors and explain what differentiates you from them.

Finally, you should finish your market analysis by giving an overview of the main regulations applicable to your chemical engineering advisory firm.

5. The strategy section

When writing the strategy section of a business plan for your chemical engineering advisory firm, it is essential to include information about your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

The competitive edge subsection should explain what sets your company apart from its competitors. This part is especially key if you are writing the business plan of a startup, as you have to make a name for yourself in the marketplace against established players.

The pricing strategy subsection should demonstrate how you intend to remain profitable while still offering competitive prices to your customers.

The sales & marketing plan should outline how you intend to reach out and acquire new customers, as well as retain existing ones with loyalty programs or special offers. 

The milestones subsection should outline what your company has achieved to date, and its main objectives for the years to come - along with dates so that everyone involved has clear expectations of when progress can be expected.

The risks and mitigants subsection should list the main risks that jeopardize the execution of your plan and explain what measures you have taken to minimize these. This is essential in order for investors or lenders to feel secure in investing in your venture.

Your chemical engineering advisory firm may face risks related to the safety and security of its clients' data. For example, if the firm does not have proper security protocols in place, the sensitive data of clients could be vulnerable to malicious actors who may gain access to it. Additionally, your chemical engineering advisory firm may also face risks related to potential litigation. For example, if the firm provides advice that leads to an incident, it could be held liable for any resulting damages, and may need to defend itself in court.

6. The operations section

The operations of your chemical engineering advisory firm must be presented in detail in your business plan.

The first thing you should cover in this section is your staffing team, the main roles, and the overall recruitment plan to support the growth expected in your business plan. You should also outline the qualifications and experience necessary to fulfil each role, and how you intend to recruit (using job boards, referrals, or headhunters).

You should then state the operating hours of your chemical engineering advisory firm - so that the reader can check the adequacy of your staffing levels - and any plans for varying opening times during peak season. Additionally, the plan should include details on how you will handle customer queries outside of normal operating hours.

The next part of this section should focus on the key assets and IP required to operate your business. If you depend on any licenses or trademarks, physical structures (equipment or property) or lease agreements, these should all go in there.

You may have key assets such as chemical engineering expertise and access to a wide network of other chemical engineers. This could be a valuable resource for providing advice on chemical engineering projects. Additionally, the firm might have Intellectual Property (IP) such as proprietary process designs or processes that have been developed in-house. This IP could give the firm an edge over competitors when seeking new business.

Finally, you should include a list of suppliers that you plan to work with and a breakdown of their services and main commercial terms (price, payment terms, contract duration, etc.). Investors are always keen to know if there is a particular reason why you have chosen to work with a specific supplier (higher-quality products or past relationships for example).

7. The presentation of the financial plan

The financial plan section is where we will include the financial forecast we talked about earlier in this guide.

Now that you have a clear idea of the content of a chemical engineering advisory firm business plan, let's look at some of the tools you can use to create yours.

What tool should I use to write my chemical engineering advisory firm's business plan?

In this section, we will be reviewing the two main options for writing a chemical engineering advisory firm business plan efficiently:

• Using specialized software,
• Outsourcing the drafting to the business plan writer.

Using an online business plan software for your chemical engineering advisory firm's business plan

Using online business planning software is the most efficient and modern way to create a chemical engineering advisory firm business plan.

There are several advantages to using specialized software:

• You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can access a library of dozens of complete business plan samples and templates for inspiration
• You get a professional business plan, formatted and ready to be sent to your bank or investors
• You can easily track your actual financial performance against your financial forecast
• You can create scenarios to stress test your forecast's main assumptions
• You can easily update your forecast as time goes by to maintain visibility on future cash flows
• You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here.

Hiring a business plan writer to write your chemical engineering advisory firm's business plan

Outsourcing your chemical engineering advisory firm business plan to a business plan writer can also be a viable option.

Business plan writers are skilled in creating error-free business plans and accurate financial forecasts. Moreover, hiring a consultant can save you valuable time, allowing you to focus on day-to-day business operations.

However, it's essential to be aware that hiring business plan writers will be expensive, as you're not only paying for their time but also the software they use and their profit margin.

Based on experience, you should budget at least £1.5k ($2.0k) excluding tax for a comprehensive business plan, and more if you require changes after initial discussions with lenders or investors.

Also, exercise caution when seeking investment. Investors prefer their funds to be directed towards business growth rather than spent on consulting fees. Therefore, the amount you spend on business plan writing services and other consulting services should be insignificant compared to the amount raised.

Keep in mind that one drawback is that you usually don't own the business plan itself; you only receive the output, while the actual document is saved in the consultant's business planning software. This can make it challenging to update the document without retaining the consultant's services.

For these reasons, carefully consider outsourcing your chemical engineering advisory firm business plan to a business plan writer, weighing the advantages and disadvantages of seeking outside assistance.

Why not create your chemical engineering advisory firm's business plan using Word or Excel?

I must advise against using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write your chemical engineering advisory firm business plan. Let me explain why.

Firstly, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is highly technical and requires a strong grasp of accounting principles and financial modelling skills. It is, therefore, unlikely that anyone will fully trust your numbers unless you have both a degree in finance and accounting and significant financial modelling experience, like us at The Business Plan Shop.

Secondly, relying on spreadsheets is inefficient. While it may have been the only option in the past, technology has advanced significantly, and software can now perform these tasks much faster and with greater accuracy. With the rise of AI, software can even help us detect mistakes in forecasts and analyze the numbers for better decision-making.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Moreover, software makes it easier to compare actuals versus forecasts and maintain up-to-date forecasts to keep visibility on future cash flows, as we discussed earlier in this guide. This task is cumbersome when using spreadsheets.

Now, let's talk about the written part of your chemical engineering advisory firm business plan. While it may be less error-prone, using software can bring tremendous gains in productivity. Word processors, for example, lack instructions and examples for each part of your business plan. They also won't automatically update your numbers when changes occur in your forecast, and they don't handle formatting for you.

Overall, while Word or Excel may seem viable for some entrepreneurs to create a business plan, it's by far becoming an antiquated way of doing things.

Takeaways

1. Using business plan software is a modern and cost-effective way of writing and maintaining business plans.
2. A business plan is not a one-shot exercise as maintaining it current is the only way to keep visibility on your future cash flows.
3. A business plan has 2 main parts: a financial forecast outlining the funding requirements of your chemical engineering advisory firm and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable.

We hope that this in-depth guide met your expectations and that you now have a clear understanding of how to write your chemical engineering advisory firm business plan. Do not hesitate to contact our friendly team if you have questions additional questions we haven't addressed here.

Also on The Business Plan Shop

• How to write a business plan to secure a bank loan?
• What is market analysis in business plan?
• Why write a business plan?
• Business plan vs business model
• Key steps to write a business plan?
• Top mistakes to avoid in your business plan

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