A petroleum business plan should not be a generic company profile with fuel terminology added. It must explain the regulated activity, the commercial transaction, the operating model and the financial resources required to implement the business.
Funders and decision-makers need to understand not only how much revenue is projected, but how the product will move, who will pay, when cash is required and which assumptions have been independently tested.
Start with the exact business model
Define:
- The petroleum activity
- Products to be traded or retailed
- Target customers
- Transaction quantities
- Geographic market
- Supply and loading arrangements
- Storage or depot access
- Transport method
- Revenue and margin model
A funder cannot assess a plan that does not clearly explain how a transaction will occur.
Explain the licensing and approval pathway
The plan should identify:
- Required petroleum licence category
- Current application or licence status
- Annual and ongoing obligations
- Municipal, environmental, technical or safety approvals where relevant
- Dependencies that may delay implementation
The existence of a licence application should not be described as approval. Use precise status language such as planned, prepared, lodged, accepted, granted or issued only where supported.
Provide market evidence
Market analysis should move from broad industry commentary to the customer and transaction level.
Include:
- Target customer segments
- Customer needs and buying behaviour
- Estimated volumes
- Current alternatives and competitors
- Pricing sensitivity
- Customer acquisition method
- Letters of intent or offtake evidence where genuine
- Sales pipeline and conversion assumptions
Do not claim contracted revenue where only an informal discussion exists.
Show the supply and logistics chain
The plan should map the product from source to customer.
Address:
- Supplier or procurement strategy
- Loading points
- Storage or direct-delivery model
- Transport capacity
- Insurance and risk allocation
- Quality and quantity controls
- Delivery documentation
- Contingency arrangements
Funders will want to know what happens if the preferred supplier, depot or transporter is unavailable.
Build the financial model from litres and transactions
Petroleum revenue forecasts should be based on supportable operational drivers.
Model:
- Litres by product
- Orders or deliveries per month
- Purchase price assumptions
- Selling price assumptions
- Transport and handling costs
- Gross contribution per litre
- Customer payment terms
- Supplier payment terms
- Operating expenses
- Capital expenditure
- Working capital
Revenue should not grow faster than the available supply, customer pipeline, transport capacity or working capital can support.
Separate profit from cash flow
A business may report accounting profit while remaining unable to fund product purchases. Show:
- Monthly profit and loss
- Monthly cash flow
- Debtor and creditor assumptions
- VAT timing
- Stock or deposit requirements
- Loan repayment
- Minimum cash reserve
The model should identify the peak funding requirement, not only the total startup budget.
Explain the funding requirement clearly
Set out:
- Total funding required
- Founder contribution
- Debt requested
- Equity requested
- Working-capital facility
- Use of funds
- Security available
- Repayment source
- Implementation milestones
A funding request should reconcile exactly to the financial model and project plan.
Include management and operating capability
Explain who will manage:
- Licensing and compliance
- Supplier relationships
- Sales and customer credit
- Transport coordination
- Finance and reconciliation
- Quality incidents
- Health, safety and environmental responsibilities
Where the management team lacks petroleum experience, identify training, specialist support and recruitment plans.
Use milestones and conditions
A credible implementation plan can include:
- Licence or approval milestones
- Supply-account approval
- Storage or loading access
- Transport agreement
- Customer validation
- Funding approval
- Systems and staffing
- First controlled transaction
Test the downside case
Sensitivity analysis should test:
- Lower volumes
- Lower margin
- Higher transport costs
- Delayed customer payment
- Higher capital expenditure
- Delayed licensing or opening
- Loss of a major customer
The plan should explain what management would do if the downside occurs.
UFuel business-plan support
UFuel prepares petroleum business plans, financial models, NPV analysis and funding-support information. Review the business plans and finance service or request a project assessment.