1. Welcome to the

2. The Successful Business Concept Every successful business consists of a Good Idea and Good Resources! (in comparison to the competition) Concept Definition: Every successful business consists of a Good Idea and Good Resources! A Good Idea cannot compensate for Poor Resources and Good Resources cannot compensate for a Poor Idea. Both are required for success! The first requirement for every business is to Be Competitive!

3. The Concept creates a Business Model Business Model Decomposition: A Business Model is a representation of the total business. The Business Model is divided into the two parts of a successful business – the Business Idea and the Business Resources The Idea and the Resources each are composed of 6 elements These 12 elements are essential components of every Business Plan There is a logical flow to completing the 12 worksheets. Follow the arrows left to right.

4. Products and Services Worksheet Example Important considerations for Products and Services Selecting the products and services you sell is the first and most important decision you will make. All of the subsequent business decisions will be based upon what you sell. A miscalculation here will negatively impact the balance of the business plan. The most important test - “is there an established demand for the products now and will there be a continuing demand for these products in the future”? The price must be competitive and yet produce enough profit to sustain the business. You must be able to reach the “decision makers” in a cost effective manner. The opportunity for “repeat business” is a very valuable feature of the business concept.

5. A Completed Business Model Example Each worksheet is assessed as Competitive/Blue or Caution/Yellow as compared to your competition. The example reflects an assessment of a small business with potential competitive issues. The yellow elements dramatically display areas of concern. These weaknesses should be the focus of corrective action. Even one element with Issues could cause the business to flounder.

6. The Toolkit Download Contains Everything! Instructions 12 Excel Worksheets Blank PPT Business Model Graphic Pre-formatted Word Business Plan Outline Sample Business Plan Advanced Financial Worksheet Supplement All of these tools are on your Flash Drive!

7. We start with the Business Idea worksheets because we need the data and decisions about the Business Idea before we can begin to estimate the required Business Resources. The first two Business Idea elements are Products and Services and Customer Profiles. They are called the” critical pair” because if they aren’t right the business will likely flounder and perhaps fail. Data for all other elements are based upon these two elements. The following example worksheets are from the Sample Business Plan. We Start with the Business Idea Worksheets

8. Step 1 - Products and Services Important considerations for Products/Services Do you sell Products, Services or both? List most representative products and services. Enter selling price. Enter cost for products. This information is used later to project income and cost of goods. You are likely to modify these entries as you complete other worksheets. Assess your competitive position as Competitive or Caution. This is the most critical worksheet!

9. Step 2 – Customer Profiles Important considerations for Customer Profiles Do you sell to Business customers, Consumers (non-business) or both? Identify the characteristics of your most ideal customers. Add comments to clarify characteristics or special segments, i.e., seniors, veterans. Add comments about geographical characteristics, i.e., Zip code locations Assess your competitive position. This is your second most critical worksheet! Step 2 - Customer Profiles

10. Step 3 - Competition Important considerations for Competition The old saying “Competition is the greatest barrier to success!” is true. You need to know your competition, because they will always be trying to gain a competitive edge. You should understand how easy or how difficult it is to start and sustain a business in your target industry. If it is difficult, then you must expect only competent and dedicated vendors to survive as competitors. If it is easy, then many startups may give it a try, and you will always be competing with low priced and perhaps unethical competitors. Market research and competitor research are two important analytical skills in business planning, Sometimes you need to temporarily acquire these skills from outside of the organization.

11. Step 4 - Differentiation Important considerations for Differentiation Differentiation is defined as “the reasons why a customer will buy from you rather than a competitor”. Quality, service and price are the three most important features in establishing your differentiation. Being the best in all three as a permanent operational philosophy defies business logic. Being better in two out three would be an achievement. Even small variations in one or more of these characteristics could provide the advantage you need to get your market share. Your customer image and reputation will probably be established over time based on one or two of these three characteristics. It is important for you to consciously decide which of these characteristics best reflect your business philosophy on an ongoing basis. Your advertising will consistently emphasize your strongest advantages.

12. Step 5 - Advertising Important considerations for Advertising Your advertising program should match the Customer Profile descriptions for your target audience. Make sure the customer profile location matches your advertising venues and budget. The rule for advertising is always “test before committing” to any program or venue. Testing means that you must be able to measure the response/results from any advertising initiative. Your advertising must reach the “decision makers” or it will not be effective. Try to reach customers that may be good candidates for “repeat business”. It is more difficult (and expensive) to find a customer than it is to retain them.

13. Step 6 - Sales Important considerations for Sales The decision about how to “close” sales is usually a “no- brainer”. It is usually inherent in the general business concept. If your business and consumers customers are in a small geographical area, the chances are that you will close sales with a personal contact with the buyer, either at your premises or theirs. In any personal sales closing, the sales skills of the employee are very important. They not only close the sale but help establish the reputation of the business. The old saying is “without sales the business fails”. Profitable sales are the ultimate test of the Business Model and Business Plan. All of the worksheet data and decisions must recognize and incorporate the ingredients that support a successful sales program.

14. Your Business Model should be posted with your assessment of the six Business Idea worksheets. How did you assess the total Business Idea? Is it as competitive as or better than your average competitor? How does Your Business Model Look Now? Updating Your Business Model Differentiation SalesAdvertising Competition Products & Services Customer Profiles Facilities Balance Sheet StaffingFunding Ownership Financial Model Business Idea Business Resources Business Model

15. We are now starting the six Business Resources worksheets. Business Resources are composed of human, physical, financial and information assets. You will recognize these different assets as you complete the Step 7 – Step 12 worksheets. Now, The Business Resource Worksheets Differentiation SalesAdvertising Competition Products & Services Customer Profiles Facilities Balance Sheet StaffingFunding Ownership Financial Model Business Idea Business Resources Business Model

16. Step 7 - Ownership Important considerations for Ownership Does the legal structure fit the organization and protect personal assets from business liabilities? What is the credit rating of the owners and the business? Is there a need for a business loan? How much of the owners personal assets are invested in the business? Bankers always want the owners to have substantial “skin in the game” before they consider loans. Are the financial and other goals for the business reasonable? Industry experience is critical for the managers of the business. Lack of industry experience has been proven to be a serious handicap, especially in startup businesses.

17. Step 8 - Staffing Important considerations for Staffing The Staffing worksheet is only important if there are employees or expectations of employees during the planning period. If there is only one owner, then our recommendation is to not plan a specific salary. In this type of business structure the owner “gets what’s left”. In other words, they get what the Bottom Line (Profit or Loss) is on the Financial Model. That is what’s left after paying all of the expenses. If you do have a staff, then enter the type and number of employees, when they are needed, and the salaries, training, and education requirements are critical. These are the people that will help establish your reputation. Make sure they can represent you well. If you have a number of employees, it is important to have a formal Human Resources structure that ensures your business adheres to legal personnel practices.

18. Step 9 - Facilities Important considerations for Facilities The Facilities worksheet itemizes the space, vehicles and equipment required for the operation of the business. As you would expect, these requirements vary greatly by type of business. The selection of the space can be the biggest commitment the business makes. Commercial space is relatively expensive. Also, a binding contract for the period of the lease is normal, so the liability may continue even if the business falters or wants to change locations. Access to “walk by” traffic is essential to the success of many small businesses. If considerable office or other equipment is needed, buying used equipment or leasing instead of buying can protect your capital.

19. Step 10 - Financial Model Important considerations for Financial Model The Financial Model is sometimes confusing for new entrepreneurs that may not be familiar with estimating sales volumes, income from sales, cost of goods, cost of sales, and making expense projections. It just requires a little time and concentration on each type of financial projection. Making projections is always fraught with the possibility of error, even for billion dollar companies so insecurity is normal. However, you must do it – there is no such thing as a business plan without financial projections. Just recognize that you must be realistic, and perhaps somewhat conservative in your income projections. We will discuss the following parts of the Financial Model mentioned above.

20. Step 11 - Funding Important considerations for Funding The Funding worksheet divides the funding requirements (money) into three categories; startup expenses, operating capital and contingency funds. Startup Expenses are any expenses occurring before you open for business. They typically must be paid for before there is any business income, so you are investing before you have any assurances of income. Operating Capital is the amount of money required to cover expenses during the normal ups and downs of the yearly business cycle. There may be periods of negative cash flow and you have to cover the shortfall. Your Financial Model will help determine these needs. Contingency Funds are needed to cover any unusual financial demands not included in the normal operating capital situations.

21. Step 12 - Balance Sheet Important considerations for Balance Sheet The Balance Sheet is a standard financial report. It reflects the current strength of the business by itemizing the Assets (what you own) and the Liabilities (what you owe) and the Net Worth (difference between the two). One important use of the Balance Sheet is to confirm that the source of funds indicated on the Funding Worksheet do truly exist in the form of provable assets. The Balance Sheet is also used to confirm the assets available for collateral for a business loan. Inadequate funding is often a cause of business failure, particularly for startup businesses. This happens when the business doesn’t have enough operating capital to last until they become established and generate a positive cash flow.

22. A Completed Business Model (with Issues) How does Your Business Model Look Now? If your Business Model looks something like this with either the Business Idea or the Business Resources box coded yellow, what should you do? Yellow indicates there may be serious issues that could endanger the success of the business plan. Consider the two scenarios below. Starting a new business? In this case, you have no business history to help you judge the likelihood of overcoming the problems and succeeding. Risks of proceeding may be greater in this scenario, because your total business plan is based completely upon assumptions. Already in business? You have more historical information and experience to help you decide about proceeding with this plan.

23. Business Plan Outline Example 1. Executive Summary The Executive Summary is not written until the other sections of the business plan are completed. Then extract brief, critical elements from the business plan to provide an overview of the important ideas and projections so that the reader gets a good snapshot of the business concept without reading the whole plan. No more than 1 1/2 pages at the most. You might include in abbreviated fashion data from these worksheets:  Ownership – owners, goals, business history and performance  Products /Services – primary product/service offerings  Customer Profiles – business or consumer buying trends that support this industry segment  Differentiation – your strengths and weaknesses compared to the competition  Advertising and Sales – how the synergy of these functions will generate required revenues  Financial Model – how adequately the Bottom Line meets financial goals  Funding and Balance Sheet – demonstrate the financial strength of the enterprise. (Start entering your text here. Delete these instructions when you no longer need them) 1. Ownership and History A business plan should be structured to introduce the reader to the owners and the business concept in a manner to maximize understanding. That’s not too different from introducing yourself to a new client. You first introduce yourself, your business and your history to establish a foundation so the reader understands who you are and where you are coming from. That’s the idea behind placing Ownership and Business History at the beginning of the business plan. You might include some of the following data from the Ownership Worksheet:  The basic nature of the business concept  Owners, qualifications and experience as managers in this industry segment  Unique ownership strengths that will contribute to success  Financial goals that will be used to measure success  Summary of previous history for an existing business  Perhaps a few comments about the concept of the business model and how it was used to validate the business concept. (Start entering your text here. Delete these instructions when you no longer need them )

24. Let SCORE Mentors help you complete your Business Plan! We hope you have had a successful day! We would like to have the opportunity to continue working with you until your business plan is complete. We will be happy to schedule an appointment with the SCORE Mentor you choose before you leave. Remember, you can meet with a SCORE Mentor as many times as you like and its always FREE!