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MANASOTA.SCORE.ORG 941.955.1029 WWW.SCORE.ORG 11 Building Your Business Plan v.20140904.

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Presentation on theme: "MANASOTA.SCORE.ORG 941.955.1029 WWW.SCORE.ORG 11 Building Your Business Plan v.20140904."— Presentation transcript:

1 MANASOTA.SCORE.ORG Building Your Business Plan v

2 A Special Thanks to Our Local Sponsors 2

3 MANASOTA.SCORE.ORG Classroom Safety – Argosy U Emergency Exits Restrooms Please do not wander around the building! You are HERE

4 MANASOTA.SCORE.ORG Classroom Safety–ComCenter Emergency Exits Restrooms Please do not wander around the building! You are HERE

5 MANASOTA.SCORE.ORG Briefly tell each other a bit about you: Your name What is your Business What you want to learn today Take about 1 minute! Here’s my background, business card and brief bio Nice to Meet You!

6 MANASOTA.SCORE.ORG Agenda Importance of Business Planning SCORE Business Plan Sample Business Plans Evolution to Detailed Business Plan - Content structure (11 sections typical) - Discussion about each section

7 MANASOTA.SCORE.ORG Importance of Business Planning Detailed Road Map Leading to Success With formal planning: Communication strategy to others Those with a plan tend to be more successful than those without a plan Without formal planning: More of a dream than pursuit of a goal  Little chance of qualifying for a loan New Businesses, with >1 employee, Survival Statistics 66% of New Businesses Survive after 2 years 44% of New Businesses Survive after 4 Years

8 MANASOTA.SCORE.ORG Why Build a Business Plan? Define business goals, strategies and tactics Define priorities for decision making during the first year or two of operation Develop a project plan and agenda of key tasks needed to create the business Create a management guide to run the business Establish specific marketing activities and goals (product, pricing, promotions, distribution) Determine financial requirements to allow profitability, cash flow, capital expenditures Obtain financing

9 MANASOTA.SCORE.ORG Creating a Draft Business Plan Using On-Line Training and Templates (

10 MANASOTA.SCORE.ORG Business Planning Templates Provided by SCORE (

11 MANASOTA.SCORE.ORG SAMPLE BUSINESS PLANS Before starting to write a business plan you might want to see what an actual business plan looks like. Go to Of the hundreds shown pick one that looks a bit like your business and read all of it. If there isn’t a plan similar to your business, pick one of interest and read all of it. Another source is “Business Plan Handbook” in the library There are 13 volumes of actual business plans. Result You’ll have an idea what your business plan might look like when completed, and you may get some good ideas for your business plan.

12 MANASOTA.SCORE.ORG Review Existing Business Plans Palo Alto’s Sample Business Plans

13 PERSONAL MENTORING Session 3: Marketing Plan Session 2: Business Concept Session 4: Financial Projections Session 1: Start-up Basics Session 5: Funding Sources Decide to Continue Simple Steps Roadmap To Accelerate Your Success 13 “GO OR NO GO” DECISION & NEXT STEPS WITH MENTOR With your Mentor Build Your Business Plan SCORE Roadmap To Accelerate your Success

14 MANASOTA.SCORE.ORG Evolution of Business Plan Updates & Revisions Simple Steps Startup Workshops Business Feasibility Plan Original Text or Edited Text Using Sample Plans Transfer to SCORE Business Plan Format Develop Remaining Information to Complete First Draft Ready for Business Startup!

15 MANASOTA.SCORE.ORG Understand the Operating Levers Target Markets – Determine who will be your customer Channels – Determine the best way to use them to reach customers Competitive Intelligence – Indentify and know your competitors Product Differentiation – Determine your competitive advantage Understand and monitor the market, economy, and your industry

16 MANASOTA.SCORE.ORG Understand the Operating Levers Understand and monitor the market, economy, and your industry Define your products and a way to track their life cycle Determine reports needed to track performance, profitability, customer satisfaction and quality of products or services MOST IMPORTANTLY… Decide if you have enough experience in this type of business Know what commitments you must make to run this business

17 MANASOTA.SCORE.ORG Engage Professional Advisors Accountant - Bookkeeper vs. Certified PublicAccountant? - Tactical daily transactions vs. strategic tax implications Attorney - Limited startup funds: Why do I need an attorney? - Finding one with multi-specialties Insurance Agent - Handle business insurance - Provide advice for business owners - Represent multiple carriers Banker Financing Setup business account Credit card processing Your SCORE Mentor

18 MANASOTA.SCORE.ORG Business Plan Outline (Typical) 1. Table of Contents (Easy Reference) 2. Executive Summary (Objectives & Goals) 3. Business Description and Mission Plan 4. Products and Services 5. Marketing Plan 6. Operational Plan 7. Management and Organization 8. Personal Financial Statement 9. Financial Plan (Projected Statements, P&Ls, Cash Flows) 10. Start-up Funding (Expenses & Capitalization) 11. Appendices From Template Found on SCORE Website and Workshop CD

19 MANASOTA.SCORE.ORG Executive Summary Brief – 1 to 2 pages long - developed after all other parts of the plan are done Business Plan Overview Product or Service (Niche) Customers / Targeted Markets and Channels Projections for Business & Industry Objectives and Goals Starting Size and Location What Makes your Products or Services Unique in the Market Applying for Loan - How much is needed - How loan dollars to lead to profit - Build confidence about repayment

20 MANASOTA.SCORE.ORG Objectives & Goals Examples Measurable, quantitative, obtainable Typically 3 to 4 major goals What are you providing Impact on community and environment Goal Examples: “Increase profits 20 % in 3 calendar years” “Pay off bank loan within 4 years” “Be a contributor to the community” “Respect the environment” “Produce the best widgets money can buy” Strategies and actions planned to achieve goals: “Add 3 sales reps next year” “Increase sales by 20% per year”

21 MANASOTA.SCORE.ORG Business Description and Plan Describe the Business What will be your role? Mission Statement** /Guiding Principles- One paragraph Business Philosophy: How will you conduct business? Customers: Who will be buying product or service? Industry Overview: Growth industry? Forecast the future Strengths & Core Competencies - Critical factors that will lead to success Goals & Objectives: What will happen and when?

22 MANASOTA.SCORE.ORG **Example - Ann’s Nursery Mission Ann’s Nursery will be a producer of ornamental vines, shrubs and trees and will sell to both retail nurseries and end consumers, offering ornamental plants suitable for most of the United States except the far southern climes. Focuses on the hard- to-grow-from-seedling plants that other nurseries do not grow themselves. Additionally, we offer considerable “best practices” information in growing and maintaining these plants free of cost to our customers. (from Simple Steps for Starting Your Business)

23 MANASOTA.SCORE.ORG Business Description Ownership and Legal Structure Organizational Structure History Services or Products offered Intellectual Property Location Facilities and other fixed assets Sources of supply Manufacturing or Service process descriptions (appendix)

24 MANASOTA.SCORE.ORG Products and Services What specific items or services will be sold? Describe your products and or services Focus on benefits rather than features Competitive advantages expected Product Differentiation / Price / Service Pricing strategy, fees and leasing plans Brand names, trademarks, proprietary features Product Positioning Detailed support such as drawings, process maps, photos, and brochures should go in the Appendix

25 MANASOTA.SCORE.ORG Marketing Plan Must be based on good research – not fuzzy ideas Primary Research: collect your own data Secondary Research: published information - Internet, libraries, Chambers of Commerce, trade journals, Government agencies, etc Apply research findings to your plan Basic marketing strategy to beat competition How product/service will be offered to customers? How will you get customers to purchase your offering rather than go to competitor?

26 MANASOTA.SCORE.ORG Advertising & Sales Promotion Most appropriate promotions for your business YesPossibleNo Direct Personal Contacts and Networking Internet Website Handbills and Flyers Ads in Newspapers & Periodicals Handout Brochures and Business Cards Direct Mailing Telephone Solicitation Social Media - Internet Others....

27 MANASOTA.SCORE.ORG Offering Characteristics – Exercise 1 What is your primary Product Line or Service? Where is it in terms of product life cycle? What are the primary Competitive Advantage characteristics that describe your Product / Service? Based on these characteristics: – What Marketing techniques will you plan to use? – Why do you think these will be successful? 15 minutes – 5 minutes to share

28 MANASOTA.SCORE.ORG Pricing Products & Services Rationale for Prices - Market Price or Cost + Expenses and Profit Pricing Strategy - Hourly Rate, Day Rate, Delivery Charges Channels of Distribution - Wholesalers, retailers, mail order Sales Force - Own sales people or independent reps After Sale Service Plan

29 MANASOTA.SCORE.ORG Perform Market Research Business Periodicals and Newspapers Trade and Professional Publications Library (Selby Library best in the area) Government Documents Census Reports Local County Records web sites ( Company Annual Reports Chambers of Commerce Databases & the Internet Look for Market and Industry Trends Risk Management Association (RMA) Annual Statement Studies for similar business financial comparisons

30 MANASOTA.SCORE.ORG Competitive Analysis Products and services Location Size Yrs in business Ownership Financial strength Importance of business Pricing Terms of Sale Advertising and promotion Image Sales approach Distribution Customer profile Mfg process & cost Patents & copyrights Gathering and analyzing competitor data is important to your business success. Compare your planned offerings to those of the competition. Potential Comparisons:

31 MANASOTA.SCORE.ORG Competitive Comparison Method Ann’sComp. AComp. BComp. C Benefits Features 5323 Pricing 3433 Sales Size/Mix 3235 Market Strategy 4354 Business Model 3334 Excellent method for ranking your planned business compared to your competition! This is a relative comparison, from Ann’s perspective, that her target CUSTOMERS might see about several facets of her proposed nursery business 1-Much Worse 2-Worse 3-Equal 4-Better 5-Much Better

32 MANASOTA.SCORE.ORG Operational Plan Inventory control Production technology Transportation and delivery Quality control Customer Service Handling variations in demand Product development Employee training Receivables / Credit / Collections Content Examples

33 MANASOTA.SCORE.ORG Inventory Considerations Use Inventory Management systems for both Retail Inventory and Service Consumable Inventory Manage inventory on hand - Keep costs down but avoid outages Lead times needed for ordering Value of inventory - New models - Freshness Seasonal buildup

34 MANASOTA.SCORE.ORG Supplier Considerations Data Base of Suppliers Names, addresses, phone numbers Previous supplier experiences Supplies delivered and when History and reliability Credit and delivery policies History and Reliability Projections of supply costs Dealing with changing costs Extended Terms Consignment – with effective financial controls in place

35 MANASOTA.SCORE.ORG Other Operational Considerations Credit policies and terms - Discounts offered Employees - Full-time, Part-time, Contractors Locations & space needed - Square feet & storage areas - Parking Environmental requirements Security needs

36 MANASOTA.SCORE.ORG Action Planning How will strategy be accomplished? Who will be responsible each item? What results will be expected? When will results be achieved? Detailed Actions Plans are usually found in Appendix A detailed action plan / task list is included on your Workshop CD – It will not be complete for your business, but it is an excellent starting point for you and your mentor to use and develop! SW1 - Building Your Business Plan - Implementation of the Business Startup Activity Plan.doc

37 MANASOTA.SCORE.ORG Management & Organization Day-to-Day management plus other planned personnel Brief resumes of key management personnel including related management experience and formal education - Full resumes go in Appendix Professional advisors identified: - Attorney, Accountant, Banker, Insurance Support needed - Subject Matter expertise and experience Organization Chart and a list showing each position’s job responsibilities

38 MANASOTA.SCORE.ORG Personal Finance Statement Personal Finances (independent of Business) - Monthly income and expenses - Annual income and expenses Personal Assets and Liabilities Personal assets required to finance a portion of the business startup and continuation May be required to use Personal Assets as collateral for repayment

39 MANASOTA.SCORE.ORG Start Up Expenses & Capitalization Financial Statements can be developed using the Excel SCORE Financial Model on the Workshop CD (examples follow) SW1 - Financial Projections Template with RMA Data.xls Itemize all expenses anticipated before “doors open” - List must be exhaustive and accurate Do not run risk of being asked “ What about X”? Add contingency for each expense item - Separate item called contingency (typical is 20%) Identify each capital item to be purchased - Cost plus some contingency

40 MANASOTA.SCORE.ORG How much do you need? What will it be used for? 9.1 Required Start-Up Funds

41 MANASOTA.SCORE.ORG Financial Plan Use SCORE Financial Projections Template – Excel Spreadsheet on the Workshop CD SW1 - Financial Projections Template with RMA Data.xls Make two projections: - “best guess” & “worst case” Accounting method used - Cash or Accrual What’s the difference??? Project sales, expenses and capital needs Prepare monthly Income, Cash Flow and Balance Sheet statements and assumptions used - First 12 months - 2 nd year and 3 rd year Loan expectations including permanent and seasonal Working Capital

42 MANASOTA.SCORE.ORG Financial Projection Model Template Common Concerns: The spreadsheets look complicated. I don’t think I can do this on my own. I don’t understand all the figures and math. This is overwhelming. Can I start my business without a financial projection model? Businesses don’t plan to fail – they often fail to plan!

43 MANASOTA.SCORE.ORG Financial Projection Model Your work is SIMPLIFIED: 1 - Provide the INPUTS and update when required 2 –The RESULTS that are CALCULATED AUTOMATICALLY, so you need to learn where to look 3 – Determine if calculated forecast of cash flow, profit and loss and balance sheet information are acceptable for startup. You DON’T need to know all the math Work with your mentor on the forecasts Your accountant can provide ongoing advice

44 MANASOTA.SCORE.ORG The seven input worksheets are: 1.Required Start-Up Funds 2.Salaries and Wages 3.Fixed Operating Expenses 4.Projected Sales Forecast 5.Projected Sales Forecast (2) 6.Cash Receipts – Disbursements 22. “RMA Compare Yr1” The remaining worksheets are calculated financial statements Financial Model Template

45 MANASOTA.SCORE.ORG Cash Flow - Initial Investment - Sales Income CASH - Startup Expenses - Cost of Goods Sold - Operating Expenses - Personal Living Cost?

46 MANASOTA.SCORE.ORG Sources of Funding What are your expected sources of capital?

47 MANASOTA.SCORE.ORG Salaries and Wages

48 MANASOTA.SCORE.ORG Operating Expense Examples Advertising Freight costs Insurance Inventory Loan repayments & Interest Maintenance Materials Rent Salaries Taxes Utilities Non-Cash Items – Depreciation / Amortization

49 49 MANASOTA.SCORE.ORG Using Financial Ratios The Risk Management Association (RMA) publishes average financial ratios for actual business results of thousands of different companies. You can find ratios in the Sarasota Selby library’s business section, your bank or from your SCORE mentor. Ratios help estimate both your first income statement and balance sheet.

50 MANASOTA.SCORE.ORG Key Financial Comparisons - RMA ASSETS Cash & Equivalents Trade Receivables Net Inventory All Other Current Total Current Fixed Assets Net Intangibles Net All Other Non-Current Total Assets LIABILITIES Notes Payable Short Term Trade Payables All Other Current Total Current Long Term Debt All Other Non-Current Net Worth Total Liabilities & Net Worth INCOME DATA Net Sales Gross Profit Operating Expenses Operating Profit All Other Expenses Net Profit Before Taxes RATIOS Current (CA/CL) Quick (CA -Cur Inv)/CL Sales/Receivables Cost of Sales/Inventory Cost of Sales/Payables Sales/Working Capital EBIT/Interest Net Profit + Depr., Dep,.Amort./Cur. Mat.L/T/D Fixed/Worth Debt/Worth % Profit Before Taxes/Net Worth % Profit Before Taxes/Total Assets Sales/Net Fixed Assets Sales/Total Assets % Depr., Dep., Amort/Sales % Officiers, Owners, Directors Comp/Sales CASH FLOW MEASURES Debt Service P&I Coverge Funded Debt / EBITDA Gives you a quick check— and a reality check—on how you stack up against your peer companies in your industry, based on Sales $. Used by the bankers to test whether your business plan estimates are valid for your type of business. Tab - RMA Compare Yr1 added to standard SCORE spreadsheet

51 MANASOTA.SCORE.ORG Appendices Keep details out of main body of Plan Photos Detailed resumes Brochures Floor plans and layouts Location maps Etc.

52 MANASOTA.SCORE.ORG Important Factors - Presenting To Banker or Investor Cover Letter that provides a “customized” summary and key points of your plan – based on your audience Complete Business Plan, in a binder, with a copy for each person in the meeting Presentation clarity and organization Prepared to support Business Plan Data Make loan approval as easy as possible - Anticipate questions - Be prepared and confident Most terms and conditions are negotiable Dress appropriately and be prompt for your appointment

53 MANASOTA.SCORE.ORG Finally.. Important Factors for Planning Be flexible early in the process. Don't commit too early. Expect your first plan to be subject to revision. Ask yourself if your experience or expertise gives you the right to an opinion on your specific opportunity. Identify your potential deal killers: variables that are likely to prove fatal to the venture. Clearly identify what you see as the key drivers of success. At some point, take the plunge and test your product or service on a small scale in the real world through customer research, test marketing, or prototypes. Test and refine your business model before expanding your operations. Detail your strategies on how you intend to handle adversities. Spell out the strengths and weaknesses of your management team. Freely and frequently modify your business plans to account for changing conditions

54 MANASOTA.SCORE.ORG Wrap-up Importance of Business Planning SCORE Business Plan Sample Business Plans Detailed Discussion of Business Plan – Review of each section – Important points to cover – Financial Model Requirements

55 MANASOTA.SCORE.ORG Fill out the online request for free, one-on- one mentoring. – Right after this session! – – click the Mentoring tab – A mentor will be assigned in about a week – Mentor will call you to setup a mentoring appointment Ongoing phone and/or face-to-face guidance to aid completion improvement plans Mentor will be available for an ongoing relationship Do You Have A SCORE Mentor? Take advantage of this free service to help you make the best decisions as you grow and improve your business!

56 MANASOTA.SCORE.ORG Visit for Schedules and SCORE Workshops Specialized Workshops Building Your Business Plan Web Site Basics Web Marketing and Social Media Simple Steps for Starting Your Business Start-up Basics Business Concept Marketing Plan Financial Projections Funding Sources & Next Steps

57 MANASOTA.SCORE.ORG Help Us, Help You Please fill out the workshop evaluation form Your feedback is important to help us improve our programs!

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