1. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ChapterChapter3 Develop a Business Plan 3.1 Why a Business Plan is Important 3.2 What Goes into a Business Plan? 3.3 How to Create an Effective Business Plan

2. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 2 The Business Plan business plan a written document that describes all the steps necessary for opening and operating a successful business

3. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 3 products manufacturing methods customers management suppliers competitive strategies how business will earn a profit future growth plans A business plan will describe your:

4. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 4 Purposes of a Business Plan A business plan: explains the idea behind your business how your product or service will be produced and sold sets specific objectives and how your business will achieve them describes the experience of the people who will run the business

5. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 5 Importance of a Business Plan A business plan: makes you think about all aspects of your business may help you secure financing helps you communicate your ideas to others can serve as a tool for managing your business

6. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 6 Basic Elements of a Business Plan The main body of a business plan should be organized into the following elements: 1.Introduction 2.Marketing 3.Financial Management 4.Operations 5.Concluding Statement

7. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 7 Introduction The introduction should contain the following information: A detailed description of business goals Ownership and legal structure of the business Your skills and experience The competitive advantages of the business

8. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 8 Describe how you came up with your business Outline the business goals for the Short-term Medium-term Long-term Detailed Description

9. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 9 sole proprietor, partnership, or corporation identify leadership team list number of shareholders Ownership and Legal Structure

10. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 10 list all of your relevant business experience paid work volunteer work hobbies list all of the relevant business experience of your leadership team Skills and Experience of the Leadership Team

11. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 11 Performance Quality Reliability Distribution Price Promotion Public image or reputation Advantages

12. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 12 Marketing The marketing section of the business plan should describe: Products and/or services Market Industry Location

13. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 13 Financial Management Identification of Risks Prospective lenders and investors will want to know what risks your business faces and how you plan to deal with them.

14. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 14 pro forma financial statement a financial statement based on projected revenues and expenses Funding Request and Return on Investment borrowed money personal investment anticipated return on investment Financial Statements

15. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 15 Operations daily business management hiring and personnel procedures insurance lease or rental agreements equipment

16. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 16 the way an entrepreneur intends to extract his or her money from a business after it is operating successfully harvest strategy

17. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 17 Concluding Statement Summarize goals and objectives. Emphasize your commitment to the success of your business.

18. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 18 Complete the Business Plan Introductory elements cover letter a letter that introduces and explains an accompanying document or set of documents

19. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 19

20. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 20 Table of Contents Statement of Purpose a brief explanation of why you are asking for a loan and what you plan to do with the money Title Page

21. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 21

22. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 22 a short restatement of the report An executive summary should: describe your business concept include projections for sales, costs, and profits identify physical needs state the requested loan value Executive Summary

23. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 23

24. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 24 includes supporting documents that provide additional information to support the body of the report Put It All Together The business plan should be: neat well organized inviting to read Appendix

25. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 25

26. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 26 Research the Business Plan Most entrepreneurs spend 50 to 100 hours developing their business plans.

27. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 27 Community, Government, and Professional Resources Small Business Administration (SBA) an independent agency of the federal government helps Americans develop new businesses

28. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 28 a cooperative effort of the private sector, the educational community, and federal, state, and local governments provides free help for businesses that cannot afford a private consultant Small Business Development Centers (SBDC)

29. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 29 retired executives provide free, confidential advice to entrepreneurs either in person or over the Internet business related workshops both short-term and long-term assistance is available Service Corps of Retired Executives (SCORE)

30. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 30 provides information on local business trends Trade Associations organizations that are made up of professionals in a specific industry provide educational and networking opportunities Chamber of Commerce

31. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 31 experts who will provide business assistance for a fee Financial Institutions Bankers and accountants can provide information about loans and financial statements. Professional Consultants

32. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 32 Print Resources library magazines government documents

33. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 33 Online Resources provide information similar to print information websites targeted to entrepreneurs and small business owners provide business plan templates

34. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 34 Mistakes in Business Planning Avoid making the following mistakes: Unrealistic financial projections An undefined target market Poor research Ignored competition Inconsistencies in the business plan