Chapter 5: Develop a Business Plan

Turning An Idea Into A Business page 105 Read the article on page 105 Answer questions under “What do You Know?” on page 105.

Why Do You Need A Business Plan: Section 5.1 Goals – Explain the purpose of writing a good business plan. – Describe the importance of a business plan.

Business Plan A business plan is a written document that describes all of the steps necessary in opening and operating a business.

A Business Plan Includes: What your business will produce, how it will produce it, and who will buy what you produce. Who will run you business. Who will supply your business with goods. How you will obtain customers. How you will keep customers. Detailed financial information.

Purpose of a Business Plan Explain the idea behind your business and spell out how you product or service will be produced and sold.

Purpose of a Business Plan Set specific objectives and describes how your business expects to achieve them. – Set goals to get you to your objective.

Purpose of a Business Plan Describe the background and the experience of the people who will be running the business.

Importance of a Business Plan A business plan makes you think about all of the aspects of the business.

Importance of a Business Plan A business plan will help you secure financing for your business.

Importance of a business Plan A business plan helps you communicate your ideas to others.

Importance of a Business Plan A business plan can serve as a tool for managing your business.

Assessment 5.1 page 109 Think Critically – Questions 1, 2, and 3 Make Connections – Question 4

Why Do You Need A Business Plan: Section 5.2 Goals – Study the seven basic elements of a business plan. – Recognize what additional elements may be needed.

Seven Basic Elements of a Business Plan (page 110) History and background of your idea. Goals and objective for your company. Products or services you will offer. Form of ownership. Management and staffing. Marketing Current and projected financial statements.

History and Background Tell how you came up with the idea for your business. Tell what lead you to this business.

Goals and Objectives Outline Goals – Long Term Goals – Strategic Planning – Shot Term Goals – Operational Planning

Products or Services What do you plan to produce or sell? Why do you plan to produce or sell this good? Explain how your goods or services differ from those already available.

Industry Describe the industry you will operate in. Growth potential. Economic trends. Technology trends. Forecast industry growth.

Location Location of a business is often a critical factor in its success. Describe exactly where you plan to locate your business.

Form of Ownership Describe your form of ownership. Provide details; don’t leave potential investors guessing.

Management and Staffing List the management and staffing who will have a direct impact in the success of your business. List your and your staff’s experience.

Marketing Explain – Your target market-who you will market to. – How large is your target market. – How you plan to deal with competition. – How you plan to overcome your competition.

Marketing List your company’s advantages Examples would be advantages in: – Performance – Price – Quality – Promotion – Reliability – Distribution – Public image or reputation

Current and Projected Financial Statements Your financial section of your business plan consists of three elements. – Identification of risks. – Financial Statements – Funding requests and return on investments.

Current and Projected Financial Statements. Pro-Forma financial statements are based on projected revenue and expenses.

Additional Elements of a Business Plan Add anything else to your business plan which impacts your business.

Assessment 5.2 page 114 Think Critically – Questions 1, 2, and 3 Make Connections – Question 5

Why Do You Need A Business Plan: Section 5.3 Goals – Research your business plan. – Organize your business plan.

Research the Business Plan There are many sources that you can use to research your business plan.

Print Resources The Library SBA – Small Business Administration: Government Documents Industry Publications

Online Resources Much of the information you can find in print you can find online. SBA:

People Resources Counselors from Small Business Development Centers SCORE: – SCORE is a volunteer group of 12,000 retired executives who help young entrepreneurs. Trade Organizations

Put Your Business Plan Together You will want to create an attractive document that is easy to read. Your business plan should look professional and well organized.

Cover Letter A cover letter is a letter that explains or provides more information about a document or set of documents.

Title Page Should include: – The name of your company – The date – The owner of the company – The address and phone number of the company.

Table of Contents A listing of the material included in the publication.

Statement of Purpose A statement of purpose very briefly describes why you are asking for a loan. Basically it explains why you want the loan and what you intend to do with the loan.

Executive Summary An executive summary is a short restatement of a report. It should capture the interest of the reader and make them want to read more.

Executive Summary Should include: – Describe your business concept and communicate what is unique about your idea. – Include your projections for sales, costs and profits. – Identify your needs. – State the amount you are interested in borrowing (if needed)

Main Body of Your Plan List all of the elements we have already described. List any necessary elements.

Appendix The appendix includes any supporting evidence that is not included in the body of the plan.

Assessment 5.3 page 121 Think Critically – Questions 1, and 2. Make Connections – Question 3