Chapter 5: Develop a Business Plan 5.1 Why do you need a business plan? Mrs. Leonard

Turn to page 105 Read Ideas in Action: Turning an Idea Into a Business. Answer the following questions. 1. Describe the idea behind Jeffrey and John’s business.

Continued 2. Why do you think it was important for Jeffrey and John to offer free art lessons to neighborhood kids?

Continued 3. As a business owner, why do you need a business plan?

Continued 4. What kinds of plans do you think someone should make before opening a business?

Question? If you were an officer at a bank, what questions would you ask an entrepreneur seeking a loan? 1. 2. 3.

The Business Plan Business Plan – a written document that describes all of the steps necessary in ___________ and __________ a successful business One of the most difficult and important things you will do as an entrepreneur ______________ to a new business A business plan: Describes what your business will ______________, how you will produce it, and who will buy your product or service Explains who will run your business and who will supply it with goods States how your business will win over customers from competitors and what your business will do to keep customers Provides detailed ___________________ information that shows how your business will succeed in earning a profit

Purposes of a Business Plan A business plan explains the idea behind your business and spells out how your product or service will be produced and sold To convince investors that your business idea is solid, you will need a __________ product or service, or a product or service that is ________________________ than the products and services that already exist You will need to identify who your ________________ is and show how your company will be able to obtain and keep customers

Purposes of a Business Plan A business plan sets specific ________________ and describes how your business expects to achieve them A good business plan includes sales projections for the ____________ (1st year), the medium term (2-5 years after startup), and the ______________ (five years in the future) Describes what products and services will be introduced over the next five years and sets forth future business plans (ex. Expansion of the business)

Purposes of a Business Plan A business plan describes the _________________ and experience of the people who will be running the business. _____________ and other lenders make financing decisions based on how well they think a company can meet its objectives If you give good information on the background and experience of the people who will be running your company, the bank or investor will be more likely to invest money in your business (shows skills and characteristics necessary to succeed)

Importance of a Business Plan A business plan makes you think about _____________ ______________ of your business Helps you think through business strategies, recognize limits, and identify problems you might encounter 2. A business plan may help you secure _______________ for your business Lenders require a business plan before they will consider financing a business Without a business plan you will not be able to obtain a business __________________

Importance of a Business Plan 3. A business plan helps you ___________________ your ideas to others. If you communicate your ideas well on paper, you will convince the reader that your business will succeed. This will help you get a ______________ from a bank Also may persuade suppliers to extend credit to your company 4. A business plan can serve as a tool for __________________ your business Once the business is up and running, you can use the business plan in your ______________________

Chapter 5.1 Assessment Directions: Answer the following assessment questions about Chapter 5. Save it as Chapter 5 assessment in your Entrepreneurship folder. Write the questions and bold the answers. Next, answer the 5.1 true/false and MC questions. Put the worksheet in your notebook. 5.1 Assessment What are the three main purposes of a business plan? Why do entrepreneurs need to write business plans? 5.1 true/false and MC worksheet