Develop a Business Plan 3 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

Ideas in Action Turning an Idea into a Business Two young men turned a passion for graffiti art into a business. Prior to requesting financing from a bank, you should prepare the “five c’s.” character capacity capital collateral conditions Chapter 3

Lesson 3.1 Why a Business Plan is Important Goals Explain the purpose of writing a good business plan. Describe the importance of a business plan. Chapter 3

Terms business plan Chapter 3

The Business Plan business plan A business plan will: a written document that describes all the steps necessary for opening and operating a successful business A business plan will: describe your ideas to investors serve as a guide for you as you start your business Chapter 3

Purposes of a Business Plan explains the idea behind your business how your product or service will be produced and sold sets specific objectives and how you will achieve them describes the experience of the people who will run the business Chapter 3

What are the three main purposes of a business plan? Chapter 3

Importance of 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 Chapter 3

Why is a business plan important to an entrepreneur? Chapter 3

Lesson 3.2 What Goes into a Business Plan? Goals List and describe the basic elements of a business plan. Describe how to pull a business plan together. Chapter 3

Terms pro forma financial statement cover letter statement of purpose executive summary Chapter 3

Basic Elements of a Business Plan The three basic components of a business plan are: introductory materials the main body the appendix Chapter 3

The main body of a business plan contains the following elements: Introduction Marketing Financial Management Operations Concluding Statement Chapter 3

Introduction The introduction should contain the following information: A detailed description of business goals short, medium, and long-term goals Chapter 3

The legal structure of the business, including ownership sole proprietor, partnership, or corporation Your applicable skills and experience paid, volunteer, and hobbies Chapter 3

The competitive advantages of your business Performance Quality Reliability Distribution Price Promotion Public image or reputation Chapter 3

Marketing The marketing section of the business plan should describe: Products and/or services Market Industry Location Chapter 3

Financial Management Identification of Risks It is reassuring to lenders to know that you have proactively defined risks and that you have a plan for dealing with them. Chapter 3

Funding Request and Return on Investment Financial Statements pro forma financial statement a financial statement based on projected revenues and expenses Funding Request and Return on Investment personal investment loan based financing anticipated return on investment Chapter 3

Operations daily business management staffing facilities equipment buy or lease equipment Chapter 3

Concluding Statement Summarize goals and objectives. Emphasize your commitment to the success of your business. Chapter 3

List the elements of the main body of a business plan and explain why each one is important. Chapter 3

Complete the Business Plan Introductory elements cover letter a letter that introduces and explains an accompanying document or set of documents Chapter 3

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Title Page 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 Chapter 3

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An executive summary should: a short restatement of the report An executive summary should: compel the reader to continue reading describe your business concept include financial projections identify physical needs state the requested loan value Chapter 3

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Appendix Put It All Together includes supporting documents that provide additional information to support the body of the report Put It All Together The business plan should be: neat attractive well organized inviting to read Chapter 3

Why should you include supporting documents in your business plan? Chapter 3

Lesson 3.3 How to Create an Effective Business Plan Goals Describe resources available for researching your business plan. Name common mistakes to avoid in business planning. Chapter 3

Terms Small Business Administration (SBA) Small Business Development Centers (SBDC) Service Corps of Retired Executives (SCORE) trade associations Chapter 3

Research the Business Plan Most entrepreneurs spend 50 to 100 hours developing their business plan. Chapter 3

Community, Government, and Professional Resources Small Business Administration (SBA) an independent government agency helps Americans develop new businesses Chapter 3

Small Business Development Centers (SBDC) a cooperative effort of the private sector, the educational community, and federal, state, and local governments provides free, individualized help for business plan development for those who cannot afford a private consultant Chapter 3

Service Corps of Retired Executives (SCORE) retired executives provide free, confidential advice to entrepreneurs either in person or over the Internet both short-term and long-term assistance is available Chapter 3

Chamber of Commerce Trade Associations provides information on local business trends Trade Associations organizations that are comprised of professionals in a specific industry provide educational and networking opportunities Chapter 3

Professional Consultants experts who will provide business assistance for a fee Financial Institutions Bankers and Accountants can provide information about loans and financial statements. Chapter 3

Print Resources library magazines government documents Chapter 3

Online Resources Provide information similar to library information Industry specific websites Websites targeted to entrepreneurs and small business owners Chapter 3

What are some of the resources that are available to help you develop your business plan? Chapter 3

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 Chapter 3

List some common mistakes that are made in business planning. Chapter 3

PERFORMANCE INDICATORS EVALUATED Demonstrate effective communication skills. Demonstrate skills in developing a speech using the three basic elements. Chapter 3

Utilize non-verbal gestures as needed. Apply speaking techniques using appropriate tempo and pitch. Secure facts and data from multiple sources, emphasizing research skills. Chapter 3

THINK CRITICALLY How can good speaking skills benefit an entrepreneur? Why is research important when preparing a speech? Chapter 3

Why should you follow copyright laws when preparing a speech? How do the three elements of a speech contribute to its effectiveness? Chapter 3