Planning and Organizing a Business Developing a Business Plan

Small Businesses Business that is independently operated, is not dominant in its field, and meets certain size standards in terms of number of employees and annual receipts Fill niche markets Niche: a place or position in the community or industry suitable for a person or thing

Entrepreneurship The American economy is based on the free enterprise system, or capitalism Means we have the right to own our own business and to make a profit, also means we can lose money

Entrepreneurs People who have the initial vision, diligence, and persistence to follow through Accepts all risks pertaining to forming and operating a small business Performs all business functions associated with a product/ service, fulfilling social responsibilities, and meeting legal requirements

Reasons to take risk of starting own business Work for yourself, make own decisions Income is all yours Can test own theories and ideas on how to run a business Set own hours Set prices and control inventory Solve own problems Perform all human resources functions: hiring, training, firing

Personal Characteristics of Entrepreneurs Independent Self- Confident Energetic Organized Visionary Persistent Optimistic Committed Problem Solver Self- Nurturing Risk Taker Flexible Emotionally Stable Action- Oriented

Challenges of Entrepreneurship Total responsibility In charge of everything, success or failure depends on 1 person (the owner) Long, Irregular Hours Financial Risks

Analyzing Your Business Venture Recognizing a need Determine what types of businesses are needed Thousands of firms go bankrupt each year because they provided the wrong type of product or service Most people would like to become wealthy by starting a business that proves to be successful. However, it is one thing to dream; it is another to make that dream become a reality. Careful planning from the beginning is one way to ensure the success of your business. Planning includes: recognizing a need, considering startup factors, applying business fundamentals, conducting business survey

Start Up Factors to Consider What financial resources are needed to get started? What labor does the business need? What management requirements exist? Does a market exist for the product/service? Where should the business be located? Should you buy a business or start a new one?

Applying Business Fundamentals Entrepreneurs must learn some business basics Keep size of the business consistent with the capital resources available. Devote adequate time to the development of management capabilities. Keep all employees fully employed. Study and improve the business continually. Maintain an adequate cash operating fund so that you will not have to borrow at high interest rates. Use as much of the profits as possible to expand the business. Set the prices at a level that will result in reasonable profit while still being lower than your competition. Treat customers courteously and fairly Treat employees fairly.

Conducting a Business Survey Survey that a business conducts to determine that market potential for a selected business Questions to answer: What resources are needed? Are these resources available? What are the costs of these resources? What level of management is required? Does the prospective owner have the experience necessary to operate the business? Are there 1 or more markets for the product? At what prices can the products/services be sold? How reliable are the potential markets? What is the potential for future growth?

Preparing a Business Plan Written description of a new business venture that describes all aspects of the proposed business Helps you focus on exactly what you want to do, how you will do it, and what you expect to accomplish Essential for receiving help from potential investors and financial institutions

Business Plan Outline Introduction Company Description Product and/or Service Management Plan Marketing Plan Legal Plan Location Analysis Business Regulations Capital Required Financial Plan Financing Arrangements Competition Operating Plan Appendix.

Cover Sheet Acts as a title page Should include: Name, address, telephone number of the company Names, titles, addresses, telephone numbers of the owners Month and year the plan was prepared Name of the person who prepared the plan

Introduction Aka: statement of purpose Summarize: Keywords= who, what, where, when, why, how Summarize: Your company Who the management is and what each manager’s strengths are What your objectives are and why you will be successful If you need financing, why you need it, how much you need, and how you intend to repay the loan or investors

Table of Contents Lists the major topics in your business plan Makes it easier for lenders or investors to review your plan quickly and find areas of particular interest

Summary description of the business In a couple of paragraphs, give a broad overview of the nature of your business Tell why and when the company was formed Mission (project short and long term goals) Business Model (describe the model for your company and why it is appropriate) SWOT Analysis (identify and describe strengths, weaknesses, opportunities, and treats that will be faced) SWOT will be looked at more during marketing unit

Products or Services Describe what you sell Include information about your sources of supply

Intellectual Property Address issues concerning copyrights, trademarks, and patents Back up your statements with supporting documents such as registrations, photographs, licenses

Location Describe your projected or current location, including advantages and disadvantages Project costs associated with that location

Legal Structure Describe the legal structure of your business and why it is advantageous List owners

Management List the people who are or will be running the business Describe their responsibilities and abilities Project their salaries

Personnel Detail how many employees you will have, and in what positions What are the necessary qualifications for each position? How many hours will employees work, and at what wage? Project future need for additional employees

Accounting What system will you use for daily accounting? Who will you use as a tax accountant? Who will be responsible for periodic analysis of financial statements?

Legal Who will you retain as an attorney?

Insurance What kinds of insurance will you carry? Consider property, liability, life, health, and disability) What will this coverage cost? Who will you use as a carrier? Will you use an insurance agent?

Security Address inventory control and theft of information What will it cost?

Goal Setting Write down your goals Organize your goals Immediate goals Short-term goals Long-term goals Immediate- accomplish within a day, week, or a month or two Short term- accomplish in a year or two Long term- many years, idea of what want to do with business several years from now

Reaching your Goals Manage your time Avoid procrastinating Judge your time Schedule your time Establish priorities Break goals into manageable units

SMART Goals Specific Measurable Attainable Realistic Timely

Specific: answer Who is involved? What do I want to accomplish? Where (Identify a location) When (Establish a time frame) Which (Identify requirements) Why (specific reasons, purpose or benefits of accomplishing the goal.

Measurable: establish concrete criteria for measuring progress toward the attainment of the goal How much? How many? Attainable: make sure they can come true Realistic: must be a goal which you are both willing and able to work towards. Timely: give a time frame