Your Business Plan
Digital Safari Institute GreenBizz Project Purpose of a Business Plan Three basic purposes: Three basic purposes: – Communication – Management – Planning "The business plan is a necessity. If the person who wants to start a small business can't put a business plan together, he or she is in trouble.“ "The business plan is a necessity. If the person who wants to start a small business can't put a business plan together, he or she is in trouble.“ Robert Krummer, Jr., Chairman of First Business Bank in Los Angeles
Digital Safari Institute GreenBizz Project A Communication Tool Used for: Used for: – Securing outside funding (banks, investors) – Seeking credit (vendors, suppliers) – Retaining top employees – Attracting strategic business partners Demonstrates Profit Potential Demonstrates Profit Potential – The development of a comprehensive business plan shows whether or not a business has the potential to make a profit. Documents Solutions Documents Solutions – It requires a realistic look at almost every phase of business and allows you to show that you have worked out all the problems and decided on potential alternatives before actually launching your business.
Digital Safari Institute GreenBizz Project A Management Tool The business plan helps you track, monitor and evaluate your progress. The business plan helps you track, monitor and evaluate your progress. By using your business plan to establish timelines and milestones, you can gauge your progress and compare your projections to actual accomplishments. By using your business plan to establish timelines and milestones, you can gauge your progress and compare your projections to actual accomplishments. The business plan is a living document that you will modify as you gain knowledge and experience. The business plan is a living document that you will modify as you gain knowledge and experience.
Digital Safari Institute GreenBizz Project A Planning Tool The business plan guides you through the various phases of your business. The business plan guides you through the various phases of your business. A thoughtful plan will help identify roadblocks and obstacles so that you can avoid them and establish alternatives. A thoughtful plan will help identify roadblocks and obstacles so that you can avoid them and establish alternatives.
Digital Safari Institute GreenBizz Project Contents of a Business Plan Cover Cover Table of contents Table of contents Executive summary Executive summary I. The Business I. The Business II. The Market and Marketing Plan II. The Market and Marketing Plan III. Operating Plan III. Operating Plan IV. The Financials IV. The Financials V. Supplemental Documents V. Supplemental Documents
Digital Safari Institute GreenBizz Project Executive Summary Clear, concise summary of the key components of the business plan Clear, concise summary of the key components of the business plan No more than two pages!!! No more than two pages!!! Needs a “hook” at the beginning Needs a “hook” at the beginning State the business opportunity clearly State the business opportunity clearly Make the ask (if appropriate) Make the ask (if appropriate) Usually drafted LAST Usually drafted LAST Often revised for different uses Often revised for different uses
Digital Safari Institute GreenBizz Project I. The Business Section Give a detailed description of the business, its history, its mission and goals Give a detailed description of the business, its history, its mission and goals Discuss the ownership of the business and the legal structure Discuss the ownership of the business and the legal structure List the skills and experience you bring to the business List the skills and experience you bring to the business Describe your products and/or services Describe your products and/or services – Needs/problems that are solved – Features and functions Describe key success factors Describe key success factors
Digital Safari Institute GreenBizz Project II. The Market/Marketing Section Market Analysis Market Analysis – Identify the customer demand for your product/service – Identify your market, its size and locations Competitive Analysis Competitive Analysis – Identify potential competitors and how they are or might be competing with your business – Discuss the advantages you and your business have over your competitors
Digital Safari Institute GreenBizz Project II. The Market/Marketing Section Marketing Plan (4 P’s) Marketing Plan (4 P’s) – Describe your Product’s or service’s “unique, sustainable advantage” in your market – Explain the Pricing strategy – Explain how and where your Product/Service will be sold (Place) – Explain how your product/service will be advertised and marketed (Promotion)
Digital Safari Institute GreenBizz Project III. The Operating Plan Production - Describe how your products will be made, purchased or acquired Production - Describe how your products will be made, purchased or acquired Distribution - Describe how your product/service will be distributed and/or delivered Distribution - Describe how your product/service will be distributed and/or delivered Management - Explain how the business will be managed on a daytoday basis Management - Explain how the business will be managed on a daytoday basis Personnel - Discuss hiring and personnel procedures Personnel - Discuss hiring and personnel procedures Operating Details – Discuss insurance, compliance, environmental and other issues pertinent to your business Operating Details – Discuss insurance, compliance, environmental and other issues pertinent to your business
Digital Safari Institute GreenBizz Project IV. The Financials Financial Write-up Financial Write-up – Discuss who will maintain your accounting records and how they will be kept. – Provide "what if" statements that address alternative approaches to any problem that may develop. – Explain your method(s) of compensation. Financial Documents Financial Documents – Start-up sources and uses of funds – Operating budget – Balance sheet – Breakeven analysis – Pro-forma income and cash flow projections First year: details by month First year: details by month Second and third: details by quarter Second and third: details by quarter Fourth and fifth: annual summaries Fourth and fifth: annual summaries Assumptions upon which projections are based Assumptions upon which projections are based
Digital Safari Institute GreenBizz Project V. Supporting Documents Tax returns of principals for last three years Tax returns of principals for last three years Personal financial statement Personal financial statement Copy of proposed lease or purchase agreement for building space Copy of proposed lease or purchase agreement for building space Copy of licenses and other legal documents Copy of licenses and other legal documents Copy of resumes of all principals Copy of resumes of all principals Copies of letters of intent from suppliers, etc. Copies of letters of intent from suppliers, etc. For franchised businesses, a copy of franchise contract and all supporting documents provided by the franchisor For franchised businesses, a copy of franchise contract and all supporting documents provided by the franchisor
Go For It!
Digital Safari Institute Small Business Management The Financial Six C'S CHARACTER CHARACTER – The degree to which a borrower feels a moral obligation to pay his/her debts, measured by the credit and payment history. CAPACITY TO PAY CAPACITY TO PAY – A subjective determination made by a lender based upon an analysis of the borrower's financial statements and other information. CAPITAL CAPITAL – The amount of capital in a business is equal to the total of capital from debt and equity. Lenders prefer low debt-to-asset and debt-to-worth ratios and high current ratios. These indicate financial stability. COLLATERAL COLLATERAL – An asset owned by the borrower, but promised to a lender against non-payment of the loan. The amount of collateral varies from lender to lender. The closer the collateral value is to the loan amount, the more comfortable the lender will be that the loan will be repaid. CONDITIONS CONDITIONS – General economic, geographic and industry CONFIDENCE CONFIDENCE – A successful borrower instills confidence in the lender by addressing all the lender's concerns on the other Five C's. Their loan application sends the message that the company is professional, with an honest reputation, a good credit history, reasonable financial statements, good capitalization and adequate collateral.