Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ChapterChapter3 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

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 2 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.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 3 Vocabulary business plan

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 4 The Business Plan business plan a written document that describes all the steps necessary for opening and operating a successful business

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 5 products manufacturing methods customers management suppliers competitive strategies how business will earn a profit future growth plans A business plan will describe your:

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 6 Purposes of a Business Plan A business plan: explains the idea behind your business how your product or service will be produced and sold sets specific objectives and how your business will achieve them describes the experience of the people who will run the business

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 7 What are the three main purposes of a business plan?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 8 Importance of a Business Plan 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

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 9 Why is a business plan important to an entrepreneur?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 10 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.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 11 Vocabulary pro forma financial statement harvest strategy cover letter statement of purpose executive summary

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 12 Basic Elements of a Business Plan The main body of a business plan should be organized into the following elements: 1.Introduction 2.Marketing 3.Financial Management 4.Operations 5.Concluding Statement

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 13 Introduction The introduction should contain the following information: A detailed description of business goals Ownership and legal structure of the business Your skills and experience The competitive advantages of the business

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 14 Describe how you came up with your business Outline the business goals for the Short-term Medium-term Long-term Detailed Description

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 15 sole proprietor, partnership, or corporation identify leadership team list number of shareholders Ownership and Legal Structure

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 16 list all of your relevant business experience paid work volunteer work hobbies list all of the relevant business experience of your leadership team Skills and Experience of the Leadership Team

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 17 Performance Quality Reliability Distribution Price Promotion Public image or reputation Advantages

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 18 Marketing The marketing section of the business plan should describe: Products and/or services Explain how your products/services differ those already on the market Highlight unique features Explain benefits customers will receive from your product/service

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 19 Marketing The marketing section of the business plan should describe: Market Who are your prospective customers? Demographics Age, income level, ethnic race Geographics Location Psychographics Attitudes and values How large is the market for your product or service? How do you plan to enter that market? How will you deal with competition? Conduct a SWOT analysis

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 20 Marketing The marketing section of the business plan should describe: Industry Perform research to complete this section Include the following: External factors that affect your business High competition Lack of certain suppliers Growth potential of the industry Give a growth forecast Economic trends of the industry Technology trends that may affect the industry

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 21 Marketing The marketing section of the business plan should describe: Location Describe the location of your business Lenders and investors want to know exactly where your business will be. Can be a critical factor in success of business

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 22 Financial Management Identification of Risks Prospective lenders and investors will want to know what risks your business faces and how you plan to deal with them.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 23 pro forma financial statement a financial statement based on projected revenues and expenses Income Statement Cash Flow Statement Balance Sheet Funding Request and Return on Investment borrowed money personal investment anticipated return on investment Financial Statements

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 24 Operations daily business management hiring and personnel procedures insurance lease or rental agreements equipment exit strategy

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 25 the way an entrepreneur intends to extract his or her money from a business after it is operating successfully harvest strategy (exit strategy)

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 26 Concluding Statement Summarize goals and objectives. Emphasize your commitment to the success of your business.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 27 List the elements of the main body of a business plan and explain why each one is important.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 28 Complete the Business Plan Introductory elements cover letter a letter that introduces and explains any accompanying document or set of documents Make sure to include your name, the name of your business, your business address and telephone number. Briefly describe your business, its potential for success and the amount of capital you may need.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 29

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 30 Title Page Name of company Date Owner of company Title of owner Address and phone number Table of Contents Shows reader what each page covers and where to find certain documents Statement of Purpose a brief explanation of why you are asking for a loan and what you plan to do with the money No longer than one to two paragraphs

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 31

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 32 a short restatement of the report An executive summary should: describe your business concept include projections for sales, costs, and profits identify physical needs state the requested loan value one to two pages in length Executive Summary

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 33

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 34 includes supporting documents that provide additional information to support the body of the report Put It All Together The business plan should be: neat well organized inviting to read Appendix

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 35

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 36 Why should you include supporting documents in your business plan?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 37 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.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 38 Vocabulary Small Business Administration (SBA) Small Business Development Centers (SBDC) Service Corps of Retired Executives (SCORE) trade associations

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 39 Research the Business Plan Most entrepreneurs spend 50 to 100 hours developing their business plans.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 40 Community, Government, and Professional Resources Small Business Administration (SBA) an independent agency of the federal government helps Americans develop new businesses

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 41 a cooperative effort of the private sector, the educational community, and federal, state, and local governments provides free help for businesses that cannot afford a private consultant Small Business Development Centers (SBDC)

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 42 retired executives provide free, confidential advice to entrepreneurs either in person or over the Internet business related workshops both short-term and long-term assistance is available Service Corps of Retired Executives (SCORE)

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 43 provides information on local business trends Trade Associations organizations that are made up of professionals in a specific industry provide educational and networking opportunities Chamber of Commerce

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 44 experts who will provide business assistance for a fee Financial Institutions Bankers and accountants can provide information about loans and financial statements. Professional Consultants

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 45 Print Resources library magazines government documents

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 46 Online Resources provide information similar to print information websites targeted to entrepreneurs and small business owners provide business plan templates

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 47 What are some of the resources that are available to help you develop your business plan?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 48 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

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 49 List some common mistakes that are made in business planning.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 50 PERFORMANCE INDICATORS Demonstrate effective communication skills Demonstrate skills in developing a speech using the three basic elements

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 51 Apply speaking techniques using appropriate tempo and pitch Secure facts and data from multiple sources, emphasizing research skills Utilize nonverbal gestures as needed

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 52 THINK CRITICALLY 1.How can good speaking skills benefit an entrepreneur? 2.Why is research important when preparing a speech?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 53 4.How do the three elements of a speech contribute to its effectiveness? 3.Why should you follow copyright laws when preparing a speech?