Roll Up Your Sleeves and Start Writing Writing and Presenting a Business Plan Chapter 3

Good ideas vs. good businesses Not every great idea is a great business idea  Wrong time – too early/late; bad economy; other priorities  Wrong market Seasonal mismatches  Wrong price Overpriced/under-priced  Wrong customer Spending priorities/patterns  Wrong product Doesn’t solve the problem as promised

Business Plan Basics Use data collected in feasibility study stage Do not exceed 25 pages Use section heads for organization Single spaced, point type User-friendly font such as Times Roman Support materials: cover page, table of contents, page numbers, citations where appropriate

Defining your business plan Future business strategy laid out in an operational format Description of business goals and the process by which to obtain them Your dreams on paper Road map for your business Requirement for investors (and professors)

Business Plan Components Executive Summary Description of Company Description of Product or Service Competitive Analysis Market Analysis Marketing Plan (sales and promotion strategies) Management Team Financial Analysis Appendices

Component Descriptions Executive Summary  Highlights each major business plan section Description of Company  Include company name, legal status, formation date, description of business/industry and a product/service overview  Legal structures to chose from: Sole proprietorship Partnership (general vs. limited) Corporation (“S Corp” vs. “C Corp”) Limited liability company Non-profit organization - 501(c)(3)

Component Descriptions Description Industry  Life stage of Industry  Industry growth rate  Competitive landscape  Cross-industry representation  Seasonality  Barriers to Entry

Component Descriptions Description of Product/Service  How was product/service developed  How does it work and how will it evolve  Exceptional attributes of product/service  Competitive advantage of product/service  Inventory requirements and demands

Component Descriptions Market Analysis  Customer demographics and spending trends  Psychographic data Competitive Analysis  Direct – other products/services that serve same markets as your business  Indirect – what else your customers spend money on instead of your product  Differentiations in product/service quality, availability, and price

Component Descriptions Marketing Plan  Three-step sales process: presale, point-of-sale, and post-sale Presale: Reaching your customers and teaching them about your product/service Point-of-sale: When your customers select your product/service over all others Post-sale: Keeping track on your repeat and hopefully happy customers

Component Descriptions Management Team  CEO/visionary  Other management  Legal counsel  Finance/Accounting  Marketing  Sales  Inventory manager  Creators/distributors/obtainers of product  Providers of services

Component Descriptions Financial Analysis  Explains where and how you spend money and how much you expect to earn as a result. Income Statements show company profits and losses Balance Sheets detail assets and liabilities Cash Flow Statements show cash on hand Assumptions are rationale for projections Break-even Analyses calculate when you’ll earn back what you’ve invested Funding request/use statements show money you’ve received from who, and what was promised in turn

Component Descriptions Appendices  Provide detailed, supplemental information to plan  Offer product diagrams, letters of endorsement, office floor plans, personnel resumes, supplier contracts, organizational charts, SWOT analyses, among other items.  Labeled alphabetically, listed at end of plan