Develop a Business Plan Chapter #5

Why do you need a Business Plan Business Plan –Written document that describes all the steps necessary in opening and operating a successful business ◦Describes what your business will produce, how it will produce it and who will buy your product or service. ◦Explains who will run the business and who will supply it. ◦States how your business will win over customers ◦Provides detailed financial information

Purpose of a business Plan ① Explains the idea behind your business ② Sets specific objectives and describes how your business expects to achieve them ③ Describes the background and experience of people running it.

Importance of a Business Plan Makes you think about all aspects of your business May help you secure funding Helps you communicate your ideas to others. Can serve as a tool for managing your business.

Seven Basic Elements of a Business Plan ① History and Background Idea ② Goals and Objectives for your company ③ Product or Services you will offer ④ Form of Ownership ⑤ Management and Staffing ⑥ Marketing ⑦ Current and Projected Financial statements

History and Background How you can up with the idea ◦Demand in the area? ◦Invention you make? ◦Area not being serviced? ◦Suggestion from others? ◦Prior experiences?

Goals and Objectives Plan should outline your short, medium and long term goals. Vision for the future of your company

Products or Services What is your product or service? How are you different from other in the market? ◦This section should include the following:  INDUSTRY – Potential Growth, Economic Trends, Technology, Industry Forecasts  LOCATION – What town – what type of community, talk about people in community and need for your product.

Form of Ownership Are you running the business alone? Who is your partner How many shareholders will you have?

Management and Staffing How is your company organized? What is the education of your management staff? What is the set up of your company?

Marketing Items to cover ◦Performance ◦Quality ◦Price ◦Promotion ◦Reliability ◦Distribution ◦Public Image or Reputation

Current or Projected Financial Statement Three Elements ① Identification of Risks ② Financial Statements ③ Funding request and return on Investment

Additional Elements What is special about your business and what is a lender going to need to know?

Create an Effective Business Plan Your plan needs to convince readers you have a great idea and plan Most entrepreneurs spend 50 – 100 hours on developing their business plan. You have to think about every part of the business.

Research Print Resources ◦Books on writing a business plan ◦Books on coming up with ideas ◦Trade Magazines ◦Government documents (SBA) Online Resources ◦ ◦Magazines online ◦Google searches People Resources ◦SCORE Service Corps or Retired Executives ◦Small Business Development Centers Additional Resources ◦Trade Associations ◦Chamber of Commerce

Put Your Business Plan Together Typed, Standard format Introductory Elements Cover Letter Title Page Table of Contents Statement of Purpose Executive Summary

Cover Letter Business Letter Format ◦Your Name ◦Business Name ◦Address ◦Phone ◦Describe business and its potential for success ◦How much capital is needed

Title Page Name of Company Date Owner of Company Title of Owner Address Phone

Table of Contents Listing of all materials included in the plan and the page number they are on.

Statement of Purpose Describes why you are asking for a loan and what you plan to do with the money if you receive it. One to two paragraphs

Executive Summary Should capture the interest of the reader. No longer than one to two pages Should summarize all the parts of a business plan.

Main Body of Your Plan Should be well laid out and easy to follow Use simple language Charts and graphs help illustrate points

Appendix End of the business plan Supporting documentation not part of your plan is placed here ◦Charts ◦Surveys ◦Tax Returns ◦Legal Documents

Who is a Business Plan Written for? What are the elements of a Business Plan? Why do you need a business plan? How can a well do plan help a business?

Check List for a Business Plan