1. Turning an idea into a business
Module 3:
Turning an idea into a business 1
© Copyright Katherine Korman Frey/Vision Forward, LLC 1
© Copyright Katherine Korman Frey/Vision Forward, LLC

2. Module 3 Goal:
Provide the future entrepreneur with an overview of nuts and bolts of starting a business including writing a business plan, obtaining funding and interacting with business-related agencies. 2
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© Copyright Katherine Korman Frey/Vision Forward, LLC

3. Module 3 Objectives: Understand importance of business planning.
Understand basics of writing a business plan.
Understand funding landscape and options.
Become familiar with agencies and their relationship to a business and its owner. 3
© Copyright Katherine Korman Frey/Vision Forward, LLC 3
© Copyright Katherine Korman Frey/Vision Forward, LLC

4. Module 3 Objectives: Understand importance of business planning.
Understand basics of writing a business plan.
Understand funding landscape and options.
Become familiar with agencies and their relationship to a business and its owner. 4
© Copyright Katherine Korman Frey/Vision Forward, LLC 4
© Copyright Katherine Korman Frey/Vision Forward, LLC

5. Thoughts on goals & planning
“Begin with the end in mind.”
– Stephen Covey,
Author of The 7 Habits of Highly Effective People
“Goals determine what you’re going to be.”
– Julius Erving
“If you don’t know where you are going, how can you expect to get there?
– Basil S. Walsh
Thoughts on goals & planning 5
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6. Purpose of a business plan
A business plan has 3 primary purposes:
1. Charts course for business owner
2. Provides introduction document for fundraising
3. Drives action
Source: DECA exercise by George T. Solomon, The George Washington University’s Center for Entrepreneurial Excellence 6
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7. Exercise 3-1 Imagine this Friend #1: Friend 1 approaches you and says:
“Hey, I’ve got this great idea for selling something to students. Can I borrow $10 to get it started?” 7
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8. Exercise 3-1 Imagine this Friend #2: Friend 2 approaches you and says:
“Hey, I’ve got this great idea. Each year students buy cookies from Organization X…but, the sales do not benefit our students or the school. I can change that. I can sell similarly-priced cookies and donate $1 to a school scholarship fund. We’d make money, and the school would make money. If you give me $10 to help fund the purchase of cookies, I’ll give you back $11 in a month.” 8
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9. Exercise 3-1 Imagine this
1. Which friend would you be most comfortable entrusting with the money? Why? 2. If you were an employee, which friend would you prefer to work for? Why? 9
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10. Exercise 3-1 Imagine this – wrap up
Choose something you love
Do the “work”
Sell it 10
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11. Module 3 Objectives: Understand importance of business planning.
Understand basics of writing a business plan.
Understand funding landscape and options.
Become familiar with agencies and their relationship to a business and its owner. 11
© Copyright Katherine Korman Frey/Vision Forward, LLC 11
© Copyright Katherine Korman Frey/Vision Forward, LLC

12. Exercise 3-2 Thinking about “how”
Ask yourself “how” in response to three ideas you have.
Write down the answer to the “how” question.
Discuss in class.
Sample:
Thought/idea: “Joining the track team.”
How I will accomplish:
1. Talk to friends on track team about try outs.
2. Talk to coach about try outs (timing, requirements, etc.).
3. Practice and train until the try out date. 12
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13. Basics of business plan Overview
Typical sections of a typical business plan.
I. Executive Summary
II. Product or Service Description
III. Market Landscape
IV. Operational Plan
V. Sales and Marketing Plan
VI. Financial Plan
VII. Appendices 13
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14. Basics of business plan Exec Summary & Product/Service Description
I. Executive Summary
- One page description of the business.
II. Product or Service Description 14
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15. Basics of business plan Market Landscape
III. Market Landscape:
The industry and its characteristics
Size – (Units and Dollars)
Growth
Consumer behavior
Other factors
Target markets.
People
Place
Preference
Competition 15
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16. Basics of business plan Operational Plan
IV. Operational Plan
Team and Structure
Management team and roles
Tip: Present team member bio.
Tip: Project needs for staff in the future.
Tip: What function in the company will they be handling?
Business location
Tip: List advantages
Form of ownership
Sole Proprietorships most common
Partnership, Corporation, LLC (click link) 16
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17. Basics of business plan OWNERSHIP STRUCTURE - SIDE BAR
IV. Operational Plan - FORM OF OWNERSHIP
Sole Proprietorship
Partnership
Corporation
C Corp
S Corp
Limited Liability Company
(Back to previous slide) 17
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18. Basics of business plan Operational Plan (cont.)
IV. Operational Plan
Product/Service Plan
Detailed description of product/service
Supplier/Manufacturing/Inventory detail
Major Year 1 Tasks and Future Goals
Year 1 Tasks
Tip: List dates and status too
Future Goals
Tip: Be as specific as possible 18
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19. Basics of business plan Sales & Marketing
IV. Sales & Marketing Strategy - Reality Check
Advertising spending:
Third largest expenditure
Growing favoritism toward online
Most important online marketing tactics
69% Web sites
36% Search engine key words
24% marketing
Most important offline marketing tactics
35% Fostering good community relations
27% Public relations/ media coverage
Sources: & 19
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20. Basics of business plan Sales & Marketing
IV. Sales & Marketing Strategy
Product
Example: Mature product
Example: New/introductory product
Place
Tip: Sales strategy
Price
Internal/Cost perspective
External/market perspective
Promotion (continued….) 20
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21. Basics of business plan Sales & Marketing (cont.)
IV. Sales & Marketing Strategy
Promotion
Advertising
Tip: Advertising value
Publicity
Tip: Made you look!
Personal Selling
Tip: Relationships 21
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22. Basics of business plan Sales & Marketing (cont.)
IV. Sales & Marketing Strategy
GENERAL TIPS
Tip: Go Guerilla
Tip: Objective-based promotion
Tip: Why is this special? 22
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23. Basics of business plan Financial plan
VI. Financial plan:
Revenue
Expenses
Net income
Basic equation: Revenue – expenses = income
Important equation: Revenue-ALL expenses=NET income
Proposed plan to meet capital needs
Capital = “money” 23
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24. Basics of business plan FINANCE DISCUSSION
VI. Financial plan (DISCUSSION)
If you could have a $1,000,000 dollar business and make $100,000 in income vs. a $250,000 business where you make the same amount in income ($100,000), which would you choose and why? 24
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25. Basics of business plan Financial plan (cont.)
VI. Financial plan
Revenue
Defining a unit
Critical for scale
Financial analysis
Defining your market
Top down
Tip: Avoid overly-aggressive .com-era projections
Bottom up 25
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26. Basics of business plan Financial plan (cont.)
VI. Financial plan
Expenses
Your time
Rent
Utilities
Telephone
Car
Insurance
Machinery
Equipment
Office
Inventory
Marketing/Promotion
Professional Dues or Fees
Other 26
© Copyright Katherine Korman Frey/Vision Forward, LLC

27. Basics of business plan Financial plan (cont.)
VI. Financial plan
Profit
Write down your projected income for a month or a year.
Write down your projected expenses for a month or a year.
Subtract #2 from #1. Example $100-$75=$25
Divide your answer by #1. Example $25/$100= 25%.
THIS IS YOUR PROFIT
$100
- $75
$25
$25 ÷ $100 = 25%
25% 27
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28. Basics of business plan Financial plan (cont.)
VI. Financial plan
Profit
What do entrepreneurs do with profit?
Invest back in the business
Pay back investors
Keep it for themselves
A combination of the above
What would you do with the profits from your business? Make a pie chart. 28
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29. Basics of business plan Financial plan (cont.)
VI. Financial plan
Proposed plan to meet your capital needs
NOW items
LATER items
Funding sources
“Funding landscape” section…. 29
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30. Basics of business plan Financial plan (cont.)
VI. Financial plan: Projected income and expenses.
Projected Income:
Revenue – expenses = income
Proposed plan to meet capital needs
Capital = “money” 30
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31. Basics of business plan Appendices
VII: Appendices
Detailed spreadsheets
Market research
Other ‘bulky’ items 31
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32. Exercise 3-3 Business plan brainstorm
Building a business plan – this exercise
Read datasource appendix
Fill in business plan outline
The general idea – skills you need
Gather data
Filter it
Put it in the right place 32
© Copyright Katherine Korman Frey/Vision Forward, LLC

33. Exercise 3-3 Business plan brainstorm
I. Executive Summary
One page description of the business.
II. Product or Service Description
III. Market Landscape
Industry and characteristics
Target markets
Competition 33
© Copyright Katherine Korman Frey/Vision Forward, LLC

34. Exercise 3-3 Business plan brainstorm
IV. Operational Plan
Team/roles and organization’s structure
Form of ownership (sole proprietorship, etc.)
Business location
Material sources for product/service
Major Year 1 Tasks and Future Goals 34
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35. Exercise 3-3 Business plan brainstorm
V. Sales & Marketing Strategy
Product
Place
Price
Promotion 35
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36. Exercise 3-3 Business plan brainstorm
VI. Financial Plan
Projected Income:
Revenue – expenses = Income
Year 1
Year 2
Proposed plan to meet capital needs 36
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37. Exercise 3-3 Business plan brainstorm
VII. Appendix/Appendices 37
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38. Exercise 3-4 YOUR business plan
Consider your passion/interest area
PART 1: Fill out business plan outline with YOUR idea
PART 2: Financial worksheet – plug back into PART 1 (main outline) 38
© Copyright Katherine Korman Frey/Vision Forward, LLC

39. Exercise 3-4 YOUR business plan
I. Executive Summary - One page description of the business.
II. Product or Service Description
III. Market Landscape
Industry and characteristics
Target markets
Competition 39
© Copyright Katherine Korman Frey/Vision Forward, LLC

40. Exercise 3-4 YOUR business plan
IV. Operational Plan
Team/roles and organization’s structure
Form of ownership (sole proprietorship, etc.)
Business location
Material sources for product/service
Major Year 1 Tasks and Future Goals 40
© Copyright Katherine Korman Frey/Vision Forward, LLC

41. Exercise 3-4 YOUR business plan
V. Sales & Marketing Strategy
Product
Place
Price
Promotion 41
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42. Exercise 3-4 YOUR business plan
VI. Financial Plan (REFER TO PDF PART 2)
Projected Income:
Revenue – expenses = Income
Year 1
Year 2
Proposed plan to meet capital needs
Sources: 3-4 PDF PART II derived from DECA curriculum by Dr. Susan G. Duffy 42
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43. Exercise 3-4 YOUR business plan
VII. Appendix 43
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44. Module 3 Objectives: Understand importance of business planning.
Understand basics of writing a business plan.
Understand funding landscape and options.
Become familiar with agencies and their relationship to a business and its owner. 44
© Copyright Katherine Korman Frey/Vision Forward, LLC 44
© Copyright Katherine Korman Frey/Vision Forward, LLC

45. Funding landscape & options
Funding, financing, etc.
Pay start up costs.
Fund growth
Short term cyclical needs
Just in case
Quick facts about funding
Credit
Sources of capital/funding
Most commonly used 45
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46. Funding landscape & options
What funding options to you have?
Debt
Equity 46
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47. Funding landscape & options
Four Sources of Funding
Financial Institutions
FFF: Founder, Friends and Family
Angel Investors
Private Equity/Venture Capital Funds 47
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48. Funding landscape & options
SOURCE 1 of 4: Financial Institutions
Credit card
Reality check
Community Banks
Large banks
Small Business Administration (works with banks)
Pros & Cons
Sources: Four funding sources provided by DECA curriculum by Dr. Susan G. Duffy 48
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49. Funding landscape & options
SOURCE 2 of 4: FFF - Founder, Family & Friends
Founder
Pros & cons
Friends and Family
Reality check
Sources: Four funding sources provided by DECA curriculum by Dr. Susan G. Duffy 49
© Copyright Katherine Korman Frey/Vision Forward, LLC

50. Funding landscape & options
SOURCE 3 & 4 of 4:
Angel Investors & Private Equity Funds
Angel Investors
Pros & cons
Private Equity/Venture Capital Funds
Sources: Four funding sources provided by DECA curriculum by Dr. Susan G. Duffy 50
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51. Funding landscape & options
5. The “FIFTH ELEMENT”:
Advanced Material:
GOING PUBLIC / IPO 51
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52. Exercise 3-5 Your funding options Debt or equity?
Further exploration on funding
Approach strategy 52
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53. Module 3 Objectives: Understand importance of business planning.
Understand basics of writing a business plan.
Understand funding landscape and options.
Become familiar with agencies and their relationship to a business and its owner. 53
© Copyright Katherine Korman Frey/Vision Forward, LLC 53
© Copyright Katherine Korman Frey/Vision Forward, LLC

54. Agency relationships Establishing a business the right way
Different rules for different business sizes 54
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55. Agency relationships Zoning office Increased vehicular traffic
Number of employees
Use of a home
Selling retail goods
Storage
Learning more: Search zoning office + town
Sources: Start Your Own Business: The Only Start-Up Book You'll Ever Need (Entrepreneur Press) & 55
© Copyright Katherine Korman Frey/Vision Forward, LLC

56. Agency relationships Internal Revenue Service
Do I need to file taxes
Federal ID number
Payment of employees
Learning more:
Business License. Do I need one?
Examples
Learning more: Search Business license + town
State corporation commission
How to incorporate
Learning more: Search 56
© Copyright Katherine Korman Frey/Vision Forward, LLC

57. Agency relationships Department of Labor Small Business Administration
Wages
Health insurance
Benefits
Work environment
Hiring, firing
Learning more:
Small Business Administration
Loans
Certification
Learning more: 57
© Copyright Katherine Korman Frey/Vision Forward, LLC

58. Associations and membership organizations for the established entrepreneur
National Federation of Independent Business
United States Association for Small Business and Entrepreneurship
Entrepreneur’s Organization
Young Presidents Organization
Women’s Presidents Organization
Search local peer forums at Edward Lowe Foundation 58
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59. Associations and membership organizations for the emerging entrepreneur
Young Entrepreneur Foundation
Distributive Education Clubs of America (DECA)
National Foundation for Teaching Entrepreneurship (NFTE)
Junior Achievement
Future Business Leaders of America (FBLA)
Students in Free Enterprise (SIFE)
Hugh O’Brien Youth Foundation (HOBY) 59
© Copyright Katherine Korman Frey/Vision Forward, LLC

60. Module 3 Objectives: Understand importance of business planning.
Understand basics of writing a business plan.
Understand funding landscape and options.
Become familiar with agencies and their relationship to a business and its owner. 60
© Copyright Katherine Korman Frey/Vision Forward, LLC 60
© Copyright Katherine Korman Frey/Vision Forward, LLC

61. Brought to you by: Entrepreneur-in-the-Classroom brought to you by:
Co-presenting Sponsor
In Conjunction With
Curriculum developed by:
Katherine Korman Frey
Founder, Vision Forward & The Hot Mommas® Project.
Associate Director Center & Adjunct Professor, The George Washington University Center for Entrepreneurial Excellence.
Contributing content provided by: Dr. George Solomon, Dr. Susan Duffy, Dr. Ayman Tarabishy and Professor Janet Nixdorff. 61
© Copyright Katherine Korman Frey/Vision Forward, LLC