1. Dr. Kenneth Lacho Dr. William Galle
The Business Plan
Dr. Kenneth Lacho
Dr. William Galle

2. The Business Plan Mission Statement and the Business Environment

3. Key Points
The business plan describes the purpose of a business & its management philosophy.
Writing a brief mission statement helps the entrepreneur to be more focused.
An analysis of the business environment is critical and includes industry trends & local economic trends.

4. Mission Statement- Definition
A mission statement is a concise well- defined explanation of the purpose of the business & management’s philosophy.
A mission statement of 50 words or less forces the entrepreneur to be focused.
The statement should state the product/service, targeted customer(s), geographic region covered.

5. Mission Statement- Purpose
The mission statement provides direction for the company & prevents the company from diversifying into areas that do not serve the company’s purpose.
A mission statement should be the first step in developing a business plan.

6. Business Environment-National Trends
Each business will be affected by different national trends.
Examples of national trends include changes in demographics, life style changes, technology, & legislative trends.

7. Business Environment- Industry Trends
Industry trends include large increases or decreases in sales or shifts in how the business operates.
National trade associations are good sources of information concerning industry trends.

8. Business Environment- Local Trends
Consider trends in the community in which the business will locate.
Local trends often have more of an impact on a business than national trends.

9. What is included in the Business Plan
Major topic headings include:
Executive Summary
Mission Statement
Business Environment
Marketing Plan
Operations including location, distribution, supplies
Legal Form of Organization
Insurance
Management and Personnel

10. What is included in the Business Plan (continued)
Major topic headings include:
Financial Projections
Cash Budget
Profit and Loss statement
Opening day balance sheet

11. Executive Summary This is exactly what the name states: a summary.
It should be brief, no more than two pages. It should also be single-spaced.
Most importantly, it should be written only after the rest of the plan has been written and follow the outline of the business plan. (Note: This section is single-spaced.)

12. Marketing Plan
The marketing plan consists of several different parts focused around the product, the customers, and how you plan to attract customers to your product.
The parts included in the marketing plan are the following: product or service, customers, competitors, competitive advantage, pricing, and promotion.

13. Marketing Plan Continued- Product or Service
Provide a brief, but complete description of your product or service.
The description should be clear and detailed enough for any reader to envision.
Unless you are dealing with a truly unusual product or service, a paragraph should be sufficient.

14. Marketing Plan Continued- Customers
Describe fully the people to whom you plan to sell your product or service. Use accurate demographics such as age, income, education, and geographic location.
Other ways to describe your customers might be: “people who are moving,” “people who are getting married,” “people who must use a wheelchair.”
Accuracy is critical because this description will help you to estimate how many customers you have, how much money you can charge, how you are going to get the product or service to them, and how you are going to tell them about your product or service.

15. Marketing Plan Continued- Competitors
In this section, you must develop a list of either specific competitors (contact names, phone numbers and locations of businesses) or groups of firms which will be competing for your customers.
Competitors should be separated into Direct and Indirect.
Direct competitors are those selling essentially the same product or service that you intend to provide. For example, if your service is swamp tours, you would list all others who are providing swamp tours.
Indirect competitors are those who are trying to attract customers away from your type of business (swamp tours) to a different type of business (fishing trips, water parks).

16. Marketing Plan Continued- Competitive Advantage
Describe in one or two sentences why people are going to use your product or service instead of that of your competitors.

17. Marketing Plan Continued- Pricing
In this section you must describe the different versions of your product or service and the prices you will charge for each.
You also may be planning to sell to different groups of customers for which you might charge different prices. For example, if you were providing landscaping services you might sell to homeowners and corporations, you might have two different pricing schedules.
Accuracy in pricing is critical because it is the foundation of your revenue estimates, and ultimately your profitability calculations.

18. Marketing Plan Continued- Promotion
Promotion consists of all the ways you inform, persuade, and remind current and potential customers about your company, product or service.
Methods of promotion include the following: personal selling, advertising, sales promotion, publicity, word-of mouth, and networking.

19. Promotion Continued Personal Selling
Includes calling customers at their place of business, serving them at the counter and on the telephone. Networking and word-of-mouth programs are included in this category.
1. Develop a list of potential customers.
2. Call and make contact.
3. Send letter or brochure.
4. Make telephone call and schedule personal visit.
5. Make visit and bring samples.
6. Follow-up with thank you phone call.

20. Promotion Continued Advertising
Is a non-personal form of communication.
Advertising media include, but are not limited to, print (newspapers, fliers, Yellow Pages), broadcast (radio, television), direct mail, signage, and Internet websites.

21. Promotion Continued Sales promotion
Consists of tours, contests, cooperative advertising, point-of-purchase advertising, specialties (e.g., calendars, T-shirts, mugs), and sales incentives.

22. Promotion Continued Publicity
Consists of free coverage in the news media, work in trade association activities, community involvement and charitable sponsorships.
For example, you might get a local newspaper or TV station to feature your business. You might volunteer your product or service for some special event such as the Chamber of Commerce or Special Olympics.

23. Promotion Continued Word of Mouth
Promotion occurs when you get a new customer and that customer has heard about your product or service from someone else. A successful word-of-mouth program consists of several elements:
offering an outstanding product or service;
handling complaints promptly;
developing champions who will tell others about your business; and
a system for rewarding champions.

24. Promotion Continued Networking
Is the process of developing business relationships with other individuals or organizations for mutual benefit.
Develop a list of beneficial organizations (such as the local Chamber of Commerce or an industry-based association), join them and become an active participant in them.

25. Promotion Continued Promotional Cost Summary Type Cost
Personal Selling $NN.NN
Advertising $NN.NN
Sales Promotion $NN.NN
Networking $NN.NN
Word-of-Mouth $NN.NN
Total $NN.NN

26. Operations
The Operations section describes some of the details of how you will actually conduct your business on a daily basis.
The critical aspects are legal issues, location, logistics, suppliers, and insurance.

27. Operations Continued Legal Issues
There are a number of legal issues which need to be considered when planning a new venture.
Select the appropriate form of organization and complete documents.
Review leases and contracts for buildings, vehicles, etc.
Review franchise agreements
Advise on intellectual rights and contracts
To advise on or register patents and trademarks
To advise on the use of a company name
To advise on or prepare an employment contract
To advise on or review any/all contracts

28. Operations Continued Location
The actual location of your business should be provided here.
This section should also explain why this location is a particularly good one.
Is it close to your customers? Is it close to transportation like highways or the airport? Is it close to suppliers?

29. Operations Continued Logistics
Logistics refers to how you plan to move materials and products in and out of your business.
How will you get the product to your customers? Explain your choice of distribution of your product or service.
Will you have your own delivery service? If you are in the pet grooming business, will you provide house service? Or will the customers have to come to you?

30. Operations Continued Suppliers
Whether you are providing a product or service, you will probably need materials to operate successfully.
Who are your suppliers? Where are they located relative to your business?

31. Operations Continued Insurance
Another important legal issue is insurance. There are a variety of possible insurance needs: product liability, property insurance and workmen’s compensation. Again, the need for these and other types of insurance should be determined after discussing your business with a qualified specialist.

32. Management
Your qualifications are the most important part of this section.
You should include any experience or skills you have that demonstrate that you will be successful operating your business.
Any special training or education you have received would be important.
Positions you have held in other companies that are relevant to your business should also be included.

33. Management Continued-Employees
If you anticipate hiring any employees whose skills or qualifications are critical to the success of your business, you should include a list of those employees and a description of their qualifications.
If you hire others to work for you, an organizational chart should be included to show the relationship between you and those individuals.

34. BAIL Acronym for the members of your professional team: Banker
Accountant
Insurance
Lawyer
You should list the names and locations of these individuals.

35. Appendices Appendices may include many things such as:
Detailed list of pricing
Competitors
Financial Statements
Acquisitions for the Businesses

36. Summary of Acquisitions
Lists the particular items that will be purchased for the operation of your business. Information specific to each acquisition may be the following:
Item description
Category (i.e. equipment, inventory)
Vendor Name
Manufacturer’s Number
Number of Items
Price of each item

37. Financial Statements
Perhaps the most critical part of the business plan is the demonstration of the financial success of your business. To demonstrate your financial success, you should include three different financial statements: cash flow statement, profit and loss, and balance sheet

38. Financial Statements Continued
Cash Flow Statement
This is essentially a list of all the sources of actual money coming into the business and the outflows of cash on a monthly and annual basis.
Sources would be cash from sales, cash from the sale of assets like , funds from loans, and money from your personal bank accounts.
Outflows would include paying for supplies, services (utilities), loans or the purchase of assets.
Note: This statement should be prepared using Microsoft Excel.

39. Financial Statements Continued
Profit and Loss:
This statement essentially provides a financial description of all the activity which occurs during a year and should include an exhaustive list of all revenues collected and all expenses incurred.
The P&L statement is usually prepared on a monthly basis for the first year of operation, and annually for the second and third years of operation.
Sources of revenues should be rather obvious, but you will need accurate estimates of the volume of sales and accurate pricing information (Revenue=price X volume).
Expenses can be identified by referring to examples in the textbook or by carefully thinking through the regular operation of your business.
Note: This statement should be prepared using Microsoft Excel.

40. Financial Statements Continued
Balance Sheet:
While the P&L statement is a description of action, the balance sheet is more like a photograph showing what your company looks like at the beginning and end of the year.
It contains a listing of three major categories of financial information: assets, liabilities and equity.
These three types of information are related in the following manner: Assets = Liabilities and Equity.
Assets include such things as cash, inventory, equipment, land and buildings.
Liabilities include various kinds of IOU’s: loans to banks and accounts payable to suppliers.
Equity is your personal interest in the business.
Note: This statement can be prepared using Word.

41. Financial Statements Continued
Revenue Statement
Detailed list of estimated revenue from capital acquisitions through loans, sales, and gifts

42. Thank you! Comments? Questions?