3 What is a Business Plan?describes all the steps necessary to open and operate a successful business.Describes your product/service, how you will produce it, and who will buy itExplains who is going to run the businessStates how it will win over customers & keep themProvides detailed financial information (earning a profit)
4 Why a business plan? Three Purposes: To explain the idea behind your business and how your product or service will be sold,To set specific objectives and describe how your business expects to achieve them,To describe the backgrounds and experiences of the people running the business.*Remember to anticipate questions potential investors will want to have answered.
5 Prewriting/Brainstorming What is my product/service?Why is my product/service unique?Who are my customers?Where will future customers come from?Who is on my business team?How will I finance my business?
6 Importance of a Business Plan Makes you think about all aspects of your businessGiving you more confidence in your ideaMay help to secure financingCannot get a loan without itHelps communicate your ideas to othersYou know your business in and out which allows you to explain it properlyServes as a tool to manage your businessCan guide you in decision making
7 Homework:Describe the importance of a business plan in your own words.Answer the who, what, where, when, why, and how of your business. (1-2 sentences to answer each)
9 Business Plan NOT all the same Retailer focuses on inventory vs. Consulting focuses on employee credentialsSmall, home-based, sole-owner vs. Large corporation with numerous offices all over
10 Three Basic Components Introductory ElementsMain BodyBulk of info with detailsWritten first and used to write the other two partsAppendix
11 Main Body has 5 Sections: IntroductionMarketingFinancial ManagementOperationsConcluding StatementWhere the inspiration came from, your vision, and the goals of the business
12 1. Introduction Detailed Description & Goals Inspiration, vision, and directionOwnership and Legal StructureNumber of owners effects business operationsSkills and ExperiencePaid, volunteer, hobbiesCompetitive AdvantagePerformance, quality, reliability, distribution, price, promotion, public image/reputation
13 2. Marketing Products and Services Market Industry Location How is it different? Unique?MarketProspective customers and size of marketIndustryResearch: external factors, growth potential, economic trends, and technology trendsLocationCritical for success
14 3. Financial Management Identify Risks How will you deal with these risks?Financial Statements (current & pro-forma)Funding Request and Return on InvestmentHow much will you borrow?How will you use the money?Return on investment.Who is managing financial records?
15 4. Operations Day-to-day operations Hiring and personnel procedures Insurance and lease or rental agreementsEquipment necessary to run your business
16 5. Concluding Statement Summary of goals and objectives Emphasize your commitment to success of business
17 Introductory Elements Cover LetterTitle PageTable of ContentsStatement of PurposeWhy are you asking for a loan and what will you do with the money?Executive SummaryShort restatement of the report
18 Appendix Supporting Documents What would you want to know about a business before lending it money?Personal tax returnsPersonal financial statementCopy of lease or purchase agreementCopy of Business licenseCopy of resumeLetters of recommendationCopies of letters of intent from suppliersCopies of contracts
19 Putting It All Together Best opportunity to convince people of:Your ideaYour talentAbility to make it successfulAttractive, neat, organized document
20 How to Create an Effective Business Plan Lesson 2.3
21 Research your industry CommunityGovernmentProfessionalPrintedOnlineSBASBDCSCOREChamber of CommerceTrade AssociationsProfessional ConsultantsFinancial Institutions
22 Mistakes to look at Unrealistic Financial Projections Undefined Target MarketPoor ResearchIgnored CompetitionInconsistencies in the Business Plan