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Developing a business plan

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Presentation on theme: "Developing a business plan"— Presentation transcript:

1 Developing a business plan
Chapter 2

2 Why a business plan is important
Lesson 2.1

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 it Explains who is going to run the business States how it will win over customers & keep them Provides 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 business Giving you more confidence in your idea May help to secure financing Cannot get a loan without it Helps communicate your ideas to others You know your business in and out which allows you to explain it properly Serves as a tool to manage your business Can 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)

8 What goes into a business plan
Lesson 2.2

9 Business Plan NOT all the same
Retailer focuses on inventory vs. Consulting focuses on employee credentials Small, home-based, sole-owner vs. Large corporation with numerous offices all over

10 Three Basic Components
Introductory Elements Main Body Bulk of info with details Written first and used to write the other two parts Appendix

11 Main Body has 5 Sections:
Introduction Marketing Financial Management Operations Concluding Statement Where the inspiration came from, your vision, and the goals of the business

12 1. Introduction Detailed Description & Goals
Inspiration, vision, and direction Ownership and Legal Structure Number of owners effects business operations Skills and Experience Paid, volunteer, hobbies Competitive Advantage Performance, quality, reliability, distribution, price, promotion, public image/reputation

13 2. Marketing Products and Services Market Industry Location
How is it different? Unique? Market Prospective customers and size of market Industry Research: external factors, growth potential, economic trends, and technology trends Location Critical 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 Investment How 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 agreements Equipment 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 Letter Title Page Table of Contents Statement of Purpose Why are you asking for a loan and what will you do with the money? Executive Summary Short restatement of the report

18 Appendix Supporting Documents
What would you want to know about a business before lending it money? Personal tax returns Personal financial statement Copy of lease or purchase agreement Copy of Business license Copy of resume Letters of recommendation Copies of letters of intent from suppliers Copies of contracts

19 Putting It All Together
Best opportunity to convince people of: Your idea Your talent Ability to make it successful Attractive, neat, organized document

20 How to Create an Effective Business Plan
Lesson 2.3

21 Research your industry
Community Government Professional Printed Online SBA SBDC SCORE Chamber of Commerce Trade Associations Professional Consultants Financial Institutions

22 Mistakes to look at Unrealistic Financial Projections
Undefined Target Market Poor Research Ignored Competition Inconsistencies in the Business Plan

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