Introduction to Preparing a Business Plan

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Introduction to Preparing a Business Plan

  1. 1. WELCOME ! Introduction to Preparing a Business Plan Presented by: Resource Partner of the U.S. Small Business Administration
  2. 2. Why a Business Plan? <ul><li>WHAT is a Business Plan ? </li></ul><ul><li>WHY is it necessary ? </li></ul><ul><li>WHEN is it needed ? </li></ul>
  3. 3. Benefits of a written Plan <ul><li>A reality check when you first examine the feasibility of your business idea, which forces you to consider all the relevant factors. </li></ul><ul><li>Y our business’s resume, which will be vital in dealing with lenders and outside investors, an important tool in negotiating with vendors, and attracting employees. </li></ul><ul><li>A timetable for operations, helping you to coordinate all the diverse activities that go into running your business. </li></ul>
  4. 4. Benefits of a written Plan <ul><li>A modeling tool that helps you evaluate the variable factors that affect your business, so you can better prepare to deal with situations that may arise as conditions change. </li></ul><ul><li>A vehicle for tracking progress </li></ul><ul><li>A blueprint against which you can adjust operations in order to achieve your goals. </li></ul><ul><li>A starting point for future planning </li></ul>
  5. 5. Events Triggering the Need for a Plan <ul><li>You want to open a new business. </li></ul><ul><li>Your business has grown. </li></ul><ul><li>You want to introduce a new product. </li></ul><ul><li>You want to enter a new market. </li></ul><ul><li>You want to acquire a new business or franchise. </li></ul>
  6. 6. The Role of Planning <ul><li>P l a n </li></ul><ul><li>(prepare for the future) </li></ul><ul><li>Evaluate A c t </li></ul><ul><li>(explain variances) (implement the plan) </li></ul><ul><li>Analyze Results </li></ul><ul><li>(compare results) (something happens) </li></ul><ul><li>Record </li></ul><ul><li>(measure the results) </li></ul>
  7. 7. Components of a Business Plan <ul><li>Part I. Executive Summary. </li></ul><ul><li>Part II. Description of the Business. </li></ul><ul><li>Part III. Operations </li></ul><ul><li>Part IV. Marketing </li></ul><ul><li>Part V. Personnel </li></ul><ul><li>Part VI. Financial Documentation </li></ul><ul><li>Part VII. Appendices with supporting </li></ul><ul><li>information. </li></ul>
  8. 8. Executive Summary (Completed LAST !) <ul><li> Purpose of the Plan </li></ul><ul><li>Communicates the Vision </li></ul><ul><li>States the Desired outcome </li></ul><ul><li>Mission Statement </li></ul><ul><li>Reflects core purpose and direction of the company </li></ul><ul><li>Embodies basic values of owners and employees </li></ul><ul><li>Brief outline of each section of the Plan </li></ul><ul><li>Description of the business, Structure, Product(s) and </li></ul><ul><li>Service(s), Marketing, Financing required. </li></ul><ul><li>CREATE INTEREST ! </li></ul>
  9. 9. Description of the Business <ul><li>Nature of the Business Retail, Manufacturing, Distribution, Services. </li></ul><ul><li>Status Startup, Expanding </li></ul><ul><li>Structure Sole Proprietor, Partnership, Corporation. </li></ul><ul><li>Location </li></ul><ul><li>Product(s) </li></ul><ul><li>Unique Selling Principle </li></ul>
  10. 10. Operations <ul><li>Where will the facilities be located. </li></ul><ul><li>Leasing or buying. </li></ul><ul><li>Zoning. </li></ul><ul><li>What material and equipment are needed. Detail the costs. </li></ul><ul><li>Special licenses required. </li></ul>
  11. 11. Marketing Strategies <ul><li>Target Market Segments </li></ul><ul><li>Promotional Strategies </li></ul><ul><li>Pricing Strategies </li></ul><ul><li>Growth Expectations, Units and/or Value </li></ul><ul><li>Identify Selling Costs, separate from production costs or other overhead expenses. </li></ul><ul><li>Distribution methods. </li></ul>
  12. 12. Market Research <ul><li>You must learn . . . </li></ul><ul><li>Who will buy from you? </li></ul><ul><li>How will they buy from you? </li></ul><ul><li>Where they will buy from you? </li></ul><ul><li>What benefits are they buying? </li></ul><ul><li>When will they buy from you? </li></ul><ul><li>How often will they buy? </li></ul><ul><li>How much will they buy? </li></ul><ul><li>Why will they buy from you? </li></ul>
  13. 13. Research Tools <ul><li>Observation </li></ul><ul><li>Public Library – On-Line, Off-Line </li></ul><ul><li>Trade Associations </li></ul><ul><li>Census Bureau – Demographic Data </li></ul><ul><li>Study Competitors – Learn who they are, what they provide, pricing structures. </li></ul><ul><li>Professional Research Companies </li></ul>
  14. 14. Competitors and Competition <ul><li>Who are they? </li></ul><ul><li>Location and Market Share </li></ul><ul><li>Increasing or Decreasing – in Number or Size </li></ul><ul><li>Comparison Grid – Price, Service, Delivery, Marketing </li></ul><ul><li>SWOT analysis – How can you exploit these factors? </li></ul>
  15. 15. Personnel <ul><li>Management Staffing </li></ul><ul><li>Who are the owners? </li></ul><ul><li>Who are the key personnel? </li></ul><ul><li>Describe their background and experience. Skills they bring to the business. </li></ul><ul><li>Personnel Staffing </li></ul><ul><li>Identify staffing requirements by type of position. Number of employees, salary ranges, timing of employment. </li></ul><ul><li>Ancillary Services </li></ul><ul><li>Identify other resources used: Accountant, Attorney, Bank, Insurance, Other professional resources. </li></ul>
  16. 16. Personal Skill Inventory <ul><li>Review past achievements </li></ul><ul><li>Work positions </li></ul><ul><li>Credentials </li></ul><ul><li>Education </li></ul><ul><li>Free-time activities </li></ul><ul><li>Projects </li></ul><ul><li>Community Service </li></ul><ul><li>Knowledge </li></ul><ul><li> Skills </li></ul><ul><li>Capabilities </li></ul><ul><li>Evaluate Past Achievements </li></ul><ul><li>How successful were you at setting and meeting goals? </li></ul><ul><li>How did interaction/communication skills affect performance? </li></ul><ul><li>How did you solve the problem or complete the project? </li></ul><ul><li>What would you do differently? </li></ul>
  17. 17. Finance <ul><li>Personal Financial Status </li></ul><ul><li>Summary of financial needs </li></ul><ul><li>Sources and uses of funds </li></ul><ul><li>Financial forecasts </li></ul><ul><li> Income Statement Cash Flow Statement, </li></ul><ul><li>Break Even Analysis Balance Sheet </li></ul>
  18. 18. Personal Financial Status <ul><li>Personal Financial Statement </li></ul><ul><li>Cash position, investments, property owned, liabilities. </li></ul><ul><li>Address past credit problems </li></ul><ul><li>Personal Assessment </li></ul><ul><li>What is the amount and nature of your investment? </li></ul><ul><li>What are you able and willing to risk? </li></ul><ul><li> </li></ul>
  19. 19. Summary of Financial Needs <ul><li>* Start-Up or Planned Expansion Costs </li></ul><ul><li>* Capital Expenditure </li></ul><ul><li>* “Long Term” Working Capital Cycle </li></ul><ul><li>Funding Losses </li></ul><ul><li>Project Financing </li></ul><ul><li>* Working Capital </li></ul><ul><li>Contract Financing </li></ul><ul><li>Accounts Receivable and Inventory Financing </li></ul>
  20. 20. Sources of all funds <ul><li>Personal </li></ul><ul><li>Family, Private Investor </li></ul><ul><li>Venture Capital Investor </li></ul><ul><li>Credit Card/ Small Business Credit Products </li></ul><ul><li>Commercial Bank </li></ul>
  21. 21. Use of Funds <ul><li>Purchase of real estate </li></ul><ul><li>Cleaning / Renovation of premises </li></ul><ul><li>Purchase of manufacturing equipment </li></ul><ul><li>Purchase of vehicles </li></ul><ul><li>Purchase of office equipment and systems </li></ul><ul><li>Start-Up organizational costs </li></ul><ul><li>Operating Funds </li></ul>
  22. 22. Source and Application of Funds <ul><li>Source of Funds: </li></ul><ul><li>Investment by Owner(s) $ 5,000 </li></ul><ul><li>Bank Loan – First City Bank 14,000 </li></ul><ul><li>Personal Loan from family (no interest) 3,000 </li></ul><ul><li>Total Investment $ 22,000 </li></ul><ul><li>Application of Funds: </li></ul><ul><li>Equipment Purchases $ 3,000 </li></ul><ul><li>Leasehold improvements 1,000 </li></ul><ul><li>Initial Inventory 4,000 </li></ul><ul><li>Pre-business startup costs 500 </li></ul><ul><li>Working Capital 4,500 </li></ul><ul><li>Purchase of truck (used) 6,000 </li></ul><ul><li>Purchase of computer and software 3,000 </li></ul><ul><li>Total $ 22,000 </li></ul><ul><li>====== </li></ul>
  23. 23. Financial Plan Current Status : * Balance Sheet * Profit & Loss Statement(s) <ul><li>Forecasts: </li></ul><ul><li>Twelve Month Sales Forecast </li></ul><ul><li>Projected Operating Statement </li></ul><ul><li>Projected Monthly Cash Flow </li></ul><ul><li>Break Even Analysis </li></ul><ul><li>Balance Sheet </li></ul>
  24. 24. Supporting Documents <ul><li>Resumes of owners and key personnel </li></ul><ul><li>Personal credit information of 20% owners </li></ul><ul><li>Personal references </li></ul><ul><li>Leases, Franchise Agreement, etc. </li></ul><ul><li>Legal Documents, Licenses, Certificates </li></ul><ul><li>Loan Agreements </li></ul><ul><li>Sales contracts from customers </li></ul><ul><li>Certified set of accounts (if already in business and seeking new financing) </li></ul>
  25. 25. Helpful Web Sites, www. <ul><li>sba.gov U.S. Small Business Administration </li></ul><ul><li>score.org Service Corps of Retired Executives </li></ul><ul><li>uspto.gov Patents and Trademarks </li></ul><ul><li>state.oh.us/sos Ohio Secretary of Sate; forms, information </li></ul><ul><li>toolkit.cch.com CCH Business Owners toolkit </li></ul><ul><li>vfinance.com Loans and investment for business </li></ul><ul><li>bplans.com Examples of Business Plans </li></ul><ul><li>startupjournal.com Wall Street Journal Center for Entrepreneurs </li></ul>

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