Business planning basics for hm educators pwp

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Business planning basics for hm educators pwp

  1. 1. Cindy Dvergsten, Holistic Management Certified Educator Whole New Concepts LLC www.wholenewconcepts.com cindydv@wholenewconcepts.com Presented December 9 th , 2011 for Certif ied Educator Conference Call
  2. 2. Overview Introductions : What brings you to this call today? Do you have a business plan? What is the purpose of having a business plan? What is a business plan? Key components of a business plan. Feasibility studies support the business plan Financial Statements Financing and Profitability considerations Group DiscussionBusiness Planning Basics Copyright © 2011 Whole New Concepts LLC
  3. 3. Why Plan a Business? “By failing to plan you are planning to fail” Proverb “It pays to plan ahead. It wasnt raining when Noah built the ark.” Proverb “Expect the best, plan for the worst, and prepare to be surprised.” Denis Waitley “Good fortune is what happens when opportunity meets with planning.” Thomas Edison In reality, business plans can take a long time to write, require that you have a tremendous amount of data at your fingertips, depend in part on projections, and often are responsible for creating a long list of research you still need to conduct and other work you need to complete. But despite all of that, business plans can be one of the most effective tools for the small business owner who is starting, growing and even managing a business.Business Planning Basics Copyright © 2011 Whole New Concepts LLC
  4. 4. Top Ten Reasons to Have a Business Plan 1. Forces you to look at the whole business  2. Focuses attention on important issues 3. Guides adaptation and innovation by testing feasibility 4. Helps to clarify and communicate your goals and objectives 5. Provides a means of assigning priorities 6. Provides a framework for daily decision‐making and better management 7. Helps maintain a proactive business attitude 8. Serves as a benchmark to track performance 9. Stimulates development of new and emerging business opportunities 10. Helps you to access capital, acquire business partners,  and attract employees Additional reasons?Business Planning Basics Copyright © 2011 Whole New Concepts LLC
  5. 5. The Business Planning Cycle  The owner assumes the lead in the process  The planning process involves everyone in the family and business  The plan reflects reality (feasibility has been determined)  There is a contingency plan for the worst-case scenario  The goals and objectives are achievable and clear  The plan is flexible  The plan is used to run the business, reviewed often, and revised when necessaryBusiness Planning Basics Copyright © 2011 Whole New Concepts LLC
  6. 6. Basic Outline for a Business Plan Section I   Executive Summary The executive summary is the first section of your small business plan that is typically written last. It provides an overview of all of the other sections in the business plan. Section II   Company Description General Description of Business Vision and Mission Statements Business Goals and Objectives Section III   Background Information Industry Business Fit in the Industry Experience & Past Performance Section IV   Organizational Matters Business Structure Management & Personnel Operating Controls & Risk Mgt.Business Planning Basics Copyright © 2011 Whole New Concepts LLC
  7. 7. Basic Outline for a Business Plan Section V   Marketing Plan Appendix Products/Services (benefits & features) The appendix of your business plan includes information that Market Analysis (identify customer, niche,  supports your statements, geographic area, competition, demand, etc.) assumptions and reasoning used Pricing & Delivery  in the other sections of your Marketing Strategies (how to attract &  business plan. This may include graphs, charts, statistics, photos, promote business, serve customers etc. marketing materials, research Section VI   Financial Plan and other relevant data. Costs of goods sold,  Operating Expenses  Start up Expenses Sales Projections  Cash Flow Projections Financial Statements Income Statement (P&L) Balance Sheet (Owners Equity/Net worth)Business Planning Basics Copyright © 2011 Whole New Concepts LLC
  8. 8. Basic Feasibility Considerations SCOPE  What is the business opportunity?  What is the purpose? What are your goals?  What are the features and benefits? SWOT ANALYSIS (strengths, weaknesses, opportunities, threats)  Your business  Your industry  Your target market  Your competition FINANCIAL FEASIBILITY  What are your capital requirements?  Do you need outside funding?  Why will your idea be profitable?  When will you reach your break-even point?  What rate of return do you expect? FEASIBILITY OF SALES VOLUME  How, when, and where will you generate revenue?  How much will it generate?  Why are these projections realistic?Business Planning Basics Copyright © 2011 Whole New Concepts LLC
  9. 9. Additional Feasibility Considerations MARKETING FEASIBILITY How will you communicate with customers? Why, when, how, where, and how much will they buy? What price will they pay? What price, promotion, and placement strategies will you use? FEASIBILITY OF PERSONNEL Do you have the right mix of personnel, with the right training? Have they bought into the business idea? What functions will be outsourced? LOGISTICAL FEASIBILITY What are your product and performance specifications? How will you ensure that they are met? Can you get enough of the supplies and materials you need? What’s the turnaround time? Is your supply chain adequate? Do you have the equipment you need?Business Planning Basics Copyright © 2011 Whole New Concepts LLC
  10. 10. Additional Feasibility Considerations LEGAL FEASIBILITY Does the idea meet local, state, and federal regulations? Do you need to protect intellectual property? What contracts, permits, licenses and leases are required? ENVIRONMENTAL FEASIBILITY Will implementing the concept reduce, reverse, or offset environmental damage? What is the environmental impact of resource extraction, manufacturing, storage, shipping, consumer use, and disposal? Can you reduce external costs and increase external benefits? SOCIAL FEASIBILITY How does each aspect of your product and your business affect workers, neighbors, and communities at home and abroad? Can you reduce external costs and increase external benefits?Business Planning Basics Copyright © 2011 Whole New Concepts LLC
  11. 11. Financial Statements Used in Business Planning Income StatementBusiness Planning Basics Copyright © 2011 Whole New Concepts LLC
  12. 12. Financial Statements Used in Business Planning Balance Sheet  Profit & Loss StatementBusiness Planning Basics Copyright © 2011 Whole New Concepts LLC
  13. 13. Financial Statements Used in Business Planning Performance  ReportsBusiness Planning Basics Copyright © 2011 Whole New Concepts LLC
  14. 14. Financial Statements Used in Business Planning Cost of Goods SoldBusiness Planning Basics Copyright © 2011 Whole New Concepts LLC
  15. 15. Financial Statements Used in Business Planning Owners Equity StatementBusiness Planning Basics Copyright © 2011 Whole New Concepts LLC
  16. 16. Financial Statements Used in Business Planning Annual Cash Flow StatementBusiness Planning Basics Copyright © 2011 Whole New Concepts LLC
  17. 17. Reasons Businesses Seek Financing  Research and development  Growth or start-up expenses  Purchase a business  Seasonal working capital  Permanent working capital  Equipment acquisition  Real estate acquisition  Other: ______________________Business Planning Basics Copyright © 2011 Whole New Concepts LLC
  18. 18. Three Ways to Increase Profitability 1. Increase your sales volume (without increasing your costs) 2. Reduce your fixed costs (without causing a decrease in your sales volume) 3. Increase your contribution margin by: • Increasing the sales price (without decreasing volume) • Decreasing variable costs (reduce inputs) • Changing product or service mix to those with contribution margins (without decreasing volume) Contribution Margin (C) is Unit Revenue (Price, P) minus Unit Variable Cost (V): C = P − VBusiness Planning Basics Copyright © 2011 Whole New Concepts LLC
  19. 19. Discussion Do you have personal experiences about business planning to share? How do you feel about business planning? What are the barriers you or other you know of have faced in completing business plans? What does the practice of Holistic Management contribute to the business planning process? Other thoughts or comments? What “gem” are you going to take away from today’s presentation and discussion?Business Planning Basics Copyright © 2011 Whole New Concepts LLC
  20. 20. Cindy Dvergsten, Holistic Management Certified Educator Whole New Concepts LLC www.wholenewconcepts.com cindydv@wholenewconcepts.com Presented December 9 th , 2011 for Certif ied Educator Conference Call

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