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  • 1. Welcome to the Business adVentures project! Through this project you will create your own small business and sell your products or services. What can you sell? That is completely up to you! If you want to sell your own products think of something that you do well, and sell it! It might be sewing, photography, welding, baking, crafting or anything else you can imagine. Of course you do not have to sell your own products. Think of a product already out there, and consider marketing it in our area. Another opportunity is to sell a service, such as snow shoveling, firewood cutting & delivery, lawn mowing, etc. Whatever you decide to sell, it will be a great adventure with a lot of learning along the way! 1
  • 2. Thoughts as you begin… Businesses succeed because they: • Have a clear sense of purpose • Base their goals on realistic expectations • Understand their strengths and weaknesses relative to those of their competitors • Target the right group of customers • Specialize in solving customer problems, and experiment with new approaches • Are organized for maximum flexibility • Create customer loyalty and repeat business by offering a unique value • Build enduring relationships based on quality, honesty, and responsiveness • Develop a new product or service that captures a large market share • Keep a close eye on costs, pricing, and profit Choosing a Name The first step in establishing a brand is usually taken – sometimes unwittingly – when the owner chooses a name for his or her product. What makes a good name? • It should suggest benefits (e.g., Sunkist, Mr. Clean, or Beautyrest mattresses) • It should fit the brand image: Nissan Pathfinder (adventure), Round Table Pizza (cozy food for friends and families), Ding Dongs (silly, playful food for kids) • It should be easy to pronounce and recognize • It should not be previously registered with another company NxLevel Tech Tips There are many websites devoted to entrepreneurship. Here are a couple that provide a wealth of information: • www.entrepreneur.com • www.sstartup.wsj.com -NXLevel Guide for Entrepreneurs 2
  • 3. 2006-2007 Business Plan Name of Business: Address: Telephone: Email: Website: Owner(s): 3
  • 4. THE BUSINESS PLAN – Description of the Business Section 1: Business Description Business Form:  Proprietorship (One owner)  Partnership (Two or more owners)  Corporations (Incorporated business) Business Type:  Merchandising (selling product)  Manufacturing (making a product)  Services (providing a service) --------------------------------------------------  Independent Business  Takeover (taking over a business already in operation)  Expansion (expanding existing business)  Franchise (bought rights to use name and concepts of an established business) What channels of distribution will you use?  Vendor at event  Online o Own website o eBay o Other  Advertising  Consign to store  Other_________________ Goals & Objectives: Describe why the business will be profitable and any opportunities for growth: 4
  • 5. Section 2: Product/Service Short description of product or service: List reasons that your product(s)/service will benefit your customers: What is unique and/or different about your product(s)/services? Section 3: The Location Items you will need for your business sale display:  Product(s)  Information on services (posters, brochures, flyers)  Table cover  Poster or sign with name of business  Business cards  Electricity  Lighting  Music player and music  Stands, boxes, containers on which to display products  ___________________________________________________________  ___________________________________________________________  ___________________________________________________________  ___________________________________________________________  ___________________________________________________________ 5
  • 6. Items you will need if marketing product online:  Computer  Internet access  Digital Camera  Scanner  ___________________________________________________________  ___________________________________________________________  ___________________________________________________________  ___________________________________________________________  ___________________________________________________________ Other items you will need for the business sale(s):  Business fee  Container for money  Change  Receipts  Accounting worksheets  Bags or wrappings for products  Price tags/signs  Camera  ___________________________________________________________  ___________________________________________________________  ___________________________________________________________  ___________________________________________________________  ___________________________________________________________ 6
  • 7. THE BUSINESS PLAN – The Marketing Plan Internet Auction Sites for Test Marketing With the success of Internet auction firms like eBay and Amazon.com, some entrepreneurs are test marketing their products at auctions in order to see what people are willing to pay, and how buyers react to their products. You can sell the same item over and over again at an auction site, varying the pictures, opening bid, and description: this may tell you which marketing messages get the most response, and which prices are seen as reasonable. This is an inexpensive means of collecting feedback and gauging your customers willingness to pay, and unlike many other marketing strategies, it can bring in money while you’re doing it! The drawback? It can be hard to find rhyme or reason in buying patterns at Internet auctions, and the information you gain can seem meaningless in the absence of any solid grounds for comparison with your target population. Still, if you find that every time your offer your product at an auction, it sells for at least 10% more than your tentative retail price, it’s a good indication that you can afford to raise your price! -NXLevel Guide for Entrepreneurs I. MARKET ANALYSIS Target Market – Who are your customers? A. We will be selling primarily to (check all that apply and indicate total percent of business):  Private Sector ____%  Wholesalers ____%  Retailers ____%  Government ____%  Other ___________________ ____% Competition A. Who are your competitors? Name: Location: Price/Strategy: 7
  • 8. Product/Service Features: Name: Location: Price/Strategy: Product/Service Features: Name: Location: Price/Strategy: Product/Service Features: B. How competitive is the market?  High  Medium  Low C. List below the strengths and weaknesses of your business as compared to your competition (consider such areas as location, personnel, service, etc): Strengths Weaknesses 1. 1. 2. 2. 3. 3. 4. 4. II. PRODUCT OR SERVICE ANALYSIS A. Comparison 1. What advantages does your product/service have over those of the competition? Consider such things as unique features, expertise, special training, pricing, etc.). 2. What disadvantages does it have? 8
  • 9. B. Some Considerations 1. Where will you get your materials and supplies? 2. List other considerations: III. MARKETING STRATEGIES – MARKET MIX A. Image – What kind of image do you want to have (cheap but good, exclusive, customer- oriented, highest quality, convenience, speed, etc.)? B. Features – List the features you will emphasize: C. Pricing 9
  • 10. 1. We will use the following pricing strategy:  Markup on cost ______% Markup  Suggested price $_____ --------------------------------------------------------  Competitive  Below competition  Premium price  Other________________ 2. Are our prices in line with our image? Yes __ No __ 3. Do our prices cover costs and leave a margin of profit? Yes __ No __ Typical Variable Costs Common Pricing Errors • Inputs and supplies • Basing price on current, artificially low overhead • Overtime wages costs instead of anticipating how overhead might • Depreciation on rise over time. equipment • Assuming that because you are the newest • Sales commissions competitor on the block, you must have the lowest -NXLevel Guide prices. for Entrepreneurs • Trying to compete head to head on price with larger competitors. Try instead to offer higher quality, or more attentive service. Typical Fixed Costs • Basing prices on manufacturing costs instead of • Salaries and wages the value of your producers to consumers, which • Vehicle leases and may be quite a bit higher! maintenance • Failing to include in the price an allowance for • Office equipment warranty costs, future services, research and • Marketing expenses development costs, cost of capital, dealer • Rent discounts, and sales commissions. • Utilities • Ignoring the way customer demand for the product • Payroll taxes will change at difference price levels. Would sales • Office supplies volume increase if you lowered prices by 10 or 20 • Machinery and percent? equipment • Failing to use some form of marketing skimming, in • Land which you enter a marker with a high price until • Insurance you have satisfied demand or attracted -NXLevel Guide competitors, then lower the price gradually. for Entrepreneurs -NXLevel Guide for Entrepreneurs 10
  • 11. D. Customer Service 1. List the customer services we provide: a. ___________________________________________________________ b. ___________________________________________________________ c. ___________________________________________________________ 2. These are our sales/credit terms: a. ___________________________________________________________ b. ___________________________________________________________ c. ___________________________________________________________ 3. The competition offers the following services: a. ___________________________________________________________ b. ___________________________________________________________ c. ___________________________________________________________ 11
  • 12. Customer Service Tricks • Know and greet your customers by name! • Compile a customer database with (at least) each customer’s name, birthday, special requests, and usual purchases. • Offer free or low-priced delivery. • Set up a fax and phone help/information number. • Create a “frequent customer” program, with rewards for repeat purchases. • Create a colorful, brief, informative customer newsletter. • Attach helpful tips and tailored promotional messages to invoices. • Have convenient, flexible hours that fit your customers’ schedules. • Offer free, convenient parking. • Give away free samples. • Send birthday greetings and offer birthday discounts. • Offer free demonstrations and installations. -NXLevel Guide for Entrepreneurs E. Advertising/Promotion 1. These are the things we wish to say about the business: a. ___________________________________________________________ b. ___________________________________________________________ c. ___________________________________________________________ 2. We will use the following advertising/promotion sources:  Television  Radio  Direct mail  Posters/flyers  Signage on streets  Sidewalk chalked  Personal contacts o Phone o Email o Door to door  Trade associations  Newspaper  Magazines 12
  • 13.  Yellow Pages  Billboard  Other ________________________________________________  Other ________________________________________________ 3. The following are the reasons why we consider the media we have chosen to be the most effective: a. ___________________________________________________________ b. ___________________________________________________________ c. ___________________________________________________________ THE BUSINESS PLAN – The Management Plan 1. How does your background/business experience help you in this business? 2. What strengths do you posses for this business and how will they benefit you? 3. What are your weaknesses and how can you compensate for them? 13
  • 14. 4. Who will be on the management team? 5. What are their strengths/weaknesses? 6. What are their duties? 7. What are your current personnel needs? 8. What are your plans for hiring and training personnel? 14
  • 15. 9. What salaries, benefits, vacations and holidays will you offer? 10. What benefits, if any, can you afford at this point? 15
  • 16. _____________________________ For the Period _______ to _______ (Your Company Name) 2006-2007 Financial Documents 16
  • 17. _____________________________ For the Period _______ to _______ (Your Company Name) INVENTORY DATE MADE/ DATE SALES GROSS PURCHASED SOLD ITEM DESCRIPTION COST PRICE PROFIT List all your products on this page. Add more pages if needed. _____________________________ For the Period _______ to _______ 17
  • 18. (Your Company Name) INCOME STATEMENT Revenue (Income) +$ Less Cost of Goods Sold/Services Provided - $ Equals Gross Profit =$ Less General & Administrative Expenses - $ Equals PROFIT OR LOSS =$ PROFIT MARGIN Profit $ Divided by Number of Items Produced / Equals Profit Margin =$ _____________________________ For the Period _______ to _______ 18
  • 19. (Your Company Name) REVENUE (INCOME) PRICE DATE ITEM/SERVICE EACH QUANTITY TOTAL TOTAL REVENUE List all your receipts on this page. Add more pages if needed. _____________________________ For the Period _______ to _______ (Your Company Name) 19
  • 20. COST OF GOODS SOLD PAGE 1 OF 2 AMOUNT DATE VENDOR/DESCRIPTION PAID NOTES TOTAL COST OF GOODS SOLD List all the costs involved in making/purchasing the product/service you sell. Add more pages if need. _____________________________ For the Period _______ to _______ (Your Company Name) 20
  • 21. COST OF GOODS SOLD PAGE 2 OF 2 Total Cost of Goods Sold $ Divided by Number of Units Produced / Equals Cost Per Unit =$ 21
  • 22. _____________________________ For the Period _______ to _______ (Your Company Name) GENERAL ADMINISTRATIVE EXPENSES AMOUN DATE VENDOR/DESCRIPTION T PAID NOTES TOTAL EXPENSES List all your other expenses on this page. Add more pages if needed. 22
  • 23. _____________________________ For the Period _______ to _______ (Your Company Name) CASH SHORT/OVER Beginning Cash $ (Record how much change you have.) CASH SHORT/OVER CALCULATIONS Cash at End of Day $ Less Beginning Cash -$ Equals Net Cash Receipts =$ Less Total Revenue (Sales) - $ Equals Cash Short/Over** =$ ** If this number is negative, you are missing money. ** If this number is positive, you have extra money. 23
  • 24. Resources 24
  • 25. Information Resources U.S. Small Business Administration (SBA) The SBA offers an extensive selection of information on most business management topics, from how to start business to exporting your products. This information is listed in “Resource Directory for Small Business Management.” For a free copy, contact SBA Helena District Office 10 West 15th Street Suite 1100 Helena, MT 59626 Phone 406.441.1081 SBA offers a number of programs and services, including training and educational programs, consulting services, financial programs and contract assistance.  Service Corps of Retired Executives (SCORE), a national organization sponsored by SBA of over 13,000 volunteer business executives who provide free counseling, workshops and seminars to prospective and existing small business owners. Locate local offices at www.score.org  Business Information Centers (BIC’s), offering state-of-the-art technology, informational resources and on-site counseling for start-up and expanding businesses to create business, marketing and other plans, do research, and receive expert training and assistance.  Small Business Development Centers (SBDC’s), sponsored by the SBA in partnership with state and local governments, the educational community and the private sector. They provide assistance, counseling, and training to prospective and existing business people. Montana’s SBDC website is sbdc.mt.gov 25
  • 26. Other U.S. Government Resources Many federal agencies offer publications of interest to small businesses. There is a nominal fee for some, but most are free. Below is a selected list of government agencies that provide publications and other services targeted to small businesses. View their websites for publications or more information.  Federal Consumer Information Center (CIC) o www.pueblo.gsa.gov/ o The CIC offers a consumer information catalog of federal publications.  U.S. Department of Treasury Internal Revenue Service (IRS) o www.irs.gov o The IRS offers information on tax requirements for small businesses.  Government Printing Office (GPO) o www.gpo.gov o Many publications on business management and other related topics are available from the (GPO).  Consumer Product Safety Commission (CPSC) o www.cpsc.gov o The CPSC offers guidelines for product safety requirements.  U.S. Department of Labor o www.dol.gov o The DOL offers publications on compliance with labor laws.  U.S. Department of Commerce (DOC) o www.commerce.gov o DOC’s Business Assistance Center provides listings of business opportunities available in the federal government. This service also will refer businesses to different programs and services in the DOC and other federal agencies. 26
  • 27. Notes…Thoughts…Ideas…Dreams…Goals 27
  • 28. Notes…Thoughts…Ideas…Dreams…Goals 28
  • 29. Notes…Thoughts…Ideas…Dreams…Goals 29