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Business Plans That Win

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Business Plans That Win

  1. 1. Business Plans That Win $$$ Presented by Jeremy Kravetz, MBA
  2. 2.  Business Planning Process  Business Plans
  3. 3.  Definition  Who Plans?  How It’s Done  Key Sections  Uses & Benefits  Costs of NOT planning
  4. 4.  Types/Uses  Differences  Key Sections/Topics  Work Products
  5. 5. THE BUSINESS PLANNING PROCESS
  6. 6. Wikipedia:  Planning (also called forethought) is the process of thinking about and organizing the activities required to achieve a desired goal.  …combines forecasting of developments with the preparation of scenarios of how to react to them
  7. 7.  Setting Goals  Thinking  Forecasting/Visualization of Future  Organizing  How to React – Courses of Action  (Managing proactively is better!)
  8. 8. Both Internal and External Uses:  Management  Equity Financing – Investors  Debt Financing – Lenders  Business Development – e.g. strategic partners, suppliers, distributors, landlords, regulators, community groups, etc.
  9. 9.  All Levels – CEO to dishwasher  Strategic – Long-term organizational goals. Executive function.  Operational/Tactical – Day-to-day management. Managers  Individuals – Organization of work. Personal and career
  10. 10.  BOARD OF DIRECTORS – Key Strategies, L-Term Goals, Policies, Values  CEO – Competitive Strategies (Marketing), Overall Business Development, Strategic Relationships, Exec Team- Building/Organization/Capital Preparedness  PRESIDENT – Overall Business/Organizational Mgt.  VPs – Overall Departmental/Functional development and management  DEPT. MANAGERS, SUPERVISORS – Operations, staffing, budgets.. Large Organizations:
  11. 11.  Owner/Managers – Wear many hats  Both Internal and External People – Employees/staff and external consultant, advisors, service providers
  12. 12.  Avoid Surprises – Anticipate future events  Prepare for what ever happens  Cheaper to “make mistakes on paper”  Organize Complexity  See things more clearly – how pieces fit together and interact
  13. 13.  Definition of goals  Definition of assumptions  Strategic allocation of scarce resources  Coordination  Alignment – Working with same concepts and principles and goals  Improved Efficiency
  14. 14.  Confusion  Become reactive (instead of proactive)  Everyone makes their own plans  “System” deteriorates  Unhappy customers  Loss of competiveness
  15. 15.  Clarity, focus on key strategies  More proactive  Better integration/coordination  Satisfied customers  Greater Competitiveness
  16. 16. CUSTOMERS
  17. 17.  Customers – Acquisition, satisfaction, retention  Other Stakeholders: ◦ Investors ◦ Lenders ◦ Employees ◦ Suppliers ◦ Community  Company / Operation - Sustainability
  18. 18.  Plan the work of others  Execute (manage) the work of others  Coordinate with other functions/ departments
  19. 19. PLAN > ACT > MONITOR > PLAN ..
  20. 20.  Research > Analyze  Visualize/ideate > Strategize  Tactics > Resource Planning  Economic/Financial Planning  Develop > Operate > Manage  Monitor > Evaluate > Repeat..
  21. 21.  Multi-disciplinary  Teamwork  Systems-Thinking  Top down – Strategic, big picture, L-Term  Bottom-up – Tactical, operational  Economic/financial design  Sustainable  Achieves LT Goals of stakeholders
  22. 22.  Everything must work  Pieces must work together  Cannot lack something essential  Vision  Resources  Management
  23. 23.  Industry dynamics  Product Life-Cycle  Technology  Availability (lack) of resources  US & global economy  Competition  Government/Politics  Terrorism  “Acts of God”
  24. 24. BUSINESS PLANS
  25. 25.  LENDERS - Safety  INVESTORS - Profit
  26. 26.  Survival  Profitability / Cash Flow  Sustainability  Ability to pay back the loan (with interest)
  27. 27.  Unique Value-Proposition  Innovation > Large growth in value  Intellectual Property  Potential Market Size – Scalability  Market Timing  Value-creation milestones, sequence
  28. 28.  Market Analysis  Competitive Strategies  Startup budget and projections  Sales projections  5-year P&L and Cash Flows  Management  Sustainability – ability to pay off debt
  29. 29.  Market Analysis  Value-Proposition/Innovation  Pitch-Deck  Executive Summary  Brief, strategic, yet comprehensive business plan  Team – Vision, leadership, ability to “pivot”/adapt  Scalable (large) value creation
  30. 30.  Executive Summary  Market Analysis  Value-Proposition  Marketing/Sales
  31. 31.  Marketing  Management Team/Organization  External Consultants, Advisors  Human Resources  Operations  Command and Control - MIS  Finance
  32. 32.  Market research studies  Contracts, orders  Management Bios  Intellectual Property  Marketing materials  Appraisals  Cost Estimates  Risk Management  Etc.
  33. 33. ► The activity ► set of institutions ► and processes ► for creating, communicating, delivering, and exchanging offerings ► that have value for customers, clients, partners, and society at large.
  34. 34.  Responsibility of the managing leadership within a business, not a separate function.  There is only one valid definition of business purpose: to create a customer… Because it is its purpose to create a customer, any business enterprise has two — and only these two—basic functions: marketing and innovation…  Marketing is so basic that it is not just enough to have a strong sales department and to entrust marketing to it. Marketing is not only much broader than selling; it is not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of its final result, that is from the customer’s point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise..
  35. 35.  The function that links the consumer, customer, and public to the marketer  through information used to  identify and define marketing opportunities and problems;  generate, refine, and evaluate marketing actions  monitor marketing performance; and improve understanding of marketing as a process.  specifies the information required to address these issues,  designs the method for collecting information,  manages and implements the data collection process,  analyzes the results,  and communicates the findings and their implications.
  36. 36.  Captures/specifies/organizes all projected, quantifiable assumptions about the enterprise, including hard and soft resources, growth and development processes, sources of income, costs, expenses, investments, sources of capital, financial structure, and all sources and uses of funds.  Requires the participation/input of planners and managers most familiar with, and responsible for, the various areas of the enterprise  Structures and charts a systematic roadmap to meet the needs of the organization/operation itself, and that of each and all stakeholders
  37. 37.  Aids in strategic, systems-oriented allocation of resources  Specifies key strategic development/value-creation goals and milestones  Informs the architecture and key monitoring points for Management Information Systems  Allows for “stress tests” and other sensitivity analyses  Allows for efficient periodic updating of plans
  38. 38.  Yields data for work products needed for fundraising and stakeholder communications and relationship management  Provides clear analyses for investors, lenders and entrepreneurs to understand their investments and returns  Thoroughly prepares entrepreneurs, owners and executives for negotiations with others vying for a piece of the pie. Enables strategic control of what, how much, and how financial information is shared.  Conveys/sells the capabilities and professionalism of an entrepreneur, business and management team.
  39. 39.  Pre-operations/organization budget  Startup operation at a loss  Sales projection / development  Break-Even-Point  Required operating loss reserves  Continued growth development  Running rate  Financial structure – debt / equity  Investor analysis  Lender analysis  Sustainability until next value inflection point/value milestone/exit
  40. 40. Who What Where When Why How
  41. 41.  STRATEGIES  TACTICS
  42. 42.  DEMAND VS. SUPPLY = GAP? COMPETITIVE STRATEGY:  CUSTOMER-FOCUSED MISSION ◦ Vision/Mission ◦ Value-Proposition ◦ Raison D’etre
  43. 43. Does my business idea have potential? What are my source(s) of finance? Do I have experience in the field or know someone who does? Where will my business be located? How many employees will I hire?
  44. 44. What is a Business Plan? A roadmap to business success
  45. 45.  Strategic Planning  Secure Funding -Loan Application -Investors  Measure Success
  46. 46. ◦ Executive Summary (1- 2 pgs.) ◦ Product and/or Service Description ◦ Financial Plan ◦ Marketing Plan  Analysis  Need  Target Market ◦ Competition
  47. 47.  What is a FICO (Fair Isaac Corp) Score? ◦ Measures Credit Worthiness (Risk) ◦ Score Range from 300 to 850 ◦ Determines whether Banks will Approve or Deny You Credit ◦ Determines Your Loan Interest Rate
  48. 48.  Separate Personal funds from business ◦ Open a business bank account  Obtain a Credit Card & Merchant Account ◦ Expand Customer Base (short term supplies - network or outreach) ◦ Increase Sales & Profits by accepting Debit and Credit Cards
  49. 49.  Business Name or DBA (Doing Business As) is your legal business name  You don’t need a DBA if? ◦ Using part or all of your surname plus the service or product description (i.e. Mr. Jones Auto Repair versus JS Auto Repair)
  50. 50.  If you are not using your legal name you must: ◦ Contact the County of S.D. Assessor/Recorder/County Clerk’s Office ◦ File a Fictitious Business Name ◦ Check to Ensure the name is not already in use
  51. 51.  Sole Proprietorship  General Partnership  “C” Corporation  “S” Corporation  Limited Liability Corporation
  52. 52. PROS CONS  Simple Formulation (i.e. fictitious business name, license, permit)  Minimal Cost (business license, public announcement)  No Special Business Income Tax Rates  Bankruptcy – Company & Individual  Not Protected from Liability
  53. 53. PROS CONS  Partnership Pays No Tax (Individual Return)  Inexpensive to Create and Maintain  Partnership Agreement  Partner Liable for Debt and Legal Liabilities  Third Party Issues – Partnership Comes Under Fire
  54. 54.  Identical to General Partnership  Difference is Limited versus General  Only Liable for Capital Investment  No Involvement in Company Management  Allows Shared Profits without Losing More than their contributions
  55. 55. PROS CONS  Legal Entity which Files Its’ Own Taxes  Responsible for Its’ Own Dealings (Liability)  Unlimited Number of Shareholders  Expensive to Begin & Maintain (annual fees)  Board of Directors  Stock Must be Issued  Double Taxed on Dividend Income (to avoid roll-over)
  56. 56. PROS CONS  Responsible for Its’ Own Dealings (Liability)  Shareholders can claim their share on personal income taxes (avoids double taxation)  Expensive to Begin & Maintain (annual fees)  Limited to a Max. of 75 Shareholders  Not Double Taxed on Dividend Income
  57. 57.  Hybrid of a Corporation and Partnership  Identical Tax & Liability as a Corporation  Same Management Structure as Partnership  Articles of Organization are Submitted to the State  Operating Agreement (can be verbal)
  58. 58. Why do I need Business Insurance?  Lawsuits, natural disasters and injuries to you or your employees could threaten your business at any time. Obtaining business insurance is critical to the existence of your business.
  59. 59.  If possible hire an attorney to review the contract/lease agreement  Read all Terms and Conditions (including the fine print)
  60. 60.  The city and type of business determines what licenses and permits you will need  Search for your industry’s business license and permits through the Cal gold website: ◦ www.calgold.ca.gov
  61. 61.  There are more than 200 Regulated Businesses ◦ State Department of Consumer Affairs www.dca.ca.gov ◦ Police Regulated - S.D. Police Dept www.sandiego.gov/police/
  62. 62.  Seller’s Permit ◦ Selling Tangible Personal Property  How to obtain a Seller’s Permit ◦ State Board of Equalization www.boe.ca.gov
  63. 63.  What is an EIN Number?  Why do I need an EIN Number?  Where do I obtain an EIN Number? ◦ Internal Revenue Service ◦ (800) 829-3676 ◦ www.irs.treas.gov
  64. 64. Logo Creation Signage Business Cards Forms (i.e. invoices, etc.) Promotional Pieces Website
  65. 65.  Ensure the Feasibility of Your Business  Business Research  Business Plan Preparation  Get Your Finances in Order  Utilize Small Business Resources
  66. 66.  Website - http://www.growmybiz.org  How You Can Use our Services * Workshops * Counseling  10-Key Steps to Starting a Business  Business Plan Template  S.D. SBDC Business Training Center We are here to Serve You!
  67. 67. SBDC Can Help You! Our Mission is to provide superior consulting & training to small businesses resulting in entrepreneurial success & growth & prosperity for California. San Diego SBDC Southwestern College Higher Education Center 880 National City Boulevard, Suite 103 National City, CA 91950 Tel. (619) 482-6391—Fax: (619) 216-6692 www.growmybiz.org

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