Building a Business Plan

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An overview of why you need a business plan, what you are going to do with it and how to go about building one. This is a companion piece to writing a business plan and is designed to give a first time business plan writer a rational reason for doing so.

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Building a Business Plan

  1. 1. Building A Business Plan Why do I need one? What do I put in it? Who sees it? Will I ever use it again? How do I build a business plan?
  2. 2. Why do I need a business plan? If you dont know where you are going youmay end up somewhere else You never get a second chance to make a firstimpression You need a coherent vehicle to present toinvestors and/or bankers You need a plan (See case study)
  3. 3. What goes in a business plan? After your table of contents comes yourExecutive Summary. Although it comes first, itis written last It must be concise (no more than 4 pages) It must be SMART (Specific, Measurable,Attainable, Realistic and Time sensitive)
  4. 4. What Goes in a Business Plan? Next comes a general company description. Mission Statement Company Goals and objectives (SMART) To whom will you market your product (Briefly) Business Philosophy Describe your industry Core strengths & competencies Legal Form of ownership
  5. 5. Products and Services Describe in depth your products or services What factors will give you competitiveadvantages or disadvantages? Include examples of level of quality orproprietary features What are the pricing, fee or leasing structuresof your product or services?
  6. 6. Marketing Plan Begins with careful, systematic thoroughresearch Secondary research (Industry profiles, tradejournals, libraries, chamber ofcommerce, internet etc. Primary Research (Traffic counts onsite, identify competitors, research consumerpreferences) Be as specific as possible, givestatistics, numbers and sources.
  7. 7. Marketing Plan Total Size of Market VS your realistic share? Define your target market, growth trends andcustomer demographic. Who buys it & why? What Barriers do you face? How will youovercome these barriers? Product Features and Benefits (Why shouldthe customer want to buy your products?) Competition. Analyze their strengths andweaknesses and compare them to your own
  8. 8. Marketing Plan In one short paragraph describe your uniqueniche in the market Design a marketing strategy consistent withyour niche Promotion (How will you get the word out tothe customers?) Advertising (What media, why, how often. Advertising on a shoe string budget What image do you want to project?
  9. 9. Marketing Plan Promotional Budget Pricing (explain how you arrived at it. Whatsyour profit level?) What are your customer service policies? Proposed location Distribution channels Sales Forecast (do two - “best guess” and“worst case” Be thorough and realistic)
  10. 10. Operational Plan How and Where are your products produced? Location (Where? How big? Access, Zoning) Licensing, Permits, Regulations, Insurance Personnel, Pay structure, training, jobdescriptions, schedules etc. Inventory (what kind, turns, seasonal, LeadTime, Average value of stock?) Suppliers (credit & delivery policies) Credit Policies, Receivables & Payables
  11. 11. Management and Organization Who will manage the business & what aretheir qualifications? Personal Financial Statements Start up Expenses and Capitalization What is your 12 month Profit and LossProjection. Projected Cash Flow for start up, preliminaryexpenses, operating costs and reserves
  12. 12. Funding• How is your start up being funded?• How much money is in your contingency fund?• Do you need more funding?• What is your “Ask”?• What will you use it for?• How and when will you pay it back?
  13. 13. Appendix• Contains proofs and examples• Pictures or brochures of equipment to bepurchased• Business License, Name registration,Partnership Agreement (if any), Incorporationpapers (if any)• Cash Flow Projections• Market Research Sources• Resumes of owner, partners and key staff
  14. 14. WHO SEES MY BUSINESSPLAN?• Members of your advisory board• Family Members and friends• Key Employees• Partners• Suppliers• Potential Investors
  15. 15. Will I ever use it again?• You will use it continually• Compare projections with actual resultsmonthly• Revise it to reflect reality every 3 months andextend it out an additional 3 months• Use it to red flag cost increases, lower thanexpected revenues or insufficient margins• Keep it current in case you need interimfinancing for a big deal or an expansion.
  16. 16. How do I build a Business Plan?• Do the research.• Identify your market niche• Define your ideal customer• Calculate your costs and overhead expenses• Identified suppliers and lead times for delivery• Determined your distribution channels• Set Goals and objectives
  17. 17. Building your Business Plan• SWOT Analysis (Strengths, Weaknesses,Opportunities and Threats)• SWOT your business idea• SWOT the owner and partners and key staff• SWOT each and every competitor• SWOT each of your products and services
  18. 18. Building Your Business Plan• Visit several financial websites looking fordownloadable Business Plan Templates• Create a 1 page Business Plan to act as anoutline for your full Business Plan• Identify your core personal values• Write a Mission Statement for your business• Write a Vision Statement for your business• Make sure both reflect your core values
  19. 19. Building Your Business Plan• What is your marketing plan? (Write one)• What are the best social media marketingtactics?• How much will you budget for marketing(Where, how often, at what cost?)• Identify your sales strategies• Identify the benefits of your product or servicefrom the customer point of view
  20. 20. Building Your Business Plan• Put all of your gathered research into theBusiness Plan Template from the FinancialInstitution you are most likely to seek fundingfrom.• Spell check and Proof read it.• Get other people to proof read it for you• Revise it, edit it and check the spelling again• Proof read the revisions
  21. 21. Building Your Business Plan• Get an accountant or book keeper to reviewyour cash flow projections• Find a professional proof reader or editor toedit your 3rd draft before you make it final• Get a professional to format and print the finaldraft on high quality paper• Bind each copy into a presentation folder andnumber it for tracking purposes
  22. 22. What Now?• Make an appointment with your potentialinvestor(s)• If you get turned down, ask for feedback andadvice from the potential lender.• Make all suggested revisions and prepare tosubmit it to a different funder (maybe severaldifferent funders)• Look for alternate methods of finance
  23. 23. Summary• A well written business plan is not a magicbullet.• You might not get funding even with a greatbusiness plan. You have a 10% chance.• You will NOT get funding without a well writtenBusiness Plan• You need to have at least 25% of your $$“ASK” in cash on hand or assets to qualify formost business loans
  24. 24. Fraser Valley Training Grouphttp://fraservalleytraininggroup.com/http://www.linkedin.com/company/fraser-valley-training-grouphttp://www.slideshare.net/RichardLindfield

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