Entrepreneurship

1
Entrepreneurship

• Unit 3.2
• Creating the Business Plan

2
Creating the Business Plan

• Students will be able to
• Construct a mission statement for a company
• Explain rationale for starting a business by
  utilizing market research
• Describe a business, its products/services, and
  customers
• Compare types of ownership for a business, and
  select best option
• Determine organizational structure and management
  skills needed to operate a business
• Assess locations for a business

3
Creating the Business Plan(Organizing the
structure of the business)

• The Business Plan format used in this unit
  closely follows the DECA Entrepreneurship
  Participating event. It is a 10-page business
  prospectus, and can be easily completed by
  students. This format contains all the common
  components of a business plan, however some parts
  are combined to shorten the document.
• Its advised for teachers/students to get a copy
  of this format on the DECA or USOE website.
  (http//www.deca.org/pdf/ENPI-ENPFguide.pdf)
• Students, however, are not required to use this
  format. Other formats are available from FBLA,
  DECA, the USOE website, or on the internet.

4
DECA Business Plan Format

• Section I Executive Summary
• Section II Analysis of Business Situation
• Rationale and marketing research, Description of
  Business, Self-analysis, Analysis of the business
  opportunity, customer and location, and Proposed
  organization
• Section III Marketing and Promotional Plan
• Section IV Financing Plan
• Income Statements, Amortization, and Return
  on Investment

5
Section IExecutive Summary

• Summarizes the main points covered in the
  business plan
• Even though this is the first page of the
  document, it is usually written lastthus the
  word summary
• May contain the Mission Statement (Goals) of
  company

6
Section IConstructing a Mission Statement

• A mission statement expresses specific goals
  for the company
• Example
• To maintain 30 lawns on a weekly basis by the
  end of the first year

7
DECA Business Plan Format

• Section I Executive Summary
• Section II Analysis of Business Situation
• Rationale and marketing research, Description of
  Business, Self-analysis, Analysis of the business
  opportunity, customer and location, and Proposed
  organization
• Section III Marketing and Promotional Plan
• Section IV Financing Plan
• Income Statements, Amortization, and Return
  on Investment

8
Section IIExplain Rationale for Starting
Businessby Utilizing Market Research

• The Market Analysis section
• Presents your market research
• Features a customer demographic profile
• Identifies and analyzes competitors and explains
  your competitive advantage
• Addresses industry trends and growth

9
Section IIDescription of Company,
Products/Services, and Customers

• Includes history and background of idea
• Describes the product or service
• Discusses features and benefits of the
  products/services offered and how it benefits the
  customer
• Discusses target market, market segments, or
  market niche served
• Assess locations

10
Assessing Locations for Business

• Location, Location, Location
• The location of a businessespecially retailis
  often a critical factor in its success
• WHERE you will locate and WHYRegardless of type
  of business, this is an important aspect of all
  business plans and must be explained in detail,
  including
• Zoning Parking Visibility of site
• Square footage Costs (Lease, taxes,
  renovations)
• Traffic counts Nearby businesses, including
• Accessibility target market

11
Section IISelect a Form of Ownership

• Sole Proprietorship
• Partnership
• Corporation
• Subchapter S Corporation
• C-Corporation
• Other legal form of Ownership
• Limited Liability Company
• See Unit 3.2A Legal Forms of Ownership slide
  presentation

12
Sole Proprietorship

• Owned and operated by one person
• Easy to create
• Receives all profits, incurs any losses, and is
  liable for the debts of business
• Most entrepreneurs often switch to another form
  that provides more personal financial protection
  as the business grows

13
Partnership

• A business with two or more owners
• Partners do not have to share a business equally
• How the partnership interests are divided are
  spelled out in the Partnership Agreement.

14
Corporation

• Registered by the state and operates apart from
  its owners
• A corporation lives-on after the owners die or
  have sold interest
• Ownership is represented by shares of stock,
  public or private

15
2 Types of Corporations

• C-Corporation
• Subchapter S Corporation

16
C-Corporation

• The most common corporate form for large
  businesses (i.e., Federal Express, Microsoft)
• Can create status that may assist in getting
  loans
• Shareholders are owners of the corporation
• Required to have an elected Board of Directors to
  make decisions for the company
• Structured to accommodate employee benefits
  i.e., pensions, retirement plans, and profit
  sharing

17
Subchapter S Corporation

• Designed for owners of smaller companies who want
  the liability protection of a corporation, but
  want to avoid double taxation
• Pass-through Taxation Profits are taxed once at
  shareholders personal tax rate
• Shareholders liable to amount invested
• In smaller private corporations, the founders
  generally hold allor a majorityof the stock.

18
Other Forms of Ownership

• Limited Liability Company
• Nonprofit Corporations
• IMPORTANT Before you start your company Check
  with your state, accountants, or attorneys to
  determine which form of legal ownership most
  benefits your needs, company size, financial
  status, and issues of liability.

19
Source Allen, Kathleen R., Meyer, Earl
(2006). Entrepreneurship and Small Business
Management. New York Glencoe, p. 143
Source Entrepreneurship and Small Business
Management, Glencoe, 2006, pg. 143.
20
Section IIOrganizational Structure
andManagement Skills

• Organizational Structure
• A plan which shows how the jobs in your company
  relate to one another
• Smaller companies may have everyone report to the
  owner. The larger the company, the more layers of
  management needed.

21
Organizational Chart

• A graphic representation of the organizational
  structure.

22
Management Skills

• The management and staffing section should
  provide skill sets neededa job descriptionfor
  each position
• Show you and your staff have the experience,
  maturity, and common sense to manage your
  business well

23
Good Management Skills

• Human Relations
• Communications
• Networking
• Math
• Problem Solving Decision-making
• Technical Skills
• Time Management
• Conceptual Skills

24
DECA Business Plan Format

• Section I Executive Summary
• Section II Analysis of Business Situation
• Rationale and marketing research, Description of
  Business, Self-analysis, Analysis of the business
  opportunity, customer and location, and Proposed
  organization
• Section III Marketing and Promotional Plan
• Section IV Financing Plan
• Income Statements, Amortization, and Return
  on Investment

25
Section IIIThe Marketing Mix

• The Marketing Mix (the 4 Ps)
• Product
• Price
• Place
• Promotion
• See Unit 3.2B The Marketing Mix slide
  presentation

26
Products/ServicesAnswers What are you selling?

• Product brands
• Ford, Dell, Kellogs
• Product Mix
• Used cars Ford, GMC, Chrysler, Toyota, Kia
• Ford only Trucks, SUVs, Sedans, Hybrids
• Inventory methods
• Keeping track of available stock of goods

27
Pricing StrategiesAnswers How much is it?

• Youre in business to make profit. Know which
  pricing strategies to utilize.
• Mark-up
• Cost-based
• Competition-based

• Demand-based
• Psychological Pricing
• Discounting
• Credit

28
Channels of DistributionAnswers Where can I get
it?

• The path a product takes from producer to final
  user (consumer)
• Direct
• Indirect (intermediaries)
• Use if results in lower cost than you would
  charge if you were handling all the phases of
  distribution yourself or if middle men have a
  ready-made network for wider distribution.
• Includes transportation, storage product
  handling

29
Promotional MixAnswers Why should I buy it?

• Advertising
• Paid non-personal presentation of ideas directed
  toward a mass audience.
• Publicity
• Free placement of newsworthy items about company,
  etc. in the media.

• Personal Selling
• Giving an oral presentation to one or more
  potential buyers.
• Promotions
• Use of incentives or interest-building activities
  to create demand. Be creative!!

30
Planning Organizational Structure for Business

• Lets Review
• Construct a mission statement for a company
• Explain rationale for starting a business by
  utilizing market research
• Describe a business, its products/services, and
  customers
• Compare types of ownership for a business, and
  select best option
• Determine organizational structure and management
  skills needed to operate a business
• Assess locations for a business