PREPARING A BUSINESS PLAN

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PREPARING A BUSINESS PLAN
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What is a Business Plan?

• Written document
• Describes steps in opening and operating a
  successful business
• Describes the Product or Service
• What you will produce/provide
• How you will produce the product or provide the
  service
• Who will buy your product or service
• Explains who will run the business and provide it
  with goods
• States how your business will win customers from
  competitors and what you will do to keep
  customers
• Provides detailed financial information that
  shows how your business will succeed in earning a
  profit

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PURPOSE OF A BUSINESS PLAN

• Explains the idea behind your business
• How your product or service will be produced and
  sold
• Used to convince investors that your business
  idea is solid
• Completely new product or service or one that is
  better or less expensive than one that already
  exists
• Identifies who your target customer is and shows
  how your company will keep customers

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PURPOSE OF A BUSINESS PLAN

• Sets specific objectives and describes how your
  business expects to achieve them
• Sales projections for
• The short termthe first year
• The medium termtwo to five years after start-up
• The long termfive years in the future
• Describes what products and services will be
  introduced over the next five years
• Discusses future business plans
• Expansion of the business

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PURPOSE OF A BUSINESS PLAN

• Describes the background and experience of the
  people who will be running the business
• Business loans are approved when lenders believe
  a company can meet its objectives
• Banks or investors will be more likely to invest
  money if good information on background and
  experience of the people who will be running the
  company is provided
• Business classes, work experience

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7 ELEMENTS OF A BUSINESS PLAN

1. History Background of your idea
2. Goals and Objectives for your company
3. Products or Services you will offer
4. Form of Ownership
5. Management and Staffing
6. Marketing
7. Current and Projected Financial Statements

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History and Background

• Describe how you came up with the idea
• Helps others understand how your business will
  operate
• Starting my own business was an idea that came
  to me when I just felt the need to control my own
  destiny. So, thats what I did.
• --Clara Taylor Reed, founder of Mid-Delta Home
  Health, Inc., the first home healthcare business
  in Mississippi

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Goals and Objectives

• Describes your vision of where you want your
  company to be in the future
• Outline your short-term, medium term, and
  long-term goals
• Short-term reach within 1 year
• Get financing to lease/buy a facility, equip the
  facility, and staff employees
• Medium-term reach in years 2 3
• Invest in more equipment, expand current location
• Long-term up to 10 years
• Remain one location or expand into a chain

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Products and Services

• Describe the product or service you will provide
  or sell
• Explain how these will differ than those
  currently available
• Highlight unique features
• Explain benefits customers will receive by doing
  business with you
• Industrydescribe the industry you will work in
• Locationdescribe the location of your business

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Products or Services

• Industry
• Things you should include in this section
• External factors affecting your business
• High competition
• Lack of certain suppliers
• Growth potential of the industry
• Economic trends of the industry
• Technology trends that may affect the industry
• Forecasts for industry growth
• Research
• Government documents, articles and books on
  industry leaders, Internet
• Cite sources used to make business plan more
  convincing

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Products or Services

• Location
• Critical factor in success
• Research sites
• Choose a site where there is a need for your
  business or where a need can be created
• Hall of Fame Fitness Center
• Added a restaurant to fitness club
• Also available to outside pool customers

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Form of Ownership

• Each legal form of business has an effect on how
  the business works and makes profit
• Describe who partners are or number of
  shareholders
• Sole proprietorship 1 owner
• Partnership 2 or more owners
• Corporation board of directors and stockholders

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Management and Staffing

• Show that you and the people who will be working
  for you are capable to manage your business well
• Experience
• Maturity
• Common sense
• Can include
• Resumes
• Letters of reference

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Marketing

• Explain who your prospective customers are
• How large the market is for your product or
  service
• How you plan to enter that market
• How you will deal with competition
• List your advantages over the competition
• Performance Reliability
• Quality Distribution
• Price Public image or
• Promotion reputation

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Current Projected Financial Statements

• Financial section of your plan consists of three
  elements
• Identification of risks
• List potential problems and how you will solve
  them
• Financial statements
• Projected revenues and expenses (pro forma
  financial statements)
• Funding request and return on investment
• Indicate how much you need to borrow
• How you plan to use the money
• How much investors can expect to earn on their
  investment
• How much money you are investing

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Research

• Pulling together information needed to write a
  business plan involves researching all aspects of
  your business
• Leasing space/buying property
• What you will charge
• Dealing with competitors
• Provides specific ideas for starting up your
  company and running a business

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Research

• Library
• Books
• Entrepreneurship
• Marketing
• Financing
• Hiring and managing a staff
• Purchasing a business
• Operating a franchise
• Magazines
• Small business ownership
• Industry magazines
• Government documents
• Issued by Small Business Administration (SBA)
• Online Resources
• People Resources

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Research

• Additional Resources
• Trade associations
• Organizations that promote certain types of
  businesses
• Local Chamber of Commerce
• Local Small Business Development Centers
• Each will have information on trends affecting
  local businesses

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Research
SBA Small Business Administration

• http//www.sba.gov/