Business Start UpBusiness Start UpAndAnd

ExpansionExpansionPresentationPresentation

bull Comparatively Jamaica is considered to be very entrepreneurial Approximately 17 of the population had an interest in conducting some form of business according to a Global Entrepreneurship Monitoring (GEM) report The report further highlighted that ldquoJamaicarsquos overall rate of entrepreneurial activity compares favorably with countries such as New Zealand (2005 ndash 2826) considered among ldquothe worldrsquos most entrepreneurial countriesrdquo Further comparison with nations with similar economic structure showed Jamaica ahead of nations like Argentina Chile Mexico South Africa and Venezuela based on the number of nascent entrepreneurs who continued on to operate sustainable enterprises 1

bull Entrepreneurship is one of the core pillars of developed economies particularly due to the fact that it enables positive contribution to economic growth and is essential in driving community sustainable livelihood

bull Studies have pointed to the fact that the establishment of new and small business is an engine for job creation and not necessarily the mega-corporations Comparatively countries with greater entrepreneurship impetus experience significant reduction in unemployment rates 5 Therefore it is important that Jamaica take the corrective actions to nurture this great potential to creating culture of entrepreneurs

bull When one considering the Jamaican scenario it becomes more crucial to focus on the development of a culture where young people are enthusiastic about creating wealth and their own employment It is evident that young people are faced with several challenges The rate of unemployment for young persons is three times higher than that of adults 6 Skill levels among youth entering the labour force are significantly low over 70 7 Additionally the youth cohort dominates those most affected by poverty 8

bull Create trust fund and finance programs for young entrepreneurs

bull One of the greatest challenges for young people in their quest to start a business is the deprived access to start-up funds That is one of the primary reasons saving is a positive behavior which should be vigorously promoted However if Jamaican youth are to excel in the field of entrepreneurship access to start-up capital is a fundamental prerequisite With the risks and high failure rate in business it is being proposed that special funds be put in place that reduce the requirement to access loans and also provide grants for solid business ideas

Simple Business Ethics and Research

bull Decide if you really want to be in businessbull You will be putting some (not all hopefully) of your net worth at risk You will run

the risk of becoming eccentric meaning creating a life that is out of balance with working hours taking

bull away from other family or pleasurable activities There may be levels of stress you have not experienced as an employee

bull Decide what business and wherebull Once you have decided you have the characteristics of a successful entrepreneur

and that you definitely want to be in business then you must decide which business is best for you and where to locate that business

bull Decide whether to start full-time or moonlightbull There are some interesting advantages and some pitfalls in starting as a moonlight

business (That is a business you start in your off hours while still working at your current job) More often than not the advantages of starting as a moonlighter outweigh the risks

bull You avoid burning your bridges of earnings including retirement health and fringe benefits and vacations

bull Your full-time job wont suffer if you maintain certain conflict of interest disciplines including

bull compartmentalizing your job and business into completely separate worlds

bull You can avoid conflict of interest with your job by choosing a business that is appropriate for moonlighting such as single products real estate specialized food e-commerce direct marketing or family-run operations

bull There are great advantages for operating a family business The family can run the business while you are at work You have a built-in organizational structure You can teach your kids the benefits of being in business

bull But there are also some pitfalls to consider in starting a moonlight business

bull There is a temptation to spend time at your job working on your moonlight business That is unfair to your employer and should not be done under any circumstances (You may need a family member or some trusted person to cover emergencies when you are at your job)

bull Another problem may be competing with your employer which again is not right Think of how you would feel or handle this employee if you were the boss

bull Any kind of conflict with your regular work can jeopardize your job and your moonlight business

bull Overwork and mental and physical exhaustion can also become a very real problem for moonlight entrepreneurs

Selection Strategy

bull Selecting the wrong business is the most frequent mistake that start-up entrepreneurs make Here is a checklist to help you select a successful one

bull Take your time and wait for the business that is just right for you You will not be penalized for missing opportunities The selection process takes a lot of planning and your experience and complete knowledge is vital for your success

bull Dont tackle businesses that may be too challenging It is better to identify a one-foot hurdle than try to jump a seven-footer

bull Try to identify a business that has long-term economic potential Follow Wayne Gretzkys advice Go to where the puck is going not to where it is

bull A big mistake can be an error of omission This means you may fail to see an opportunity that is right in front of you

bull Look for a business that will grow in todays and tomorrows markets Many small retail stores are no longer in business because huge stores provide more choices to the customer and often at a cheaper price

bull Businesses to avoid are commodity businesses where you must compete entirely on price and in which you must have the lowest cost to survive As Mr Buffett has said In a commodity type business youre only as smart as your dumbest competitor

bull Most service businesses have pricing power

bull If you intend to manufacture a product consider the pros and cons of contracting out production to a low-cost supplier In other words operate a hollow corporation A hollow corporation is a company that subcontracts manufacturing and packaging

bull Things to Watch Out For bull Impatience bull Do not let overconfidence short-circuit you from analyzing your

selection of businesses carefully You must not fear of hearing the negative aspects it is much better to be aware of them and face them early on

bull Be realistic Do not become lured by high rewards They will come if you choose the right business and if you understand every aspect of the business before you open its doors

bull Required Activitiesbull It is worth repeating again The most common mistake and the most

costly one is not picking the right business to begin with This is the time for soul searching

bull How to Evaluate a Specific Business you have in mindbull Here are some questions to help clarify your thoughts

bull Is it something I will enjoy doingMy favorite activities are __________________________I like to serve people by ________________________________

bull Will it serve an expanding need for which there is no close substitute

bull Can I be so good at a specialized targeted need that customers will think there is no close substitute

bull Can I handle the capital requirements bull Can I learn the business by working for someone else

first bull Could I operate as a hollow corporation without a factory

and with a minimum number of employees (Hollow corporation refers to a business where everything is outsourced meaning you would subcontract manufacturing and packaging to outside sources )

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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bull Comparatively Jamaica is considered to be very entrepreneurial Approximately 17 of the population had an interest in conducting some form of business according to a Global Entrepreneurship Monitoring (GEM) report The report further highlighted that ldquoJamaicarsquos overall rate of entrepreneurial activity compares favorably with countries such as New Zealand (2005 ndash 2826) considered among ldquothe worldrsquos most entrepreneurial countriesrdquo Further comparison with nations with similar economic structure showed Jamaica ahead of nations like Argentina Chile Mexico South Africa and Venezuela based on the number of nascent entrepreneurs who continued on to operate sustainable enterprises 1

bull Entrepreneurship is one of the core pillars of developed economies particularly due to the fact that it enables positive contribution to economic growth and is essential in driving community sustainable livelihood

bull Studies have pointed to the fact that the establishment of new and small business is an engine for job creation and not necessarily the mega-corporations Comparatively countries with greater entrepreneurship impetus experience significant reduction in unemployment rates 5 Therefore it is important that Jamaica take the corrective actions to nurture this great potential to creating culture of entrepreneurs

bull When one considering the Jamaican scenario it becomes more crucial to focus on the development of a culture where young people are enthusiastic about creating wealth and their own employment It is evident that young people are faced with several challenges The rate of unemployment for young persons is three times higher than that of adults 6 Skill levels among youth entering the labour force are significantly low over 70 7 Additionally the youth cohort dominates those most affected by poverty 8

bull Create trust fund and finance programs for young entrepreneurs

bull One of the greatest challenges for young people in their quest to start a business is the deprived access to start-up funds That is one of the primary reasons saving is a positive behavior which should be vigorously promoted However if Jamaican youth are to excel in the field of entrepreneurship access to start-up capital is a fundamental prerequisite With the risks and high failure rate in business it is being proposed that special funds be put in place that reduce the requirement to access loans and also provide grants for solid business ideas

Simple Business Ethics and Research

bull Decide if you really want to be in businessbull You will be putting some (not all hopefully) of your net worth at risk You will run

the risk of becoming eccentric meaning creating a life that is out of balance with working hours taking

bull away from other family or pleasurable activities There may be levels of stress you have not experienced as an employee

bull Decide what business and wherebull Once you have decided you have the characteristics of a successful entrepreneur

and that you definitely want to be in business then you must decide which business is best for you and where to locate that business

bull Decide whether to start full-time or moonlightbull There are some interesting advantages and some pitfalls in starting as a moonlight

business (That is a business you start in your off hours while still working at your current job) More often than not the advantages of starting as a moonlighter outweigh the risks

bull You avoid burning your bridges of earnings including retirement health and fringe benefits and vacations

bull Your full-time job wont suffer if you maintain certain conflict of interest disciplines including

bull compartmentalizing your job and business into completely separate worlds

bull You can avoid conflict of interest with your job by choosing a business that is appropriate for moonlighting such as single products real estate specialized food e-commerce direct marketing or family-run operations

bull There are great advantages for operating a family business The family can run the business while you are at work You have a built-in organizational structure You can teach your kids the benefits of being in business

bull But there are also some pitfalls to consider in starting a moonlight business

bull There is a temptation to spend time at your job working on your moonlight business That is unfair to your employer and should not be done under any circumstances (You may need a family member or some trusted person to cover emergencies when you are at your job)

bull Another problem may be competing with your employer which again is not right Think of how you would feel or handle this employee if you were the boss

bull Any kind of conflict with your regular work can jeopardize your job and your moonlight business

bull Overwork and mental and physical exhaustion can also become a very real problem for moonlight entrepreneurs

Selection Strategy

bull Selecting the wrong business is the most frequent mistake that start-up entrepreneurs make Here is a checklist to help you select a successful one

bull Take your time and wait for the business that is just right for you You will not be penalized for missing opportunities The selection process takes a lot of planning and your experience and complete knowledge is vital for your success

bull Dont tackle businesses that may be too challenging It is better to identify a one-foot hurdle than try to jump a seven-footer

bull Try to identify a business that has long-term economic potential Follow Wayne Gretzkys advice Go to where the puck is going not to where it is

bull A big mistake can be an error of omission This means you may fail to see an opportunity that is right in front of you

bull Look for a business that will grow in todays and tomorrows markets Many small retail stores are no longer in business because huge stores provide more choices to the customer and often at a cheaper price

bull Businesses to avoid are commodity businesses where you must compete entirely on price and in which you must have the lowest cost to survive As Mr Buffett has said In a commodity type business youre only as smart as your dumbest competitor

bull Most service businesses have pricing power

bull If you intend to manufacture a product consider the pros and cons of contracting out production to a low-cost supplier In other words operate a hollow corporation A hollow corporation is a company that subcontracts manufacturing and packaging

bull Things to Watch Out For bull Impatience bull Do not let overconfidence short-circuit you from analyzing your

selection of businesses carefully You must not fear of hearing the negative aspects it is much better to be aware of them and face them early on

bull Be realistic Do not become lured by high rewards They will come if you choose the right business and if you understand every aspect of the business before you open its doors

bull Required Activitiesbull It is worth repeating again The most common mistake and the most

costly one is not picking the right business to begin with This is the time for soul searching

bull How to Evaluate a Specific Business you have in mindbull Here are some questions to help clarify your thoughts

bull Is it something I will enjoy doingMy favorite activities are __________________________I like to serve people by ________________________________

bull Will it serve an expanding need for which there is no close substitute

bull Can I be so good at a specialized targeted need that customers will think there is no close substitute

bull Can I handle the capital requirements bull Can I learn the business by working for someone else

first bull Could I operate as a hollow corporation without a factory

and with a minimum number of employees (Hollow corporation refers to a business where everything is outsourced meaning you would subcontract manufacturing and packaging to outside sources )

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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bull Entrepreneurship is one of the core pillars of developed economies particularly due to the fact that it enables positive contribution to economic growth and is essential in driving community sustainable livelihood

bull Studies have pointed to the fact that the establishment of new and small business is an engine for job creation and not necessarily the mega-corporations Comparatively countries with greater entrepreneurship impetus experience significant reduction in unemployment rates 5 Therefore it is important that Jamaica take the corrective actions to nurture this great potential to creating culture of entrepreneurs

bull When one considering the Jamaican scenario it becomes more crucial to focus on the development of a culture where young people are enthusiastic about creating wealth and their own employment It is evident that young people are faced with several challenges The rate of unemployment for young persons is three times higher than that of adults 6 Skill levels among youth entering the labour force are significantly low over 70 7 Additionally the youth cohort dominates those most affected by poverty 8

bull Create trust fund and finance programs for young entrepreneurs

bull One of the greatest challenges for young people in their quest to start a business is the deprived access to start-up funds That is one of the primary reasons saving is a positive behavior which should be vigorously promoted However if Jamaican youth are to excel in the field of entrepreneurship access to start-up capital is a fundamental prerequisite With the risks and high failure rate in business it is being proposed that special funds be put in place that reduce the requirement to access loans and also provide grants for solid business ideas

Simple Business Ethics and Research

bull Decide if you really want to be in businessbull You will be putting some (not all hopefully) of your net worth at risk You will run

the risk of becoming eccentric meaning creating a life that is out of balance with working hours taking

bull away from other family or pleasurable activities There may be levels of stress you have not experienced as an employee

bull Decide what business and wherebull Once you have decided you have the characteristics of a successful entrepreneur

and that you definitely want to be in business then you must decide which business is best for you and where to locate that business

bull Decide whether to start full-time or moonlightbull There are some interesting advantages and some pitfalls in starting as a moonlight

business (That is a business you start in your off hours while still working at your current job) More often than not the advantages of starting as a moonlighter outweigh the risks

bull You avoid burning your bridges of earnings including retirement health and fringe benefits and vacations

bull Your full-time job wont suffer if you maintain certain conflict of interest disciplines including

bull compartmentalizing your job and business into completely separate worlds

bull You can avoid conflict of interest with your job by choosing a business that is appropriate for moonlighting such as single products real estate specialized food e-commerce direct marketing or family-run operations

bull There are great advantages for operating a family business The family can run the business while you are at work You have a built-in organizational structure You can teach your kids the benefits of being in business

bull But there are also some pitfalls to consider in starting a moonlight business

bull There is a temptation to spend time at your job working on your moonlight business That is unfair to your employer and should not be done under any circumstances (You may need a family member or some trusted person to cover emergencies when you are at your job)

bull Another problem may be competing with your employer which again is not right Think of how you would feel or handle this employee if you were the boss

bull Any kind of conflict with your regular work can jeopardize your job and your moonlight business

bull Overwork and mental and physical exhaustion can also become a very real problem for moonlight entrepreneurs

Selection Strategy

bull Selecting the wrong business is the most frequent mistake that start-up entrepreneurs make Here is a checklist to help you select a successful one

bull Take your time and wait for the business that is just right for you You will not be penalized for missing opportunities The selection process takes a lot of planning and your experience and complete knowledge is vital for your success

bull Dont tackle businesses that may be too challenging It is better to identify a one-foot hurdle than try to jump a seven-footer

bull Try to identify a business that has long-term economic potential Follow Wayne Gretzkys advice Go to where the puck is going not to where it is

bull A big mistake can be an error of omission This means you may fail to see an opportunity that is right in front of you

bull Look for a business that will grow in todays and tomorrows markets Many small retail stores are no longer in business because huge stores provide more choices to the customer and often at a cheaper price

bull Businesses to avoid are commodity businesses where you must compete entirely on price and in which you must have the lowest cost to survive As Mr Buffett has said In a commodity type business youre only as smart as your dumbest competitor

bull Most service businesses have pricing power

bull If you intend to manufacture a product consider the pros and cons of contracting out production to a low-cost supplier In other words operate a hollow corporation A hollow corporation is a company that subcontracts manufacturing and packaging

bull Things to Watch Out For bull Impatience bull Do not let overconfidence short-circuit you from analyzing your

selection of businesses carefully You must not fear of hearing the negative aspects it is much better to be aware of them and face them early on

bull Be realistic Do not become lured by high rewards They will come if you choose the right business and if you understand every aspect of the business before you open its doors

bull Required Activitiesbull It is worth repeating again The most common mistake and the most

costly one is not picking the right business to begin with This is the time for soul searching

bull How to Evaluate a Specific Business you have in mindbull Here are some questions to help clarify your thoughts

bull Is it something I will enjoy doingMy favorite activities are __________________________I like to serve people by ________________________________

bull Will it serve an expanding need for which there is no close substitute

bull Can I be so good at a specialized targeted need that customers will think there is no close substitute

bull Can I handle the capital requirements bull Can I learn the business by working for someone else

first bull Could I operate as a hollow corporation without a factory

and with a minimum number of employees (Hollow corporation refers to a business where everything is outsourced meaning you would subcontract manufacturing and packaging to outside sources )

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
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• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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• Slide 30

bull Create trust fund and finance programs for young entrepreneurs

bull One of the greatest challenges for young people in their quest to start a business is the deprived access to start-up funds That is one of the primary reasons saving is a positive behavior which should be vigorously promoted However if Jamaican youth are to excel in the field of entrepreneurship access to start-up capital is a fundamental prerequisite With the risks and high failure rate in business it is being proposed that special funds be put in place that reduce the requirement to access loans and also provide grants for solid business ideas

Simple Business Ethics and Research

bull Decide if you really want to be in businessbull You will be putting some (not all hopefully) of your net worth at risk You will run

the risk of becoming eccentric meaning creating a life that is out of balance with working hours taking

bull away from other family or pleasurable activities There may be levels of stress you have not experienced as an employee

bull Decide what business and wherebull Once you have decided you have the characteristics of a successful entrepreneur

and that you definitely want to be in business then you must decide which business is best for you and where to locate that business

bull Decide whether to start full-time or moonlightbull There are some interesting advantages and some pitfalls in starting as a moonlight

business (That is a business you start in your off hours while still working at your current job) More often than not the advantages of starting as a moonlighter outweigh the risks

bull You avoid burning your bridges of earnings including retirement health and fringe benefits and vacations

bull Your full-time job wont suffer if you maintain certain conflict of interest disciplines including

bull compartmentalizing your job and business into completely separate worlds

bull You can avoid conflict of interest with your job by choosing a business that is appropriate for moonlighting such as single products real estate specialized food e-commerce direct marketing or family-run operations

bull There are great advantages for operating a family business The family can run the business while you are at work You have a built-in organizational structure You can teach your kids the benefits of being in business

bull But there are also some pitfalls to consider in starting a moonlight business

bull There is a temptation to spend time at your job working on your moonlight business That is unfair to your employer and should not be done under any circumstances (You may need a family member or some trusted person to cover emergencies when you are at your job)

bull Another problem may be competing with your employer which again is not right Think of how you would feel or handle this employee if you were the boss

bull Any kind of conflict with your regular work can jeopardize your job and your moonlight business

bull Overwork and mental and physical exhaustion can also become a very real problem for moonlight entrepreneurs

Selection Strategy

bull Selecting the wrong business is the most frequent mistake that start-up entrepreneurs make Here is a checklist to help you select a successful one

bull Take your time and wait for the business that is just right for you You will not be penalized for missing opportunities The selection process takes a lot of planning and your experience and complete knowledge is vital for your success

bull Dont tackle businesses that may be too challenging It is better to identify a one-foot hurdle than try to jump a seven-footer

bull Try to identify a business that has long-term economic potential Follow Wayne Gretzkys advice Go to where the puck is going not to where it is

bull A big mistake can be an error of omission This means you may fail to see an opportunity that is right in front of you

bull Look for a business that will grow in todays and tomorrows markets Many small retail stores are no longer in business because huge stores provide more choices to the customer and often at a cheaper price

bull Businesses to avoid are commodity businesses where you must compete entirely on price and in which you must have the lowest cost to survive As Mr Buffett has said In a commodity type business youre only as smart as your dumbest competitor

bull Most service businesses have pricing power

bull If you intend to manufacture a product consider the pros and cons of contracting out production to a low-cost supplier In other words operate a hollow corporation A hollow corporation is a company that subcontracts manufacturing and packaging

bull Things to Watch Out For bull Impatience bull Do not let overconfidence short-circuit you from analyzing your

selection of businesses carefully You must not fear of hearing the negative aspects it is much better to be aware of them and face them early on

bull Be realistic Do not become lured by high rewards They will come if you choose the right business and if you understand every aspect of the business before you open its doors

bull Required Activitiesbull It is worth repeating again The most common mistake and the most

costly one is not picking the right business to begin with This is the time for soul searching

bull How to Evaluate a Specific Business you have in mindbull Here are some questions to help clarify your thoughts

bull Is it something I will enjoy doingMy favorite activities are __________________________I like to serve people by ________________________________

bull Will it serve an expanding need for which there is no close substitute

bull Can I be so good at a specialized targeted need that customers will think there is no close substitute

bull Can I handle the capital requirements bull Can I learn the business by working for someone else

first bull Could I operate as a hollow corporation without a factory

and with a minimum number of employees (Hollow corporation refers to a business where everything is outsourced meaning you would subcontract manufacturing and packaging to outside sources )

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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Simple Business Ethics and Research

bull Decide if you really want to be in businessbull You will be putting some (not all hopefully) of your net worth at risk You will run

the risk of becoming eccentric meaning creating a life that is out of balance with working hours taking

bull away from other family or pleasurable activities There may be levels of stress you have not experienced as an employee

bull Decide what business and wherebull Once you have decided you have the characteristics of a successful entrepreneur

and that you definitely want to be in business then you must decide which business is best for you and where to locate that business

bull Decide whether to start full-time or moonlightbull There are some interesting advantages and some pitfalls in starting as a moonlight

business (That is a business you start in your off hours while still working at your current job) More often than not the advantages of starting as a moonlighter outweigh the risks

bull You avoid burning your bridges of earnings including retirement health and fringe benefits and vacations

bull Your full-time job wont suffer if you maintain certain conflict of interest disciplines including

bull compartmentalizing your job and business into completely separate worlds

bull You can avoid conflict of interest with your job by choosing a business that is appropriate for moonlighting such as single products real estate specialized food e-commerce direct marketing or family-run operations

bull There are great advantages for operating a family business The family can run the business while you are at work You have a built-in organizational structure You can teach your kids the benefits of being in business

bull But there are also some pitfalls to consider in starting a moonlight business

bull There is a temptation to spend time at your job working on your moonlight business That is unfair to your employer and should not be done under any circumstances (You may need a family member or some trusted person to cover emergencies when you are at your job)

bull Another problem may be competing with your employer which again is not right Think of how you would feel or handle this employee if you were the boss

bull Any kind of conflict with your regular work can jeopardize your job and your moonlight business

bull Overwork and mental and physical exhaustion can also become a very real problem for moonlight entrepreneurs

Selection Strategy

bull Selecting the wrong business is the most frequent mistake that start-up entrepreneurs make Here is a checklist to help you select a successful one

bull Take your time and wait for the business that is just right for you You will not be penalized for missing opportunities The selection process takes a lot of planning and your experience and complete knowledge is vital for your success

bull Dont tackle businesses that may be too challenging It is better to identify a one-foot hurdle than try to jump a seven-footer

bull Try to identify a business that has long-term economic potential Follow Wayne Gretzkys advice Go to where the puck is going not to where it is

bull A big mistake can be an error of omission This means you may fail to see an opportunity that is right in front of you

bull Look for a business that will grow in todays and tomorrows markets Many small retail stores are no longer in business because huge stores provide more choices to the customer and often at a cheaper price

bull Businesses to avoid are commodity businesses where you must compete entirely on price and in which you must have the lowest cost to survive As Mr Buffett has said In a commodity type business youre only as smart as your dumbest competitor

bull Most service businesses have pricing power

bull If you intend to manufacture a product consider the pros and cons of contracting out production to a low-cost supplier In other words operate a hollow corporation A hollow corporation is a company that subcontracts manufacturing and packaging

bull Things to Watch Out For bull Impatience bull Do not let overconfidence short-circuit you from analyzing your

selection of businesses carefully You must not fear of hearing the negative aspects it is much better to be aware of them and face them early on

bull Be realistic Do not become lured by high rewards They will come if you choose the right business and if you understand every aspect of the business before you open its doors

bull Required Activitiesbull It is worth repeating again The most common mistake and the most

costly one is not picking the right business to begin with This is the time for soul searching

bull How to Evaluate a Specific Business you have in mindbull Here are some questions to help clarify your thoughts

bull Is it something I will enjoy doingMy favorite activities are __________________________I like to serve people by ________________________________

bull Will it serve an expanding need for which there is no close substitute

bull Can I be so good at a specialized targeted need that customers will think there is no close substitute

bull Can I handle the capital requirements bull Can I learn the business by working for someone else

first bull Could I operate as a hollow corporation without a factory

and with a minimum number of employees (Hollow corporation refers to a business where everything is outsourced meaning you would subcontract manufacturing and packaging to outside sources )

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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bull compartmentalizing your job and business into completely separate worlds

bull You can avoid conflict of interest with your job by choosing a business that is appropriate for moonlighting such as single products real estate specialized food e-commerce direct marketing or family-run operations

bull There are great advantages for operating a family business The family can run the business while you are at work You have a built-in organizational structure You can teach your kids the benefits of being in business

bull But there are also some pitfalls to consider in starting a moonlight business

bull There is a temptation to spend time at your job working on your moonlight business That is unfair to your employer and should not be done under any circumstances (You may need a family member or some trusted person to cover emergencies when you are at your job)

bull Another problem may be competing with your employer which again is not right Think of how you would feel or handle this employee if you were the boss

bull Any kind of conflict with your regular work can jeopardize your job and your moonlight business

bull Overwork and mental and physical exhaustion can also become a very real problem for moonlight entrepreneurs

Selection Strategy

bull Selecting the wrong business is the most frequent mistake that start-up entrepreneurs make Here is a checklist to help you select a successful one

bull Take your time and wait for the business that is just right for you You will not be penalized for missing opportunities The selection process takes a lot of planning and your experience and complete knowledge is vital for your success

bull Dont tackle businesses that may be too challenging It is better to identify a one-foot hurdle than try to jump a seven-footer

bull Try to identify a business that has long-term economic potential Follow Wayne Gretzkys advice Go to where the puck is going not to where it is

bull A big mistake can be an error of omission This means you may fail to see an opportunity that is right in front of you

bull Look for a business that will grow in todays and tomorrows markets Many small retail stores are no longer in business because huge stores provide more choices to the customer and often at a cheaper price

bull Businesses to avoid are commodity businesses where you must compete entirely on price and in which you must have the lowest cost to survive As Mr Buffett has said In a commodity type business youre only as smart as your dumbest competitor

bull Most service businesses have pricing power

bull If you intend to manufacture a product consider the pros and cons of contracting out production to a low-cost supplier In other words operate a hollow corporation A hollow corporation is a company that subcontracts manufacturing and packaging

bull Things to Watch Out For bull Impatience bull Do not let overconfidence short-circuit you from analyzing your

selection of businesses carefully You must not fear of hearing the negative aspects it is much better to be aware of them and face them early on

bull Be realistic Do not become lured by high rewards They will come if you choose the right business and if you understand every aspect of the business before you open its doors

bull Required Activitiesbull It is worth repeating again The most common mistake and the most

costly one is not picking the right business to begin with This is the time for soul searching

bull How to Evaluate a Specific Business you have in mindbull Here are some questions to help clarify your thoughts

bull Is it something I will enjoy doingMy favorite activities are __________________________I like to serve people by ________________________________

bull Will it serve an expanding need for which there is no close substitute

bull Can I be so good at a specialized targeted need that customers will think there is no close substitute

bull Can I handle the capital requirements bull Can I learn the business by working for someone else

first bull Could I operate as a hollow corporation without a factory

and with a minimum number of employees (Hollow corporation refers to a business where everything is outsourced meaning you would subcontract manufacturing and packaging to outside sources )

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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• Slide 30

Selection Strategy

bull Selecting the wrong business is the most frequent mistake that start-up entrepreneurs make Here is a checklist to help you select a successful one

bull Take your time and wait for the business that is just right for you You will not be penalized for missing opportunities The selection process takes a lot of planning and your experience and complete knowledge is vital for your success

bull Dont tackle businesses that may be too challenging It is better to identify a one-foot hurdle than try to jump a seven-footer

bull Try to identify a business that has long-term economic potential Follow Wayne Gretzkys advice Go to where the puck is going not to where it is

bull A big mistake can be an error of omission This means you may fail to see an opportunity that is right in front of you

bull Look for a business that will grow in todays and tomorrows markets Many small retail stores are no longer in business because huge stores provide more choices to the customer and often at a cheaper price

bull Businesses to avoid are commodity businesses where you must compete entirely on price and in which you must have the lowest cost to survive As Mr Buffett has said In a commodity type business youre only as smart as your dumbest competitor

bull Most service businesses have pricing power

bull If you intend to manufacture a product consider the pros and cons of contracting out production to a low-cost supplier In other words operate a hollow corporation A hollow corporation is a company that subcontracts manufacturing and packaging

bull Things to Watch Out For bull Impatience bull Do not let overconfidence short-circuit you from analyzing your

selection of businesses carefully You must not fear of hearing the negative aspects it is much better to be aware of them and face them early on

bull Be realistic Do not become lured by high rewards They will come if you choose the right business and if you understand every aspect of the business before you open its doors

bull Required Activitiesbull It is worth repeating again The most common mistake and the most

costly one is not picking the right business to begin with This is the time for soul searching

bull How to Evaluate a Specific Business you have in mindbull Here are some questions to help clarify your thoughts

bull Is it something I will enjoy doingMy favorite activities are __________________________I like to serve people by ________________________________

bull Will it serve an expanding need for which there is no close substitute

bull Can I be so good at a specialized targeted need that customers will think there is no close substitute

bull Can I handle the capital requirements bull Can I learn the business by working for someone else

first bull Could I operate as a hollow corporation without a factory

and with a minimum number of employees (Hollow corporation refers to a business where everything is outsourced meaning you would subcontract manufacturing and packaging to outside sources )

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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bull If you intend to manufacture a product consider the pros and cons of contracting out production to a low-cost supplier In other words operate a hollow corporation A hollow corporation is a company that subcontracts manufacturing and packaging

bull Things to Watch Out For bull Impatience bull Do not let overconfidence short-circuit you from analyzing your

selection of businesses carefully You must not fear of hearing the negative aspects it is much better to be aware of them and face them early on

bull Be realistic Do not become lured by high rewards They will come if you choose the right business and if you understand every aspect of the business before you open its doors

bull Required Activitiesbull It is worth repeating again The most common mistake and the most

costly one is not picking the right business to begin with This is the time for soul searching

bull How to Evaluate a Specific Business you have in mindbull Here are some questions to help clarify your thoughts

bull Is it something I will enjoy doingMy favorite activities are __________________________I like to serve people by ________________________________

bull Will it serve an expanding need for which there is no close substitute

bull Can I be so good at a specialized targeted need that customers will think there is no close substitute

bull Can I handle the capital requirements bull Can I learn the business by working for someone else

first bull Could I operate as a hollow corporation without a factory

and with a minimum number of employees (Hollow corporation refers to a business where everything is outsourced meaning you would subcontract manufacturing and packaging to outside sources )

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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bull Is it something I will enjoy doingMy favorite activities are __________________________I like to serve people by ________________________________

bull Will it serve an expanding need for which there is no close substitute

bull Can I be so good at a specialized targeted need that customers will think there is no close substitute

bull Can I handle the capital requirements bull Can I learn the business by working for someone else

first bull Could I operate as a hollow corporation without a factory

and with a minimum number of employees (Hollow corporation refers to a business where everything is outsourced meaning you would subcontract manufacturing and packaging to outside sources )

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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• Slide 30

bull Is this a product or service that I can test first bull Should I consider a partner who has complementary skills to mine

or who could help finance the business

bull Before you start get completely qualifiedbull The best way to become qualified is to go to work for someone in

the same business bull Attend all classes you can on the subjects you need for example

accounting computer and selling bull Read all the appropriate how-to books you can bull Dont be afraid to ask questions or seek help from the most

successful people in your intended business

bull FOUR AREAS OF INTEREST IN STARTING A BUSINESSbull Researchbull Investmentstartupbull Marketingbull Savingsexpansion

Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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Research ideas when Starting a business

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my business bull Self-Confidence

Entrepreneurs are self-confident when they are in control of what theyre doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their objectives Most are at their best in the face of adversity since they thrive on their own self-confidence

bull Sense of UrgencyEntrepreneurs have a never-ending sense of urgency to develop their ideas Inactivity makes them impatient tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting When they are in the entrepreneurial mode they are more likely to be found getting things done instead of fishing

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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• Slide 30

bull Comprehensive AwarenessSuccessful entrepreneurs can comprehend complex situations that may include planning making strategic decisions and working on multiple business ideas simultaneously They are farsighted and aware of important details and they will continuously review all possibilities to achieve their business objectives At the same time they devote their energy to completing the tasks immediately before them

bull Status RequirementsEntrepreneurs find satisfaction in symbols of success that are external to themselves They like the business they have built to be praised but they are often embarrassed by praise directed at them personally Their egos do not prevent them from seeking facts data and guidance When they need help they will not hesitate to admit it especially in areas that are outside of their expertise During tough business periods entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for extended periods of time

bull Symbols of achievement such as position have little relevance to them Successful entrepreneurs find their satisfaction of status needs in the performance of their business not in the appearance they present to their peers and to the public They will postpone acquiring status items like a luxury car until they are certain that their business is stable

bull Interpersonal RelationshipsEntrepreneurs are more concerned with peoples accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business During the business-building period when resources are scarce they seldom devote time to dealing with satisfying peoples feelings beyond what is essential to achieving their goals

bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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bull General Start-Up Activitiesbull Determine the business you want to start and determinebull Your qualifications for the businessbull The feasibility of making that business profitablebull Conduct research on your industry target market andbull competitionbull Select a location and analyze it for traffic parking and customerbull and delivery accessbull Investigate all start-up procedures specific to your industrybull There is a lot to think about when you are starting your own businessbull The following checklist will help guide you onbull Checklist for Business Start-Upbull 1bull wwwpaopen4businessstatepausbull Write a business plan that includes your strategies forbull management marketing production and financial contingenciesbull Develop a list of all potential monthly expensesbull Determine potential sources of financing for your type ofbull businessbull Develop a list of all equipment and purchases required tobull start your business Identify the costs of eachbull Research potential suppliers and investigate credit termsbull with eachbull Develop descriptions of all duties within your firm andbull determine the person responsible for each Identify futurebull educational needs

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
• Slide 17
• Slide 18
• Slide 19
• Slide 20
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25
• Slide 26
• Slide 27
• Slide 28
• Slide 29
• Slide 30

bull Business Start-Up Costs

Business start-up costs are the expenses you incur before you

actually begin business operations Your business start-up costs

will depend on the type of business you are starting They may

include advertising travel surveys and training These costs

are capital expenses which are expenses you deduct over a

number of years However if you never begin business operations

you cannot deduct start-up costs

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
• Slide 17
• Slide 18
• Slide 19
• Slide 20
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25
• Slide 26
• Slide 27
• Slide 28
• Slide 29
• Slide 30

A business plan is a tool with three essential purposes A business plan is a tool with three essential purposes planning communication and management Use the planning communication and management Use the advice here to create or update your business plan advice here to create or update your business plan

Gather additional advice from fellow entrepreneurs and Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forumsexperienced business owners on our business Forums

PlanningPlanning The business plan guides you through the The business plan guides you through the various phases of your business Preparing a business various phases of your business Preparing a business plan requires that you look realistically at almost every plan requires that you look realistically at almost every

phase of business because you must show that you have phase of business because you must show that you have worked out all the problems and decided on potential worked out all the problems and decided on potential

alternatives before actually launching your business A alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles thoughtful plan will help identify roadblocks and obstacles

to avoid and help you to establish alternativesto avoid and help you to establish alternatives

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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• Slide 30

bull Communication As a tool for communication the business plan is used to attract investment capital secure loans convince workers to hire on and assist in attracting strategic business partners A comprehensive clearly-written business plan shows whether or not a business has the potential to make a profit Many business owners share their business plans with their employees to foster a broader understanding of where the business is going

bull Management As a management tool the business plan helps you track monitor and evaluate your progress It is a living document that you will modify as you gain knowledge and experience By using your business plan to establish timelines and milestones you can gauge your progress and compare your projections to actual accomplishments

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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• Slide 20
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25
• Slide 26
• Slide 27
• Slide 28
• Slide 29
• Slide 30

bull A business must have a business plan If there is no plan then there is no business

bull The importance of a comprehensive thoughtful business plan cannot be overemphasized Much hinges on it outside funding credit from suppliers effective management of your operation and finances promotion and marketing of your business and achievement of your goals and objectives

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
• Slide 17
• Slide 18
• Slide 19
• Slide 20
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25
• Slide 26
• Slide 27
• Slide 28
• Slide 29
• Slide 30

bull to persuade someone to buy them When you write your business plan consider yourself a salesperson The product youre trying to sell is your business idea Your customers are potential investors and employees Since you want your customers to believe in you you must be able to convince them that you know what you are talking about when it comes to your business

bull Before you begin writing your business plan consider four core questions

bull What service or product does my business provide and what needs does it fill

bull Who are the potential customers for my product or service and why will they purchase it from me

bull How will I reach my potential customers bull Where will I get the financial resources to start my

business

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
• Slide 17
• Slide 18
• Slide 19
• Slide 20
• Slide 21
• Slide 22
• Slide 23
• Slide 24
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• Slide 30

bull In order to answer these questions you must become an expert about your own business (or to fine-tune your knowledge if you already believe you are one) You must be willing to roll up your sleeves and begin digging through information Since not all information that you gather will be relevant to the development of your business plan it will help you to know what you are looking for before you get started

bull What part does you business plan play bull The business plan often is called the blueprint for

success Without a good business plan you will find it nearly impossible to obtain capital The business plan starkly exposes your business knowledge (or lack of it) to lenders or investors Preparing a business plan forces you to think through your ideas and helps you communicate

bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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bull them clearly Not only does this help you obtain financing it is vital for successfully establishing your goals and managing your business and employees

Much of the information requested in other portions of this booklet is necessary for completing the business plan The business plan ties together this and much more information into a document explaining most things an investor or lender would want to know about your business

Preparing a business plan isnt easy It takes time and money to collect the necessary information to analyze that information and to properly communicate your findings This cannot be done overnight Successful entrepreneurs usually spend six to 10 months researching and preparing their ventures Ninety percent of them utilize professional advisers such as lawyers or accountants while almost 70 percent attend business seminars and regularly read business material

bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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bull Business Plan Outlinebull

Executive summary (to be completed last) ndash A broad overview of your companys activities management and objectives ndash Distinguishing features of your productsservicesndash Attractiveness of your marketndash Summary of historical financial results and financial projectionsndash Amount of money you seek in what form and for what specific purposes

Description of your business and industryndash Your business ndash The industry its history and its anticipated future

Features and advantages of your productsservicesndash Descriptionndash Competitive advantage and market niche

bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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bull ndash Proprietary positionndash Future potential

bull You should consider including some products or sales literature as exhibits

Market research and analysisndash Existing and potential customers and marketsndash Critical customers (over 10 of sales) ndash Market size and trendsndash Competition and strategy for competing

Estimated market share and salesndash Marketing planndash Marketing strategyndash Pricingndash Sales tacticsndash Service and warranty policiesndash Advertising public relations and promotion

Product design and development plansndash Development status and tasksndash Difficulties and risksndash Costs

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

• Slide 1
• Slide 2
• Slide 3
• Slide 4
• Slide 5
• Slide 6
• Slide 7
• Slide 8
• Slide 9
• Slide 10
• Slide 11
• Slide 12
• Slide 13
• Slide 14
• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
• Slide 16
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• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25
• Slide 26
• Slide 27
• Slide 28
• Slide 29
• Slide 30

bull Operations plansndash Production or service delivery process (flow charts may be helpful) ndash Geographic locationndash Existing facilities and projected improvements for future needsndash Strategy and plansndash Labor forcendash Productservice distributionndash Availability of material and suppliesndash Dependence on critical suppliersndash Unique or novel processes used

Management teamndash Organization and ownership (charts are helpful) ndash Key management personnel (credentials) ndash Management strengths and weaknessesndash Management compensationndash Board of directorsndash Key business advisersndash Professionals retained (accountant and attorney)

bull Include personal financial statements of principal owners as exhibits

bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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bull Overall schedulendash Timing of critical activities before opening (obtaining funds incorporating the company selecting the location ordering supplies hiring employees starting operations) ndash Timing of critical activities after opening (expansion productservice extension)

Response to critical risks and problemsndash Working capital shortagendash Price cutting by competitorsndash Unfavorable industry-wide trendsndash Designoperating costs over estimatesndash Low salesndash Difficulty obtaining supplies raw materialsndash Difficulty obtaining creditndash High inflationndash Lack of trained laborndash Recession

Financial statements and projectionsndash Five years of annual historical financial statements (or from the period the business has been in operation whichever is shorter) ndash Profit and loss forecasts for each month of the first full year and for each of the first three years of operation

bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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bull Cash flow projections and an operating budget for each month of the first full year and for each of the first three years of operationndash Pro forma balance sheet at start-up monthly balance sheets for the first year and at the end of each of the first three yearsndash Financial controls to be implementedndash Person responsible for finance and accounting mattersndash Outside accountant or bookkeeper who will audit review or compile the companys financial statements

bull Ownership structurendash Owners and how much they are investingndash Shareholder agreementsndash Which owners are making personal guarantees

Proposed company financing soughtndash Desired amount and terms of financing and form (equity grant or loan)

ndash Timing of required financingndash Proposed use of funds scheduling

bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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bull Simpler Outlinebull 1048644Executive Summary - summarizing keybull points of the plan in one or two pagesbull 1048644Overview - introducing the reader to yourbull company and the industrybull 1048644Description of products and servicesbull 1048644Analysis of the market in which yourbull business will competebull 1048644Marketing strategy - summarizing thebull product promotion pricing and distributionbull strategies of the businessbull 1048644Operations planbull 1048644Description of the experience trainingbull and talent of your staffbull 1048644Schedule of activities outlining yourbull timelinebull 1048644Analysis of critical risks and problemsbull 1048644Financial plan - including pro-formabull balance sheets income statements and cashbull flow statements A balance sheet comparesbull what your business owns (assets) to what itbull owes A cash flow statement compares howbull much money will be coming in to how muchbull you will be spending An income statementbull compares your revenues to your expenses tobull see if you are going to make money

bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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bull Once you have worked through your business plan and have a good product you should work on your personal presentation Remember your ability to effectively manage is being judged as is your business plan itself Preparing key visual aids developing responses for likely questions and repeated practice are good strategies

bull What are some sources of investment capital bull Many people interested in starting a business immediately look to commercial

banks for financing This is understandable because of the important financial role banks play in our society However banks are only one source of possible financing often a business combines several sources The following list of potential financing sources is presented for your consideration

YourselfIn addition to contributing your own sweat equity you have to be willing to put up a good share of the money No lender will give you money if you are not at personal financial risk You may be asked to personally guarantee repayment of any loans made to your business As well as indicating your commitment to the business personal investment is one of your easiest sells If you cant convince yourself to invest who can you convince

Savings mortgages personal possessions and life insurance policies are just a few sources of money that can get you started

Relatives and friendsAgain these are people you should have a good chance of

bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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bull convincing to loan you money They know you better than any potential outside lender However be careful Make sure your relatives and friends know the risk involved and formalize the lending arrangement with a promissory note or loan agreement Many personal relationships have been ruined by small business failure

bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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bull Government-sponsored financing programsState and local governments offer financing options for your company as well Many have subsidized loan pools that provide fixed-rate below-market business loans or grant programs JBDC

bull Small business investment companies are private companies that offer financing JNBS Licensed by the Small Business Administration they provide debt and equity capital to many small businesses They will undertake more risks but also demand greater rewards through either higher interest rates or equity positions

Commercial banksBanks operate on a small margin of error and are extremely wary of investing in a risky business Collateral to more than fully secure the loan - including personal guarantees - is necessary to convince a bank to lend you money

THE END

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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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• A business plan is a tool with three essential purposes planning communication and management Use the advice here to create or update your business plan Gather additional advice from fellow entrepreneurs and experienced business owners on our business Forums Planning The business plan guides you through the various phases of your business Preparing a business plan requires that you look realistically at almost every phase of business because you must show that you have worked out all the problems and decided on potential alternatives before actually launching your business A thoughtful plan will help identify roadblocks and obstacles to avoid and help you to establish alternatives
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