WELCOME !

Introduction to

Preparing a Business PlanPresented by:

Resource Partner of the U.S. Small Business Administration

Why a Business Plan?

• WHAT is a Business Plan ?• WHY is it necessary ?• WHEN is it needed ?

Benefits of a written Plan

• A reality check when you first examine the feasibility of your business idea, which forces you to consider all the relevant factors.

• Your business’s resume, which will be vital in dealing with lenders and outside investors, an important tool in negotiating with vendors, and attracting employees.

• A timetable for operations, helping you to coordinate all the diverse activities that go into running

your business.

Benefits of a written Plan

• A modeling tool that helps you evaluate the variable factors that affect your business, so you can better prepare to deal with situations that may arise as conditions change.

• A vehicle for tracking progress• A blueprint against which you can adjust operations

in order to achieve your goals.

• A starting point for future planning

Events Triggering the Need for a Plan

• You want to open a new business.

• Your business has grown.

• You want to introduce a new product.

• You want to enter a new market.

• You want to acquire a new business or franchise.

The Role of Planning

P l a n (prepare for the future)

Evaluate A c t (explain variances) (implement the plan)

Analyze Results (compare results) (something happens)

Record (measure the results)

Components of a Business Plan

Part I. Executive Summary.

Part II. Description of the Business.

Part III. Operations

Part IV. Marketing

Part V. Personnel

Part VI. Financial Documentation

Part VII. Appendices with supporting

information.

Executive Summary(Completed LAST !)

Purpose of the PlanCommunicates the VisionStates the Desired outcome

Mission StatementReflects core purpose and direction of the companyEmbodies basic values of owners and employees

Brief outline of each section of the PlanDescription of the business, Structure, Product(s) andService(s), Marketing, Financing required.

CREATE INTEREST !

Description of the Business

• Nature of the Business Retail, Manufacturing, Distribution, Services.

• Status Startup, Expanding

• Structure Sole Proprietor, Partnership, Corporation.

• Location• Product(s)• Unique Selling Principle

Operations

• Where will the facilities be located.

• Leasing or buying.• Zoning.• What material and

equipment are needed. Detail the costs.

• Special licenses required.

Marketing Strategies

• Target Market Segments

• Promotional Strategies

• Pricing Strategies• Growth Expectations, Units and/or Value

• Identify Selling Costs, separate from production costs or other overhead expenses.

• Distribution methods.

Market Research

You must learn . . .• Who will buy from you?

• How will they buy from you?

• Where they will buy from you?

• What benefits are they buying?

• When will they buy from you?

• How often will they buy?

• How much will they buy?

• Why will they buy from you?

Research Tools

• Observation• Public Library – On-Line, Off-Line

• Trade Associations

• Census Bureau – Demographic Data • Study Competitors – Learn who they are, what

they provide, pricing structures.

• Professional Research Companies

Competitors and Competition

• Who are they?

• Location and Market Share• Increasing or Decreasing – in Number or Size

• Comparison Grid – Price, Service, Delivery, Marketing

• SWOT analysis – How can you exploit these factors?

PersonnelManagement Staffing• Who are the owners?• Who are the key personnel?

Describe their background and experience. Skills they bring to the business.

Personnel StaffingIdentify staffing requirements by type of position. Number of employees, salary ranges, timing of employment.

Ancillary ServicesIdentify other resources used: Accountant, Attorney, Bank,

Insurance, Other professional resources.

Personal Skill InventoryReview past achievements

Work positions CredentialsEducation Free-time activitiesProjects Community ServiceKnowledge

Skills

Capabilities

Evaluate Past Achievements

How successful were you at setting and meeting goals?

How did interaction/communication skills affect performance?

How did you solve the problem or complete the project?

What would you do differently?

Finance

• Personal Financial Status

• Summary of financial needs

• Sources and uses of funds

• Financial forecasts Income Statement Cash Flow Statement,

Break Even Analysis Balance Sheet

Personal Financial Status• Personal Financial Statement

Cash position, investments, property owned, liabilities.

• Address past credit problems

• Personal AssessmentWhat is the amount and nature of your investment?What are you able and willing to risk?

Summary of Financial Needs

* Start-Up or Planned Expansion Costs

* Capital Expenditure

* “Long Term” Working Capital CycleFunding LossesProject Financing

* Working CapitalContract Financing

Accounts Receivable and Inventory Financing

Sources of all funds

• Personal

• Family, Private Investor

• Venture Capital Investor

• Credit Card/ Small Business Credit Products

• Commercial Bank

Use of Funds

• Purchase of real estate

• Cleaning / Renovation of premises

• Purchase of manufacturing equipment

• Purchase of vehicles

• Purchase of office equipment and systems

• Start-Up organizational costs

• Operating Funds

Source and Application of FundsSource of Funds:

Investment by Owner(s) $ 5,000Bank Loan – First City Bank 14,000Personal Loan from family (no interest) 3,000

Total Investment $ 22,000

Application of Funds:Equipment Purchases $ 3,000

Leasehold improvements 1,000Initial Inventory 4,000Pre-business startup costs 500Working Capital 4,500Purchase of truck (used) 6,000Purchase of computer and software 3,000

Total $ 22,000 ======

Financial Plan

Current Status:

* Balance Sheet * Profit & Loss Statement(s)

Forecasts:

•Twelve Month Sales Forecast•Projected Operating Statement•Projected Monthly Cash Flow •Break Even Analysis•Balance Sheet

Supporting Documents• Resumes of owners and key personnel• Personal credit information of 20% owners• Personal references• Leases, Franchise Agreement, etc.• Legal Documents, Licenses, Certificates• Loan Agreements• Sales contracts from customers• Certified set of accounts (if already in business

and seeking new financing)

Helpful Web Sites, www.

sba.gov U.S. Small Business Administration

score.org Service Corps of Retired Executives

uspto.gov Patents and Trademarks

state.oh.us/sos Ohio Secretary of Sate; forms, information

toolkit.cch.com CCH Business Owners toolkit

vfinance.com Loans and investment for business

bplans.com Examples of Business Plans

startupjournal.com Wall Street Journal Center for Entrepreneurs