Develop a Business Plan Chapter #5. Why do you need a Business Plan Business Plan –Written document that describes all the steps necessary in opening.

Develop a Business Plan

Chapter #5

Why do you need a Business Plan

Business Plan –Written document that describes all the steps necessary in opening and operating a successful business◦Describes what your business will produce, how

it will produce it and who will buy your product or service.

◦Explains who will run the business and who will supply it.

◦States how your business will win over customers

◦Provides detailed financial information

Purpose of a business Plan

① Explains the idea behind your business② Sets specific objectives and describes

how your business expects to achieve them

③ Describes the background and experience of people running it.

Importance of a Business Plan

Makes you think about all aspects of your business

May help you secure fundingHelps you communicate your ideas to

others.Can serve as a tool for managing your

business.

Seven Basic Elements of a Business Plan

① History and Background Idea② Goals and Objectives for your company③ Product or Services you will offer④ Form of Ownership⑤ Management and Staffing⑥ Marketing⑦ Current and Projected Financial

statements

History and Background

How you can up with the idea◦Demand in the area?◦Invention you make?◦Area not being serviced?◦Suggestion from others?◦Prior experiences?

Goals and Objectives

Plan should outline your short, medium and long term goals.

Vision for the future of your company

Products or Services

What is your product or service?How are you different from other in the

market?◦This section should include the following:

INDUSTRY – Potential Growth, Economic Trends, Technology, Industry Forecasts

LOCATION – What town – what type of community, talk about people in community and need for your product.

Form of Ownership

Are you running the business alone?Who is your partnerHow many shareholders will you have?

Management and Staffing

How is your company organized?What is the education of your

management staff?What is the set up of your company?

Marketing

Items to cover◦Performance◦Quality◦Price◦Promotion◦Reliability◦Distribution◦Public Image or Reputation

Current or Projected Financial Statement

Three Elements① Identification of Risks② Financial Statements③ Funding request and return on

Investment

Additional Elements

What is special about your business and what is a lender going to need to know?

Create an Effective Business Plan

Your plan needs to convince readers you have a great idea and plan

Most entrepreneurs spend 50 – 100 hours on developing their business plan.

You have to think about every part of the business.

Research

Print Resources◦Books on writing a business plan◦Books on coming up with ideas◦Trade Magazines◦Government documents (SBA)

Online Resources◦WWW.SBA.ORG◦Magazines online◦Google searches

People Resources◦SCORE Service Corps or Retired Executives◦Small Business Development Centers

Additional Resources◦Trade Associations◦Chamber of Commerce

Put Your Business Plan Together

Typed, Standard formatIntroductory Elements

Cover LetterTitle PageTable of ContentsStatement of PurposeExecutive Summary

Cover Letter

Business Letter Format◦Your Name◦Business Name◦Address◦Phone◦Describe business and its potential for success◦How much capital is needed

Title Page

Name of CompanyDateOwner of CompanyTitle of OwnerAddressPhone

Table of Contents

Listing of all materials included in the plan and the page number they are on.

Statement of Purpose

Describes why you are asking for a loan and what you plan to do with the money if you receive it.

One to two paragraphs

Executive Summary

Should capture the interest of the reader.No longer than one to two pagesShould summarize all the parts of a

business plan.

Main Body of Your Plan

Should be well laid out and easy to followUse simple languageCharts and graphs help illustrate points

Appendix

End of the business plan Supporting documentation not part of

your plan is placed here◦Charts◦Surveys◦Tax Returns◦Legal Documents

Who is a Business Plan Written for?What are the elements of a Business Plan?Why do you need a business plan?How can a well do plan help a business?

Check List for a Business Plan