How to Develope Business Plan

8/9/2019 How to Develope Business Plan

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Develop a Winning BusinessPlanBrought to you by:

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Orange County SCORE Services' Assist with Business ldeas' Help with Business Plans' Expand Clients Understanding & Use ofFinancial Tools-Profit & Loss Statements-Balance Sheet-Cash FIow' Help with Marketing Plans' Assist in Preparing Loan DocumentsSCORE.

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Develop a WinningBusiness Planl. Whr you slrould lrale a business plan2. What does a business plan do?3. What s in a business plan?4. Llnscres,ing the Dileirnra: What l)o I5. Analvzing the investlrenl

and occasional personal obsen ations. irrclerenlcomments and asidesl

Develop a Winning BusinessPlan

Bonni( C,'nelnndOrdnge (i,unf SCORECi,pJrighl 2llo9 SCORE.

' Analyze strengths & shore up we' Set goals and control yourjourney.' Make sure there's profit at the end of therainbow.' Communicate youl ideas to others for input.' Convince others to let you use their stuff:lenders. investors, grantors, vendors.Iandlords.

#1. Why You Should HaveA Business Plan Nl\ TaLeWhy You Should Have A Business PlanA chance to fail on paper, fix theproblem, succeed in real life.Reduce stress later -- it's hard tothink wlien you're up to your ears in

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Start-Up Survival

in Bnsiness

\ cars {fter 51.rct pFronr Illusions of Enlrer{grtgurd4 b) Sco11 A Shane'|!''15n'n'Iftqndunil\tr1 scoRE.

Personal ObservationdClie,rr. Slct rr'rtu trouhlc hccrrtsc tlrcr erpeet tllt hLtstrtestpJan to arrsu,er the preceding cluestiot'ts. A businessplarr rsrr't rnagic, and r1 doesn-t knou anv tttore thanrou dol It s nrcrclr u plaec to !]Ll!S-d!!-! \\hat \ou rcgorng to do.dDif-liculty u,riting a plan is a valuable signal that canhighlight trouble spots and even slave oll'disaster!Clients l'ho have trouble u'riting a business plan olienlack the skills and experience to successf-ull1' run thcbusiness thet'-re rvriting aboutl

About the Companv and People:1. Where is the company NOW?2. Wlrat is the product or service?3. Who is involved in the company?4. Ho* are they qualified? 6;1tJ


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A Business Plan AnswersThese 20 Ouestions:

About Finances:12. How much money does the business need?13. When does it need it?14. How much of the nloney comes from YOU?I -5. What kind of return can the businessproduce?16. When will it paythat return? >,; '(,I7. What are the risks? \SCORE"

And, If the Purpose of the Plan is toGet Other People's Monev for YOUR Business:;>-.'.--

18. What is 1'our p49!ggg4[ at rnanaging similat'sums of money?19. Wh1' should the moneyed par'ry trust that 1'ou'lldeliver the return you promise in the stated

time period?20. What is the moneyed partl's recourse if 1'oudon't deliver? SCORE.

The Underpartls Gnomes are a communtty otunderground dwellers who steal underpants in SouthPark, Colorado.*They have aSuperbBuzz Word Filled

Power-Point Presentationof theirThree-Phase

Business Plan SCORE"nl\il hdn .lmtn iil i:ot'cnilrcr tntl l)eccnthar.

Business Plan

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UnderpantsProfitSCORE.

NONE of the gnomes know what is inPhase 2 of the Plan'Each one believes that ANOTHERgnome knows.They don't have any idea how they're goingtoto make a Profit,, "nO the underpants are O"'"nd8OOU.

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Business Plan

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Personal Observation ..1662fftrofit doesn'l appear by magic, and rrdoesn't come from dreaming, wishing,

hopingo being determined to succeedogood with people, because you 'odeserveitr" or from moving assets, money anddebt from one place to another,AND it certainly isn't the automaticresult of opening a business-!' SCORE.

Profit comes from sellingsomethingfor more money than it costs toproduce and deliver it.

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RevenueExpenseProfit

...Dadd1,'sRule SCORE"

#3. What's in A Business Plan?SCORE"

#3. What's in A Business Plan?1. Cover Page2. Table of Contents

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3. Executive Summary ''.. ;4. Company Descriplion5. Ownership & Management6. Product/Service7. The Market/Marketing Strategy8. Competition9. Financials10. Supporling Documents SCORE"


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,,6,i _ ,.nf[\v)o'- t/#4. Unscrewing the Dilemma:Writing Order orWhat Comes First, the Chicken or

Hggffithe Egg?

Presenting Order1. CoverPage2. Table of Contenls3. Erecutive Sunrmary4. Compaily Description5, Ownership/Management6- Producr/Servic7. l\tarkel & Msrkeling Str{tegy8. Competition9. Financials10. Supporting Documents

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Writins Orderl- Prodilct/SenicZ. Market/luarketing Strateg)3. Competition?1. Financills5. Company Description6. Ownership^|anagement7. Supporting Documents8. Xlecutive Sumnlffry9. Table offlontents10. Cover Pag

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Underpants' SCORE.

2, Table of Contents

7. luarket & l'Irrketing Strategt

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2. Nlrrket/llarkelin g Strategy. Trllle of Conlents

5. C-ompanl' Des(riplion

7. Markel & \larketing Strntegl9. Table ofConlents

i:g HI,\Presenting Order \\rriting Order

l. Cover Page l. Prodnct/Senicc2, 'l'able of Contents 2. Nlarket/Nlarkeling Strateg]3, Executivc Surnorar.r' 3. Compotilior4. Compan.rl Description r'- Fhrncials5. Ounership/l{anagemenl 5. Compan) Descripfion6. Product/Senice 6. Ownership/['lanagement7. luarket & \larketing Strateg] 7, Supporting Documents8. Conrpetition 8. E\ectrti\ e Snrnmary9. Finanrials 9. Tablc of Conlnlslu. Supportiilg Do(ilmcnts 10. Cover Page icc

Product/Service/Describes u'hat is unique about the products or serviccs/Tells thc cuslomer need it \\'ill fill/Details product use. function. cost. qualit)'. reliabilit.v.price/Lists lcatures and beneflts/Explains the [ .S.A. (t nique Selling Advantage)/Discusses manulacturing or production plan. prqected

costs. ke]'equipr.nent and materials. sources andalternative sources./C-overs intellectual properlv protectioll (il'applicable)/[rnlairrs corrlractual arranElcnrcnt:. SCORE.i: ::: : :::i:: F

Services: Acme ConsultingAcme offers the kind of marketing experlise

high-technology companies need to developproduct distribution and establish marketsegmentation in new markets.

Our service is available three ways: as high-Ievel consulting paid for on a retainer basis.project-by-project, ol through our target marketresearch reports.

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Presenting Ordcr Writing Orderl. Coler l'{ge l. Producl/Serfic2. Trble of Conlents 2. lUarkel/l\tarketinq Stralegl3. Execrtivc Surnmarl 3. Compelilion{. Companl DescriDtion {. Finrncials5, Ou'nership/[f anagemenl 5. ConrllanJ Description6. Product/Sen.ice 6. Ownership,4\lanagenrenl7. lUarkel & Ilarktling Strategt 7. Supporting Documents8. Conpti(ion 8. Executi\ e Silmnran9- Financirls 9. Tnble ofContents10. Supporling Docilments 10. Colcr Page #*o*RH

Services: Acme ConsultingI Retriner consultins se represent thc client companl br actln-q as an

e\tension ofils business and rnarket derelol)nren1 ilnclions \\'c begin b1undcrstanding ofclient compan\ s silualion. obiectiles. and corstraints thensifi through ne$ nlarkel de\elollmenls and opponunities as appt opriale 1otheclient \\'ealsorepresenltheclientininitiallallssilhpotentialallies.vendors and channels

I Proiecl consullins Billed on a per-proiect and per'rrilesrone basis. projectconsultinq otl'ers a client conpanv a \{a\ lo Llse our e\peftise 10 solvcspecific problenrs. build and or intplenrerl plans. and de\elop largeledinibrnrarirtr

I fl4LSt-$SS4-IgI: \\'c oilir paclaged rePofts to selecled clierrls at S5.0otr perunit These locus on a specilic marlet. channel. or tolic Recent otl'eringsinclude a studr oldeveloping consunrer channels in Jal)ail ancl one on lheimplications of the narrouing linancial mar.gins tn llte solj*a'Stbng.

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Market & Marketing StrategyDescribes thc 19!gyg4j rnarkel lor the compan\,'s products andserviccs. including market size. proiected gro\\th rate. and

receptiVitl, to the producl.It rnar also covcr:'/ Trcnds in the marketr' Characteristics of typical custorrersr' Market share conrpelitols and yours"' Feedback from potential customersr' lndependent nrarket studies and statistics/ I lol, the market is sold or serviccdr' Significance ofprice. quantitv. performance. sen'ice.

warrantv to the rnarket

Market & Marketing StrategyClimber Mountain ChaletConsumer expenditures tirr rock-clirlbing equiprrent rose toS3.000.000 in Central Oregor in 1005. Clirnber Mountarn

Chalet exllecls sales to increase steadily as Oregon's populationgrou's and rock-clitnbing as a hobbt'becornes increasinglypopular.Studcnl' and rr*itor. lo seretal laruc uni\crsilies r)ear ourWestern Oregon location fuel our business. as does nearblSrrith Rock. an international rock cJimbing "nrust-do."Enlhusiasts fronr -Tapan. Europe- South America- and Australia\isit Srnith Rock for a beautiful and challenging sport- androck-climbing erperience. **OBS

Market & Marketing StrategyClimber Mountain ChaletOur market breaks do\rn to three distmcl segnlerts:Hardcorc climbers, This segmerrt is pick! about thc gear thcY use aDd

l ol'al to cstabl i shed brands. For therr- $ e canl' relatir eJr erpen sir eteclrnical ilerus fronr l)etzl. Black Diarnond. Patagonia ancl l\4ountainGear. This segmcnt ofour market pal s the price lbr gooti gearlrecause it pror icies theD q ith safen and long-lenn 1iu.

\\'eekend $'arriors. These clilrbers \\'anl lo look (-OOL or their localrock uall Ther.want f'ashionable clolhing and sale but reasonabllpriced gcar f'rtrrr companies such as Colurnbia and Keln.

Curious Georqes. oil their \\'av k) caDlpsites or holel rooms. rr il1 bul1un iterns likc Frisbccs. hackr -sack ba1ls. board garnes. and uotntain-themed gil'ts lbr the lblk back honre. SCORE":]:i :i: i:;]i:::;::]i;

Market & Marketing StrategyClimber Mountain ChaletOur advenising strateg)' re\'olves arourtd small lrighri'arsigns that courrt-dourr the nriles to Climbcr MountainChalet These reselnble the "Burma-Shave" ads ofpastvears. promisittg clean restroonrs and liee santples oiourexclr-rsir,c Old (lintber llole-.1sses ('andtrvln addrtron. snrall advertisements and discout.tt coupolts ill

local tourist ne\\,spapers and thc- Western Oregon RegionalScctions of intemalionalmountaineering magazincsbrng u,orldu'ide visitorstoourdoor scoRE,

I)resentins Order2. TEble ofContents 2. l\larkcl^larkeling Slra(eg\3. E\ecutive Sufimrr.\

5. Cornpanl Dscription

7, I\larkel & trIarkeling Strateg]9. Table ol (ontents

Competition

The competition section identifies conlpetingproducts. businesses and technology. andcol.llpares your ofrering with theirs.

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CompetitionClimber Mountain ChaletClimber Mountain Clhalet is a fun. spacious slorecatering to erpericnced. interrnediate and noriceclimbers and the general vacationing public.

Our primarl'compelitor. The Rock Shop. is located 8miles au,af iu thc toun ol Snrithville. Thcir stafT areexperienced. rvorld renou'ned mountatneers, and theirinverllor)'conlains costly European goods. \Ue believeThe l{ock Shop discourages rte\\'colrers to the sport.Other competitors include Intentet-based sellers ofclimbing and sports gear as $'ell as large relailers such

as R E.1. arrd Sport Chalct. SCORE.

CompetitionClinrber Mbuntai n ChaletThc ad\,antages we have or'er colnpelltors are: (

t'I . A uelcorning public face. includrng anple parking. clean-ctlrlbrlable restroorrs. a fir+ia(L \rilll a llN(c lo cllal. an'l fi (( calld\ ail in att anta, tirechrlet-sn le buildinc.2. t"*' in.."n,ort, -,1-rn,r


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Personal Monthly Expenses

Financialsfor ALL BusinessesL Pro.jected Balance Sheets. lrrcortre Statemcnts. artd

Statements ofCash Flori lbr thc nexl 3 t'ears. Thescmllst tle to each other and to wltat vou lrale in vourmarketrng and operations pJan.2. Break Er,en Analysis3. Ratio Analvsis4. Bart casc \\or5l eJse 5ecllcTl0\

*SrtnLtintt.t tttlltd I'rrlit Lttd I o::.s tr "l't(1. lhc lir:r war shutli htntntilhl\': liilil:ttlr OL ltr .tLtottlotul thtt,t .vLtr:. SCORE.ffi

Personal Income StatementFor the Period.lanuary I Januan'30

Monlhll' Income fiom Wilb's Salary $3.800Supplemental lnconte liom Savings 2.000

$.s.800Less: Living Expenses (see sohedule) 3.536Excess of Monthl.v lncome

over Expenses $2,264SCORE.ffi

Add:For Established Businesses1. Projected Balance Sheets, Income

Statements. and Statements of Cash Flow forthe past 3 years. These must tie to each otherand to what you reported to the IRS.

2. Copies of current Accounts Receivable andPayable aging schedule

3. Schedule ofbusiness debts.SCORE.

ExanrpleBusiness Balance SheetAs of.lanuatl 1. 20\'YAssets Liabilities

ttl hdi it oi n\ S) tll'hil rt t\ t\ - \)(ash il bank sl:.lur r\ccounls Pr\rbl. 1i l5-0(l)Cash in Rcgislcr ll(r Crcdrt Cr;d Balanccs lo.(xl)AccouDLsRcc.r\nblc l0-(l[) Balancco$cdoilFurnrlureln\cnlor\ l(r {XX) ard Fr\tures IE.0(n)Furitrrrc& Fi\tures :o-ix{r BalanoconTrucl 18({X)ln,ck j!l{)! Loan l-ronr Pircrls l(.r-!LlilTotrl Assefs S 82,000 Totl Liabilitis $!!q@Net \\rorthAsscts .!E1.0(X)'I.,lbrl,tics !l-!l1l!Nel $orth $ l.0mSCORE.ffi

ErampleBusiness Income StatementIt(l)l

For the Period January 1 - Decemher 31 20XXOl 02 Ol O'{ lsl \ r. -

Srles S 30 ,10 (30'1,)60 (s0'7") | Io (81"1,) l'10-Cosl ot Coods l50o/") 15 :0 l0 55 l:0-Othr Erpnses 30 30 30 30 120lncon(Loss)BeforeTxr (ls) (10) 0 25 0

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lJxampleBusiness Cash Flow,uoo,Fot the Period January 1 - December 31 20XX

or ol ()3 ().1Beginning Cash in Bank $ 20 zlJ 2O 35Crsh Collected 30 35 45 60Lr.r: ( ash FrpendcdCrsh {ronr Operations (15) (0) J5 45a'sh lnli'sion" Renrired 35 :0Endins CasI in Brnh 20 20 35 {5

Add:For Start-UpsI . Schedule of Start-Up Costs2. Proiected Sources and Applications ofStart-Up Funding

Schedule of Start-Up CostsE\peps. Ellinalc 5@

Cash Dcposit rtr Busurcss Brnk Account S:0 0(l) \hrBcginnurg lr\ciltor\ 10.0(xl Your Fl\p.ri.rccFr\trtrcs EqurtlncnlrlDstullation 8.5'10 Cucss & PriccDccorrtiDe and Remodcling r.i(0 Cucss & PrjccPrc-Opciling Rcnl l.l(xl Rcalbr LrndlordScr\iccs. Supplics 5()() CucssLcgal and Profcssional Fccs l-(xx) (all & \skI-rccnscs- Pcrnrts 10il ( rll & -{sLTclcfhonc and I tillt\ Drposic 100 (all.t AskSrgns l.orx) ( all & AskAd\crllsilre lbr Opcnrng l.(x)(r \c\spaP!r. elcLiranucipatcd Erpcnses Ciu.ss - l(Ll0'lofstimatedStarGl'p(losts $5(1.000 SCORE"

Projected Sources and ApplicationsOf Starl-Up Funds

First Year Operations (Applications)l:stinratedStart-UpCosts 550.000WorLinrCaoitrl"lnfu:ion -'5.00frNeeded: First Year Operation 575.000 r ttrt'l

Sources of Starl-Up FundsPersonal Savings 520-000Sell Stocks. Bonds. Etc. 5.000Loan frorn parents I I.000Funds Provided br: entrepreneur lq0!0 r l8',i)Bank [,oan r-eeded 539.000 t .::'r'r

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Other Business FinancialsNice to Have Sonretirnes Required

3 1'r'. \\rorking Capital and Inventor)'Requilentents3 1r. Capital Expcr.rditr"rre PlanRisk: l,oss and Disaster Contingencl PlansRcsl ( ase \\ orst (.'asc ScenariosValiable & Fixed Cosl Anah'sisRatio Anall,ses - Liquiditl'. Solvencl'. ROI.Profi tatrilit). Operating Clash l- lon

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Presenting Order

3. Erecutive Sunman4. Companl Description

7. Silpporling Documenls, -Markt & l\larkting Strategl8. Erectrlil e Snmmar.\

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66:$#u)#5. Analyzing The

InvestmentSCORE.

Analyzing the Investment:Will this Business Pay Off?You have developed the information you

need to decide whether it's worth your tirneand money to stalt, continue. or expand yourbusiness. I urge you to analJ-ze the financialexpectations and risks before you take action.This 5 step process is ONE WAY.

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You can always throw out the analysisand go with your gut or your passion oryour clreamo but if you do the analysis, atleast you'll know what your business lookslike from a strict financial point ofvievf'

iFfl)@*gR*eAnalyzing the Investment

l. Set your marketplace rvorth. Horv much *'ouldsomebodl' else pa1 )'ou to u'ork lor them. salary plusbsnclits? Sar $50,000.2, Add risk and return. Estlmate hou'much nrone-v1'ou plan to put into thc business and then horv much)/ou. as an "investor." u'ould expecl as a return onthat investnrent. Let's sa)'!'ou put up $60.000 andexpcct a I 0olo annual return - not an unreasonablesull.l that's anotlter $h.000. 999-Rt

Analyzing the Investment3. Add lnvestor Return. An1'bod1'else putting up

monel'? Add the returlt olt their investmenl. too!Let's sa1' lJncle .loc is investing ti50.000. He \\'ants250/o compounded annuall1. the average rateinvestors expect to eam, plus tlre eventual return o1-is capital.Put in $12.-500 per )1ear fbr l-lncle .loe.

Analyzing the Investment

Over the course of the first fir'e lears of I our buslness.1'ou should expect to generale 53'12.500That's not necessaril\' $68.500 each and evelr' )'ear. Startups beinguhrt ther arc. \ou rnr\ carn nolhtttu thc lir.t rclr b!Lmke -137.000 in thu sccond SCORE.

Entrepreneur's Salary and Benefits S50^000Plus the Annual Relurn on:Entreprcneur's Investment 6.000Uncle Joe-s lnYestnrent ll-500Required Annual Return Jiom Business 568'500

$68,500x5:$342'500

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Analyzing the Plan U.

5. Think and decide.You may conclude that your business idea

won't generate an acceptable retum on yourinvestment. That's OK.

Analyzing the Plan

That's why they invented erasers andput a delete key on computers!*9*R

But lf You Wait Until AFTERYou Take Action

To Learn the ldea Doesn't Work,,4i :-!

LJg: =9;r;:::;.-+You Could Be inSERIOUSTrouble! SCORE.![ \'ou Do A PIan and Learn lt Won't WorkBEFORE you take action:You can go back to the dran'ing boardYou can do more tcsting and fine tuningYou can add or subtract products/servicesYou can wait, save money, get rvork cxperience

YouFIX the Can ,+.:.problem! ,ldt,^!/T -L \-.e$zz*- -..-.,^-,. -",ffi

Business Plan.Ao

utWould BVBR Do That!

now nYOU

Phase ICollcltinderpants

Business Plan/\tot-LrPhase 2 Phase 3

Profil!

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