Business Plan Components of the Business Plan FEASIBILITY

Business Plan Components of the Business Plan

FEASIBILITY STUDY • Is there a demand for the product or service? • Can that demand be fulfilled on a profitable basis? • Overview of Business-Market • Competitive Advantage, Strengths and Weaknesses • Rough Pro formas

Why do a Business Plan? Submit to funders Sales purposes External and Internal uses

Why Write a Business Plan? Record your dreams Bank requires plan for a loan Investor needs it to decide to fund business or not Roadmap to Lifeline - guides Update yearly your destination you through hard times You will know Plan influences Focus on the industry and your decisions upcoming issues market in-depth -what ifs

External Business Plan Bankers and Investors Focus on provider of funds Form of selling documents Explains concept in detail Marketing and finance Highlights management

Internal Business Plan • Focus on Internal Operations • Purpose is Implementation • Briefly covers concept • Quantitative emphasis • Highlights obj. to be accomplished

The Mission Statement • Some of the basic attributes of mission statement are: • • It is normally less than 50 words and very succinctly written • It establishes what your company does and is • It specifies where you want to take your company •

The American Red Cross, a humanitarian organization led by volunteers and guided by its Congressional Charter and the Fundamental Principles of the International Red Cross Movement, will provide relief to victims of disasters and help people prevent, prepare for, and respond to emergencies.

Outline for a Business Plan • BASIC COMPONENTS – – – – – Executive Summary Company Description Marketing Plan Management Team Production Financial Plan Critical Risks Harvest Plan Supporting Documents

EXECUTIVE SUMMARY • Write a GREAT executive summary • Needs to be substantiated with data • Should include: company status, product or service, customer benefits, forecasts, investor information, and plans for repayment • Appears first-written last

COMPANY DESCRIPTION • Description of the business…form of organization, industry, trademarks, etc. • Product or service • History of the business • Location

MARKETING PLAN • Address the competition, market potential, and strategy • Sales forecasts are the basis for the rest of the plan • Identify and Describe target market • Conduct research to determine market potential • Research industry to determine growth potential and competition • Compare strengths and weaknesses • Describe pricing and packaging

Define TARGET MARKET FACTS • Description: gender, income level, age, education, etc. • Location of customers • Number of customers Target Market Customer Profile

Industry Trends-FACTS • Detail trends-tell why • Growth 5 -10 yrs. Compare rate – GNP • Detail national, regional, state, and local data • Discuss time and $ to remain competitive

Defining the Market • Determine size, YOU MUST show demand potential profitability • Market Segmentation • Marketing Strategy 4 Ps • Note mkt. Changes in share and in demand

Advertising • • Geared to your target market: Know media to reach your target market Radio, magazines, tv Discuss what %of sales and when these costs will be incurred. 3 -5%generally • Describe all methods of advertising and promotion

EXAMINE COMPETITION DIRECT AND INDIRECT • • Know Type and Size, how they compete Compete on Price-no loyalty-not retain C Know Annual Sales, Mkt. Share statistics Monitor current activity Develop a PROACTIVE Mkt. Strategy Create a matrix of strengths & problems Rank: 1=Weak to 10=Strong

Getting Market Data Secondary Data • Reference Librarians: CD-ROM databases: Text: Resources • Journals, Periodicals, Trade Associations, Government Publications • SBA, U. S. Census Bureau, U. S. Dept. of Commerce, Local Chamber of Commerce, • County Planning Department

Primary Data • Surveys-Surveymonkey. com Zoomerang, telephone, mail, personal interviews, focus groups • Observation • Include information in the body of the Business Plan • Include actual surveys in Supporting Documents section

Sales Forecast • • • 246, 400 20. 1% 49, 527 29% 14, 363 97% 13, 932 X 9. 2 128, 175 X 9 1, 153, 575 X$12. 45 MSA Population Ratio of People ages 19 -23 People with income<$16, 000 Customers with appropriate age and income Customers that will frequent a closer location Appropriate customers dining out Average visits monthly/customer Potential restaurant visits/month Months in a 2 semester school year Potential dinners sold/9 months Avg. amount of $ spent on dinner • $14, 362, 055 Sales Forecast Niceville MSA

Marketing Plan • • Customers Industry Trends Defining the Market-size, need, uniqueness Competition Packaging and Pricing Market Strategy-Advertising & Promotion Distribution

MANAGEMENT TEAM • Bottom line is that management team needs to be able to make the business happen • Identify skills and abilities of team and their area of expertise and how it relates to the business • Include complete resumes for each member • Identify the ownership structure and compensation • Identify the Board of Directors and outside consultants or advisors

Importance of the Management Team • How capable is the management team to run a business? • Venture capitalists scrutinize the management team • Management team is critical to long-term success of business

Areas to Address in this Section • Include information on management team, the organizational structure, ownership structure and the Board of Directors • Begin with an assessment of the business owner – strengths and weaknesses, skills and experience • Determine positions needed to start and run the business

Information about Ownership • Include names, % of ownership, form of ownership, type of stock, experience and how it relates to the business • Identify person who controls stock – skills and responsibilities • Investors want this information

Organization Chart • Identifies positions and areas of responsibility and how it relates to other positions • Include a NARRATIVE description of the chart • Undefined areas of responsibility can become contentious

PRODUCTION • Includes production processes, time schedule, and research and development • Identify methods of production • Discuss status of product development

FINANCIAL PLAN • Financial statements include Income statements, Balance sheets, and Cash Flow Statements for three to five years • Include a set of assumptions and basis for numbers in statement • Base numbers on sales projections from marketing plan • Include a breakeven analysis

Exit or Harvest Plan • Estimate when you plan on getting out. • Cross train so that the business is not dependent on you (worth 30 -50% less) • Review financial statements to reflect as much profit and growth as possible (eliminate any personal expenses and monitor how much salary you take out) • Decide who might purchase your firm-takes 12 -18 months to sell generally.

OTHER IMPORTANT DATA • • Critical risks Timeline chart Milestones and Priorities Develop contingency plans to meet crises

SUPPORTING DOCUMENTS • Statements regarding: – Industry Trends, Market Potential, and Management • Documents included: – Demographic market documentation – Legal contracts – Resumes of owners and managers – Articles of incorporation or Partnership agreements – Organizational charts and diagrams