BUSNESS PLAN Developing a Business Plan This project

BUSNESS PLAN Developing a Business Plan This project has received funding from the European Union’s Erasmus+ programme under the registration number 2018 -1 -HU 01 -KA 203 -047766. This document reflects only the author’s view and the Commission is not responsible for any use that may be made of the information it contains.

CONTENTS The Business Plan is a concise, convincing, and credible written document prepared by the entrepreneur describing • the present venture • market situation • future directions • implementation strategies The major purposes of the plan are • supporting the financing needs for the entrepreneur • guiding the future direction of the venture. 2

_ Three Perspectives Need to be Considered: • The entrepreneur's perspective • The marketing perspective considers the venture through the eyes of the customer • The investor’s perspective. The investor looks for sound financial projections. 3

_ Sources of Information for Planning: • Market Information: The first step is to define the market • Operations Information Needs: considers manufacturing operations, materials, labor, overhead • Financial Information: pro forma income statements, balance sheets and cash flow statements for the next 3 years 4

_ A convincing business opportunity is Marketable Competitive Desirable Feasible Profitable 5

_ Answer the basic questions in the business plan • Is there a need/demand? • Finding, creating, fulfilling market niches with the right product/service (Marketable) • Can we win it? • Utilizing distinct competences (better, special, different) (Competitive) • Can we do it? • Launching, managing the new venture with the right people and organization (Feasible) • Is it worth doing? • Making it profitable (Profitable) • Do we have money for it? • Getting the seed capital for launching and starting (Capitalization) • Does the entrepreneur(s) really want it? • Mobilizing commitment (Commitment) 6

_ Outline of a Business Plan 1. Introductory Page 2. Executive Summary 3. Industry and Market Analysis 4. Description of Venture 5. Production/ Operation Plan 6. Marketing Plan 6. Organizational Plan 7. Financial Plan 8. Risk assessment and Contingency Plan 9. Appendix Cafe - Internet Cafe Business Plan Java. Net Internet Cafe 1. 0 Executive Summary Highlights 1. 1 Objectives 1. 2 Mission 1. 3 Keys to Success 1. 4 Risks 2. 0 Company Summary 3. 0 Services 4. 0 Market Analysis Summary 5. 0 Strategy and Implementation Summary 6. 0 Management Summary 7. 0 Financial Plan 7

_ Why do business plans fail? • Goals are unreasonable. • Total commitment to the business was never made. • Entrepreneur has insufficient experience and knowledge. • Customer need was never established. • Entrepreneur has no sense of potential threats or weaknesses to business. 8

_ The Marketing Plan 9

_ Market planning should focus on implementing decisions related to the marketing-mix variables of product, price, distribution and promotion. 10

_ Critical Decisions for Marketing Mix Marketing Variable Product Critical Decisions Quality of components or materials, style, features, options, brand name. Price credit. Quality image, list price, quantity, discounts, quick payments Channels of Distribution Use of wholesaler and/or retailers, type of wholesaler or retailers, #. Promotion selling. Media alternatives, message, media budget, role of personnel 11

_ Marketing research involves determining: • who will buy the product or service? • what is the size of the potential market? • what price should be charged? • the most appropriate distribution channel. • the most effective promotion strategy to inform and reach potential customers. 12

_ The steps to follow in a market research study: 1. Define the purpose or objectives. 2. Gather data from secondary source. 3. Gather information from primary sources. 4. Analyze and interpret the results. 13

_ The steps in preparing the marketing plan: 1. Define the business situation. 2. Define target market/opportunities and threats. 3. Consider strengths and weaknesses. 4. Establish goals and objectives. 5. Define marketing strategy. 6. Coordinate, budget, implement and monitor. 14

_ The marketing system identifies the major interacting components (product, price, distribution, and promotion) both internal and external, that enable the firm to provide products to the marketplace. 15

_ The Financial Plan 16

_ Cash flow is not the same as profit. Cash flow results from the difference between the actual cash receipts and cash payments. Cash flows only when actual payments are received or made. Sales may or may not result in immediate cash. 17

_ Before developing the pro forma financials: 1. Prepare operating and capital budgets. 2. Develop a sales budget. 3. Production or manufacturing budgets will provide basis for projecting cash-flows. Note that: Operating budgets focus on operating costs. Capital budgets evaluate expenditures that will impact the business for more than one year. 18

_ Pro forma cash flow statement. Because many of the businesses that fail run out of cash, it is important for the entrepreneur to develop a realistic, pro forma cash flow statement. TIf disbursements exceed receipts, plan to either borrow funds or tap cash reserves TInvest positive cash flows in short term sources TProvide different scenarios based on different levels of success 19

_ 9 -4 To prepare a pro forma income statement: 1. calculate sales by month 2. project operating expenses for each month of the 1 st year 3. Reference unusual expenses with an explanation at the bottom 4. Be conservative especially regarding sales 20

_ Break-even analysis is a technique for determining how many units must be sold in order to break-even. ' The break-even point is the volume of sales where neither a profit nor a loss is incurred. &Break-even is the volume of sales needed to cover total variable and fixed expenses. 21

Software packages supporting financial plans • Spreadsheet programs can be used for both breakeven analysis and for constructing pro form financial statements • Most software packages for small business allow check writing, payroll, invoicing, inventory management, bill paying, credit management and taxes. 22 _

_ The Organizational Plan 23

_ Organiziation Plan 1. Select legal form 2. Building the organization 3. Select the first board of directors 24

_ Building an organization that will last requires careful planning and strategy • Potential investors are interested in the quality of the management team. • The initial organization design is simple. The entrepreneur handles multiple tasks. 25

_ Coping with increased work load • As the work load increases, the organization will need to expand • The entrepreneur will have to: • adapt to changes in the environment. • “put out fires. ” • allocate resources, budget, delegate responsibility. • negotiate, compromise and make adjustments. 26

_ Staffing • The job analysis is a more general guide for determining hiring procedures, training, appraisal, compensation and job description. • The job description specifies the details of the work to be performed. • The job specification identifies the requirements needed by the person applying for a job (skills, experience, education, etc. . ) 27

_ The role of the board of directors • review operating and capital budgets • develop longer-term strategic plans for growth • support day-to-day activities • resolve conflicts • ensure proper use of assets 28

_ The process of making a business plan Goal setting Prepare first draft Revise first draft Collect data Write business plan Revise business plan Actualize business plan 29

Summary 30 _

_ Summary The business plan: consize, convincing and credible document • A thought process on • The venture • The product or service • The industry, market penetration • The organization and people • The financials • The risk and contingency • Use of internet 31

@ifempow er facebook. com/ifempower. e u/ linkedin. com/company/ife mpower/ This project has received funding from the European Union’s Erasmus+ programme under the registration number 2018 -1 -HU 01 -KA 203 -047766. This document reflects only the author’s view and the Commission is not responsible for any use that may be made of the information it contains. 32