Chapter 3 Develop a Business Plan 3 1
Chapter 3 Develop a Business Plan 3. 1 3. 2 3. 3 Why a Business Plan is Important What Goes into a Business Plan? How to Create an Effective Business Plan Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Lesson 3. 1 Why a Business Plan is Important Goals n Explain the purpose of writing a good business plan. n Describe the importance of a business plan. Chapter 3 Slide 2 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Vocabulary n business plan Chapter 3 Slide 3 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Business Plan n business plan n a written document that describes all the steps necessary for opening and operating a successful business Chapter 3 Slide 4 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n A business plan will describe your: n n n n Chapter 1 Slide 5 products manufacturing methods customers management suppliers competitive strategies how business will earn a profit future growth plans Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Purposes of a Business Plan n A business plan: n explains the idea behind your business n how your product or service will be produced and sold n sets specific objectives and how your business will achieve them n describes the experience of the people who will run the business Chapter 3 Slide 6 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
What are three main purposes of a business plan? Chapter 1 Slide 7 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Importance of a Business Plan n A business plan: n makes you think about all aspects of your business n may help you secure financing n helps you communicate your ideas to others n can serve as a tool for managing your business Chapter 3 Slide 8 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Why is a business plan important to an entrepreneur? Chapter 1 Slide 9 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Lesson 3. 2 What Goes into a Business Plan? Goals n List and describe the basic elements of a business plan. n Describe how to pull a business plan together. Chapter 3 Slide 10 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Vocabulary n n n pro forma financial statement harvest strategy cover letter statement of purpose executive summary Chapter 3 Slide 11 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Basic Elements of a Business Plan n The main body of a business plan should be organized into the following elements: 1. 2. 3. 4. 5. Chapter 3 Slide 12 Introduction Marketing Financial Management Operations Concluding Statement Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Introduction n The introduction should contain the following information: n A detailed description of business goals n Ownership and legal structure of the business n Your skills and experience n The competitive advantages of the business Chapter 3 Slide 13 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Detailed Description n Describe how you came up with your business n Outline the business goals for the n Short-term n Medium-term n Long-term Chapter 3 Slide 14 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Ownership and Legal Structure n sole proprietor, partnership, or corporation n identify leadership team n list number of shareholders Chapter 3 Slide 15 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Skills and Experience of the Leadership Team n list all of your relevant business experience n paid work n volunteer work n hobbies n list all of the relevant business experience of your leadership team Chapter 3 Slide 16 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Advantages n Performance n Quality n Reliability n Distribution n Price n Promotion n Public image or reputation Chapter 3 Slide 17 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Marketing n The marketing section of the business plan should describe: n n Chapter 3 Slide 18 Products and/or services Market Industry Location Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Financial Management n Identification of Risks n Prospective lenders and investors will want to know what risks your business faces and how you plan to deal with them. Chapter 3 Slide 19 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Financial Statements n pro forma financial statement n a financial statement based on projected revenues and expenses n Funding Request and Return on Investment n borrowed money n personal investment n anticipated return on investment Chapter 3 Slide 20 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Operations n n n daily business management hiring and personnel procedures insurance lease or rental agreements equipment Chapter 3 Slide 21 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n harvest strategy n the way an entrepreneur intends to extract his or her money from a business after it is operating successfully Chapter 3 Slide 22 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Concluding Statement n Summarize goals and objectives. n Emphasize your commitment to the success of your business. Chapter 3 Slide 23 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
List the elements of the main body of a business plan and explain why each one is important. Chapter 1 Slide 24 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Complete the Business Plan n Introductory elements n cover letter n a letter that introduces and explains an accompanying document or set of documents Chapter 3 Slide 25 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 3 Slide 26 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Title Page n Table of Contents n Statement of Purpose n a brief explanation of why you are asking for a loan and what you plan to do with the money Chapter 3 Slide 27 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 3 Slide 28 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Executive Summary n a short restatement of the report n An executive summary should: n n Chapter 3 Slide 29 describe your business concept include projections for sales, costs, and profits identify physical needs state the requested loan value Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 1 Slide 30 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Appendix n includes supporting documents that provide additional information to support the body of the report n Put It All Together n The business plan should be: n neat n well organized n inviting to read Chapter 3 Slide 31 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 1 Slide 32 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Why should you include supporting documents in your business plan? Chapter 1 Slide 33 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Lesson 3. 3 How to Create an Effective Business Plan Goals n Describe resources available for researching your business plan. n Name common mistakes to avoid in business planning. Chapter 3 Slide 34 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Vocabulary n Small Business Administration (SBA) n Small Business Development Centers (SBDC) n Service Corps of Retired Executives (SCORE) n trade associations Chapter 3 Slide 35 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Research the Business Plan n Most entrepreneurs spend 50 to 100 hours developing their business plans. Chapter 3 Slide 36 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Community, Government, and Professional Resources n Small Business Administration (SBA) n an independent agency of the federal government n helps Americans develop new businesses Chapter 3 Slide 37 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Small Business Development Centers (SBDC) n a cooperative effort of the private sector, the educational community, and federal, state, and local governments n provides free help for businesses that cannot afford a private consultant Chapter 3 Slide 38 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Service Corps of Retired Executives (SCORE) n retired executives provide free, confidential advice to entrepreneurs n either in person or over the Internet n business related workshops n both short-term and long-term assistance is available Chapter 3 Slide 39 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Chamber of Commerce n provides information on local business trends n Trade Associations n organizations that are made up of professionals in a specific industry n provide educational and networking opportunities Chapter 3 Slide 40 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Professional Consultants n experts who will provide business assistance for a fee n Financial Institutions n Bankers and accountants can provide information about loans and financial statements. Chapter 3 Slide 41 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Print Resources n library n magazines n government documents Chapter 3 Slide 42 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Online Resources n provide information similar to print information n websites targeted to entrepreneurs and small business owners n provide business plan templates Chapter 3 Slide 43 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
What are some of the resources that are available to help you develop your business plan? Chapter 1 Slide 44 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Mistakes in Business Planning n Avoid making the following mistakes: n n n Chapter 3 Slide 45 Unrealistic financial projections An undefined target market Poor research Ignored competition Inconsistencies in the business plan Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
List some common mistakes that are made in business planning. Chapter 1 Slide 46 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
PERFORMANCE INDICATORS n Demonstrate effective communication skills n Demonstrate skills in developing a speech using the three basic elements Chapter 3 Slide 47 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
n Utilize nonverbal gestures as needed n Apply speaking techniques using appropriate tempo and pitch n Secure facts and data from multiple sources, emphasizing research skills Chapter 3 Slide 48 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
THINK CRITICALLY 1. How can good speaking skills benefit an entrepreneur? 2. Why is research important when preparing a speech? Chapter 3 Slide 49 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3. Why should you follow copyright laws when preparing a speech? 4. How do the three elements of a speech contribute to its effectiveness? Chapter 3 Slide 50 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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