Developing a Business Plan Why a Business Plan

Developing a Business Plan Why a Business Plan is Important What Goes into a Business Plan? How to Create an Effective Business Plan

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. SWH Slide 2

Vocabulary n Business plan SWH Slide 3

The Business Plan n Business plan n a written document that describes all the steps necessary for opening and operating a successful business SWH Slide 4

n A Business plan will describe your: n n n n SWH Slide 5 products manufacturing methods customers management suppliers competitive strategies how business will earn a profit future growth plans

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 SWH Slide 6

What are three main purposes of a business plan? SWH Slide 7

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 SWH Slide 8

Why is a business plan important to an entrepreneur? SWH Slide 9

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. SWH Slide 10

Vocabulary n n n SWH Slide 11 pro forma financial statement harvest strategy cover letter statement of purpose executive summary

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. SWH Slide 12 Introduction Marketing Financial Management Operations Concluding Statement

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 SWH Slide 13

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 SWH Slide 14

n Ownership and Legal Structure n sole proprietor, partnership, or corporation n identify leadership team n list number of shareholders SWH Slide 15

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 SWH Slide 16

n Advantages n Performance n Quality n Reliability n Distribution n Price n Promotion n Public image or reputation SWH Slide 17

Marketing n The marketing section of the business plan should describe: n n SWH Slide 18 Products and/or services Market Industry Location

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. SWH Slide 19

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 SWH Slide 20

Operations n n n SWH Slide 21 daily business management hiring and personnel procedures insurance lease or rental agreements equipment

n Long term Strategy n the way an entrepreneur intends to extract his or her money from a business after it is operating successfully SWH Slide 22

Concluding Statement n Summarize goals and objectives. n Emphasize your commitment to the success of your business. SWH Slide 23

List the elements of the main body of a business plan and explain why each one is important. SWH Slide 24

Complete the Business Plan n Introductory elements n cover letter n a letter that introduces and explains an accompanying document or set of documents SWH Slide 25

n Executive Summary n a short restatement of the report n An executive summary should: n n SWH Slide 26 describe your business concept include projections for sales, costs, and profits identify physical needs state the requested loan value

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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 SWH Slide 28

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Why should you include supporting documents in your business plan? SWH Slide 30

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. SWH Slide 31

Vocabulary n Small Business Administration (SBA) n Small Business Development Centers (SBDC) n Service Corps of Retired Executives (SCORE) n trade associations SWH Slide 32

Research the Business Plan n Most entrepreneurs spend 50 to 100 hours developing their business plans. SWH Slide 33

Community, Government, and Professional Resources n Small Business Administration (SBA) n an independent agency of the federal government n helps Americans develop new businesses SWH Slide 34

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 SWH Slide 35

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 SWH Slide 36

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 SWH Slide 37

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. SWH Slide 38

Mistakes in Business Planning n Avoid making the following mistakes: n n n SWH Slide 39 Unrealistic financial projections An undefined target market Poor research Ignored competition Inconsistencies in the business plan

PERFORMANCE INDICATORS n Demonstrate effective communication skills n Demonstrate skills in developing a speech using the three basic elements SWH Slide 40

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 SWH Slide 41

THINK CRITICALLY 1. How can good speaking skills benefit an entrepreneur? 2. Why is research important when preparing a speech? SWH Slide 42

3. Why should you follow copyright laws when preparing a speech? 4. How do the three elements of a speech contribute to its effectiveness? SWH Slide 43