DEVELOPING A BUSINESS PLAN Chapter 2. Lesson 2.1 Why a business plan is important.
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Transcript of DEVELOPING A BUSINESS PLAN Chapter 2. Lesson 2.1 Why a business plan is important.
What is a Business Plan?
describes all the steps necessary to open and operate a successful business. Describes your product/service, how you
will produce it, and who will buy it Explains who is going to run the business States how it will win over customers &
keep them Provides detailed financial information
(earning a profit)
Why a business plan?
Three Purposes:1. To explain the idea behind your
business and how your product or service will be sold,
2. To set specific objectives and describe how your business expects to achieve them,
3. To describe the backgrounds and experiences of the people running the business.
*Remember to anticipate questions potential investors will want to have answered.
Prewriting/Brainstorming
What is my product/service? Why is my product/service unique? Who are my customers? Where will future customers come from? Who is on my business team? How will I finance my business?
Importance of a Business Plan Makes you think about all aspects of
your business Giving you more confidence in your idea
May help to secure financing Cannot get a loan without it
Helps communicate your ideas to others You know your business in and out which
allows you to explain it properly Serves as a tool to manage your
business Can guide you in decision making
Homework:
Describe the importance of a business plan in your own words.
Answer the who, what, where, when, why, and how of your business. (1-2 sentences to answer each)
Business Plan
NOT all the same Retailer focuses on inventory vs.
Consulting focuses on employee credentials
Small, home-based, sole-owner vs. Large corporation with numerous offices all over
Three Basic Components
1. Introductory Elements2. Main Body
Bulk of info with details Written first and used to write the other
two parts
3. Appendix
Main Body has 5 Sections:
1. Introduction2. Marketing3. Financial Management4. Operations5. Concluding Statement
Where the inspiration came from, your vision, and the goals of the business
1. Introduction
Detailed Description & Goals Inspiration, vision, and direction
Ownership and Legal Structure Number of owners effects business
operations Skills and Experience
Paid, volunteer, hobbies Competitive Advantage
Performance, quality, reliability, distribution, price, promotion, public image/reputation
2. Marketing
Products and Services How is it different? Unique?
Market Prospective customers and size of market
Industry Research: external factors, growth
potential, economic trends, and technology trends
Location Critical for success
3. Financial Management
Identify Risks How will you deal with these risks?
Financial Statements (current & pro-forma)
Funding Request and Return on Investment How much will you borrow? How will you use the money? Return on investment. Who is managing financial records?
4. Operations
Day-to-day operations Hiring and personnel procedures Insurance and lease or rental
agreements Equipment necessary to run your business
5. Concluding Statement
Summary of goals and objectives Emphasize your commitment to
success of business
Introductory Elements
Cover Letter Title Page Table of Contents Statement of Purpose
Why are you asking for a loan and what will you do with the money?
Executive Summary Short restatement of the report
Appendix
Supporting Documents What would you want to know about a
business before lending it money?
Personal tax returns Personal financial
statement Copy of lease or
purchase agreement Copy of Business
license
Copy of resume Letters of
recommendation Copies of letters of
intent from suppliers
Copies of contracts
Putting It All Together
Best opportunity to convince people of: Your idea Your talent Ability to make it successful
Attractive, neat, organized document
Research your industry
Community Government Professional Printed Online
SBA SBDC SCORE Chamber of
Commerce Trade Associations Professional
Consultants Financial Institutions