SMALL BUSINESS
MANAGEMENT
Chapter Four
The Business Plan
1
Getting Started
Establishing the Business
 Advantages
of Organizing a Business from
Scratch
 Disadvantages of Organizing a Business
from Scratch
2
Components of the Business
Plan
 There
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are ten components in a plan.
1. Prepare a Table of Contents
2. Executive Summary and background
3. Describe the Management Team
4. Describe the Business Objective
5. Plan the Marketing Approach
3
Components of the Business
Plan
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6. Describe the Selection of the Location
7. Determine the Physical Facilities
8. Plan the Financing
9. Plan the Personnel
10. Investigate the Legal Requirements
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Components of the Plan
 1.
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Prepare a Table of Contents
overview of the plan
quick access to the various parts of the plan
5
Components of the Plan
 2.
Executive Summary and Background
Statement
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Completed at the end of the complete plan
history of the project to date
statement of the intended mission of the venture
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Components of the Plan
 3.
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Describe the Management Team
resume and background of those making the
decisions for the organization
7
Components of the Plan
 4.
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Establish the Business Objective
Business Size
Production Levels
Performance Levels
8
Components of the Plan
 5.
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Plan the Marketing Approach
Have a clear concept of the target market.
Understand the target market’s needs, wants
and purchasing habits
 answer
the following questions
 where, when, what, how much, why
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Be aware of any uncontrollable factors that
might affect the marketing of the product or
service
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Components of the Plan
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Be aware of any uncontrollable factors that
might affect the marketing of the product or
service such as
 existing
or pending legislation relevant to the
business
 state of the economy in the market
 extent and strategies of the competition
 cultural norms of the market
 new technologies that might offset the business
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Components of the Plan
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Plan the Marketing Program
 the
Product or Service
 the Distribution System
 the Promotion Plan
 the Pricing Plan
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Components of the Plan
 6.
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Describe the Selection of the Location
the Trading Area
 the
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Economic Base
Attitude of the Trading Area towards New
Businesses
 Competition
 Costs
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Components of the Plan
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The Site
 accessibility,
site costs, restrictions, site history,
proximity to other businesses, physical
characteristics
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the Buy-or-Lease Decision
 cost
of the lease, length of the lease, restrictions,
repairs and lease hold improvements, insurance
coverage
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Running the Business from One’s Home
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Components of the Plan
 7.
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Determine the Physical Facilities
insurance types
loss or damage to the property
 business interruption
 liability and disability
 life insurance

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insurance decisions

what kind to purchase, how much to purchase, from whom to
purchase the insurance
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Components of the Plan
 8.
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Plan the Financing
establish capital requirements
make feasibility projections
determine the sources of funding
plan the accounting, bookkeeping and computer
systems
determine the financial evaluation measures
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Components of the Plan
 9.
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Plan the Personnel
Administrative structure
Employee recruitment and training
Personnel Policies
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Components of the Plan
 10.
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Investigate the Legal Requirements
Legal Structure (four styles)
 1.Sole
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 2.
Proprietorship
advantages and disadvantages
Partnership
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 3.
Limited, General
advantages and disadvantages
Cooperative
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one member-one vote vs each share a vote
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Components of the Plan
 4.
Corporation
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advantages and disadvantages of a corporation
steps in incorporation
• selection of the business name
• development of the share structure, directors,
restrictions on share transfers, etc.
• description of the company operations
• acquiring the necessary supports
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Components of the Plan
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Joint Ventures
Licenses and Taxes
 Federal
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Government
income tax, goods and services taxes, excise tax
 Provincial
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income tax, licenses, sales tax
 Municipal
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Government
Governments
licenses, property taxes, business taxes
Patents
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registration, search, application
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Appendices
 Appendix A -
Checklist for a Small
Business Plan
 Appendix B - Sample Business Plans (2)
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The Sock Hop, Quality Cuts
 Appendix
C - Incorporation of Companies
and Associations
 Appendix D - Jurisdiction of Licenses and
Taxes
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CONCEPT CHECKS
 1.
What are the advantages and
disadvantages of owning a small business?
 2. What steps are involved in preparing a
business plan?
 3. What criteria must be evaluated before
choosing a trading area?
 4. When is it advantageous to lease instead
of owning?
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CONCEPT CHECKS
 5.
What information should be investigated
before construction starts and purchasing
equipment?
 6. Why is insurance purchased? What are
some small business insurance types?
 7. What major financial aspects should be
planned in advance of business operation?
 8. What are four legal structures that an
owner can utilize?
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CONCEPT CHECKS
 9.
What are the advantages and
disadvantages of Incorporation?
 10. What level of government issues
business licenses?
 11. What taxes are levied by the Federal
Government?
 12. What are the steps required to register a
patent?
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