SMALL BUSINESS MANAGEMENT Chapter 4 The Business Plan

advertisement
SMALL BUSINESS
MANAGEMENT
Chapter 4
The Business Plan
Aggasiz Brewing Company
1.
Briefly discuss the problems of starting from
scratch, as illustrated by the Aggasiz Brewing
Company
2.
How could Gary DePape have avoided these
problems?
3.
What would have been the advantages and
disadvantages of Gary purchasing a
microbrewery instead of starting from scratch?
4.
What risks would Gary have faced if he had
dropped the price of his product?
Getting Started
Establishing the Business

Advantages of Organizing a
Business from Scratch





Define nature of business
Exact physical _______
Fresh inventory
Employee selection
Develop _______ system
Getting Started
Establishing the Business

Disadvantages of Organizing a
Business from Scratch





Lack of _______ info
Time assembling physical facilities
Start-up bugs & problems
Establishing outside relationships
Risk of _______
Caribbean Beer vs Agassiz Beer

Compare and contrast the two small
business ventures in similar industry

Non-Quantitative Assessment







Personality Characteristics
Goals
Content of _______
Lifestyle
Capabilities
Experience
Quantitative _______ of Business
Small Business Plan

_______ purposes



Blueprint to maintain focus
Tool to evaluate performance
_______ purposes



Recruit lenders & investors
Test of ideas viability
Form and emphasis will vary depending
on the user
Firm’s
Management
Insiders
Employees
New Venture
Business Plan
Customers
Outsiders
Suppliers
Investors
The Investor’s Perspective
 Plans





that speak the investors’ language:
Are brief, not extremely _______ in written
length.
Have an a _______ overall appearance.
Are well-organized with a table of
contents and numbered pages.
Are _______ _______ in meeting
customer needs; are not
product-oriented.
Show _______ of customer
acceptance of the proposed
product or service.
Features of Plans
that will Repel Investors
that create _______ reactions:
Show an infatuation with the product or service
and downplay market needs or acceptance.
 Plans



Are based on financial _______ at odds with
accepted industry norms.
Have unrealistic _______ projections.
Business Plans that Attract Investors
• Recognize
the _______ needs for required
rates of return on investments.
• Demonstrate _______ of focus on a limited
number of products or services
• Have a proprietary market position
through patents, copyrights,
and _______
Business Planning Needed and
Influencing Factors
Factors
affecting the extent of a
business plan:
Cost in _______ and money to prepare
the plan
 Management style and ability
 _______ of the management team
 Complexity of the business
 Competitive _______
 Level of _______

Preparing a Business Plan
Two
issues critical in preparing a
business plan:

The basic format and _______ of the
written presentation.


Clear writing that effectively communicates
The _______ of the plan.

Factual support for the concept
in the form of _______ _______
evidence
Resources for Business
Plan Preparation

Computer-Aided Planning
 Word-processing
 Spreadsheets
Specialized _______ Plan Software Packages (BizPlan)
 Professional Assistance
 Lawyers
 Marketing specialists
 Engineering and production experts
 Accounting firms
 Incubator organizations
 Small business development agencies

Research to Support the Plan

Both primary and secondary research must
be carried out by the writer of the business
plan.

Secondary Research

Primary Research
The Small Business Plan

There are ten components in a
plan:
1. Prepare a table of contents.
2. Prepare a synopsis of the plan in an
executive summary and background
statement.
3. Describe the management team.
4. Describe the business objective.
5. Plan the marketing approach.
The Small Business Plan

Components of the Plan (cont.)
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.
Components of the Plan

1. Prepare a table of contents.


Overview of the plan
Quick access to the various parts of the
plan
Components of the Plan

2. Prepare synopsis of the plan in
an executive summary and
background statement.



completed at the end of the complete
plan
history of the project to date
statement of the intended mission of
the venture
Components of the Plan

3. Describe the management team.

résumé and background of those
making the decisions for the
organization
Components of the Plan

4. Establish business objectives.



Business Size
Production Levels
Performance Levels
Components of the Plan

5. 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.
Components of the Plan

5. Plan the marketing approach (cont.)

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 _______ in the market.
 extent and strategies of the competition.
 cultural _______ of the market.
 new technologies that might offset the
business.
Components of the Plan

5. Plan the marketing program
(cont.)
Components of the Plan

6. Describe the selection of the
location.

the trading area


the Economic _______
attitude of the _______ area towards
new businesses
Competition
 Costs

Components of the Plan

6. Describe the selection of the
location.

The Site


The Buy-or-Lease Decision


accessibility, site costs, _______, site
history, proximity to other businesses,
physical characteristics
cost of the lease, length of the lease,
restrictions, repairs and lease hold
improvements, _______ coverage
Running the Business from One’s Home
Components of the Plan

7. Determine the physical facilities.



Building, equipment, fixtures, starting
inventory
_______ flow in business
 Production, layout, distribution of
product
_______
 Don’t risk more than you can lose
 Don’t risk a lot for a little
 Buy insurance only when necessary
 Investigate company and agent
Components of the Plan

7. Determine the physical facilities.

insurance types

loss or _______ to the property
business interruption

liability and _______ life insurance


insurance _______

what kind to purchase, how much to
purchase, from whom to purchase the
insurance
Components of the Plan

8. Plan the financing.





establish capital requirements
make _______ projections
determine the sources of funding
plan the _______, and bookkeeping
systems
determine the _______ evaluation
measures
Components of the Plan

9. Plan the personnel.



Administrative structure
Employee _______ and training
Personnel Policies
Components of the Plan

10. Investigate the legal
requirements.

Legal Structure (four styles)

1.Sole _______


2. Partnership



advantages and disadvantages
Limited, _______
advantages and disadvantages
3. Cooperative

one member-one vote vs each share a vote
Components of the Plan

10. Investigate the legal
requirements. (cont.)

4. Corporation


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 supplies
Components of the Plan

10. Investigate the legal requirements
(cont.)
 5.
Joint Ventures
Components of the Plan

10. Investigate the legal requirements.
(cont.)

Licenses and Taxes
Federal Government
 Provincial Government
 Municipal Governments


Intellectual Property Protection

patent steps
Appendices


Appendix A - Checklist for a Small
Business Plan
Appendix B - Sample Business Plans
(2)



The Sock Hop, Quality Cuts
Appendix C - Incorporation of
Companies and Associations
Appendix D - Jurisdiction of
Licenses and Taxes
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?
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?
Concept Checks




9. What are the advantages and
disadvantages of incorporation?
10. What level of government issues
business licences?
11. What taxes are levied by the federal
government?
12. What are the steps required to register
a patent?
Download