Business Planning Workbook
Don Urbaniec
SCORE – Fox Valley Chapter – Branch #289
(630) 692-1162
www.scorefoxvalley.org
January 2008
Printed in the United States of America. Except as permitted under the United States Copywrite Act of
1976, no part of this publication may be reproduced or distributed in any form or by any means or stored in
a data base or retrieval system, without the prior written permission of the author.
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Table Of Contents
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
Introduction
Describe Your Business
Describe Your Products Or Services
Describe Your Customers
Describe Your Competition
Describe Your Operations
Describe Your Marketing Plan
Describe Your Financial Requirements
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I. Introduction: Outline
A. What is a workbook?
B. A business plan defined.
C. Benefits of planning.
D. A dozen critical factors.
I. Introduction
A. What is a workbook?
This is not a textbook. This is a workbook. It is to be read and, then, it is
to be “worked.” These words are generalities. Your words are the specific
elements that will create your business plan.
In “working” this book, you will no doubt discover sections that require
additional research and the development of additional information. Therefore,
you will not be able to complete everything in one sitting. However, this does not
mean you should leave an important section incomplete. One incomplete area
could be the one most critical for securing a loan to start your business.
Once this workbook is completed, you need to use all of the handwritten
portions to create your final business plan. This may take several drafts, and we
suggest that you see a SCORE counselor for help if needed. Construct your
business plan in the same order as the sections presented in this workbook, and
label each section clearly for easy identification.
B. A business plan defined.
What is a business plan? A business plan is your thoughtful analysis of a
market opportunity in written form, describing the business resources needed to
fulfill that opportunity. The plan helps you develop reasonable and realistic
strategies within acceptable levels of risk. The plan identifies the facilities,
equipment, personnel, supplies, and money required to operate a business. If you
cannot write a business plan, your likelihood of creating a successful business is
slim.
Warning: not all business plans illustrate a successful business.
Sometimes, the business plan illustrates too many negative factors and lacks
positive ideas which could make it successful. Write with honesty and listen to
your SCORE counselor if he or she advises that your plan is not going to work in
current market conditions.
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C. The benefits of planning.
Planning is anticipating and predicting the future. There are probably two
reasons why people do not plan. First, they do not know how—which is a need
this workbook fulfills. Secondly, people have a subconscious desire to act on an
idea as it occurs to them rather than evaluate all of its parts before proceeding.
Planning will help you:

Clarify opportunities and unknowns

Identify risks

Quantify potential rewards

Develop strategies and “how to’s”

Define and quantify resources

Establish goals

Guide your decisions

Attract investors
On that last point, it may be difficult to obtain the financing you need to
start your business without a business plan. Investors need a written guide to see
what your idea is including the financial projections for your business, and a clear
understanding of your proposed business processes.
D. A dozen critical factors.
Consider the following twelve factors before you complete this workbook.
After you finish, review this list again to make sure you have not forgotten any.
1. Identify a market opportunity, and a specific niche, that you believe
you can serve successfully.
2. Describe your competitors and the specific competencies that give you
superiority over them—what makes you different?
3. Identify all assumptions used in your plan.
4. Be realistic or even pessimistic in your forecasts.
5. Identify how and when all investors and loans will be repaid.
6. Identify any milestones and the financial effects of meeting or missing
those milestones.
7. Identify your management team and reconcile any missing skills.
8. Consider the impact of competitors’ reactions to your strategies.
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9. Identify contingencies and allow for changes in your strategies.
10. Do not try to do everything yourself. Rely on professionals within and
outside of your business.
11. Think like an investor. Balance risks against payoffs, and think about
payoffs when making all your decisions.
12. Make sure your pricing covers all costs, losses, theft, benefits,
unforeseen events, and inflation. PROFIT IS THE TARGET.
After you complete this workbook, you may still need assistance in
creating your business plan. SCORE is happy to help you. Please visit our Web
site at www.scorefoxvalley.org and click on “Free Counseling” to sign up for
your counseling session(s) at the SCORE Fox Valley branch closest to you.
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II. Describe Your Business: Outline
A. Describe your business in 25 words or less.
B. What industry is your business part of?
C. What is the name of your business?
D. Where is your business located?
E. What is the legal structure of your business?
a. Sole Proprietorship
b. Partnership
c. Corporation
d. Limited Liability Company (LLC)
F. Why do you believe your business will be successful?
G. What is unique or different about your company?
II. Describe Your Business
A. Describe your business in 25 words or less.
Whether you are starting a new business or have an existing business, you
need to detail the key elements of your business for prospective customers.
Pretend that you are in an elevator and a person asks you what business
you are in. You only have a few minutes to speak with this person, so be concise.
The following exercise will help:
My business is __________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
.
____________________________________________________________
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B. What industry is your business part of?
Every business is part of an industry. It is important to identify your
business within its industry so you can locate valuable research that can help you
understand potential market opportunities and the competitive landscape. If you
are seeking financing, your lending institution will most likely require that you
provide data on your targeted industry. The government generates an abundance
of data that you can collect and analyze with a little effort.
My business industry is __________________________________
____________________________________________________________
An important element that can help you research your industry is an
SIC code (Standard Industrial Classification). Go to your local library or the
College of DuPage’s library and ask how to locate SIC information. Libraries can
likewise introduce you to other industry databases that may be valuable.
MY SIC code is ____ ____ ____ ____
Once you know your SIC code, there is a lot of data available to help you
project sales in your industry. Remember, you will be asked to prove your
projections. Do no plan your business without researching your targeted industry!
C. What is the name of your business?
There are several steps to take to make sure you have properly registered
the name of your business. First, if you plan on being a Sole Proprietor, go to
your county clerk’s office. They will have a form for you to fill out with your
“Doing Business As” (DBA) name. Second, they will require you to run an
advertisement for several days as proof of your business and its originality. Once
completed, they will mail you a certificate validating your business name.
My business name is __________________________________________
D. Where is your business located?
A business address is very important. If your business is conducted out of
a truck or van, you still need a mailing address for all government
correspondence, taxes, business card information, invoicing and accounting, and
advertising material. Beware of using a P.O. Box! It may imply a temporary
business rather than a permanent one.
If you are starting a business out of your home, use your house address
until you move to a more formal location. However, you may never need a more
formal address if your home office fulfills all of your business needs.
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Address _____________________________________________
_____________________________________________________
City, State, Zip _______________________________________
Office Phone ________________________________________
Cell Phone
________________________________________
Fax
________________________________________
Web Site
________________________________________
E-Mail address ________________________________________
E. What is the legal structure of your business?
There are four major types of legal business structures: Sole
Proprietorship, Partnership, Corporation, and Limited Liability Company (LLC).
Each has distinct advantages and disadvantages.
The following is a brief overview of each business structure to give you an
idea of which to choose:
a. Sole Proprietorship
A sole proprietorship simply means you own a business
exclusively. Most businesses start this way, as it is the simplest format
and the easiest to create.
No special tax ID number is assigned. Your Social Security
number is the Tax ID for your company. A limited name check will be
performed by your local state agency for the clearance of your proposed
business name. A simple form needs to be filled out to initiate this
process, and then you are almost ready for business! (This is in addition
to the county activity previously mentioned.)
Next you will need to contact your local bank and get a business
checking account. You absolutely should not do business with a personal
account. Separate your business banking activities from your personal
banking activities.
Once you have a checking account, you can print your business
stationary and business cards, invoices, and any advertising material with
your name, address, and phone number(s).
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An important point is that you can easily move from a sole
proprietorship to a corporation, but reversing a corporation is complicated.
It will cost time and money to remove the corporation structure.
The real point here is that you can evolve to a corporation over time.
Ultimately, you are trying to limit your legal exposure and lessen the
ability a customer may have to sue you. Choosing a proper business
structure is a decision best made with your accountant and your attorney.
b. Partnership
Think of a partnership in terms of a marriage: easy to form, but
sometimes difficult to live with and, if necessary, difficult to dissolve.
Like in marriage, the honeymoon is short-lived and then the real work
begins.
The major reason for forming a partnership is to share or divide the
financial risk, the work to be performed, the income, and the overall
responsibility. Neither partner needs the skills of the other, but divisions of
work need to be discussed, written down and re-visited by all partners on a
regular basis. Bottom line: splitting the work 50/50 is easier said than
done, and using the partnership business structure can be tricky.
c. Corporation
Corporations are complicated. Use a lawyer to form one if you
believe this is the correct legal structure for you.
The major reason for considering a corporation is its legal
protection. If sued, you have an established legal entity that helps protect
your personal assets. Otherwise, your house, car, and personal
possessions can be lost if you lose a comprehensive lawsuit.
A secondary benefit for corporations is that stock can be
distributed to others as a means of acquiring cash or money to support
business activities and future growth. You can retain control of your
company as long as you hold the majority of the stock issued.
d. Limited Liability Company (LLC)
A Limited Liability Company is really a partnership taxed as a
corporation. This type of structure requires a lawyer and an accountant.
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F. Why do you believe your business and industry will be successful?
Answer this in 25 words or less:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
G. What is unique or different about your company?
Beware of NOT being able to answer this question. Companies that
cannot distinguish themselves from their competitors will struggle to survive.
You must develop a unique difference that separates you from the
competition. If you have that edge, customers will buy your product or service.
What are the competitive differences or unique selling features of your
product or service?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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III. Describe Your Products Or Services: Outline
A. What are the products or services you are offering?
B. What are the customer benefits of each product or service you offer?
C. How are your products packaged or services explained?
D. What patents, permits, copyrights, or trademarks are required?
III. Describe Your Products or Services?
A. What are the products or services you are offering?
If you are planning to start a business that will sell products such as
chemicals, components (parts that fit into other parts), or even a store that sells
tires, you need to establish a list of the products. Use the form below to start a
list, and if you need more space create a separate list.
1. __________________________ 11. _________________________
2. __________________________ 12. _________________________
3. __________________________ 13. _________________________
4. __________________________ 14. _________________________
5. __________________________ 15. _________________________
6. __________________________ 16. _________________________
7. __________________________ 17. _________________________
8. __________________________ 18. _________________________
9. __________________________ 19. _________________________
10. __________________________ 20. _________________________
Selling a service is different than selling a product. If you are starting a
painting business, a restaurant, or giving credit advice, you need to describe your
services. Generally speaking, you will offer multiple services. (A painting
company offers both interior painting as well as exterior painting).
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In addition, many products being sold require services to support them. If
your business will offer services, add them at this time.
Describe the services you are offering:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
B. What are the benefits of each product or service you offer?
What is a benefit? A benefit is a specific type of value your customer
gains by purchasing and using your product or service. Benefits can include:
1.
2.
3.
4.
Saving money
Saving time
Reducing effort
Performing better than a competitor’s product
List the benefits of your products or services:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
C. How are your products packaged or services explained?
If you are selling and distributing a product, you will require some form of
packaging. There is a whole industry that specializes in the packaging of
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products. Everything from a cardboard box to a clam shell (a clear plastic casing
that encloses the product—like what you find batteries packaged in). Be aware
that packaging can be expensive, so research this subject closely. The business
Yellow Pages have companies you can contact for more detailed information.
If you are selling a service, print literature will probably be used to
explain your offering and its benefits. Some brochures or informational flyers
will need to be used when a customer asks for further information. A small
advertising agency can be a great help, but they can also be expensive.
Write a description of what packaging you intend to use for your products:
____________________________________________________________
____________________________________________________________
____________________________________________________________
What types of printed literature do you plan on using?
____________________________________________________________
____________________________________________________________
____________________________________________________________
D. What patents, permits, copyrights, or trademarks are required?
Patents:
If you are selling a new product you have invented or created, you may
want to protect your exclusivity to that product by obtaining a patent. Patents are
complicated and can take years to obtain, but their application is critical to
establish your right for exclusivity. See a lawyer who specializes in patent, and,
yes, it will be an expensive proposition. The application date can be a critical
element in your efforts, so do not hesitate in at least exploring patent options.
Briefly describe the type of patent(s) you think you need to apply for:
____________________________________________________________
____________________________________________________________
____________________________________________________________
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Others: permits, copyrights, trademarks
If you are planning to open a restaurant, for example, you will be required
to obtain a license before you can open. Your accountant or lawyer may be able
to tell you if a permit or license is required, and the Illinois Department of
Revenue should be contacted to help you determine what is needed. (They can be
reached at 1-800-732-8866.) Ask for their “Business Registration Kit.”
Sometimes several licenses will be required depending upon your industry.
Briefly describe the other type(s) you think you need to apply for:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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IV. Describe Your Customers: Outline
A. Who are your customers?
B. Where and how many customers are in your area or niche?
C. What are your customers buying patterns and cycles?
D. Why do your customers buy your product or service?
E. How often do your customers buy?
F. What price will your customers pay?
G. Who makes the final purchase decision?
H. Describe your typical customer.
IV. Describe Your Customers?
This workbook section is very revealing. You may think you know your
customers well, but this section will make sure you do.
A. Who are your customers?
Start off with a general overview of who you think your customers are in
terms of their overall characteristics.
The customer I wish to sell to is:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
B. Where and how many customers are in your area or niche?
Let’s say you want to start a painting business. You have to be able to
understand that many houses are now being sided, which will cut down the
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amount of exterior painting services you can sell. If starting a restaurant, what
ages will you be catering to and will alcohol be part of lunch or dinner meals? If
you are selling a product to a manufacturer, how many manufacturers are in your
immediate area, or out-of-state, who may use your product? You must know this!
My business has approximately # ________ customers in my immediate area.
I have determined this by:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
C. What are your customers’ buying patterns and cycles?
Nearly every business selling products or services goes through cycles.
Snow blowers are purchased in the fall, not spring. Exterior house painting is
conducted in the summer, not winter.
You must understand the buying patterns of your business because it
affects your cash flow, which in turn affects the health of your business. Try to
get data on how your business and industry cycles. This will help you plan for the
months that are normally slow in your industry.
Determine the buying cycle that you think will be normal for your
business by indicating high, medium, and low for each month.
Jan. _______________________
July _____________________
Feb. _______________________ Aug. _____________________
Mar. _______________________ Sept. _____________________
Apr. _______________________ Oct. ______________________
May _______________________ Nov. _____________________
June ________________________ Dec. _____________________
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D. Why do your customers buy your product or service?
Interesting question, right? Have you ever asked your customers why they
buy your product or service, or do you assume you know? Most companies take
this question for granted and do not collect this type of valuable research.
Take a moment and fill in your answer:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
E. How often do your customers buy?
If you are a business selling a product or service, it is important to know
how often your customers may purchase your service or product. If you provide a
service, the list of customers who use you quite frequently is extremely valuable.
But if they purchase your product or service only once every few years, you will
probably need to reach new customers through advertising.
My customer base will typically purchase how often, and why:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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F. What price will customers pay?
It is very important to know what price you will sell your products or
services for (high, medium, or low). Are you sure you know your price point?
Since profit and price are related, you better know your pricing, and make sure
you can back it up with solid data to justify it.
My price or pricing will be ___________ and why:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
G. Who makes the final purchase decision?
In the world of selling products to other businesses, a purchasing agent
will often be involved. Sometimes, a business client has a purchasing limit and a
supervisor who must sign off on the purchase. The point is, you need to
understand who has the ultimate authority to both specify and purchase your
product or service. Sometimes these are different people.
The person (or people) who will make the final decision is (are):
____________________________________________________________
____________________________________________________________
____________________________________________________________
H. Describe your typical customer.
After completing exercises A through G, this should be easier to do. Describe
your typical customer:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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V. Describe Your Competition: Outline
A. Who are your competitors?
B. Compare advantages and disadvantages.
C. How many competitors are in your area or niche?
D. Who manufactures or supplies your product?
E. How are your products or services delivered?
F. Do your products or services come with any warranties or maintenance?
V. Describe Your Competition
It is very important to know your competition. No matter what you are
selling, there is a product or service competing with you. Too often, an
entrepreneur will overlook the competition and think that extra effort, price, or
location will drive their business. Since competitors have been around longer,
they can and will retaliate. Be aware of competitors’ presence and describe them
with great detail in your business plan.
A. Who are your competitors?
The Yellow Pages, library, and Internet are good resources for identifying
your major competitors. Your customers are an excellent source as well.
List your top six competitors (the top three will be the most problematic):
1.
_______________________
4. _____________________
2.
_______________________
5. _____________________
3.
_______________________
6. _____________________
B. Compare advantages and disadvantages.
Rate your products or services in the “me “ columns of the table below.
Put a check mark in your competitors’ boxes regarding how they rate. This
should give you a good visual of how your competitors compare with your
products or services. Return to Chapter III and review the benefits you listed
from your products or services. (Make a copy of the attached chart for other
competitors you are comparing strengths and weaknesses against.)
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Factors to
Consider
Importance To
Customer
Competitor1
Competitor2
Comp...x
My Company
Strength Weakness
Products
Price
Quality
Variety of
Selection
Supporting
Services
Reliability
Delivery
Methods
Timeliness
Experience
Expertise
Reputation
Location
Size
Sales
Method
Credit
Policies
Advertising
Image
Other1
Other2
Other3
Rating Scale:
1 = low
5= high
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C. How many competitors are in your area or niche?
List the name of your competitors as well as their location:
Competitor
Location
1a.
_______________________ 1b. _____________________
2a.
_______________________ 2b. _____________________
3a.
_______________________ 3b. _____________________
4a.
_______________________ 4b. _____________________
5a.
_______________________ 5b. _____________________
6a.
_______________________ 6b. _____________________
A good idea is to get a map and put a dot where your competitors are
located. Competitors are very territorial and will try to protect their turf.
D. Who manufacturers or supplies your product?
If you are a service-oriented company you can skip this section. If you are
selling a product, you need to establish accounts with your main suppliers. Most
suppliers will allow 30-day credit terms and, in the beginning, will watch your
pay pattern closely. The cost of your product will have a definite relationship to
your profit. Frequently, it will be the highest cost in terms of your overhead.
List the manufacturers or suppliers of your product:
____________________________________________________________
____________________________________________________________
E. How are your products or services delivered?
Your customers either need to purchase your product at your place of
business or have it delivered.
Who are you planning to use for your delivery service if one is required?
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____________________________________________________________
____________________________________________________________
If you are a service business, how will you deliver your services?
____________________________________________________________
____________________________________________________________
F. Does the product come with any warranty or maintenance package?
If you are selling a product, you should understand any warranty
agreements or maintenance the product requires. The manufacturer of your
product will use phrases like, “limited warranty” and “under normal wear” to
describe their terms. This means they will not be responsible for any out of the
ordinary wear and tear that occurs with products you purchase from them.
Describe product warranty and maintenance if it applies:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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VI. Describe Your Operations: Outline
A. Business functions.
B. How many employees are required for your business?
C. If you need employees, how much will they be paid?
D. Do you have managers? What are their qualifications?
E. What equipment and facilities will be needed to run your business?
F. What influenced your choice of location?
G. How will you keep records or inventories of your products or services?
H. Can you measure the quality of your products or services?
VI. Describe Your Operations
A. Business functions. (If no employees, you may have to do all of these.)
Bookkeeping: Monthly statements, writing checks, reconciliation, bills and
expenses, payroll, maintaining books, and depreciating company equipment
Accounting: Taxes, profit or loss statement, balance sheet
Insurance: Personal (major medical, prescription) and Company
Banking: Loan application, checking account administration, banking
relationships, savings account
Operations: Physical labor, management, warehousing
Purchasing: Buying, purchase orders, stocking, inventory
Personnel: Hiring, firing, record keeping (personnel forms etc.)
Sales: Selling to customers, answering inquires
Marketing: Advertising, brochures, business cards
Electronics: Computers, cell phones, Web sites
Legal: Legal entity of business, agreements, contracts, licenses, warranties
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If you are the sole proprietor of a business, a one-man or one-woman
band, you will be managing all of the above during the course of daily business.
Overwhelmed? You should be, this list is comprehensive. Buying and selling
have been called the easy parts of running a business. It is the rest of the “stuff”
that can make you work six to seven days a week, 60 to 70 hours per week.
Ultimately, you cannot perform all of the business functions. You will
need the help of several business professionals whose services you will have to
pay for. These will include an accountant, lawyer, banker, computer expert, and
insurance professional. It is important you assign a resource for each of these
business functions. Do not confuse bookkeeping with accounting. These are two
different functions. You cannot afford to have your accountant doing
bookkeeping functions. You need to do most of the bookkeeping functions
yourself as they are critical to the success of your business.
As a sole-proprietor, you will be responsible for all the functions listed,
but may contract with outside services for professional assistance. If you have a
partner or partners, these functions can be shared. Eventually, if your business is
successful, employees can be brought on to do many of these functions. An office
manager (part-time) may be all that is needed. Fill out the following:
Function
Responsibility
Outside Service (?)
1. Bookkeeping
a.
_______________________ b. _____________________
2. Accounting
a.
_______________________ b. _____________________
3. Insurance
a.
_______________________ b. _____________________
4. Banking
a.
_______________________ b. _____________________
5. Operations
a.
_______________________ b. ______________________
6. Purchasing
a.
_______________________ b._______________________
7. Personnel
a.
_______________________ b. ______________________
8. Sales
a.
_______________________ b. ______________________
9. Marketing
a.
_______________________ b. _____________________
10. IT Help
a.
_______________________ b. _____________________
11. Legal
a.
_______________________ b. _____________________
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B. How many employees are required for your business?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
C. If you will have employees, how much will they be paid?
Number of employees ______
Hourly wage $ _____ x # employees ______ = ______
Weekly wage $ _____ x # employees ______ = ______
Weekly payroll $ _________________
Bi- Monthly payroll $______________
D. Do you have managers? What are their qualifications?
Are you planning to have a manager involved with your operation? Describe the
relationship and their responsibilities:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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E. What equipment will be needed to run your business?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Describe the facilities that will be needed?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
F. What influenced your choice of location?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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G. How will you keep records and inventories of your products or services?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
H. Can you measure the quality of your products or services?
Regardless of the nature of your business, or how long you have been
doing business, you need an effective way to measure the quality of what you
supply your customers. The best way to ask them is with customer surveys.
We have all received a satisfaction survey in the mail. Here are examples
of questions that should be on your survey:






Were our products/services delivered on time?
Has the product or service performed up to your expectations?
What can we do to improve?
Describe any problems you had with our service.
Who can we contact to learn more about any problems you had?
Rate our performance (1 being the lowest, and 10 being highest).
Indicate how you intend to survey your customers:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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VII. Describe Your Marketing Plan: Outline
B. Definitions:
 Marketing
 Sales
 Advertising
 Public Relations
C. How and where will you advertise?
D. How often will you use advertising?
E. What are your public relations strategies?
F. What are your sales strategies?
G. How long does it take to make a sale?
H. How will you attract new customers?
I.
How will you keep existing customers?
J.
What are your pricing strategies?
K. How much will you spend on marketing?
VII. Describe Your Marketing Plan
A. Definitions
Before we go into the components of a marketing plan, let us define some terms
frequently used when creating a marketing plan.
Marketing is all the activities that occur to promoted your product or service.
Specifically, for small business, it has three parts: sales, advertising, and public
relations. This chapter will discuss these three components in great detail.
Sales: The selling of your product or service to your customer base. Remember,
marketing is not sales. Sales is only a part of the overall marketing function.
Advertising: Any and all means to reach your customers with your selling
message and drive them to your location. Examples are newspaper ads, direct
mail, telemarketing, cold calls, trade advertisements, Yellow Page listings,
signage, Internet advertising, Web sites, newsletters, etc.
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Public Relations: Activities that can generate free publicity. Examples include
articles in local or major newspapers, radio and TV interviews, guest speaking at
local organizations, etc. The key point is that the exposure is free. By in large,
the information you are providing is helpful to the public and your customers.
B. How and where will you advertise?
In the definition of advertising, there was a list of things you might
consider doing to reach your customers. Regardless of who your business is
targeting, or how it operates, you have to reach customers to persuade them to
take action and buy your products or services. Learning where to advertise can be
difficult. No advertising, however, is deadly. You must make your phone ring
and you must get visitors to your website. At a minimum, learn from your
competitors. What do they do, and how successful are they?
How will you reach your customers? What will this cost you?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
C. How often will you use advertising?
Not only do you have to know where to advertise, but you also need to set
up an advertising schedule. Once a schedule is created, you can budget for
necessary expenses. Remember that there will be buying cycles you must track
your advertising schedule against.
How often will you use advertising?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
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D. What are your public relations strategies?
Return to the list of public relations examples: newspaper articles, radio
and TV interviews, guest speaking, and special events.
Contact your local newspaper and ask if they will consider publishing an
article you submit. Look in the Yellow Pages for public relations firms. Ask
what they would charge to help you write an article. Contact your local speakers’
bureau. Write a “Ten Things to Consider About Your Business” article. If you
have a public relations consultant, ask them to help general affordable ideas.
What ideas could you use in your business?
__________________________________________________________________
__________________________________________________________________
E. What are your sales strategies and tactics?
The key to your sales strategy is to simply ask yourself, what are you
offering your customers? Why should they buy from you versus your
competitors? Why are you unique? Finally, how can you get them to buy now?
An introductory offer? A discount that expires within a short period of time?
These points should roll into your sales presentation and be consistent
with your advertising message. Next, ask questions. Don’t just sell. Wasting
time with people who are “just looking” is one of the most common mistakes
salespeople make. Learn buying signals that translate to “I want to buy now.”
Write down the major points of your sales strategies:
1.________________________________________________________________
2. ________________________________________________________________
3. ________________________________________________________________
4. ________________________________________________________________
5. ________________________________________________________________
6. ________________________________________________________________
7. ________________________________________________________________
8. ________________________________________________________________
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F. How long does it take to make a sale?
It is important to understand that all businesses require different amounts
of time to close a sale. Generally speaking, a sale is not made until either money
has passed from buyer to the seller or a contract is signed and services paid for.
Consider your business. How long will it take from the time a contact is
signed until either products or services are transferred, i.e. the sale is completed?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
G. How will you attract new customers?
When starting a new business, consider repeating or even changing your
advertising to reach new customers. Your customer base will need to expand
because some customers will fade away. As suggested earlier, an advertising
schedule will be helpful to support this effort.
How will you attract new customers?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
H. How will you keep existing customers?
Statistics have proven that it is much harder to get new customers than to
keep the existing ones. Frequently, businesses forget this. As stated earlier,
customer satisfaction surveys and listening to your customers is the key. Focus
on what you can do to improve as a company?
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How will you keep your existing customers?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
I. What are your pricing strategies?
Begin with research. What price does the competition sell their products
or services for? To compete, you probably need to be close to the same price or
below. How much below? That is a function of your overhead versus theirs.
Regardless of what level, you must make a profit—not just survive. If there is no
profit in what you are doing, why do it? Calculating “breakeven” is beyond this
workbook, yet it is critical that you operate above breakeven and attain
profitability. This is where your accountant can help. You, however, must supply
the numbers that your accountant will use.
What are your pricing strategies?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
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J. How much will you spend on marketing?
This should provide the “wrap-up ingredients” needed for your marketing
plan. How much marketing you do will be determined in large part by what your
start-up budget is. Since each section has been discussed in depth, you should be
able to calculate the amounts needed for each part:
How much money will I need for sales?
__________________________________________________________________
__________________________________________________________________
How much money will I need for advertising?
__________________________________________________________________
__________________________________________________________________
How much money will I need for public relations?
__________________________________________________________________
__________________________________________________________________
Remember, your numbers must not account for start-up costs, but also be
spread over your expected annual operating expenses.
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VIII. Describe Your Financial Requirements: Outline
A. Profit defined.
B. How much money will you need? When? How often? For what? Why?
C. What sources of funding have you identified? Can you qualify for a loan? What will it cost?
Can you pay it back? When?
D. What are the tax consequences of your decision? For the business? For your personal
situation?
E. Is there a profit? When? If not, what can you change to make it work?
VIII. Describe Your Financial Requirements
A. Profit defined.
A simple statement typifies the word profit: “Money in, minus money out, equals profit or
loss.”
No matter how complicated a company or business, this law applies. The difficulty is in
accurately predicting and identifying all of your expenses. One of the most overlooked factors is to
consider your salary as part of deducted expenses. Therefore, profit is realized after you have paid
yourself a salary. In the beginning, there might not be enough cash flow available to pay yourself.
Unfortunately, the owner is the last to be paid.
The Cash Flow Projection spreadsheet on the next page can be used to list your expenses.
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B. How much money will you need? When? How often? For what? Why?
How much money will you need?
This question is directed toward your business start-up as well as your annual expenses. Plan
to spread the financial needs of your operation over at least a three to six month period. Funds
should cover any equipment, salaries, office supplies, etc. The Cash Flow Projection spreadsheet
and its related categories will help you determine costs and expenses.
Use the following to project your money needs:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
When will you need the money? How often?
The important word here is “schedule.” The Cash Flow Projection spreadsheet will help
identify when you need money to pay your expenses.
Be careful of business taxes, which are due on a quarterly basis. Your monthly projections
may not yet reflect theses quarterly payments. Spread out your budget needs over 12 months by
filling out the following:
Jan. _______________________
July ____________________
Feb. _______________________
Aug. ____________________
Mar. _______________________ Sept. ____________________
Apr. ________________________ Oct. ____________________
May _______________________
Nov. ____________________
June ______________________
Dec. ____________________
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For what?
Match the monthly amount to the need:
Jan. $______________________ July $____________________
Feb. $______________________ Aug. $___________________
Mar. $______________________ Sept. $___________________
Apr. $_______________________ Oct. $___________________
May $______________________ Nov. $___________________
June $_____________________
Dec. $___________________
Why?
If you are going to get financing, you will have to answer questions. Why do you need
equipment, computers, office supplies, etc? The lending officer will most likely ask you or tell you
to include it in your lending application.
Review the things you need to purchase and breakdown the “why’s” for each:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
C. What sources of funding have you identified?
Most companies need funding at some point. There are several ways to invest in your
business: using your own money, borrowing from investors, borrowing from relatives, or going to a
bank.
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What sources of funding have you identified?
____________________________________________________________
____________________________________________________________
____________________________________________________________
Can you qualify for a loan?
____________________________________________________________
____________________________________________________________
____________________________________________________________
What will it cost?
____________________________________________________________
____________________________________________________________
____________________________________________________________
Can you pay it back? How and when?
____________________________________________________________
____________________________________________________________
____________________________________________________________
D. What are the tax consequences of your decision? For the business? For your
personal situation?
There is no greater need for an accountant than tax preparation. You should plan on seeing
him or her every three months, as the government will require your tax filing and payment a
quarterly basis.
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Remember, your business taxes and your individual taxes can be two separate issues. If you
have a payroll, you will need to file quarterly FICA (social security) and personal taxes. Again, see
your accountant for help.
Fill out what you know about your business and personal taxes:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
E. Is there a profit? When? If not, what can you change to make it work?
This entire workbook is directed towards this one statement. “Is there a profit?” Do not go
into a business without anticipating a profit. Remember, you cannot rely on a weekly or bi-weekly
check and benefits from your current job. You will work weekends, long hours, and have to pay for
all your expenses before you get paid. Sometimes, there may be no remaining funds to pay your
salary.
Is there a profit? If yes, how much? If not, when do you anticipate a profit?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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If your business is not profitable, what changes can you make to turn things around?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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