The Second Step of Starting a Business:
Writing a Business Plan
119 Technology Center
University Park, PA 16802
814-863-4293
sbdc@psu.edu
www.sbdc.psu.edu
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About the SBDC
• Eighteen Centers in Pennsylvania
• More than 1,000 Centers Nationwide
The SBDC network provides free confidential one-on-one
consulting to current or potential small business owners and
free and low-cost educational programs.
www.americassbdc.org
www.pasbdc.org
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www.facebook.com/PennStateSBDC
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Why do businesses fail?
One-third fail in the first year, 50% go under
within five years
• Poor Management
• Poor Marketing
• Poor Finances
How to minimize your chances of failure?
Write a business plan!
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Business Planning
What is a business plan?
Who needs a business plan?
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Business Planning
Five Reasons for Writing a Business Plan
• It forces you to look at your entire
business
• It becomes a tool to help you
manage your business
• It demonstrates your goals and
objectives to others
• It provides a basis for your
financing proposal
• It creates a ‘yardstick’ to measure
your progress
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Business Planning
Common Questions
• Can you write my plan for me?
• How long does it need to be?
• I know everything about my
business. Do I need to write it?
• I don’t need a bank loan, so do I still
need a plan?
• How long will it take to write a plan?
• How do I get started?
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Business Planning
Formatting Issues
• It should look like a professional
document. It should be typed and
free of grammatical errors.
• Always write it in the third person—
don’t use the words I, me, we, our,
or us.
• All sections of the plan ‘talk’ to each
other, so proofread it to check for
mistakes.
• Include an appendix with supporting
documentation.
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Business Planning
Three Major Sections of a Business Plan
• The Company
• The Marketing Plan
• The Financial Plan
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Business Planning
Title Page
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Business Name
Owners’ Names
Address
Phone Numbers
Website
Email Addresses
Logo
Date
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Business Planning
Table of Contents
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Business Planning
Executive Summary
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Business Purpose and Goals
Products or Services
Target Market
Marketing Strategy
Management Team
Funding Needed—The ‘Ask”
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Business Planning
Executive Summary—Your Mission Statement
• What are your values?
• What is your mission?
Google: “To organize the world’s information and make it
universally accessible and useful.”
Nike: “To bring inspiration and innovation to every athlete in the
world.”
Disney: “To make people happy.”
Think short and to the point…
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Business Planning
Organization and Management
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Business History/Purpose/Goals
Corporate Structure
Management Team Experience
Individual Roles
Legal and Tax Issues
Advisors and Support
Opportunities and Threats
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Business Planning
Products and Services
• Products, Services, or Production
Process
• Facility and Infrastructure Needs
• Suppliers
• Pricing
• Future Expansion Opportunities
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Business Planning
The Industry
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Industry Trends
Strengths and Weaknesses
Regulatory and Technology Issues
Trade Associations
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Business Planning
Human Resources
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Employees
Independent Contractors
Compensation and Benefits
Payroll Processing
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Business Planning
Disaster Preparedness
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What if…
Data Backup
Alternative Suppliers
Partnerships with
Other Businesses
• Insurance
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Marketing Plan
Starting the Marketing Plan
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What exactly am I selling?
Is there a market niche that I can capture?
Who exactly am I selling to?
What do I know about my potential customers?
Who are my competitors and what are they doing?
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Marketing Plan
The Customers
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Target Market
Size of the Market
Characteristics and Demographics
Message Delivery
Master the bull's-eye before you move to the next ring…
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Marketing Plan
The Competition
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Direct vs. Indirect
Strengths
Weaknesses
Differentiation
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Marketing Plan
Promotional Strategies
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Which media are most appropriate for your audience?
What will you do at start-up and then on an ongoing basis?
What is your mix of traditional vs. non-traditional methods?
What will all of your efforts cost?
Like the entire plan itself, your marketing plan is never ‘done.’
You will regularly be making updates and adjustments.
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Financial Plan
Start-Up Costs
Recurring Monthly Expenses
Projected Financial Statements
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Financial Plan
Estimating Revenues
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Cash Sales
Credit Terms to Customers
Seasonal Variations
Revenue Projections ‘Grid’
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Financial Plan
Other Concerns
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Inventory Levels and Lead Times
Production Cycle and Lead Times
Credit Terms from Suppliers
Capital Expenditures
Loan/Investment Repayment Terms
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Cashflow Statement
“A summary of the inflows and outflows
of cash in over a certain period of time.”
“What will my checkbook look like over the next
few months or year?”
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Breakeven Analysis
Answers the questions:
• How many units do I need to sell?
• How many guests do I need to serve?
• How many clients do I need to capture?
• How much do I need to bill out each week?
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Resources
Penn State SBDC
www.sbdc.psu.edu
SBDCNet
www.sbdcnet.org
U. S. Small Business Administration
www.sba.gov
Central PA Chapter of SCORE
www.scorecpa.org
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For Additional Assistance:
200 Innovation Boulevard, Suite 119, University Park
152 East Market Street, Suite 100, Lewistown
814-863-4293 717-247-1280
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sbdc@psu.edu
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