chapter 1

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ROADMAP TO SUCCESS:

HOW TO WRITE A BUSINESS PLAN

Foundation Communities Community Tax Center

PART 1: LAYING THE FOUNDATION I.

II.

III.

IV.

V.

Introductions Overview of Course Why Develop a Business Plan?

Strategic Planning – A Brief Overview Components of Your Business Plan 

Your Plan’s “Curb Appeal”

WHAT IS A BUSINESS PLAN ?

 Summary of your business and the future you hope to create  Realistic but conveys energy and optimism  Step by step plan to achieve your goals  “A goal is a dream with a deadline” – Steve Smith

WHY DO A BUSINESS PLAN?

 Clarifies direction for you and your team  Foundation for raising capital  A way to track progress of your business  Protects your financial future

STRATEGIC PLANNING GOALS CONSTRAINTS RESOURCES Success Occurs at the Intersection of: Goals, Constraints, and Resources

GOALS Own My Own Business CONSTRAINTS Financial Legal: Permits, Licenses etc.

RESOURCES Find Money: Savings/Equity Borrow, etc.

“Bootstrap” Become informed Connect with SBDP Staff Talent/Education/Ability Take Courses Hire Talent Work Hard Environmental Mitigate, Choose Another Site

BUSINESS PLAN TIPS  Takes 40 + hours to complete, 20 – 30 pages maximum  Be concise; less is more  Appearance counts – easy to read, professional

COMPONENTS OF YOUR BUSINESS PLAN       Cover Sheet Table of Contents Executive Summary Company Overview Product and Service Description Market Analysis      Marketing Sales Strategy Internet Strategy Management & Personnel Team Financial Projections APPENDIX

COVER SHEET  Introduces your business to prospective funders  Keep it clean and simple  Full legal name of business  Location: Address, Street, City, State, Zip  Telephone numbers and email addresses  Main contact person(s)

TABLE OF CONTENTS  Road map for prospective Funder or Investor  Statement about you  Organized  Visionary  Structured

EXECUTIVE SUMMARY  Write this section last  One section that everyone will read  Must capture and hold interest of reader  Encapsulates the entire Business Plan  Shows clarity of your goals    Who you are What you want Where you are going

MISSION STATEMENT  Who You Are  What You Do (Products & Services)  For Whom (Customers)  Why (What your Customer wants)  “It’s not what you sell, it’s what you stand for” – Roy Spence

FRITO LAY MISSION STATEMENT

Satisfy our Customers by providing fresh, tasty snack products throughout all segments of our business

COMPANY OVERVIEW  Provides information on your company including where you’ve been  How your company fits into your industry and marketplace  Your growth potential  Economic trends that are favorable to your company

BUSINESS ENTITIES       Sole Proprietorship General Partnership Limited Partnership (LP) Limited Liability Partnership (LLP) Limited Liability Company (LLC) Corporations   C Corporation S Corporation

PRODUCT & SERVICE DESCRIPTION  Specifics on what your business does  Service Industry  Product Sales  NIC/SIC Code ( http://www.osha.gov/pls/imis/sic_manual.html

)  Competitive Comparison  Pricing Strategy

PART 2: YOUR BUSINESS PLAN  Market Analysis  Marketing and Sales Strategy  Internet Strategy  Marketing is the process of creating and retaining customers in large enough numbers to be profitable

MARKET ANALYSIS  Market Segmentation –who will buy your products  Define target market strategy  How current market is underserved or not served effectively  Competition & buying patterns  Define a unique niche within the existing marketplace

MARKETING & SALES STRATEGY  Science of planning for and executing a promotional campaign  Develop marketing strategy  Product  Price  Place  Promotion  Budget

INTERNET STRATEGY  Sell products or information only  Internet sales integrated with inventory  Website  Viral Marketing / Facebook

MANAGEMENT & PERSONNEL PLAN  Experience  Maturity  Vision  Drive  Leadership

YOUR MANAGEMENT TEAM

 INTERNAL  Yourself  Partners (if Applicable)  Key Staff (If Applicable )

MANAGEMENT TEAM -EXTERNAL

 EXTERNAL  CPA: with Small Business Experience  Attorney: With Small Business Experience  Financial Planner: with Small Business Experience  Board of Directors

PART 3: FINANCIAL PLAN  Start Up Costs  Break Even Analysis  Projected Profit and Loss  Projected Cash Flow –

Business!

The Lifeblood of Your

BREAK EVEN ANALYSIS

The point at which a businesses is neither making a profit nor experiencing a loss

BREAK EVEN ANALYSIS: FIXED COSTS • •

Costs that generally remain the same month to month and are not dependent upon the number of Sales. What you would have to pay regardless of whether you had any customers walk in.

BREAK EVEN ANALYSIS: FIXED COSTS  Personnel (with exceptions)  Lease/Mortgage  Utilities  Debt Financing  Insurance

BREAK EVEN ANALYSIS: VARIABLE COSTS •

Costs that vary directly with:

the number of units sold, or

the number of clients served

BREAK EVEN ANALYSIS: FIXED COSTS SAMPLE (CLASS PROJECT)  Designer Bags  Fixed Costs  Variable Costs  Variable Income  Break Even  Profit

CASH FLOW STATEMENTS  Shows the effects on Cash of operating and Financing Activities   Indicator of Ability to    Generate Positive Cash Flows Pay Liabilities Pay Dividends Could indicate need for additional Financing

BALANCE SHEET     Provides a ‘snapshot’ of a business’s financial position at a given point in time Assets: What a business Owns Liabilities: What a business Owes Net Worth (Equity) NET WORTH = ASSETS – LIABILITES

BALANCE SHEET: ASSETS

 Cash  Inventory  Receivables  Prepaid Expenses  Plant & Equipment  Office Equipment  Machinery  Land & Facilities  Goodwill

BALANCE SHEET: LIABILITIES  Current Liabilities    Current Debt Payables Credit Cards  Long Term Liabilities   Long Term Debt (Loans) Payments to Investors  Equity  Paid in Capital  Retained Earnings

PROJECTED CASH FLOW: THREE THINGS TO REMEMBER: 1.

2.

3.

Cash is King Cash is King Cash is King Class Test

FINANCIALS: PRACTICAL PLAN HOW/WHERE DO I START?

 Spreadsheets (2)  Start up Costs (what are the things I need to get started and how much do they cost?)  12 Month Cash Flow (Detailed Line Item Income and Expense)  Read Sample Plan through a couple of times  highlight and make notes!

APPENDIX  Keep it uncluttered!

 Biographies and resumes of key team  Supporting documents  Brochures, flyers, magazine articles  References  Past lenders  Suppliers  Trade creditors

BUSINESS PLANNING RESOURCES  City of Austin SBDC  Gold Book  Services available through other organizations  Silver Book  Networking Resource Guide for Small Businesses  Bronze Book  Resource directory of local women and ethnic minority professional associations

HOW TO WRITE A BUSINESS PLAN

RECAP

      Components of a Business Plan The Planning Process Researching Target Markets, Demographics, Competitors Financials: Start Up Costs, Cash Flow, Break Even, Balance Sheet Relate Business Planning Components to Own Business Other Resources for Assistance

ROADMAP TO SUCCESS:

HOW TO WRITE A BUSINESS PLAN

Questions Comments, Ideas Suggestions or Thoughts?

Thank You

!

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