DEVELOP A BUSINESS PLAN LESSONS Chapter 5 5.1

Chapter 5
DEVELOP A BUSINESS PLAN
LESSONS
5.1 Why Do You Need a Business Plan?
5.2 What Goes into a Business Plan?
5.3 Create an Effective Business Plan
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Chapter 5
Slide 2
Lesson 5.1
WHY DO YOU NEED
A BUSINESS PLAN?
GOALS
Explain the purpose of
writing a good business
plan.
Describe the importance of
a business plan.
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Chapter 5
Slide 3
THE BUSINESS PLAN
A business plan is a written document that
describes all the steps necessary in opening
and operating a successful business.
Describes what is produced, how it is
produced, and to whom it is produced for
Explains who runs it and who supplies it
Explains plans on getting & keeping
customers
Provides detailed financial information
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PURPOSES OF A BUSINESS PLAN
 Explains the idea behind your business and spells
out how your product or service will be produced
and sold.
 Sets specific objectives and describes how your
business expects to achieve them.
 Describes the background and experience of the
people who will be running the business.
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IMPORTANCE OF A BUSINESS PLAN
Makes you think about all aspects of
your business.
May help you secure financing for your
business.
Helps you communicate your ideas to
others.
Can serve as a tool for managing your
business.
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Chapter 5
Slide 6
Lesson 5.2
WHAT GOES INTO
A BUSINESS PLAN?
GOALS
Study the seven basic
elements of a business
plan.
Recognize what additional
elements may be needed.
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SEVEN BASIC ELEMENTS
OF A BUSINESS PLAN
1.
2.
3.
4.
5.
6.
7.
Chapter 5
Slide 7
History and background
Goals and objectives
Products or services
Form of ownership
Management and staffing
Marketing
Current and projected financial
statements
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Chapter 5
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1. HISTORY AND BACKGROUND
Describing how you came up with your
idea can help lenders, investors, and
others understand how your business
will operate.
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Chapter 5
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2. GOALS AND OBJECTIVES
Your business plan should outline your
goals—short-term, medium-term, and
long-term. Be specific!
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Chapter 5
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3. PRODUCTS OR SERVICES
In this section your business plan should:
Explain how your products or services differ
from those already on the market.
Describe the industry you will operate in.
External factors (competition & lack of suppliers)
Growth in industry
Economic trends in industry
Technology trends that affect industry
Describe the location of your business. (critical
factor in success)!
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Chapter 5
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4. FORM OF OWNERSHIP
Identify your form of ownership
Provide information relevant to your
form of ownership such as partners or
shareholders
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Chapter 5
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5. MANAGEMENT AND STAFFING
Demonstrate that you and the people
working for you have the experience,
maturity, and common sense to manage
your business.
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Chapter 5
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6. MARKETING
The marketing section should:
Identify your prospective customers (target
market) in detail
Describe the size of the market for your
product or service.
Explain how you plan to enter the market.
Explain how you plan to deal with competition
(performance, price, quality, promotion,
reliability, reputation, distribution)
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7. CURRENT AND PROJECTED
FINANCIAL STATEMENTS
Chapter 5
Slide 14
The financial section has three elements:
Identification of risks
Ex: competitors cutting prices, costs
exceed projections, demand for product
decline over time
Financial statements (projected if new,
current if existing)
Funding request and return on
investment
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ADDITIONAL ELEMENTS
OF THE BUSINESS PLAN
Chapter 5
Slide 15
Some businesses need to provide
additional information in their business
plans related to:
Licensing (EX: hair dresser, daycare)
Legal restrictions (EX: liquor stores)
Regulations (EX: restaurants)
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Chapter 5
Slide 16
Lesson 5.3
CREATE AN EFFECTIVE
BUSINESS PLAN
GOALS
Research your business plan.
Organize your business plan.
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Chapter 5
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RESEARCH THE BUSINESS PLAN
Print resources
Books in the library (entrepreneurship, marketing,
financing, operating a franchise)
Magazines (small business magazines & industry
magazines)
Government documents (SBA & other federal
agencies)
Online resources
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Chapter 5
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RESEARCH THE BUSINESS PLAN
People resources
 Small Business Development Centers-provide free
assistance in developing a business plan
 Service Corps of Retired Executives (SCORE)-over 12,000
retired executive volunteers offer free advise
Additional resources
 Internet sites that walk you step by step how to create a
business plan
 Chamber of Commerce & Small Business Development
Centers – trends affecting local businesses
 Trade associations –great source of info
 Professional business consultants—hire an expert
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PUT YOUR BUSINESS PLAN
TOGETHER
Chapter 5
Slide 19
Introductory elements
 Cover letter-briefly describe business & potential for success
as well as how much capital you need (pg. 118)
 Title page (company name, date, owner, address, phone
number)
 Table of contents-listing of material included
 Statement of purpose-why you are asking for loan & what
you will do with money
 Executive summary (pg 120)
No more than one or two pages
Describe business concept & how it is unique
Include projections of sales, costs, & profits
Identify your needs (inventory, land, equipment)
State the amount you need to borrow
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PUT YOUR BUSINESS PLAN
TOGETHER
Chapter 5
Slide 20
Main body of your plan (seven parts)
Appendix (anything not included in the
body)
Resume
Personal financial statements
Tax returns
Letters of recommendations
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Chapter 5
Slide 21
Your Business Plan:
Create a new document in Word
Save as Your Name’s Business Plan in
your Business Plan folder
In the same document:
Create a title page and outline
Using pg. 118 as example, start creating
your cover letter
We will wait to create your statement of
purpose & executive summary later
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